508 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

ANNOTATION

INSTANCES OF THE APPLICATION OF THE

PRINCIPLES OF EQUITY
By
Atty. SEVERIANO S. TABIOS

§ 1. Introduction, p. 508.
§ 2. Application of Equity in Human Relations, p.
510.

A. Requirement to act with Justice, Observe Honesty

and Good Faith, p. 510.
B. Prevention of Unjust Enrichment at the Expense of
Another, p. 512.
C. Recognition of Voluntary Performance as Natural
Obligation, p. 514.
D. Recognition of Implied Trust arising from Specific
Acts, p. 516.

§ 3. Application of Equity to Procedural

Requirements of Court Action, p. 518.

A. Liberal Interpretation of the Rules of Court, p. 518.

B. Relief from Judgment where no other Remedy is
Available, p. 520.
C. Operation of Estoppel on Acts or Omissions
involved in a Cause of Action, p. 522.

_____________

§ 1. Introduction.
Equity has been equated with justice. In fact, it has been
considered as an attribute of justice and may correct and
modify the bare written law. Sometimes, equity limits the
excessive generality of written laws and at times it extends
it to supply some deficiencies in the law. As its mission is to
temper
509

VOL. 109, NOVEMBER 27, 1981 509

Instances of the Application of the Principles ofEquity

the rigor of positive law, it has been said that there can be
no justice if the application of the law is not made with
equity. As Justinian said, equity is justice sweetened with
mercy; its purpose, therefore, is to seek and follow the
intention of the legislator rather than the bare legal
provisions,
1
to adopt the rigid precept of law to the social
life.
In common law countries like the United States equity
has been adopted as a remedy to correct the apparent
weakness of law courts whose rigid rules make it difficult
in some cases to obtain justice. Thus, equity courts were
established apart from law courts to handle cases in which
a strict interpretation of the law would likely cause
injustice to a person. While in most states equity courts
and law courts have been combined, the 2
distinction
between law cases and equity cases still exist.
As a result of a distinction between law cases and equity
cases, courts in the common law system are vested with
common law jurisdiction and equity jurisdiction. In this
regard, equity jurisprudence has been described as that
portion of remedial justice which is exclusively
administered by courts of equity as distinguished from that
portion of remedial justice which3 is exclusively
administered by courts of common law. For this purpose,
courts of law generally consist of a judge and jury for the
trial of cases while equity courts
4
generally consist of one or
more judges without a jury.
Under the system of procedure existing in the
Philippines, where no courts of law or courts of equity as
they are known in England and the United States are
made to exist separately, all cases whether of law or of
equity are presented and tried in the same manner,
including their final disposition in the same
________________

1 Arturo M. Tolentino, Commentaries and Jurisprudence on the Civil

Code of the Philippines (Manila: ACME Publishing Co., 1960), Vol. I, p. 42
citing I Valverde 211.
2 Kennard E. Goodman, et. al., Today's Business Law (New York:
Pitman PublishingCorp., 1956) p. 12.
3 Melquiades J. Gamboa, An Introduction to Philippine Law New York:
The Lawyers Cooperative Publishing Co., 1955) p. 482.
4 Kennard E. Goodman, et. al., Op. Cit., pp. 11-12.

510

510 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

tribunal. Thus, courts including the Supreme Court 5

grant
both legal and equitable relief to parties in a case.

§ 2. Application of Equity in Human Relations.

A. Requirement to act with Justice, Observe Honesty and

Good Faith.
Under the New Civil Code, every person must, in the
exercise of his rights and in the performance of his duties,
act with justice,6 give everyone his due, and observe honesty
and good faith. Correspondingly, where a person willfully
causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy, such
person shall compensate the 7injured individual for the
damage suffered by the latter, in the same way that he
would be required to indemnify the latter should he
willfully
8
or negligently cause damage that is contrary to
law. Thus, even if an act is in itself legal or not prohibited,
if such act is contrary to morals or good customs, public
order or public policy, such act may give rise to liability
based on the principle that a person, even in the exercise of
a formal right, cannot with impunity intentionally cause
damage to another
9
in a manner contrary to good morals or
public policy.
In justifying the inclusion in the New Civil Code of
certain norms of conduct based on morals, the Code
Commission anchored its argument on the premise that
every good law draws its breath of life from morals, from
those principles which are written with words of fire in the
conscience of man. Thus, as further stated by the Code
Commission, when it is reflected that while codes of law
and statutes have changed from age to age, the conscience
of man has remained fixed to its ancient moorings, one
cannot but feel that it is safe and salutary to

