Republic of the Philippines 

SUPREME COURT
Manila
IN BANC
GR No. L-47362 December 19, 1940
JUAN F. VILLARROEL, appellant-appellant, 
vs. 
BERNARDINO ESTRADA, appealed-appealed.
D. Felipe Agoncillo in representation of the appellant-appelant. 
D. Crispin Oben in representation of the appealed-appellant.

AVANCEÑA, Pres .:
On May 9, 1912, Alejandro F. Callao, the mother of the defendant Juan F. Villarroel,
obtained from the Mariano Estrada and Severina spouses a loan of P1,000 payable after
seven years (Exhibit A). Alejandra passed away, leaving the defendant as the sole
heir. The spouses Mariano Estrada and Severina also died, leaving the plaintiff
Bernardino Estrada as the sole heir. On August 9, 1930, the defendant signed a document
(Exhibit B) declaring the applicant P1,000 in duty, with an interest of 12 percent per
year. This action is about the collection of this amount.
The Court of First Instance of Laguna, in which this action was filed, ordered the
defendant to pay the plaintiff the amount claimed of P1,000 with his legal interests of 12
percent a year from August 9, 1930 to its full payment. Appeal of this sentence.
It will be noted that the parties in the present case are, respectively, the sole heirs of the
original creditors and the debtor. This action is exercised by virtue of the obligation that
the defendant, as the only son of the original debtor, contracted in favor of the plaintiff,
the only heir of the original creditors. It is admitted that the amount of P1,000 to which
this obligation is contracted is the same debt of the defendant's mother to the parents of
the plaintiff. lawphil.net
Although the action to recover the original debt has already prescribed when the claim
was filed in this case, the question that arises in this appeal is mainly the question of
whether, notwithstanding such a prescription, the action filed is appropriate. However,
the present action is not based on the original obligation contracted by the defendant's
mother, which has already been prescribed, but on the one contracted by the defendant on
August 9, 1930 (Exhibit B) upon assuming compliance with that obligation, already
prescribed. The defendant being the sole heir of the original debtor, with the right to
succeed him in his inheritance, that debt legally brought by his mother, although it lost its
effectiveness by prescription, is now, for him, a moral obligation,
The rule that a new promise to pay a prescreened debt must be made by the same
obligated person or by another legally authorized by it, is not applicable to the present
case in which compliance with the obligated obligation is not required, but which you des
voluntarily wanted to assume this obligation.
The sentence appealed is confirmed, with the costs to the appellant. This is how it is
ordered.

1
Republic of the Philippines only after there has been voluntary performance. But here there has been no voluntary
SUPREME COURT performance. In fact, the court cannot order the performance.
Manila At this point, we would like to reiterate what we said in the case of Philippine Education
EN BANC Co. vs. CIR and the Union of Philippine Education Co., Employees (NUL) (92 Phil., 381;
G.R. No. L-13667             April 29, 1960 48 Off. Gaz., 5278) —
PRIMITIVO ANSAY, ETC., ET AL., plaintiffs-appellants,  xxx     xxx     xxx
vs. From the legal point of view a bonus is not a demandable and enforceable obligation. It is
THE BOARD OF DIRECTORS OF THE NATIONAL DEVELOPMENT so when it is made a part of the wage or salary compensation.
COMPANY, ET AL., defendants-appellees. And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union,
Celso A. Fernandez for appellants. et al., 95 Phil., 553; 50 Off. Gaz., 4253, we stated that:
Juan C. Jimenez, for appellees. Even if a bonus is not demandable for not forming part of the wage, salary or
PARAS, C. J.: compensation of an employee, the same may nevertheless, be granted on equitable
On July 25, 1956, appellants filed against appellees in the Court of First Instance of consideration as when it was given in the past, though withheld in succeeding two years
Manila a complaint praying for a 20% Christmas bonus for the years 1954 and 1955. The from low salaried employees due to salary increases.
court a quo on appellees' motion to dismiss, issued the following order: still the facts in said Heacock case are not the same as in the instant one, and hence the
Considering the motion to dismiss filed on 15 August, 1956, set for this morning; ruling applied in said case cannot be considered in the present action.
considering that at the hearing thereof, only respondents appeared thru counsel and there Premises considered, the order appealed from is hereby affirmed, without pronouncement
was no appearance for the plaintiffs although the court waited for sometime for them; as to costs.
considering, however, that petitioners have submitted an opposition which the court will Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion, Endencia
consider together with the arguments presented by respondents and the Exhibits marked Barrera and Gutierrez David, JJ.,concur.
and presented, namely, Exhibits 1 to 5, at the hearing of the motion to dismiss;
considering that the action in brief is one to compel respondents to declare a Christmas
bonus for petitioners workers in the National Development Company; considering that
the Court does not see how petitioners may have a cause of action to secure such bonus
because:
(a) A bonus is an act of liberality and the court takes it that it is not within its judicial
powers to command respondents to be liberal;
(b) Petitioners admit that respondents are not under legal duty to give such bonus but that
they had only ask that such bonus be given to them because it is a moral obligation of
respondents to give that but as this Court understands, it has no power to compel a party
to comply with a moral obligation (Art. 142, New Civil Code.).
IN VIEW WHEREOF, dismissed. No pronouncement as to costs.
A motion for reconsideration of the afore-quoted order was denied. Hence this appeal.
Appellants contend that there exists a cause of action in their complaint because their
claim rests on moral grounds or what in brief is defined by law as a natural obligation.
Since appellants admit that appellees are not under legal obligation to give such claimed
bonus; that the grant arises only from a moral obligation or the natural obligation that
they discussed in their brief, this Court feels it urgent to reproduce at this point, the
definition and meaning of natural obligation.
Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil
obligations are a right of action to compel their performance. 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 been delivered or rendered by reason thereof".
It is thus readily seen that an element of natural obligation before it can be cognizable by
the court is voluntary fulfillment by the obligor. Certainly retention can be ordered but

2
FIRST DIVISION liable in his personal capacity. The petition is impressed with merit. The right to
G.R. No. L-48889 May 11, 1989 prescription may be waived or renounced. Article 1112 of Civil Code provides:
DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,  Art. 1112. Persons with capacity to alienate property may renounce prescription already
vs. obtained, but not the right to prescribe in the future.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Prescription is deemed to have been tacitly renounced when the renunciation results from
Court of First Instance of Iloilo and SPOUSES PATRICIO CONFESOR and acts which imply the abandonment of the right acquired.
JOVITA VILLAFUERTE, respondents. There is no doubt that prescription has set in as to the first promissory note of February
GANCAYCO, J.: 10, 1940. However, when respondent Confesor executed the second promissory note on
The issue posed in this petition for review on certiorari is the validity of a promissory April 11, 1961 whereby he promised to pay the amount covered by the previous
note which was executed in consideration of a previous promissory note the enforcement promissory note on or before June 15, 1961, and upon failure to do so, agreed to the
of which had been barred by prescription. foreclosure of the mortgage, said respondent thereby effectively and expressly renounced
On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an and waived his right to the prescription of the action covering the first promissory note.
agricultural loan from the Agricultural and Industrial Bank (AIB), now the Development This Court had ruled in a similar case that –
of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by ... when a debt is already barred by prescription, it cannot be enforced by the creditor. But
a promissory note of said date whereby they bound themselves jointly and severally to a new contract recognizing and assuming the prescribed debt would be valid and
pay the account in ten (10) equal yearly amortizations. As the obligation remained enforceable ... . 1
outstanding and unpaid even after the lapse of the aforesaid ten-year period, Confesor, Thus, it has been held —
who was by then a member of the Congress of the Philippines, executed a second Where, therefore, a party acknowledges the correctness of a debt and promises to pay it
promissory note on April 11, 1961 expressly acknowledging said loan and promising to after the same has prescribed and with full knowledge of the prescription he thereby
pay the same on or before June 15, 1961. The new promissory note reads as follows — waives the benefit of prescription. 2
I hereby promise to pay the amount covered by my promissory note on or before June 15, This is not a mere case of acknowledgment of a debt that has prescribed but a new
1961. Upon my failure to do so, I hereby agree to the foreclosure of my mortgage. It is promise to pay the debt. The consideration of the new promissory note is the pre-existing
understood that if I can secure a certificate of indebtedness from the government of my obligation under the first promissory note. The statutory limitation bars the remedy but
back pay I will be allowed to pay the amount out of it. does not discharge the debt.
Said spouses not having paid the obligation on the specified date, the DBP filed a A new express promise to pay a debt barred ... will take the case from the operation of the
complaint dated September 11, 1970 in the City Court of Iloilo City against the spouses statute of limitations as this proceeds upon the ground that as a statutory limitation
for the payment of the loan. merely bars the remedy and does not discharge the debt, there is something more than a
After trial on the merits a decision was rendered by the inferior court on December 27, mere moral obligation to support a promise, to wit a – pre-existing debt which is a
1976, the dispositive part of which reads as follows: sufficient consideration for the new the new promise; upon this sufficient consideration
WHEREFORE, premises considered, this Court renders judgment, ordering the constitutes, in fact, a new cause of action. 3
defendants Patricio Confesor and Jovita Villafuerte Confesor to pay the plaintiff ... It is this new promise, either made in express terms or deduced from an
Development Bank of the Philippines, jointly and severally, (a) the sum of P5,760.96 acknowledgement as a legal implication, which is to be regarded as reanimating the old
plus additional daily interest of P l.04 from September 17, 1970, the date Complaint was promise, or as imparting vitality to the remedy (which by lapse of time had become
filed, until said amount is paid; (b) the sum of P576.00 equivalent to ten (10%) of the extinct) and thus enabling the creditor to recover upon his original contract. 4
total claim by way of attorney's fees and incidental expenses plus interest at the legal rate However, the court a quo held that in signing the promissory note alone, respondent
as of September 17,1970, until fully paid; and (c) the costs of the suit. Confesor cannot thereby bind his wife, respondent Jovita Villafuerte, citing Article 166
Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo wherein in of the New Civil Code which provides:
due course a decision was rendered on April 28, 1978 reversing the appealed decision Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift, or is
and dismissing the complaint and counter-claim with costs against the plaintiff. under civil interdiction or is confined in a leprosarium, the husband cannot alienate or
A motion for reconsideration of said decision filed by plaintiff was denied in an order of encumber any real property of the conjugal partnership without, the wife's consent. If she
August 10, 1978. Hence this petition wherein petitioner alleges that the decision of ay compel her to refuses unreasonably to give her consent, the court m grant the same.
respondent judge is contrary to law and runs counter to decisions of this Court when We disagree. Under Article 165 of the Civil Code, the husband is the administrator of the
respondent judge (a) refused to recognize the law that the right to prescription may be conjugal partnership. As such administrator, all debts and obligations contracted by the
renounced or waived; and (b) that in signing the second promissory note respondent husband for the benefit of the conjugal partnership, are chargeable to the conjugal
Patricio Confesor can bind the conjugal partnership; or otherwise said respondent became partnership. 5 No doubt, in this case, respondent Confesor signed the second promissory

3
note for the benefit of the conjugal partnership. Hence the conjugal partnership is liable
for this obligation.
WHEREFORE, the decision subject of the petition is reversed and set aside and another
decision is hereby rendered reinstating the decision of the City Court of Iloilo City of
December 27, 1976, without pronouncement as to costs in this instance. This decision is
immediately executory and no motion for extension of time to file motion for
reconsideration shall be granted.
SO ORDERED.