________________

5 U.S. vs. Tamparqng, 31 Phil. 321.

6 Art. 19, New Civil Code.
7 Art. 21, New Civil Code.
8 Art. 20, New Civil Code.
9 Tolentino, Op. Cit., pp. 65-66.

511

VOL. 109, NOVEMBER 27, 1981 511

Instances of the Application of the Principles ofEquity

transmute, as far as may be, moral norms into legal rules,

thus imparting to every legal system that enduring quality 10
which ought to be one of its superlative attributes.
Appropriately, these guides for human conduct should run
as golden threads through society, to the end that law may
approach its supreme 11
ideal, which is the sway and
dominance of justice.
Accordingly, where after preparations for a wedding
whereby invitations were printed and distributed to
relatives, dresses for the bride-to-be, the maid of honor and
flower girls were prepared, showers were given, gifts were
received and the marriage license was issued, the groom-to-
be left for his home city in Mindanao two days before the
wedding, leaving a note requesting for postponement of the
wedding because of his mother's objection, although he
made assurances that he would be returning soon, and he
never returned nor was he ever heard from again, the
Supreme Court in awarding damages in favor of the bride-
to-be remarked that the situation was not a mere breach of
promise to marry. According to the Supreme Court, while
a mere breach of promise to marry is not an actionable
wrong, however, to formally set a wedding and go through
all the preparations and publicity, only to walk out of it
when the matrimony is about to be solemnized is quite
different. This is palpably and unjustifiably contrary to
good customs for which defendant must be held answerable
in damages in accordance with Article 21 of the New Civil
Code which provides that "any person who wilfully causes
loss or injury to another in a manner that is contrary to
morals, good customs or12
public policy shall compensate the
latter for the damage"
In another case, whereby members of a labor union after
having entered into collective bargaining with management
left the bargaining union and after joining another sought
to be recognized and negotiate a new agreement, the
Supreme

________________

10 Report of the Code Commission, pp. 40-41.

11 Report of the Code Commission, p. 39.
12 Wassmer vs. Velez, L-20089, December 26, 1964, 12 SCRA 648, 652-
653.

512

512 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

Court in declaring as illegal the strike staged by the new

union when management refused to recognize them said
that if the move of the new union observed by the court as
intended to circumvent the contract previously entered into
were allowed, the result would be a subversion of a contract
freely entered into without any valid and justifiable reason.
Such an act, according to the Supreme Court, could not be
sanctioned in law or in equity as it was a derogation of the
principle underlying the freedom of contract and 13
the good
faith that should exist in contractual relations.

B. Prevention of Unjust Enrichment at the Expense of

Another.
Under the New Civil Code, certain lawful, voluntary and
unilateral acts give rise to the juridical relation of
quasicontract to the end that no one shall be 14unjustly
enriched or benefited at the expense of another. In this
regard, the Code Commission in justifying the inclusion of
the concept in the New Civil Code emphasized that it is
most needful that this ancient principle be clearly and
specifically consecrated in the Civil Code to the end that in
cases not foreseen by the lawmaker, no one 15
may unjustly
benefit himself to the prejudice of another.
Regarded as one of the mainstays of every legal system
for centuries, the doctrine that no person should unjustly
enrich himself at the expense of another was in the
beginning never expressly consecrated in positive law as a
general principle. In the Roman Law, for instance, there
were several actions like condictio indebiti available to the
party who, by mistake or otherwise, had paid or given to
another party something that was not due him, and
condictio causa data non secuta available to a person who
had performed in anticipation of a counterperformance by
another which did not follow, based on the

________________

13 Manila Oriental SawmiU Co. vs. National Labor Union, et al L-4330,

March. 24,1952.
14 Art. 2124, New Civil Code.
15 Report of the Code Commission, p. 41.