4
SECOND DIVISION the agreement has already been partly executed and not merely executory within the
G.R. No. L-23749 April 29, 1977 contemplation of the Statute; and that his action has not prescribed for the reason that
FAUSTINO CRUZ, plaintiff-appellant,  defendants had ten years to comply and only after the said ten years did his cause of
vs. action accrue, that is, ten years after March 16, 1963, the date of the approval of the
J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, compromise agreement, and his complaint was filed on January 24, 1964.
INC., defendants-appellees. Ruling on the motion to dismiss, the trial court issued the herein impugned order of
August 13, 1964:
BARREDO, J.: In the motion, dated January 31, 1964, defendant Gregorio Araneta, Inc. prayed that the
Appeal from the order dated August 13, 1964 of the Court of First Instance of Quezon complaint against it be dismissed on the ground that (1) the claim on which the action is
City in Civil Case No. Q-7751, Faustino Cruz vs. J.M. Tuason & Co., Inc., and Gregorio founded is unenforceable under the provision of the Statute of Frauds; and (2) the
Araneta, Inc., dismissing the complaint of appellant Cruz for the recovery of plaintiff's action, if any has already prescribed. In the other motion of February 11, 1964,
improvements he has made on appellees' land and to compel appellees to convey to him defendant J. M. Tuason & Co., Inc. sought the dismissal of the plaintiffs complaint on the
3,000 square meters of land on three grounds: (1) failure of the complaint to state a cause ground that it states no cause of action and on the Identical grounds stated in the motion
of action; (2) the cause of action of plaintiff is unenforceable under the Statute of Frauds; to dismiss of defendant Gregorio Araneta, Inc. The said motions are duly opposed by the
and (3) the action of the plaintiff has already prescribed. plaintiff.
Actually, a perusal of plaintiff-appellant's complaint below shows that he alleged two From the allegations of the complaint, it appears that, by virtue of an agreement arrived at
separate causes of action, namely: (1) that upon request of the Deudors (the family of in 1948 by the plaintiff and the Deudors, the former assisted the latter in clearing,
Telesforo Deudor who laid claim on the land in question on the strength of an improving, subdividing and selling the large tract of land consisting of 50 quinones
"informacion posesoria" ) plaintiff made permanent improvements valued at P30,400.00 covered by the informacion posesoria in the name of the late Telesforo Deudor and
on said land having an area of more or less 20 quinones and for which he also incurred incurred expenses, which are valued approximately at P38,400.00 and P7,781.74,
expenses in the amount of P7,781.74, and since defendants-appellees are being benefited respectively; and, for the reasons that said improvements are being used and enjoyed by
by said improvements, he is entitled to reimbursement from them of said amounts and (2) the defendants, the plaintiff is seeking the reimbursement for the services and expenses
that in 1952, defendants availed of plaintiff's services as an intermediary with the stated above from the defendants.
Deudors to work for the amicable settlement of Civil Case No. Q-135, then pending also Defendant J. M. Tuason & Co., Inc. claimed that, insofar as the plaintiffs claim for the
in the Court of First Instance of Quezon City, and involving 50 quinones of land, of reimbursement of the amounts of P38,400.00 and P7,781.74 is concerned, it is not a privy
Which the 20 quinones aforementioned form part, and notwithstanding his having to the plaintiff's agreement to assist the Deudors n improving the 50 quinones. On the
performed his services, as in fact, a compromise agreement entered into on March 16, other hand, the plaintiff countered that, by holding and utilizing the improvements
1963 between the Deudors and the defendants was approved by the court, the latter have introduced by him, the defendants are unjustly enriching and benefiting at the expense of
refused to convey to him the 3,000 square meters of land occupied by him, (a part of the the plaintiff; and that said improvements constitute a lien or charge of the property itself
20 quinones above) which said defendants had promised to do "within ten years from and On the issue that the complaint insofar as it claims the reimbursement for the services
after date of signing of the compromise agreement", as consideration for his services. rendered and expenses incurred by the plaintiff, states no cause of action, the Court is of
Within the Period allowed by the rules, the defendants filed separate motions to dismiss the opinion that the same is well-founded. It is found that the defendants are not parties to
alleging three Identical grounds: (1) As regards that improvements made by plaintiff, that the supposed express contract entered into by and between the plaintiff and the Deudors
the complaint states no cause of action, the agreement regarding the same having been for the clearing and improvement of the 50 quinones. Furthermore in order that the
made by plaintiff with the Deudors and not with the defendants, hence the theory of alleged improvement may be considered a lien or charge on the property, the same should
plaintiff based on Article 2142 of the Code on unjust enrichment is untenable; and (2) have been made in good faith and under the mistake as to the title. The Court can take
anent the alleged agreement about plaintiffs services as intermediary in consideration of judicial notice of the fact that the tract of land supposedly improved by the plaintiff had
which, defendants promised to convey to him 3,000 square meters of land, that the same been registered way back in 1914 in the name of the predecessors-in-interest of defendant
is unenforceable under the Statute of Frauds, there being nothing in writing about it, and, J. M. Tuason & Co., Inc. This fact is confirmed in the decision rendered by the Supreme
in any event, (3) that the action of plaintiff to compel such conveyance has already Court on July 31, 1956 in Case G. R. No. L-5079 entitled J.M. Tuason & Co. Inc. vs.
prescribed. Geronimo Santiago, et al., Such being the case, the plaintiff cannot claim good faith and
Plaintiff opposed the motion, insisting that Article 2142 of the applicable to his case; that mistake as to the title of the land.
the Statute of Frauds cannot be invoked by defendants, not only because Article 1403 of On the issue of statute of fraud, the Court believes that same is applicable to the instant
the Civil Code refers only to "sale of real property or of an interest therein" and not to case. The allegation in par. 12 of the complaint states that the defendants promised and
promises to convey real property like the one supposedly promised by defendants to him, agreed to cede, transfer and convey unto the plaintiff the 3,000 square meters of land in
but also because, he, the plaintiff has already performed his part of the agreement, hence consideration of certain services to be rendered then. it is clear that the alleged agreement

5
involves an interest in real property. Under the provisions of See. 2(e) of Article 1403 of alleged improvement may he considered a lien or charge on the property, the same should
the Civil Code, such agreement is not enforceable as it is not in writing and subscribed by have been made in good faith and under the mistake as to title. The Court can take
the party charged. judicial notice of the fact that the tract of land supposedly improved by the plaintiff had
On the issue of statute of limitations, the Court holds that the plaintiff's action has been registered way back in 1914 in the name of the predecessors-in-interest of defendant
prescribed. It is alleged in par. 11 of the complaint that, sometime in 1952, the defendants J. M. Tuason & Co., Inc. This fact is confirmed in the decision rendered by the Supreme
approached the plaintiff to prevail upon the Deudors to enter to a compromise agreement Court on July 31, 1956 in case G. R. No. L-5079 entitled 'J M. Tuason & Co., Inc. vs,
in Civil Case No. Q-135 and allied cases. Furthermore, par. 13 and 14 of the complaint Geronimo Santiago, et al.' Such being the case, the plaintiff cannot claim good faith and
alleged that the plaintiff acted as emissary of both parties in conveying their respective mistake as to the title of the land.
proposals and couter-proposals until the final settlement was effected on March 16, 1953 The position of this Honorable Court (supra) is that the complaint does not state a cause
and approved by Court on April 11, 1953. In the present action, which was instituted on of action in so far as the claim for services and expenses is concerned because the
January 24, 1964, the plaintiff is seeking to enforce the supposed agreement entered into contract for the improvement of the properties was solely between the Deudors and
between him and the defendants in 1952, which was already prescribed. plaintiff, and defendants are not privies to it. Now, plaintiff's theory is that defendants are
WHEREFORE, the plaintiffs complaint is hereby ordered DISMISSED without nonetheless liable since they are utilizing and enjoying the benefit's of said
pronouncement as to costs. improvements. Thus under paragraph 16 of "he complaint, it is alleged:
SO ORDERED. (Pp. 65-69, Rec. on Appeal,) (16) That the services and personal expenses of plaintiff mentioned in paragraph 7 hereof
On August 22, 1964, plaintiff's counsel filed a motion for reconsideration dated August were rendered and in fact paid by him to improve, as they in fact resulted in considerable
20, 1964 as follows: improvement of the 50 quinones, and defendants being now in possession of and utilizing
Plaintiff through undersigned counsel and to this Honorable Court, respectfully moves to said improvements should reimburse and pay plaintiff for such services and expenses.
reconsider its Order bearing date of 13 August 1964, on the following grounds: Plaintiff's cause of action is premised inter alia, on the theory of unjust enrichment under
1. THAT THE COMPLAINT STATES A SUFFICIENT CAUSE OF ACTION Article 2142 of the civil Code:
AGAINST DEFENDANTS IN SO FAR AS PLAINTIFF'S CLAIM PAYMENT OF ART. 2142. Certain lawful voluntary and unilateral acts give rise to the juridical relation
SERVICES AND REIMBURSEMENT OF HIS EXPENSES, IS CONCERNED; of quasi-contract to the end that no one shill be unjustly enriched or benefited at the
II. THAT REGARDING PLAINTIFF'S CLAIM OVER THE 3,000 SQ. MS., THE expense of another.
SAME HAS NOT PRESCRIBED AND THE STATUTE OF FRAUDS IS NOT In like vein, Article 19 of the same Code enjoins that:
APPLICABLE THERETO; ART. 19. Every person must, in the exercise of his rights and in the performance of his
ARGUMENT duties, act with justice, give every-one his due and observe honesty and good faith.
Plaintiff's complaint contains two (2) causes of action — the first being an action for sum We respectfully draw the attention of this Honorable Court to the fact that ARTICLE
of money in the amount of P7,781.74 representing actual expenses and P38,400.00 as 2142 (SUPRA) DEALS WITH QUASI-CONTRACTS or situations WHERE THERE IS
reasonable compensation for services in improving the 50 quinones now in the NO CONTRACT BETWEEN THE PARTIES TO THE ACTION. Further, as we can
possession of defendants. The second cause of action deals with the 3,000 sq. ms. which readily see from the title thereof (Title XVII), that the Same bears the designation
defendants have agreed to transfer into Plaintiff for services rendered in effecting the 'EXTRA CONTRACTUAL OBLIGATIONS' or obligations which do not arise from
compromise between the Deudors and defendants; contracts. While it is true that there was no agreement between plaintiff and defendants
Under its order of August 3, 1964, this Honorable Court dismissed the claim for sum of herein for the improvement of the 50 quinones since the latter are presently enjoying and
money on the ground that the complaint does not state a cause of action against utilizing the benefits brought about through plaintiff's labor and expenses, defendants
defendants. We respectfully submit: should pay and reimburse him therefor under the principle that 'no one may enrich
1. THAT THE COMPLAINT STATES A SUFFICIENT CAUSE OF ACTION himself at the expense of another.' In this posture, the complaint states a cause of action
AGAINST DEFENDANTS IN SO FAR AS PLAINTIFF'S CLAIM FOR PAYMENT against the defendants.
OF SERVICES AND REIMBURSEMENT OF HIS EXPENSES IS CONCERNED. II. THAT REGARDING PLAINTIFF'S CLAIM OVER THE 3,000 SQ. MS. THE
Said this Honorable Court (at p. 2, Order): SAME HAS NOT PRESCRIBED AND THE STATUTE OF FRAUDS IS NOT
ORDER APPLICABLE THERETO.
xxx xxx xxx The Statute of Frauds is CLEARLY inapplicable to this case:
On the issue that the complaint, in so far as it claims the reimbursement for the services At page 2 of this Honorable Court's order dated 13 August 1964, the Court ruled as
rendered and expenses incurred by the plaintiff, states no cause of action, the Court is of follows:
the opinion that the same is well-founded. It is found that the defendants are not parties to ORDER
the supposed express contract entered into by and between the plaintiff and the Deudors xxx xxx xxx
for the clearing and improvement of the 50 quinones. Furthermore, in order that the