513

VOL. 109, NOVEMBER 27, 1981 513

Instances of the Application of the Principles ofEquity

16
principle of unjust enrichment. Similarly, under the New
Civil Code, every person who through an act of
performance by another, or any other means, acquires or
comes into possession of something at the expense of the
latter
17
without just or legal ground, shall return the same to
him, for the same reason that whoever finds personal
property which is 18not a treasure must return it to its
previous possessor. Furthermore, even if the property was
not taken but instead was damaged by an act or event not
due to the fault or negligence of defendant, the latter shall
be liable for
19
indemnity if through the act or even he was
benefited.
It is to be noted that the rule that no person shall
unjustly enrich himself at the expense of another should
not be extended beyond its legitimate scope. Thus, if the
enrichment does not cause injury to another, it is not
prohibited. Correspondingly, the owner of a property whose
usufruct belongs to another shall retain the improvement
on the property which cannot be removed without
destroying
20
it at the time of the termination of the
usufruct.
While the concept is reflected in the new provisions of
the New Civil Code, it was already recognized as early as
1903 in a case that
21
involves a claim for payment for
services rendered. It was also applied in other early case
in which the Supreme Court declared that under the
principle that one person may not enrich himself at the
expense of another, a judgment creditor would not be
permitted to retain the purchase price of a land sold as the
property of the judgment debtor after it has been made to
appear that the judgment debtor has no title to the 22
land
and that the purchaser had been evicted therefrom.
It is moreover noted that the concept that no person
shall be enriched at the expense of another which found its
way into

________________

16 Tolentino, Op. Cit., p. 71.

17 Art. 22, New Civil Code.
18 Art. 719, New Civil Code.
19 Art. 23, New Civil Code.
20 Art. 579, New Civil Code.
21 Perez vs. Pomar, 2 PhiL 682.
22 Banzon vs. Standard Oil Co., 27 Phil. 141.

514

514 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

our New Civil Code is of foreign origin. In this regard, the

Code Commission reasoned that since the Philippines by
its contact with the Western culture for the last four
centuries is a rightful beneficiary of the Roman Law which
is a common heritage of civilization, it is but natural and
fitting, therefore, that when the young Republic of the
Philippines framed its new Civil Code, the main inspiration
should be the Roman Law as unfolded and adapted in
Spain, France,
23
Argentina, Germany and other civil law
countries.

C. Recognition of Voluntary Performance as Natural

Obligation.
According to the New Civil Code, obligations are civil or
natural. If there is a right of action to compel performance,
the obligation is civil; but if there is no right of action to
compel performance, the obligation is natural. Thus,
natural obligations, not being based on positive law but on
equity and natural law, do not grant a right of action to
enforce their performance, but after voluntary fulfillment
by the obligor, they authorize the retention of what has 24
been delivered or rendered by reason thereof.
Correspondingly, when without the knowledge or against
the will of the debtor, a third person pays a debt which the
obligor is not legally bound to pay because the action
thereon has prescribed, but the debtor later voluntarily
reimburses the third25 person, the obligor cannot recover
what has been paid. Similarly, if inspite of the lapse by
extinctive prescription of the right to sue upon a civil
obligation the obligor voluntarily performs the contract, he
cannot later on recover what he 26
has delivered or the value
of the service he has rendered. Likewise, if a defendant in
an action to enforce a civil obligation which has failed
voluntarily performs the

_________________

23 Report of the Code Commission, p. 3.

24 Art. 1423, New Civil Code.
25 Art. 1425, New Civil Code.
26 Art. 1424, New Civil Code; Villareal vs. Estrada, 40 O. G. (10th
Supp.)No. 14, p. 87.