6
On the issue of statute of fraud, the Court believes that same is applicable to the instant ONLY TO EXECUTORY CONTRACTS BUT NOT WHERE THE CONTRACT HAS
Case, The allegation in par. 12 of the complaint states that the defendants promised and BEEN PARTLY EXECUTED:
agree to cede, transfer and convey unto the plaintiff, 3,000 square meters of land in SAME ACTION TO ENFORCE. — The statute of frauds has been uniformly interpreted
consideration of certain services to be rendered then. It is clear that the alleged agreement to be applicable to executory and not to completed or contracts. Performance of the
involves an interest in real property. Under the provisions of Sec. 2(e) of Article 1403 of contracts takes it out of the operation of the statute. ...
the Civil Code, such agreement is not enforceable as it is not in writing and subscribed by The statute of the frauds is not applicable to contracts which are either totally or
the party charged. partially performed, on the theory that there is a wide field for the commission of frauds
To bring this issue in sharper focus, shall reproduce not only paragraph 12 of the in executory contracts which can only be prevented by requiring them to be in writing, a
complaint but also the other pertinent paragraphs therein contained. Paragraph 12 states facts which is reduced to a minimum in executed contracts because the intention of the
thus: parties becomes apparent buy their execution and execution, in mots cases, concluded the
COMPLAINT right the parties. ... The partial performance may be proved by either documentary or
xxx xxx xxx oral evidence. (At pp. 564-565, Tolentino's Civil Code of the Philippines, Vol. IV, 1962
12). That plaintiff conferred with the aforesaid representatives of defendants several Ed.; Emphasis supplied).
times and on these occasions, the latter promised and agreed to cede, transfer and convey Authorities in support of the foregoing rule are legion. Thus Mr. Justice Moran in his
unto plaintiff the 3,000 sq. ms. (now known as Lots 16-B, 17 and 18) which plaintiff was 'Comments on the Rules of Court', Vol. III, 1974 Ed., at p. 167, states:
then occupying and continues to occupy as of this writing, for and in consideration of the 2 THE STATUTE OF FRAUDS IS APPLICABLE ONLY TO EXECUTORY
following conditions: CONTRACTS: CONTRACTS WHICH ARE EITHER TOTALLY OR PARTIALLY
(a) That plaintiff succeed in convincing the DEUDORS to enter into a compromise PERFORMED ARE WITHOUT THE STATUE. The statute of frauds is applicable only
agreement and that such agreement be actually entered into by and between the to executory contracts. It is neither applicable to executed contracts nor to contracts
DEUDORS and defendant companies; partially performed. The reason is simple. In executory contracts there is a wide field for
(b) That as of date of signing the compromise agreement, plaintiff shall be the owner of fraud because unless they be in writing there is no palpable evidence of the intention of
the 3,000 sq. ms. but the documents evidencing his title over this property shall be the contracting parties. The statute has been enacted to prevent fraud. On the other hand
executed and delivered by defendants to plaintiff within ten (10) years from and after date the commission of fraud in executed contracts is reduced to minimum in executed
of signing of the compromise agreement; contracts because (1) the intention of the parties is made apparent by the execution and
(c) That plaintiff shall, without any monetary expense of his part, assist in clearing the 20 (2) execution concludes, in most cases, the rights of the parties. (Emphasis supplied)
quinones of its occupants; Under paragraphs 13 and 14 of the complaint (supra) one can readily see that the plaintiff
13). That in order to effect a compromise between the parties. plaintiff not only as well has fulfilled ALL his obligation under the agreement between him defendants concerning
acted as emissary of both parties in conveying their respective proposals and counter- the 3,000 sq. ms. over which the latter had agreed to execute the proper documents of
proposals until succeeded in convinzing the DEUDORS to settle with defendants transfer. This fact is further projected in paragraph 15 of the complaint where plaintiff
amicably. Thus, on March 16, 1953, a Compromise Agreement was entered into by and states;
between the DEUDORS and the defendant companies; and on April 11, 1953, this 15). That in or about the middle of 1963, after all the conditions stated in paragraph 12
agreement was approved by this Honorable Court; hereof had been fulfilled and fully complied with, plaintiff demanded of said defendants
14). That in order to comply with his other obligations under his agreement with that they execute the Deed of Conveyance in his favor and deliver the title certificate in
defendant companies, plaintiff had to confer with the occupants of the property, exposing his name, over the 3,000 sq. ms. but defendants failed and refused and continue to fail
himself to physical harm, convincing said occupants to leave the premises and to refrain and refuse to heed his demands. (par. 15, complaint; Emphasis supplied).
from resorting to physical violence in resisting defendants' demands to vacate; In view of the foregoing, we respectfully submit that this Honorable court erred in
That plaintiff further assisted defendants' employees in the actual demolition and holding that the statute of frauds is applicable to plaintiff's claim over the 3,000 sq. ms.
transferof all the houses within the perimeter of the 20 quinones until the end of 1955, There having been full performance of the contract on plaintiff's part, the same takes this
when said area was totally cleared and the houses transferred to another area designated case out of the context of said statute.
by the defendants as 'Capt. Cruz Block' in Masambong, Quezon City. (Pars. 12, 13 and Plaintiff's Cause of Action had NOT Prescribed:
14, Complaint; Emphasis supplied) With all due respect to this Honorable court, we also submit that the Court committed
From the foregoing, it is clear then the agreement between the parties mentioned in error in holding that this action has prescribed:
paragraph 12 (supra) of the complaint has already been fully EXECUTED ON ONE ORDER
PART, namely by the plaintiff. Regarding the applicability of the statute of frauds (Art. xxx xxx xxx
1403, Civil Code), it has been uniformly held that the statute of frauds IS APPLICABLE On the issue of the statute of limitations, the Court holds that the plaintiff's action has
prescribed. It is alleged in par. III of the complaint that, sometime in 1952, the defendants

7
approached the plaintiff to prevail upon the Deudors to enter into a compromise is hereby denied and the findings and conclusions arrived at by the Court in its order of
agreement in Civil Case No. Q-135 and allied cases. Furthermore, pars. 13 and 14 of the August 13, 1964 are hereby reiterated and affirmed.
complaint alleged that plaintiff acted as emissary of both parties in conveying their SO ORDERED. (Page 90, Rec. on Appeal.)
respective proposals and counter-proposals until the final settlement was affected on Under date of September 24, 1964, plaintiff filed his record on appeal.
March 16, 1953 and approved by the Court on April 11, 1953. In the present actin, which In his brief, appellant poses and discusses the following assignments of error:
was instituted on January 24, 1964, the plaintiff is seeking to enforce the supposed I. THAT THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT ON
agreement entered into between him and the defendants in 1952, which has already THE GROUND THAT APPELLANT'S CLAIM OVER THE 3,000 SQ. MS. IS
proscribed. (at p. 3, Order). ALLEGEDLY UNENFORCEABLE UNDER THE STATUTE OF FRAUDS;
The present action has not prescribed, especially when we consider carefully the terms of II. THAT THE COURT A QUO FURTHER COMMITTED ERROR IN DISMISSING
the agreement between plaintiff and the defendants. First, we must draw the attention of APPELLANT'S COMPLAINT ON THE GROUND THAT HIS CLAIM OVER THE
this Honorable Court to the fact that this is an action to compel defendants to execute a 3,000 SQ. MS. IS ALLEGEDLY BARRED BY THE STATUTE OF LIMITATIONS;
Deed of Conveyance over the 3,000 sq. ms. subject of their agreement. In paragraph 12 and
of the complaint, the terms and conditions of the contract between the parties are spelled III. THAT THE LOWER COURT ERRED IN DISMISSING THE COMPLAINT FOR
out. Paragraph 12 (b) of the complaint states: FAILURE TO STATE A CAUSE OF ACTION IN SO FAR AS APPELLANT'S CLAIM
(b) That as of date of signing the compromise agreement, plaintiff shall be the owner of FOR REIMBURSEMENT OF EXPENSES AND FOR SERVICES RENDERED IN
the 3,000 sq. ms. but the documents evidencing his title over this property shall be THE IMPROVEMENT OF THE FIFTY (50) QUINONES IS CONCERNED.
executed and delivered by defendants to plaintiff within ten (10) years from and after We agree with appellant that the Statute of Frauds was erroneously applied by the trial
date of signing of the compromise agreement. (Emphasis supplied). court. It is elementary that the Statute refers to specific kinds of transactions and that it
The compromise agreement between defendants and the Deudors which was conclude cannot apply to any that is not enumerated therein. And the only agreements or contracts
through the efforts of plaintiff, was signed on 16 March 1953. Therefore, the defendants covered thereby are the following:
had ten (10) years signed on 16 March 1953. Therefore, the defendants had ten (10) years (1) Those entered into in the name of another person by one who has been given no
from said date within which to execute the deed of conveyance in favor of plaintiff over authority or legal representation, or who has acted beyond his powers;
the 3,000 sq. ms. As long as the 10 years period has not expired, plaintiff had no right to (2) Those do not comply with the Statute of Frauds as set forth in this number, In the
compel defendants to execute the document and the latter were under no obligation to do following cases an agreement hereafter made shall be unenforceable by action, unless the
so. Now, this 10-year period elapsed on March 16, 1963. THEN and ONLY THEN does same, or some note or memorandum thereof, be in writing, and subscribed by the party
plaintiff's cause of action plaintiff on March 17, 1963. Thus, under paragraph 15, of the charged, or by his agent; evidence, therefore, of the agreement cannot be received
complaint (supra) plaintiff made demands upon defendants for the execution of the deed without the writing, or a secondary evidence of its contents:
'in or about the middle of 1963. (a) An agreement that by its terms is not to be performed within a year from the making
Since the contract now sought to be enforced was not reduced to writing, plaintiff's cause thereof;
of action expires on March 16, 1969 or six years from March 16, 1963 WHEN THE (b) A special promise to answer for the debt, default, or miscarriage of another;
CAUSE OF ACTION ACCRUED (Art. 1145, Civil Code). (c) An agreement made in consideration of marriage, other than a mutual promise to
In this posture, we gain respectfully submit that this Honorable Court erred in holding marry;
that plaintiff's action has prescribed. (d) An agreement for the sale of goods, chattels or things in action, at a price not less than
PRAYER five hundred pesos, unless the buyer accept and receive part of such goods and chattels,
WHEREFORE, it is respectfully prayed that " Honorable Court reconsider its Order or the evidences, or some of them of such things in action, or pay at the time some part of
dated August 13, 1964; and issue another order denying the motions to dismiss of the purchase money; but when a sale is made by auction and entry is made by the
defendants G. Araneta, Inc. and J. M. Tuason Co. Inc. for lack of merit. (Pp. 70-85, auctioneer in his sales book, at the time of the sale, of the amount and kind of property
Record on Appeal.) sold, terms of sale, price, names of the purchasers and person on whose account the sale
Defendants filed an opposition on the main ground that "the arguments adduced by the is made, it is a sufficient memorandum:
plaintiff are merely reiterations of his arguments contained in his Rejoinder to Reply and (e) An agreement for the leasing for a longer period than one year, or for the sale of real
Opposition, which have not only been refuted in herein defendant's Motion to Dismiss property or of an interest therein:
and Reply but already passed upon by this Honorable Court." (f) a representation as to the credit of a third person.
On September 7, 1964, the trial court denied the motion for reconsiderations thus: (3) Those where both parties are incapable of giving consent to a contract. (Art. 1403,
After considering the plaintiff's Motion for Reconsideration of August 20, 1964 and it civil Code.)
appearing that the grounds relied upon in said motion are mere repetition of those already In the instant case, what appellant is trying to enforce is the delivery to him of 3,000
resolved and discussed by this Court in the order of August 13, 1964, the instant motion square meters of land which he claims defendants promised to do in consideration of his