515

VOL. 109, NOVEMBER 27, 1981 515

Instances of the Application of the Principles ofEquity

obligation after the right to enforce the same has failed, he

cannot later on demand the return of what he has delivered 27
or the payment of the service he has rendered.
Furthermore, if a testate or intestate heir voluntarily pays
a debt of the decedent exceeding the value of the property
which he received by 28will or by law of intestacy from the
estate of the deceased, or after a will was declared void for
not being in accordance with the formalities required by
law, an intestate heir pays a legacy in compliance with a
clause of the defective will after the settlement of the debts
29
 29
of the deceased, the payment is valid, effective and
irrevocable.
It must be noted that in all of the above examples, the
juridical tie is based on voluntary performance. In this
regard, voluntary fulfillment should be understood as that
act through which a debtor complied with an obligation
even if he
30
knew that he could not have been legally forced
to do so. Hence, if a payment is made through a coercive
process of the writ of execution issued at the instance and
insistence of the prevailing party, the payment is not
considered voluntary and the provisions
31
of the law on
natural obligation cannot be applied.
There should also be a distinction between actions that
give rise to natural obligations as against those that are
merely the exercise of moral obligation. In this regard, the
giving of legal assistance to one's employee who has been
accused of a crime has been considered as merely a moral
obligation and so the employee cannot
32
recover attorney's
fee from the benevolent employer. Correspondingly, while
a moral duty would ripen into a natural obligation when
the person thus performing or paying feels that in good
conscience, he should comply with his

________________

27 Art. 1428, New Civil Code.

28 Art. 1429, New Civil Code.
29 Art. 1430, NewCivilCode.
30 ManiJa Surety and Fidelity Co. vs. Lim, L-9343, Dec. 29, 1959.
31 Manila Surety and Fidelity Co. vs. Lim, L-9343, Dec. 29, 1959,
32 Dela Cruz vs. Northern Theatrical Enterprises, Inc., et. al., 50 O.G.
4225.

516

516 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

undertaking which is based on moral grounds, if there is no

voluntary performance as yet, natural obligation cannot be
invoked as natural obligation is a legal principle that would
encourage a person to fulfill his obligations by not allowing
him to change his mind but33rather compel him to abide by
his honor and conscience. Therefore, as the Supreme
Court has previously ruled, a Christmas bonus, not yet
given to employees, is not generally a demandable and
enforceable obligation, nor may it be considered a natural
obligation
34
for there has been no voluntary performance as
yet, unless it used to be 35given in the past, although
withheld in succeeding
36
years or it had been made a part of
the wage or salary.

D. Recognition of Implied Trust arising from Speciftc Acts.

Under the New Civil Code, several acts are recognized to
give rise to a relation of implied trust in favor of another.
Thus, when property is sold and the legal estate is granted
to one party but the price is paid by another f or the
purpose of having the beneficial interest of the property, an
implied trust is created between the former as trustee and
the latter as the beneficiary, unless the person to whom
title is conveyed is a child, legitimate or illegitimate, of the
one paying the price for in that case a disputable 37
presumption exists that there is a gift in favor of the child.
There is also an implied trust when a donation is made to a
person but it appears that although the legal estate is
transmitted to the donee, he nevertheless is either 38
to have
no beneficial interest or only a part thereof. Siipilarly,
when land passes by succession to any person and he
pauses the legal title to be put in the name of another, a

________________

33 Report of the Code Commission, pp. 58-59.

34 Ansay, et. al. vs. Board of Directors of NDC, L-13667, April 29,1960.
35 Heacock vs. NLU, L-5577, July 31,1954.
36 PECO vs. Court of Industrial Relations, et. al., L-5103, Dec. 24,1952.
37 Art. 1448, New CiviI Code.
38 Art. 1449, NewCivilCode.

517

VOL. 109, NOVEMBER 27, 1981 517

Instances of the Application of the Principles ofEquity

trust is established
39
by implication of law for the benefit of
the true owner, and for this reason, an heir who acquires
a Torrens Title in his own name to property which he is
administering for himself and his brother and sisters as
heirs from a common ancestor may be compelled to 40
surrender to each of his coheirs his appropriate share.
Furthermore, if two or more persons agree to purchase
property and by common consent the legal title is taken in
the name of one of them for the benefit of all, a trust is
created by force of law41in favor of the others in proportion
to the interest of each. Moreover, if a property is acquired
through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust 42for the
benefit of the person from whom the property comes.
The foregoing enumeration are just some of the cases of
implied trusts recognized under the New Civil Code. There 43
are still others established by the general law of trust
which are not in conflict with the New Civil Code, the44Code
of Commerce, the Rules of Court and special laws. But
regardless of the circumstances that give rise to their
establishment as such, they are generally not created by
any words, either expressly or impliedly evincing a direct
intention to crease a trust, but by the construction
45
of equity
in order to satisfy the demands of justice.
According to the Code Commission, the doctrine of
implied trust is founded on equity and is applied in the
American legal system to numerous cases where an
injustice would result if the legal estate or title were to
prevail over the equitable right

________________

39 Art. 1451, New Civil Code.

40 Castro vs. Castro, 57 Phil. 675.
41 Art. 1452, New Civil Code; Uy Aloc vs. Cho Jan Jing, 19 PhiL 202.
42 Art. 1456, NewCivilCode.
43 Art. 1447, New Civil Code.
44 Art. 1442, New Civil Code.
45 Armamento vs. Guerrero, L-34228, Feb. 21 1980, 96 SCRA 178, 183-
184.

518

518 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

46
of the beneficiary. It does not47 arise by agreement or
intention but by operation of law.

§ 3. Application of Equity to Procedural

Requirements of Court Action.
A. Liberal Interpretation of the Rules of Court.
Under the Revised Rules of Court, the rules shall be
liberally construed in order to promote their object and to
assist the parties in obtaining just, speedy and inexpensive
48
determination of every action and proceeding. In this
regard, as the rules of pleadings are intended to secure a
method by which the issues may be properly laid before the
court, any deficiency in the observance of the rules should
not be given undue importance when those issues are
already clear before the court, as what is important is that
the case be decided upon the merits and 49 that it should not
be allowed to go off on procedural points. Thus, according
to the Supreme Court, pleadings, as well as remedial laws,
should be construed liberally in order that the litigants
may have ample opportunity to prove their respective
claims and that a possible denial
50
of justice due to legal
technicalities may be avoided.
As early as 1910 our Supreme Court has already
adopted a liberal approach in the interpretation of
procedural rules. In51 fact, in the precedent setting case of
Alonzo vs. Villamor, the Supreme Court speaking through
Mr. Justice Moreland

_______________

46 Report of the Code Commission, p. 60.

47 Armamento vs. Guerrero, L-34228, Feb. 21, 1980, 96 SCRA 178, 184.
48 Rule 1, Section 2, Revised Rules of Court.
49 Supio, et. al. vs. Garde, et. al., L-27210. June 29, 1972, 45 SCRA 429,
436.
50 Luzon Stevedoring Corp. vs. CIR, et. al., L-17411, Dec. 31, 1965, 15
SCRA 660, 670-671; Concepcion, et. al. vs. Payatas Estate Development
Co., Inc., L-1 15331-33, May 30, 1958; Quibuyen, et. al. vs. Court of
Appeals, et. al., L-16854, Dec. 26, 1963, 9 SCRA 741, 747.
51 16 Phil. 315, 322.

519

VOL. 109, NOVEMBER 27, 1981 519

Instances of the Application of the Principles ofEquity

already emphasized that there should be no vested rights

in technicalities, since technicality when it deserts its
proper office as an aid to justice and becomes its grave
hindrance and chief enemy deserves scant consideration
from the courts. Furthermore, underscoring the emphasis
on liberal interpretation, the Supreme Court also remarked
that the rules shall not be interpreted to "sacrifice
substantial rights of a litigant in the sophisticated altar of
technicalities
52
with impairment of the sacred principle of
justice". Through the years, the rule has remained
unchanged, it53 being reiterated by the Supreme Court from
time to time.
Correspondingly, from the first application of54
the rule on
liberal interpretation in Alonzo vs. Villamor, where the
Supreme Court declared that to take advantage of the error
for other purposes than to cure it does not appeal to a fair
sense of justice,55 to the most recent case of Dionisio vs.
Paterno, et. al., where the Supreme Court reiterated its
plenary powers to do justice and equity as long as no
positive law is violated to the extent of suspending in
appropriate instances the force and applicability of the
Rules of Court, the High Tribunal has time and again
adopted a liberal approach in the interpretation of
procedural requirements of the Revised Rules of Court. In
this regard, in a case wherein petitioner urged the
dismissal of respondent's appeal on the ground that
respondent's brief failed to include an assignment of errors,
the Supreme Court considered the clear discussion of the
points in issue in the brief as well as the statement of
issues in the amended petition as having accomplished the
task of informing the court of matters