8
services as mediator or intermediary in effecting a compromise of the civil action, Civil the actor who is not previously bound by any reciprocal or bilateral agreement. The
Case No. 135, between the defendants and the Deudors. In no sense may such alleged reason why the law creates a juridical relations and imposes certain obligation is to
contract be considered as being a "sale of real property or of any interest therein." Indeed, prevent a situation where a person is able to benefit or take advantage of such lawful,
not all dealings involving interest in real property come under the Statute. voluntary and unilateral acts at the expense of said actor." (Ambrosio Padilla, Civil Law,
Moreover, appellant's complaint clearly alleges that he has already fulfilled his part of the Vol. VI, p. 748, 1969 ed.) In the case at bar, since appellant has a clearer and more direct
bargains to induce the Deudors to amicably settle their differences with defendants as, in recourse against the Deudors with whom he had entered into an agreement regarding the
fact, on March 16, 1963, through his efforts, a compromise agreement between these improvements and expenditures made by him on the land of appellees. it Cannot be said,
parties was approved by the court. In other words, the agreement in question has already in the sense contemplated in Article 2142, that appellees have been enriched at the
been partially consummated, and is no longer merely executory. And it is likewise a expense of appellant.
fundamental principle governing the application of the Statute that the contract in dispute In the ultimate. therefore, Our holding above that appellant's first two assignments of
should be purely executory on the part of both parties thereto. error are well taken cannot save the day for him. Aside from his having no cause of
We cannot, however, escape taking judicial notice, in relation to the compromise action against appellees, there is one plain error of omission. We have found in the order
agreement relied upon by appellant, that in several cases We have decided, We have of the trial court which is as good a ground as any other for Us to terminate this case
declared the same rescinded and of no effect. In J. M. Tuason & Co., Inc. vs. Bienvenido favorably to appellees. In said order Which We have quoted in full earlier in this opinion,
Sanvictores, 4 SCRA 123, the Court held: the trial court ruled that "the grounds relied upon in said motion are mere repetitions of
It is also worthy of note that the compromise between Deudors and Tuason, upon which those already resolved and discussed by this Court in the order of August 13, 1964", an
Sanvictores predicates his right to buy the lot he occupies, has been validly rescinded and observation which We fully share. Virtually, therefore. appellant's motion for
set aside, as recognized by this Court in its decision in G.R. No. L-13768, Deudor vs. reconsideration was ruled to be pro-forma. Indeed, a cursory reading of the record on
Tuason, promulgated on May 30, 1961. appeal reveals that appellant's motion for reconsideration above-quoted contained exactly
We repeated this observation in J.M. Tuason & Co., Inc. vs. Teodosio Macalindong, 6 the same arguments and manner of discussion as his February 6, 1964 "Opposition to
SCRA 938. Thus, viewed from what would be the ultimate conclusion of appellant's case, Motion to Dismiss" of defendant Gregorio Araneta, Inc. ((pp. 17-25, Rec. on Appeal) as
We entertain grave doubts as to whether or not he can successfully maintain his alleged well as his February 17, 1964 "Opposition to Motion to Dismiss of Defendant J. M.
cause of action against defendants, considering that the compromise agreement that he Tuason & Co." (pp. 33-45, Rec. on Appeal and his February 29, 1964 "Rejoinder to
invokes did not actually materialize and defendants have not benefited therefrom, not to Reply Oil Defendant J. M. Tuason & Co." (pp. 52-64, Rec. on Appeal) We cannot see
mention the undisputed fact that, as pointed out by appellees, appellant's other attempt to anything in said motion for reconsideration that is substantially different from the above
secure the same 3,000 square meters via the judicial enforcement of the compromise oppositions and rejoinder he had previously submitted and which the trial court had
agreement in which they were supposed to be reserved for him has already been already considered when it rendered its main order of dismissal. Consequently,
repudiated by the courts. (pp. 5-7. Brief of Appellee Gregorio Araneta, Inc.) appellant's motion for reconsideration did not suspend his period for appeal. (Estrada vs.
As regards appellant's third assignment of error, We hold that the allegations in his Sto. Domingo, 28 SCRA 890, 905-6.) And as this point was covered by appellees'
complaint do not sufficiently Appellants' reliance. on Article 2142 of Civil Code is "Opposition to Motion for Reconsideration" (pp. 8689), hence, within the frame of the
misplaced. Said article provides: issues below, it is within the ambit of Our authority as the Supreme Court to consider the
Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi- same here even if it is not discussed in the briefs of the parties. (Insular Life Assurance
contract to the end that no one shall be unjustly enriched or benefited at the expense of Co., Ltd. Employees Association-NATU vs. Insular Life Assurance Co., Ltd.
another. [Resolution en banc of March 10, 1977 in G. R. No. L-25291).
From the very language of this provision, it is obvious that a presumed qauasi-contract Now, the impugned main order was issued on August 13, 1964, while the appeal was
cannot emerge as against one party when the subject mater thereof is already covered by made on September 24, 1964 or 42 days later. Clearly, this is beyond the 30-day
an existing contract with another party. Predicated on the principle that no one should be reglementary period for appeal. Hence, the subject order of dismissal was already final
allowed to unjustly enrich himself at the expense of another, Article 2124 creates the and executory when appellant filed his appeal.
legal fiction of a quasi-contract precisely because of the absence of any actual agreement WHEREFORE, the appeal of Faustino Cruz in this case is dismissed. No costs.
between the parties concerned. Corollarily, if the one who claims having enriched
somebody has done so pursuant to a contract with a third party, his cause of action should
be against the latter, who in turn may, if there is any ground therefor, seek relief against
the party benefited. It is essential that the act by which the defendant is benefited must
have been voluntary and unilateral on the part of the plaintiff. As one distinguished
civilian puts it, "The act is voluntary. because the actor in quasi-contracts is not bound by
any pre-existing obligation to act. It is unilateral, because it arises from the sole will of

9
[ GR No. 9188, Dec 04, 1914 ] the just and reasonable value for the occupancy of the said property, the possession of
GUTIERREZ HERMANOS v. ENGRACIO ORENSE + which the defendant likewise refused to deliver to the plaintiff company, in spite of the
DECISION continuous demands made upon him, the defendant, with bad faith and to the prejudice of
the firm of Gutierrez Hermanos, claiming to have rights of ownership and possession in
28 Phil. 571 the said property. Therefore it was prayed that judgment be rendered by holding that the
land and improvements in question belong legitimately and exclusively to the plaintiff,
and ordering the defendant to execute in the plaintiff's behalf the said instrument of
TORRES, J.: transfer and conveyance of the property and of all the right, interest, title and share which
Appeal through bill of exceptions filed by counsel for the appellant from the judgment the defendant has therein; that the defendant be sentenced to pay P30 per month for
rendered on April 14, 1913, by the Honorable P. M. Moir, judge, wherein he sentenced damages and rental of the property from February 14, 1911, to the date of the restitution
the defendant to make immediate delivery of the property in question, through a public of the property to the plaintiff, and that, in case these remedies were not granted to the
instrument, by transferring and conveying to the plaintiff all his rights in the property plaintiff, the defendant be sentenced to pay to it the sum of P3,000 as damages, together
described in the complaint and to pay it the sum of P780, as damages, and the costs of the with interest thereon since the date of the institution of this suit, and to pay the costs and
suit. other legal expenses.
On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards The demurrer filed to the amended complaint was over-ruled, with exception on the part
amended, in the Court of First Instance of Albay against Engracio Orense, in which he set of the defendant, whose counsel made a general denial of the allegations contained in the
forth that on and before February 14, 1907, the defendant Orense had been the owner of a complaint, excepting those, that were admitted, and specifically denied paragraph 4
parcel of land, with the buildings and improvements thereon, situated in the pueblo of thereof to the effect that on February 14, 1907, Jose Duran executed the deed of sale of
Guinobatan, Albay, the location, area and boundaries of which were specified in the the property in favor of the plaintiff with the defendant's knowledge and consent.
complaint; that the said property has up to date been recorded in the new property As the first special defense, counsel for the defendant alleged that the facts set forth in the
registry in the name of the said Orense, according to certificate No. 5, with the complaint with respect to the execution of the deed did not constitute a cause of action,
boundaries therein given; that, on February 14, 1907, Jose Duran, a nephew of the nor did those alleged in the other form of action for the collection of P3,000, the value of
defendant, with the latter's knowledge and consent, executed before a notary a public the realty.
instrument whereby he sold and conveyed to the plaintiff company, for P1,500, the As the second special defense, he alleged that the defendant was the lawful owner of the
aforementioned property, the vendor Duran reserving to himself the right to repurchase it property claimed in the complaint, as his ownership was recorded in the property registry,
for the same price within a period of four years from the date of the said instrument; that and that, since his title had been registered under the proceedings in rem prescribed by
the plaintiff company had not entered into possession of the purchased property, owing to Act No. 496, it was conclusive against the plaintiff and the pretended rights alleged to
its continued occupancy by the defendant and his nephew, Jose Duran, by virtue of a have been acquired by Jose Duran prior to such registration could not now prevail; that
contract of lease executed by the plaintiff to Duran, which contract was in force up to the defendant had not executed any written power of attorney nor given any verbal
February 14, 1911; that the said instrument of sale of the property, executed by Jose authority to Jose Duran in order that the latter might, in his name and representation, sell
Duran, was publicly and freely confirmed and ratified by the defendant Orense in a the said property to the plaintiff company; that the defendant's knowledge of the said sale
verbal declaration made by him on March 14, 1912, in the Court of First Instance of was acquired long after the execution of the contract of sale between Duran and Gutierrez
Albay, to the effect that the said instrument of sale was executed by Duran with the Hermanos, and that prior thereto the defendant did not intentionally and deliberately
knowledge and consent of the defendant, Orense; that, in order to perfect the title to the perform any act such as might have induced the plaintiff to believe that Duran was
said property, the plaintiff had to demand of the defendant that he execute in legal form a empowered and authorized by the defendant and which would warrant him in acting to
deed pf conveyance of the property, but that the defendant Orense refused to do so, his own detriment, under the influence of that belief. Counsel therefore prayed that the
without any justifiable cause or reason, wherefore he should be compelled to execute the defendant be absolved from the complaint and that the plaintiff be sentenced to pay the
said deed by an express order of the court, for Jose Duran is notoriously insolvent and costs and to hold his peace forever.
cannot reimburse the plaintiff company for the price of the sale which he received, nor After the hearing of the case and an examination of the evidence introduced by both
pay any sum whatever for the losses and damages occasioned by the said sale, aside from parties, the court rendered the judgment aforementioned, to which counsel for the
the fact that the plaintiff had suffered damage by losing the present value of the property, defendant excepted and moved for a new trial. This motion was denied, an exception was
which was worth P3,000; that, unless such deed of final conveyance were executed in taken by the defendant and, upon presentation of the proper bill of exceptions, the same
behalf of the plaintiff company, it would be injured by the fraud perpetrated by the was approved, certified and forwarded to the clerk of this court.
vendor, Duran, in connivance with the defendant; that the latter had been occupying the This suit involves the validity and efficacy of the sale under right of redemption of a
said property since February 14, 1911, and refused to pay the rental thereof, parcel of land and a masonry house with a nipa roof erected thereon, effected by Jose
notwithstanding the demand made upon him for its payment at the rate of P30 per month,

10
Duran, a nephew of the owner of the property, Engracio Orense, for the sum of P1,500 by "A contract executed in the name of another by one who has neither his authorization nor
means of a notarial instrument executed and ratified on February 14, 1907. legal representation shall be void, unless it should be ratified by the person in whose
After the lapse of the four years stipulated for the redemption, the defendant refused to name it was executed before being revoked by the other contracting party."
deliver the property to the purchaser, the firm of Gutierrez Hermanos, and to pay the The sworn statement made by the defendant, Orense, while testifying as a witness at the
rental thereof at the rate of P30 per month for its use and occupation since February 14, trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by
1911, when the period for its repurchase terminated. His refusal was based on the his nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects
allegations that he had been and was then the owner of the said property, which was which the contract may have contained from the moment of its execution.
registered in his name in the property registry; that he had not executed any written The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and
power of attorney to Jose Duran, nor had he given the latter any verbal authorization to void in the beginning, but afterwards became perfectly valid and cured of the defect of
sell the said property to the plaintiff firm in his name; and that, prior to the execution of nullity it bore at its execution by the confirmation solemnly made by the said owner upon
the deed of sale, the defendant performed no act such as might have induced the plaintiff his stating under oath to the judge that he himself consented to his nephew Jose Duran's
to believe that Jose Duran was empowered and authorized by the defendant to effect the making the said sale. Moreover, pursuant to article 1309 of the Code, the right of action
said sale. for nullification that could have been brought became legally extinguished from the
The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said moment the contract was validly confirmed and ratified, and, in the present case, it is
province, with estafa, for having represented himself in the said deed of sale to be the unquestionable that the defendant did confirm the said contract of sale and consent to its
absolute owner of the aforesaid land and improvements, whereas in reality they did not execution.
belong to him, but to the defendant Orense. However, at the trial of the case Engracio On the testimony given by Engracio Orense at the trial of Duran for estafa, the latter was
Orense, called as a witness, being interrogated by the fiscal as to whether he had acquitted, and it would not be just that the said testimony, expressive of his consent to the
consented to Duran's selling the said property under right of redemption to the firm of sale of his property, which determined the acquittal of his nephew, Jose Duran, who then
Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the acted as his business manager, and which testimony wiped out the deception that in the
court acquitted Jose Duran of the charge of estafa. beginning appeared to have been practiced by the said Duran, should not now serve in
As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle, passing upon the conduct of Engracio Orense in relation to the firm of Gutierrez
Engracio Orense, the owner of the property, to the effect that he had consented to his Hermanos in order to prove his consent to the sale of his property, for, had it not been for
nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos, the consent admitted by the defendant Orense, the plaintiff would have been the victim of
counsel for this firm filed a complaint praying, among other remedies, that the defendant estafa.
Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff If the defendant Orense acknowledged and admitted under oath that he had consented to
company of all the right, title and interest which Orense had in the property sold, and to Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it
pay to the same the rental of the property due from February 14, 1911. permissible for him afterward to deny that admission, to the prejudice of the purchaser,
Notwithstanding the allegations of the defendant, the record in this case shows that he did who gave P1,500 for the said property.
give his consent in order that his nephew, Jose Duran, might sell the property in question The contract of sale of the said property contained in the notarial instrument of February
to Gutierrez Hermanos, (and that he did thereafter confirm and ratify the sale by means of 14, 1907, is alleged to be invalid, null and void under the provisions, of paragraph 5 of
a public instrument executed before a notary. section 335 of the Code of Civil Procedure, because the authority which Orense may
It having been proven at the trial that he gave his consent to the said sale, it follows that have given to Duran to make the said contract of sale is not shown to have been in
the defendant conferred verbal, or at least implied, power of agency upon his nephew writing and signed by Orense, but the record discloses satisfactory and conclusive proof
Duran, who accepted it in the same way by selling the said property. The principal must that the defendant Orense gave his consent to the contract of sale executed in a public
therefore fulfill all the obligations contracted by the agent, who acted within the scope of instrument by his nephew Jose Duran. Such consent was proven in a criminal action by
his authority. (Civil Code, arts, 1709, 1710 and 1727.) the sworn testimony of the principal and presented in this civil suit by other sworn
Even should it be held that the said consent was granted subsequently to the sale, it is testimony of the same principal and by other evidence to which the defendant made no
unquestionable that the defendant, the owner of the property, approved the action of his objection. Therefore the principal is bound to abide by the consequences of his agency as
nephew, who in this case acted as the manager of his uncle's business, and Orense's though it had actually been given in writing. (Conlu vs. Araneta and Guanko, 15 Phil.
ratification produced the effect of an express authorization to make the said sale. (Civil Rep., 387; Gallemit vs. Tabiliran, 20 Phil. Rep., 241; Kuenzle & Streiff vs.Jiongco, 22
Code, arts. 1888 and 1892.) Phil. Rep., 110.)
Article 1259 of the Civil Code prescribes: "No one can contract in the name of another The repeated and successive statements made by the defendant Orense in two actions,
without being authorized by him or without having his legal representation according to wherein he affirmed that he had given his consent to the sale of his property, meet the
law. requirements of the law and legally excuse the lack of written authority, and, as they are a

11
full ratification of the acts executed by his nephew Jose Duran, they produce the effects
of an express power of agency.
The judgment appealed from is in harmony with the law and the merits of the case, and
the errors assigned thereto have been duly refuted by the foregoing considerations, so it
should be affirmed.
The judgment appealed from is hereby affirmed, with the costs against the appellant.

12
SECOND DIVISION I. ... declaring the defendant absolute owner of the property;
G.R. No. L-44546 January 29, 1988 II. ... not ordering the partition of the property; and
RUSTICO ADILLE, petitioner,  III. ... ordering one of the plaintiffs who is in possession of the portion of the property to
vs. vacate the land, p. 1 Appellant's brief.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA which can be reduced to simple question of whether or not on the basis of evidence and
ASEJO, DOMINGO ASEJO, JOSEFA ASEJO and SANTIAGO law, judgment appealed from should be maintained. 3
ASEJO, respondents. xxx xxx xxx
The respondent Court of appeals reversed the trial Court, 4 and ruled for the plaintiffs-
SARMIENTO, J.: appellants, the private respondents herein. The petitioner now appeals, by way of
In issue herein are property and property rights, a familiar subject of controversy and a certiorari, from the Court's decision.
wellspring of enormous conflict that has led not only to protracted legal entanglements We required the private respondents to file a comment and thereafter, having given due
but to even more bitter consequences, like strained relationships and even the forfeiture course to the petition, directed the parties to file their briefs. Only the petitioner, however,
of lives. It is a question that likewise reflects a tragic commentary on prevailing social filed a brief, and the private respondents having failed to file one, we declared the case
and cultural values and institutions, where, as one observer notes, wealth and its submitted for decision.
accumulation are the basis of self-fulfillment and where property is held as sacred as life The petition raises a purely legal issue: May a co-owner acquire exclusive ownership
itself. "It is in the defense of his property," says this modern thinker, that one "will over the property held in common?
mobilize his deepest protective devices, and anybody that threatens his possessions will Essentially, it is the petitioner's contention that the property subject of dispute devolved
arouse his most passionate enmity." 1 upon him upon the failure of his co-heirs to join him in its redemption within the period
The task of this Court, however, is not to judge the wisdom of values; the burden of required by law. He relies on the provisions of Article 1515 of the old Civil Article 1613
reconstructing the social order is shouldered by the political leadership-and the people of the present Code, giving the vendee a retro the right to demand redemption of the
themselves. entire property.
The parties have come to this Court for relief and accordingly, our responsibility is to There is no merit in this petition.
give them that relief pursuant to the decree of law. The right of repurchase may be exercised by a co-owner with aspect to his share
The antecedent facts are quoted from the decision 2 appealed from: alone. 5 While the records show that the petitioner redeemed the property in its entirety,
xxx xxx xxx shouldering the expenses therefor, that did not make him the owner of all of it. In other
... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City words, it did not put to end the existing state of co-ownership.
with an area of some 11,325 sq. m. originally belonged to one Felisa Alzul as her own Necessary expenses may be incurred by one co-owner, subject to his right to collect
private property; she married twice in her lifetime; the first, with one Bernabe Adille, reimbursement from the remaining co-owners. 6 There is no doubt that redemption of
with whom she had as an only child, herein defendant Rustico Adille; in her second property entails a necessary expense. Under the Civil Code:
marriage with one Procopio Asejo, her children were herein plaintiffs, — now, sometime ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute
in 1939, said Felisa sold the property in pacto de retro to certain 3rd persons, period of to the expenses of preservation of the thing or right owned in common and to the taxes.
repurchase being 3 years, but she died in 1942 without being able to redeem and after her Any one of the latter may exempt himself from this obligation by renouncing so much of
death, but during the period of redemption, herein defendant repurchased, by himself his undivided interest as may be equivalent to his share of the expenses and taxes. No
alone, and after that, he executed a deed of extra-judicial partition representing himself to such waiver shall be made if it is prejudicial to the co-ownership.
be the only heir and child of his mother Felisa with the consequence that he was able to The result is that the property remains to be in a condition of co-ownership. While a
secure title in his name alone also, so that OCT. No. 21137 in the name of his mother was vendee a retro, under Article 1613 of the Code, "may not be compelled to consent to a
transferred to his name, that was in 1955; that was why after some efforts of compromise partial redemption," the redemption by one co-heir or co-owner of the property in its
had failed, his half-brothers and sisters, herein plaintiffs, filed present case for partition totality does not vest in him ownership over it. Failure on the part of all the co-owners to
with accounting on the position that he was only a trustee on an implied trust when he redeem it entitles the vendee a retro to retain the property and consolidate title thereto in
redeemed,-and this is the evidence, but as it also turned out that one of plaintiffs, his name. 7 But the provision does not give to the redeeming co-owner the right to the
Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate that, entire property. It does not provide for a mode of terminating a co-ownership.
— Neither does the fact that the petitioner had succeeded in securing title over the parcel in
Well then, after hearing the evidence, trial Judge sustained defendant in his position that his name terminate the existing co-ownership. While his half-brothers and sisters are, as
he was and became absolute owner, he was not a trustee, and therefore, dismissed case we said, liable to him for reimbursement as and for their shares in redemption expenses,
and also condemned plaintiff occupant, Emeteria to vacate; it is because of this that he cannot claim exclusive right to the property owned in common. Registration of
plaintiffs have come here and contend that trial court erred in:

13
property is not a means of acquiring ownership. It operates as a mere notice of existing It is true that registration under the Torrens system is constructive notice of title, 10 but it
title, that is, if there is one. has likewise been our holding that the Torrens title does not furnish a shield for
The petitioner must then be said to be a trustee of the property on behalf of the private fraud. 11 It is therefore no argument to say that the act of registration is equivalent to
respondents. The Civil Code states: notice of repudiation, assuming there was one, notwithstanding the long-standing rule
ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by that registration operates as a universal notice of title.
force of law, considered a trustee of an implied trust for the benefit of the person from For the same reason, we cannot dismiss the private respondents' claims commenced in
whom the property comes. 1974 over the estate registered in 1955. While actions to enforce a constructive trust
We agree with the respondent Court of Appeals that fraud attended the registration of the prescribes in ten years, 12 reckoned from the date of the registration of the property, 13 we,
property. The petitioner's pretension that he was the sole heir to the land in the affidavit as we said, are not prepared to count the period from such a date in this case. We note the
of extrajudicial settlement he executed preliminary to the registration thereof betrays a petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning
clear effort on his part to defraud his brothers and sisters and to exercise sole dominion with his fraudulent misrepresentation in his unilateral affidavit of extrajudicial settlement
over the property. The aforequoted provision therefore applies. that he is "the only heir and child of his mother Feliza with the consequence that he was
It is the view of the respondent Court that the petitioner, in taking over the property, did able to secure title in his name also." 14 Accordingly, we hold that the right of the private
so either on behalf of his co-heirs, in which event, he had constituted himself respondents commenced from the time they actually discovered the petitioner's act of
a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in defraudation. 15 According to the respondent Court of Appeals, they "came to know [of it]
which case, he is guilty of fraud, and must act as trustee, the private respondents being apparently only during the progress of the litigation." 16 Hence, prescription is not a bar.
the beneficiaries, under the Article 1456. The evidence, of course, points to the second Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either
alternative the petitioner having asserted claims of exclusive ownership over the property in a motion to dismiss or in the answer otherwise it is deemed waived, 17 and here, the
and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the petitioner never raised that defense. 18 There are recognized exceptions to this rule, but
mere management of the property abandoned by his co-heirs, the situation Article 2144 the petitioner has not shown why they apply.
of the Code contemplates. In any case, as the respondent Court itself affirms, the result WHEREFORE, there being no reversible error committed by the respondent Court of
would be the same whether it is one or the other. The petitioner would remain liable to Appeals, the petition is DENIED. The Decision sought to be reviewed is hereby
the Private respondents, his co-heirs. AFFIRMED in toto. No pronouncement as to costs.
This Court is not unaware of the well-established principle that prescription bars any SO ORDERED,
demand on property (owned in common) held by another (co-owner) following the
required number of years. In that event, the party in possession acquires title to the
property and the state of co-ownership is ended . 8 In the case at bar, the property was
registered in 1955 by the petitioner, solely in his name, while the claim of the private
respondents was presented in 1974. Has prescription then, set in?
We hold in the negative. Prescription, as a mode of terminating a relation of co-
ownership, must have been preceded by repudiation (of the co-ownership). The act of
repudiation, in turn is subject to certain conditions: (1) a co-owner repudiates the co-
ownership; (2) such an act of repudiation is clearly made known to the other co-owners;
(3) the evidence thereon is clear and conclusive, and (4) he has been in possession
through open, continuous, exclusive, and notorious possession of the property for the
period required by law. 9
The instant case shows that the petitioner had not complied with these requisites. We are
not convinced that he had repudiated the co-ownership; on the contrary, he had
deliberately kept the private respondents in the dark by feigning sole heirship over the
estate under dispute. He cannot therefore be said to have "made known" his efforts to
deny the co-ownership. Moreover, one of the private respondents, Emeteria Asejo, is
occupying a portion of the land up to the present, yet, the petitioner has not taken pains to
eject her therefrom. As a matter of fact, he sought to recover possession of that portion
Emeteria is occupying only as a counterclaim, and only after the private respondents had
first sought judicial relief.

14
THIRD DIVISION made a duplication of the remittance, it asked for a recredit of its account in the amount
G.R. No. 82670 September 15, 1989 of $10,000.00. Private respondent complied with the request.
DOMETILA M. ANDRES, doing business under the name and style "IRENE'S Private respondent asked petitioner for the return of the second remittance of $10,000.00
WEARING APPAREL," petitioner,  but the latter refused to pay. On May 12, 1982 a complaint was filed with the Regional
vs. Trial Court, Branch CV, Quezon City which was decided in favor of petitioner as
MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF defendant. The trial court ruled that Art. 2154 of the New Civil Code is not applicable to
APPEALS, respondents. the case because the second remittance was made not by mistake but by negligence and
Roque A. Tamayo for petitioner. petitioner was not unjustly enriched by virtue thereof [Record, p. 234]. On appeal, the
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent. Court of Appeals held that Art. 2154 is applicable and reversed the RTC decision. The
dispositive portion of the Court of Appeals' decision reads as follows:
CORTES, J.: WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and
Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, another one entered in favor of plaintiff-appellant and against defendant-appellee
which, applying the doctrine of solutio indebiti, reversed the decision of the Regional Domelita (sic) M. Andres, doing business under the name and style "Irene's Wearing
Trial Court, Branch CV, Quezon City by deciding in favor of private respondent. Apparel" to reimburse and/or return to plaintiff-appellant the amount of $10,000.00, its
Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the equivalent in Philippine currency, with interests at the legal rate from the filing of the
manufacture of ladies garments, children's wear, men's apparel and linens for local and complaint on May 12, 1982 until the whole amount is fully paid, plus twenty percent
foreign buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred (20%) of the amount due as attomey's fees; and to pay the costs.
to as FACETS) of the United States. With costs against defendant-appellee.
In the course of the business transaction between the two, FACETS from time to time SO ORDERED. [Rollo, pp. 29-30.]
remitted certain amounts of money to petitioner in payment for the items it had Thereafter, this petition was filed. The sole issue in this case is whether or not the private
purchased. Sometime in August 1980, FACETS instructed the First National State Bank respondent has the right to recover the second $10,000.00 remittance it had delivered to
of New Jersey, Newark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer petitioner. The resolution of this issue would hinge on the applicability of Art. 2154 of
$10,000.00 to petitioner via Philippine National Bank, Sta. Cruz Branch, Manila the New Civil Code which provides that:
(hereinafter referred to as PNB). Art. 2154. If something received when there is no right to demand it, and it was unduly
Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover delivered through mistake, the obligation to return it arises.
and Trust Corporation to effect the above- mentioned transfer through its facilities and to This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:
charge the amount to the account of FNSB with private respondent. Although private Art. 1895. If a thing is received when there was no right to claim it and which, through an
respondent was able to send a telex to PNB to pay petitioner $10,000.00 through the error, has been unduly delivered, an obligation to restore it arises.
Pilipinas Bank, where petitioner had an account, the payment was not effected In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice
immediately because the payee designated in the telex was only "Wearing Apparel." Bocobo explained the nature of this article thus:
Upon query by PNB, private respondent sent PNB another telex dated August 27, 1980 Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable.
stating that the payment was to be made to "Irene's Wearing Apparel." On August 28, This legal provision, which determines the quasi-contract of solution indebiti, is one of
1980, petitioner received the remittance of $10,000.00 through Demand Draft No. the concrete manifestations of the ancient principle that no one shall enrich himself
225654 of the PNB. unjustly at the expense of another. In the Roman Law Digest the maxim was formulated
Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the thus: "Jure naturae acquum est, neminem cum alterius detrimento et injuria fieri
money to petitioner, FACETS informed FNSB about the situation. On September 8, locupletiorem." And the Partidas declared: "Ninguno non deue enriquecerse
1980, unaware that petitioner had already received the remittance, FACETS informed tortizeramente con dano de otro." Such axiom has grown through the centuries in
private respondent about the delay and at the same time amended its instruction by asking legislation, in the science of law and in court decisions. The lawmaker has found it one of
it to effect the payment through the Philippine Commercial and Industrial Bank the helpful guides in framing statutes and codes. Thus, it is unfolded in many articles
(hereinafter referred to as PCIB) instead of PNB. scattered in the Spanish Civil Code. (See for example, articles, 360, 361, 464, 647, 648,
Accordingly, private respondent, which was also unaware that petitioner had already 797, 1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-honored
received the remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 aphorism has also been adopted by jurists in their study of the conflict of rights. It has
to petitioner. Hence, on September 11, 1980, petitioner received a second $10,000.00 been accepted by the courts, which have not hesitated to apply it when the exigencies of
remittance. right and equity demanded its assertion. It is a part of that affluent reservoir of justice
Private respondent debited the account of FNSB for the second $10,000.00 remittance upon which judicial discretion draws whenever the statutory laws are inadequate because
effected through PCIB. However, when FNSB discovered that private respondent had they do not speak or do so with a confused voice. [at p. 632.]