_________________

52 Alonso vs. ViUamor, 16 Phil. 315; Case vs. Jugo, 77 Phil. 517;
International Tobacco Co., Inc. vs. Yatco, 55 O. G. No. 5, p. 811.
53 Dionisio vs. Paterno, et. al., L-49654, December 19,1980,101 SCRA
723; Dionisio vs. Paterno, et. al., L-49654, July 23, 1980, 98 SCRA 677; Air
Manila, et. al. vs. Court of Industrial Relations, et. al., L-39742, June
9,1978, 83 SCRA 579; Ledesma Overseas Corporation vs. Avelino, et. al.,
L-47698, April 28, 1978, 82 SCRA 396; Flores vs. Buencamino, et. al, L-
43815, Dec. 15,1976, 74 SCRA 332.
54 16 Phil. 315.
55 L-49654, July 23,1980, 98 SCRA 677, 721.

520

520 SUPREME COURT REPORTS ANNOTATED

 Instances of the Application of the Principles ofEquity

sought to be reviewed and correspondingly satisfied

substantially the requirements of the rule inasmuch as
pleadings56 as well as remedial laws should be construed
liberally. In another case, which is a petition for certiorari
to annul and set aside the actuations of the CFI of Cebu in
an action for accounting of properties and money totalling
about 15 million pesos, the Supreme Court decided to grant
the relief sought by petitioners "if only to stress
emphatically once more that the rules of procedures may
not be misused and abused
57
as instruments for the denial of
substantial justice". It was further stated by the court
that a review of the record of the case immediately
disclosed that the case was "another demonstrative
instance of how some members of the bar, availing of their
proficiency in invoking the letter of the rules without
regard to their real spirit and intent, succeed in inducing
the courts
58
to act contrary to the dictates of justice and
equity".
It must be remembered that equity as the complement of
legal jurisdiction seeks to reach and do complete justice
where courts of law, through the inflexibility of their rules
and want of power to adapt their judgments to the special
circumstances of cases, are incompetent to do so. Equity
regards the spirit and not the letter, the intent and not the
form, the substance rather than the circumstance,
59
as it is
variously expressed by different courts.

B. Relief from Judgment where no other Remedy is

Available.
A petition for relief from a final judgment or order of a
court is a special remedy in which equity and justice will
prompt the

________________

56 Luzon Stevedoring Corp. vs. CIR, et. al., L-17411, Dec. 31, 1965, 15
SCRA 660, 670-671.
57 Lim Tanhu, et. al. vs. Ramolete, et. al., L-40098, Aug. 29, 1975, 66
SCRA 425, 441.
58 Lim Tanhu, et. al. vs. Ramolete, et. al., L-40098, Aug. 29, 1975, 66
SCRA 425, 441.
59 Air Manila, Inc., et. al. vs. CIR, et. al., L-39742, June 9,1978, 83
SCRA 579, 589.
 521

VOL. 109, NOVEMBER 27, 1981 521

Instances of the Application of the Principles ofEquity

court to give the petitioner

60
a last chance to defend his right
or protect his interest. It is enunciated under Rule 38 of
the Revised Rules of Court and available only after a
decision or judgment from 61
which relief is sought has
become final and executory
62
and there is no other available
and adequate remedy. As it is not regarded with favor,
judgment will not be disturbed where the complaining
party has, or by exercising proper diligence would have
had, an adequate remedy at law, as by proceeding in the
original action, by motion, petition, or the like to open,
vacate, modify,
63
or otherwise obtain relief against the
judgment.
A petition for relief may also be used to annul not only a
judgment or order but also a writ of execution issued by the
trial court
64
on the ground that the notice of judgment is
defective. Thus, where a party's lawyer who allegedly
forgot to inform his client of a lower court's order upon
which a writ of execution was issued had deprived his
client of his day in court by his inaction, the court would
have to apply the rules liberally to promote their object and
assist parties in obtaining a just, speedy and inexpensive
determination of every action, so that even if the court
were to apply the rule that notice to an attorney is also
notice to the parties, where the circumstances are such
that its application would be to the detriment of justice, the
Supreme Court would disregard the rule on notice because
the lawyer was irresponsible and consider the petition for
relief from judgment
65
as a petition for relief from the order
of execution.

_________________

60 Commissioner of Customs vs. JEA Commercial, 102 Phil. 894.

61 Qurino vs. Philippine National Bank, 101 Phil. 705.
62 Santos vs. Manila Electric Co., et. al., L-7735, Dec. 29, 1955;
Palomares vs. Jimenez, 90 Phil. 773.
63 Palomares vs. Jimenez, 90 Phil. 773; Arante vs. Rosul, et. al., 49 O.
G. 2522.
64 Aquino vs. Blanco, 79 Phil. 647; People's Homesite & Housing Corp.
vs. Tiongco, et. al., L-18891, Nov. 28,1964,12 SCRA 471.
 65 People's Homesite & Housing Corp. vs. Tiongco, et. al, L18891, Nov.
28,1964,12 SCRA 471.

522

522 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

A petition for relief is allowed when a judgment or order is

entered, or any other proceeding is taken against a party in
an inferior court or a Court of First Instance through
66
fraud,
accident, mistake or 67
excusable negligence. As it is of
equitable character, principles of equity shall apply in its
implementation. Thus, the court in applying the principles
of equity need not be bound to a rigid application of the
law, but rather its action should conform to the conditions
or exigencies of a given problem or situation 68in order to
grant a relief that will serve the ends of justice.

C. Operation of Estoppel for Acts or Omission involved in a

Cause of Action.
Estoppel is a concept derived from American law that aims
to bring out justice between parties, through the operation
of the principle that an admission or representation is
rendered conclusive upon the person making it, and can not
be denied69
or disproved as against the person relying
thereon. Expressed in statutory form for the first time in
the New Civil Code, it is not really an innovation, as it has
its origin in equity and, being based on moral and natural
justice, finds applicability whenever 70
the special
circumstances of a case so demands. In fact, it has been
applied by the Supreme Court in the case of71Llacer vs.
Mufloz, et. al. (12 Phil. 328) as long ago as 1908.

_________________

66 Rule 38, Sections 1 and 2, Revised Rules of Court.

67 Santos vs. Manila Electric Co., et. al., L-7735, Dec. 29, 1955;
Palomares vs. Jimenez, et. al., 90 Phil. 773.
68 Cristobal vs. Melchor, et. al., L-43203, Dec. 29, 1980, 101 SCRA 857,
865.
69 Report of the Code Commission, p. 59.
70 Philippine National Bank vs. Court of Appeals, et. al., L30831 &
31176, Nov. 21,1979,94 SCRA 357, 368; Castrillo, et. al. vs. Court of
Appeals, et. al., L-18046, March 11,1964,10 SCRA 549, 553-554.
 71 Castrillo, et. al. vs. Court of Appeals, et. al., L-18046, March 31,
1964, 10 SCRA 549; Mirasol vs. Municipality of Tabaco, 43 PhiL 610.

523

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Instances of the Application of the Principles ofEquity

The doctrine of estoppel is based upon the grounds of public

policy, fair dealing, good faith and justice, and its purpose
is to forbid one to speak against his own act,
representations or commitments to the injury of one to
whom they were directed and who reasonably relied
thereon. It springs from equitable principles and the
equities in the case. It is designed to aid the law in the
administration72
of justice where without its aid injustice
might result.
In
73
the case of Reyes vs. Philippine Duplicators, Inc., et.
al., which is the most recent case where estoppel was
applied, the Supreme Court after noting that respondent
company failed to apprise petitioner of his supposed
detrimental acts of becoming one of the incorporators of
another corporation which was a competitor of respondent,
upon knowledge thereof, applied estoppel on the
respondent company in questioning petitioner's
involvement in another corporation and for that reason the
company's denial of petitioner's application for retirement
benefits for reasons of lack of confidence and conflict of
interest was considered to be made in bad faith. According
to the Supreme Court, estoppel which has its roots in
equity and based on good faith and moral right, which are
apparently lacking in the case at bar, therefore operates
against the respondent corporation.
While estoppel
74
is an instrument for the administration
75
of justice, it may however become harsh or odious and
when misapplied may become a most effective weapon to
accomplish an injustice, inasmuch as it shuts a man's
mouth from speaking
76
the truth and debars the truth in a
particular case. For this reason, it can not be sustained by
mere argument or doubtful inference but must be clearly
proved in all its essen-

________________
 72 Philippine National Bank vs. Court of Appeals, et. al., L30831, & L-
31176, Nov. 21,1979, 94 SCRA 357, 368.
73 L-54996, November 27,1981.
74 PNB vs. Court of Appeals, et. al., L-30831 & 31176, Nov. 21, 1979, 94
SCRA 357, 368.
75 Coronel, et. al. vs. CIR, et. al., L-22359, Aug. 30, 1968, 24 SCRA 990,
996.
76 28 Am. Jur. 2d. pp. 601-602.

524

524 SUPREME COURT REPORTS ANNOTATED

Instances of the Application of the Principles ofEquity

tial elements
77
by clear, convincing and satisfactory
evidence. No party should be precluded from making out
his case according to its 78
truth unless by force of some
positive principle of law.
The doctrine of estoppel precludes a party from
repudiating an obligation voluntarily assumed after having
accepted benefits therefrom. To countenance such
repudiation would be contrary to equity 79and would put a
premium on fraud or misrepresentation. Thus, an alien
obligor who offered a bond to enable him to enter and stay
in the country is under estoppel to plead the invalidity of
said bond f or lack of approval by the Secretary of Justice,
because equitable considerations preclude him from
attacking 80its validity after having enjoyed benefits
therefrom.
Silence or inaction may give rise to estoppel. Thus, it has
been said that one who is silent when he ought to speak 81
will not be heard to speak when he ought to be silent.
However, mere innocent silence will not work an estoppel
for there must be some element of turpitude or negligence
connected 82with the silence by which another is misled to
his injury.
Moreover, estoppel is effective only as between
83
the
parties thereto or their successors in interest. Thus, in a
contract of sale, only the sellers and buyers are held 84
chargeable with misrepresentation as against each other.
Correspondingly, a stranger to the transaction is neither
bound by nor in a position to take advantage of an estoppel
arising from said tran-

_________________
 77 Rivers vs. Metropolitan Ins. Co. of New York, 6 N. Y. 2d. 3, 5.
78 Kalalo vs. Luz, L-27782, July 31, 1970, 34 SCRA 337, 346-347.
79 Saura Import & Export Co., Inc., et. al. vs. Solidum, et. al., L24514,
JuL 31,1968, 24 SCRA 574.
80 Morano, et. al. vs. Vivo, L-22196, June 30, 1967, 20 SCRA 562.
81 19 Am. Jur. 661.
82 Beronilla vs. GSIS, et. al., L-21723, Nov. 26, 1970, 36 SCRA 44,45.
83 Art. 1439, New Civil Code.
84 Borlaza vs. Borgonio, L-3433, July 16,1951.

525

VOL. 109, NOVEMBER 27, 1981 525

Instances of the Application of the Principles ofEquity

85
saction. If anybody at all may be heard to challenge the
application of the doctrine of estoppel,
86
it is only the party
against whom it may be invoked.

——oOo——

_________________

85 19 Am. Jur. 809.

86 Castrillo, et. al. vs. Court of Appeals, et. al., L-18046, March
31,1964,10 SCRA 549, 554.

526

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