15
For this article to apply the following requisites must concur: "(1) that he who paid was The rule in this jurisdiction is that only questions of law may be raised in a petition for
not under obligation to do so; and, (2) that payment was made by reason of an essential certiorari under Rule 45 of the Revised Rules of Court. "The jurisdiction of the Supreme
mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563 (1960)]. Court in cases brought to it from the Court of Appeals is limited to reviewing and
It is undisputed that private respondent delivered the second $10,000.00 remittance. revising the errors of law imputed to it, its findings of fact being conclusive" [Chan v.
However, petitioner contends that the doctrine of solutio indebiti, does not apply because Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line
its requisites are absent. of decisions]. This Court has emphatically declared that "it is not the function of the
First, it is argued that petitioner had the right to demand and therefore to retain the second Supreme Court to analyze or weigh such evidence all over again, its jurisdiction being
$10,000.00 remittance. It is alleged that even after the two $10,000.00 remittances are limited to reviewing errors of law that might have been committed by the lower court"
credited to petitioner's receivables from FACETS, the latter allegedly still had a balance [Tiongco v. De la Merced, G.R. No. L-24426, July 25, 1974, 58 SCRA 89; Corona v.
of $49,324.00. Hence, it is argued that the last $10,000.00 remittance being in payment of Court of Appeals, G.R. No. L-62482, April 28, 1983, 121 SCRA 865; Baniqued v. Court
a pre-existing debt, petitioner was not thereby unjustly enriched. of Appeals, G. R. No. L-47531, February 20, 1984, 127 SCRA 596]. "Barring, therefore,
The contention is without merit. a showing that the findings complained of are totally devoid of support in the record, or
The contract of petitioner, as regards the sale of garments and other textile products, was that they are so glaringly erroneous as to constitute serious abuse of discretion, such
with FACETS. It was the latter and not private respondent which was indebted to findings must stand, for this Court is not expected or required to examine or contrast the
petitioner. On the other hand, the contract for the transmittal of dollars from the United oral and documentary evidence submitted by the parties" [Santa Ana, Jr. v. Hernandez,
States to petitioner was entered into by private respondent with FNSB. Petitioner, G.R. No. L-16394, December 17, 1966, 18 SCRA 9731. [at pp. 144-145.]
although named as the payee was not privy to the contract of remittance of dollars. Petitioner invokes the equitable principle that when one of two innocent persons must
Neither was private respondent a party to the contract of sale between petitioner and suffer by the wrongful act of a third person, the loss must be borne by the one whose
FACETS. There being no contractual relation between them, petitioner has no right to negligence was the proximate cause of the loss.
apply the second $10,000.00 remittance delivered by mistake by private respondent to the The rule is that principles of equity cannot be applied if there is a provision of law
outstanding account of FACETS. specifically applicable to a case [Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-
Petitioner next contends that the payment by respondent bank of the second $10,000.00 29701, March 16, 1987,148 SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958,
remittance was not made by mistake but was the result of negligence of its employees. In July 10, 1986, 142 SCRA 587; Rural Bank of Paranaque, Inc. v. Remolado, G.R. No.
connection with this the Court of Appeals made the following finding of facts: 62051, March 18, 1985, 135 SCRA 409; Cruz v. Pahati, 98 Phil. 788 (1956)]. Hence, the
The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the written Court in the case of De Garcia v. Court of Appeals, G.R. No. L-20264, January 30, 1971,
interrogatories sent to the First National State Bank of New Jersey through the Consulate 37 SCRA 129, citing Aznar v. Yapdiangco, G.R. No. L-18536, March 31, 1965, 13
General of the Philippines in New York, Adelaide C. Schachel, the investigation and SCRA 486, held:
reconciliation clerk in the said bank testified that a request to remit a payment for Facet ... The common law principle that where one of two innocent persons must suffer by a
Funwear Inc. was made in August, 1980. The total amount which the First National State fraud perpetrated by another, the law imposes the loss upon the party who, by his
Bank of New Jersey actually requested the plaintiff-appellant Manufacturers Hanover & misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case
Trust Corporation to remit to Irene's Wearing Apparel was US $10,000.00. Only one which is covered by an express provision of the new Civil Code, specifically Article 559.
remittance was requested by First National State Bank of New Jersey as per instruction of Between a common law principle and a statutory provision, the latter must prevail in this
Facets Funwear (Exhibit "J", pp. 4-5). jurisdiction. [at p. 135.]
That there was a mistake in the second remittance of US $10,000.00 is borne out by the Having shown that Art. 2154 of the Civil Code, which embodies the doctrine
fact that both remittances have the same reference invoice number which is 263 80. of solutio indebiti, applies in the case at bar, the Court must reject the common law
(Exhibits "A-1- Deposition of Mr. Stanley Panasow" and "A-2-Deposition of Mr. Stanley principle invoked by petitioner.
Panasow"). Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the
Plaintiff-appellant made the second remittance on the wrong assumption that defendant- fact that from the time the second $10,000.00 remittance was made, five hundred and ten
appellee did not receive the first remittance of US $10,000.00. [Rollo, pp. 26-27.] days had elapsed before private respondent demanded the return thereof. Needless to say,
It is evident that the claim of petitioner is anchored on the appreciation of the attendant private respondent instituted the complaint for recovery of the second $10,000.00
facts which petitioner would have this Court review. The Court holds that the finding by remittance well within the six years prescriptive period for actions based upon a quasi-
the Court of Appeals that the second $10,000.00 remittance was made by mistake, being contract [Art. 1145 of the New Civil Code].
based on substantial evidence, is final and conclusive. The rule regarding questions of WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is
fact being raised with this Court in a petition for certiorari under Rule 45 of the Revised hereby AFFIRMED.
Rules of Court has been stated in Remalante v. Tibe, G.R. No. 59514, February 25, 1988, SO ORDERED.
158 SCRA 138, thus:

16
EN BANC Second Quarter 1950 Apr. 25, 1950 215895X 1,250.00
G.R. No. L-17447             April 30, 1963
GONZALO PUYAT & SONS, INC., plaintiff-appelle,  Third Quarter 1950 Jul. 25, 1950 243321X 1,250.00
vs.
CITY OF MANILA AND MARCELO SARMIENTO, as City Treasurer of Fourth Quarter 1950 Oct. 25, 1950 271165X 1,250.00
Manila, defendants-appellants (Follows the assessment for different quarters in 1951, 1952,
Feria, Manglapus & Associates for plainttiff-appelle.Asst. City Fiscal Manuel T. Reyes 1953, 1954 and 1955, fixing the same amount quarterly.) x x x..
for defendants-appellants.
PAREDES, J.: First Quarter 1956 Jan. 25, 1956 823047X 1,250.00
This is an appeal from the judgment of the CFI of Manila, the dispostive portion of which
reads: Second Quarter 1956 Apr. 25, 1956 855949X 1,250.00
"xxx Of the payments made by the plaintiff, only that made on October 25, 1950 in the
Third Quarter 1956 Jul. 25, 1956 880789X 1,250.00
amount of P1,250.00 has prescribed Payments made in 1951 and thereafter are still
recoverable since the extra-judicial demand made on October 30, 1956 was well within
the six-year prescriptive period of the New CivilCode. TOTAL     ............. P33,785.00
In view of the foregoing considerations, judgment is hereby rendered in favor of the ===========
plaintiff, ordering the defendants to refund the amount of P29,824.00, without interest.
No costs. "4. That plaintiff, being a manufacturer of various kinds of furniture, is exempt from the
Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted payment of taxes imposed under the provisions of Sec. 1, Group II, of Ordinance No.
and approved by this Honorable Court, without prejudice to the parties adducing other 3364,which took effect on September 24, 1956, on the sale of the various kinds of
evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët furniture manufactured by it pursuant to the provisions of Sec. 18(n) of Republic Act No.
Defendants' counterclaim is hereby dismissed for not having been substantiated." 409 (Revised Charter of Manila), as restated in Section 1 of Ordinance No.3816.
On August 11, 1958, the plaintiff Gonzalo Puyat & Sons, Inc., filed an action for refund "5. That, however, plaintiff, is liable for the payment of taxes prescribed in Section 1,
of Retail DealerlsTaxes paid by it, corresponding to the first Quarter of 1950 up to the Group II or Ordinance No. 3364mas amended by Sec. 1, Group II of Ordinance No.
third Quarter of 1956, amounting to P33,785.00, against the City of Manila and its City 3816, which took effect on September 24, 1956, on the sales of imported billiard balls,
Treasurer.The case was submitted on the following stipulation of facts, to wit-- bowling balls and other accessories at its displayroom. The taxes paid by the plaintiff on
"1. That the plaintiff is a corporation duly organized and existing according to the laws of the sales of said article are as follows:
the Philippines, with offices at Manila; while defendant City Manila is a Municipal xxx     xxx     xxx
Corporation duly organized in accordance with the laws of the Philippines, and defendant "6. That on October 30, 1956, the plaintiff filed with defendant City Treasurer of Manila,
Marcelino Sarmiento is the dulyqualified incumbent City Treasurer of Manila; a formal request for refund of the retail dealer's taxes unduly paid by it as aforestated in
"2. That plaintiff is engaged in the business of manufacturing and selling all kinds of paragraph 3, hereof.
furniture at its factory at 190 Rodriguez-Arias, San Miguel, Manila, and has a display "7. That on July 24, 1958, the defendant City Treasurer of Maniladefinitely denied said
room located at 604-606 Rizal Avenue, Manila, wherein it displays the various kind of request for refund.
furniture manufactured by it and sells some goods imported by it, such as billiard balls, "8. Hence on August 21, 1958, plaintiff filed the present complaint.
bowling balls and other accessories; "9. Based on the above stipulation of facts, the legal issues to be resolved by this
"3. That acting pursuant to the provisions of Sec. 1. group II, of Ordinance No. 3364, Honorable Court are: (1) the period of prescription applicable in matters of refund of
defendant City Treasurer of Manilaassessed from plaintiff retail dealer's tax municipal taxes errenously paid by a taxpayer and (2) refund of taxes not paid under
corresponding to the quarters hereunder stated on the sales of furniture manufactured and protest. x x x."
sold by it at its factory site, all of which assessments plaintiff paid without protest in the Said judgment was directly appealed to this Court on two dominant issues to wit: (1)
erroneous belief that it was liable therefor, on the dates and in the amount enumerated Whether or not the amounts paid by plaintiff-appelle, as retail dealer's taxes under
herein below: Ordinance 1925, as amended by Ordinance No. 3364of the City of Manila, without
protest, are refundable;(2) Assuming arguendo, that plaintiff-appellee is entitled to the
Amount  refund of the retail taxes in question, whether or not the claim for refund filed in October
Period Date Paid O.R. No. Assessed  1956, in so far as said claim refers to taxes paid from 1950 to 1952 has already
and Paid. prescribed. .
First Quarter 1950 Jan. 25, 1950 436271X P1,255.00 Under the first issue, defendants-appellants contend tht the taxes in question were
voluntarily paid by appellee company and since, in this jurisdiction, in order that a legal
17
basis arise for claim of refund of taxes erroneously assessed, payment thereof must be him, nor should he suffer loss by complying with what he bona fide believe to be his duty
made under protest, and this being a condition sine qua non, and no protest having been as a good citizen. Upon the contrary, he should be promoted to its ready performance by
made, -- verbally or in writing, therebyindicating that the payment was voluntary, the refunding to him any legal exaction paid by him in ignorance of its illegality; and,
action must fail. Cited in support of the above contention, are the cases of Zaragoza vs. certainly, in such a case, if be subject to a penalty for nonpayment, his compliance under
Alfonso, 46 Phil. 160-161, and Gavino v. Municipality of Calapan, 71 Phil. 438.. belief of its legality, and without awaitinga resort to judicial proceedings should not be
In refutation of the above stand of appellants, appellee avers tht the payments could not regrded in law as so far voluntary as to affect his right of recovery.".
have been voluntary.At most, they were paid "mistakenly and in good faith"and "without "Every person who through an act or performance by another, or any other means,
protest in the erroneous belief that it was liable thereof." Voluntariness is incompatible acquires or comes into possession of something at the expense of the latter without just or
with protest and mistake. It submits that this is a simple case of "solutio indebiti".. legal grounds, shall return the same to him"(Art. 22, Civil Code). It would seems
Appellants do not dispute the fact that appellee-companyis exempted from the payment unedifying for the government, (here the City of Manila), that knowing it has no right at
of the tax in question.This is manifest from the reply of appellant City Treasurer stating all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant
that sales of manufactured products at the factory site are not taxable either under the to return the same. No one should enrich itself unjustly at the expense of another (Art.
Wholesalers Ordinance or under the Retailers' Ordinance. With this admission, it would 2125, Civil Code)..
seem clear that the taxes collected from appellee were paid, thru an error or mistake, Admittedly, plaintiff-appellee paid the tax without protest.Equally admitted is the fact
which places said act of payment within the pale of the new Civil Code provision on that section 76 of the Charter of Manila provides that "No court shall entertain any suit
solutio indebiti. The appellant City of Manila, at the very start, notwithstanding the assailing the validity of tax assessed under this article until the taxpayer shall have paid,
Ordinance imposing the Retailer's Tax, had no right to demand payment thereof.. under protest the taxes assessed against him, xx". It should be noted, however, that the
"If something is received when there is no right to demand it, and it was unduly delivered article referred to in said section is Article XXI, entitled Department of Assessment and
through mistake, the obligationto retun it arises" (Art. 2154, NCC).. the sections thereunder manifestly show that said article and its sections relate to
Appelle categorically stated that the payment was not voluntarily made, (a fact found also asseessment, collection and recovery of real estate taxes only. Said section 76, therefor, is
by the lower court),but on the erronoues belief, that they were due. Under this not applicable to the case at bar, which relates to the recover of retail dealer taxes..
circumstance, the amount paid, even without protest is recoverable. "If the payer was in In the opinion of the Secretary of Justice (Op. 90,Series of 1957, in a question similar to
doubt whether the debt was due, he may recover if he proves that it was not due" (Art. the case at bar, it was held that the requiredment of protest refers only to the payment of
2156, NCC). Appellee had duly proved that taxes were not lawfully due. There is, taxes which are directly imposed by the charter itself, that is, real estate taxes, which
therefore, no doubt that the provisions of solutio indebtiti, the new Civil Code, apply to view was sustained by judicial and administrative precedents, one of which is the case of
the admitted facts of the case.. Medina, et al., v. City of Baguio, G.R. No. L-4269, Aug. 29, 1952. In other words,
With all, appellant quoted Manresa as saying: "x x x De la misma opinion son el Sr. protest is not necessary for the recovery of retail dealer's taxes, like the present, because
Sanchez Roman y el Sr. Galcon, et cual afirma que si la paga se hizo por error de they are not directly imposed by the charter. In the Medina case, the Charter of Baguio
derecho, ni existe el cuasi-contrato ni esta obligado a la restitucion el que cobro, aunque (Chap. 61, Revised Adm. Code), provides that "no court shall entertain any suit assailing
no se debiera lo que se pago" (Manresa, Tomo 12, paginas 611-612). This opinion, the validity of a tax assessed unde this charter until the tax-payer shall have paid, under
however, has already lost its persuasiveness, in view of the provisions of the Civil Code, protest, the taxes assessed against him (sec.25474[b], Rev. Adm. Code), a proviso similar
recognizing "error de derecho" as a basis for the quasi-contract, of solutio indebiti. . to section 76 of the Manila Charter. The refund of specific taxes paid under a void
"Payment by reason of a mistake in the contruction or application of a doubtful or ordinance was ordered, although it did not appear that payment thereof was made under
difficult question of law may come within the scope of the preceding article" (Art. protest..
21555).. In a recent case, We said: "The appellants argue that the sum the refund of which is
There is no gainsaying the fact that the payments made by appellee was due to a mistake sought by the appellee, was not paid under protest and hence is not refundable. Again, the
in the construction of a doubtful question of law. The reason underlying similar trial court correctly held that being unauthorized, it is not a tax assessed under the Charter
provisions, as applied to illegal taxation, in the United States, is expressed in the case of of the Appellant City of Davao and for that reason, no protest is necessary for a claim or
Newport v. Ringo, 37 Ky. 635, 636; 10 S.W. 2, in the following manner:. demand for its refund" (Citing the Medina case, supra; East Asiatic Co., Ltd. v. City of
"It is too well settled in this state to need the citation of authority that if money be paid Davao, G.R. No. L-16253, Aug. 21, 1962). Lastly, being a case of solutio indebiti, protest
through a clear mistake of law or fact, essentially affecting the rights of the parties, and is not required as a condition sine qua non for its application..
which in law or conscience was not payable, and should not be retained by the party The next issue in discussion is that of prescription. Appellants maintain that article 1146
receiving it, it may be recovered. Both law and sound morality so dictate. Especially (NCC), which provides for a period of four (4) years (upon injury to the rights of the
should this be the rule as to illegal taxation. The taxpayer has no voice in the plaintiff), apply to the case. On the other hand, appellee contends that provisions of Act
impositionof the burden. He has the right to presume that the taxing power has been 190 (Code of Civ. Procedure) should apply, insofar as payments made before the
lawfully exercised. He should not be required to know more than those in authority over effectivity of the New Civil Code on August 30, 1950, the period of which is ten (10)

18
years, (Sec. 40,Act No. 190; Osorio v. Tan Jongko, 51 O.G. 6211) and article 1145
(NCC), for payments made after said effectivity, providing for a period of six (6) years
(upon quasi-contracts like solutio indebiti). Even if the provisionsof Act No. 190 should
apply to those payments made before the effectivity of the new Civil Code, because
"prescription already runnig before the effectivity of this Code shall be governed by laws
previously in force x x x" (art. 1116, NCC), for payments made after said
effectivity,providing for a period of six (6) years (upon quasi-contracts like solutio
indebiti). Even if the provisions of Act No. 190should apply to those payments made
before the effectivity of the new Civil Code, because "prescription already running before
the effectivity of of this Code shall be govern by laws previously in force xxx " (Art.
1116, NCC), Still payments made before August 30, 1950 are no longer recoverable in
view of the second paragraph of said article (1116), which provides:"but if since the time
this Code took effect the entire period herein required for prescription should elapse the
present Code shall be applicable even though by the former laws a longer period might be
required". Anent the payments made after August 30, 1950, it is abvious that the action
has prescribed with respect to those made before October 30, 1950 only, considering the
fact that the prescription of action is interrupted xxx when is a writteen extra-judicial
demand x x x" (Art. 1155, NCC), and the written demand in the case at bar was made on
October 30, 1956 (Stipulation of Facts).MODIFIED in the sense that only payments
made on or after October 30, 1950 should be refunded, the decision appealed from is
affirmed, in all other respects. No costs. .

19
 Respondents appealed to the Court of Appeals which rendered the assailed Decision, the
THIRD DIVISION decretal portion of which provides, viz:
G.R. No. 179337             April 30, 2008 WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10,
JOSEPH SALUDAGA, petitioner,  2004 is hereby REVERSED and SET ASIDE. The complaint filed by Joseph Saludaga
vs. against appellant Far Eastern University and its President in Civil Case No. 98-89483 is
FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his capacity as DISMISSED.
President of FEU, respondents. SO ORDERED.10
DECISION Petitioner filed a Motion for Reconsideration which was denied; hence, the instant
YNARES-SANTIAGO, J.: petition based on the following grounds:
This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO
June 29, 2007 Decision2 of the Court of Appeals in CA-G.R. CV No. 87050, nullifying LAW AND JURISPRUDENCE IN RULING THAT:
and setting aside the November 10, 2004 Decision3 of the Regional Trial Court of 5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;
Manila, Branch 2, in Civil Case No. 98-89483 and dismissing the complaint filed by 5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY
petitioner; as well as its August 23, 2007 Resolution4 denying the Motion for RESULTING FROM A GUNSHOT WOUND SUFFERED BY THE PETITIONER
Reconsideration.5 FROM THE HANDS OF NO LESS THAN THEIR OWN SECURITY GUARD IN
The antecedent facts are as follows: VIOLATION OF THEIR BUILT-IN CONTRACTUAL OBLIGATION TO
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME, TO PROVIDE HIM
University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the security WITH A SAFE AND SECURE EDUCATIONAL ENVIRONMENT;
guards on duty at the school premises on August 18, 1996. Petitioner was rushed to FEU- 5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT PETITIONER
Dr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the wound he WHILE HE WAS WALKING ON HIS WAY TO THE LAW LIBRARY OF
sustained.6Meanwhile, Rosete was brought to the police station where he explained that RESPONDENT FEU IS NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT
the shooting was accidental. He was eventually released considering that no formal FOR SECURITY SERVICES BETWEEN GALAXY AND FEU
complaint was filed against him. NOTWITHSTANDING THE FACT THAT PETITIONER, NOT BEING A PARTY TO
Petitioner thereafter filed a complaint for damages against respondents on the ground that IT, IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE OF RELATIVITY OF
they breached their obligation to provide students with a safe and secure environment and CONTRACTS; and
an atmosphere conducive to learning. Respondents, in turn, filed a Third-Party 5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS
Complaint7 against Galaxy Development and Management Corporation (Galaxy), the THE AGENCY WHICH WOULD PROVIDE SECURITY SERVICES WITHIN THE
agency contracted by respondent FEU to provide security services within its premises and PREMISES OF RESPONDENT FEU.11
Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them for whatever Petitioner is suing respondents for damages based on the alleged breach of student-school
would be adjudged in favor of petitioner, if any; and to pay attorney's fees and cost of the contract for a safe learning environment. The pertinent portions of petitioner's Complaint
suit. On the other hand, Galaxy and Imperial filed a Fourth-Party Complaint against AFP read:
General Insurance.8 6.0. At the time of plaintiff's confinement, the defendants or any of their representative
On November 10, 2004, the trial court rendered a decision in favor of petitioner, the did not bother to visit and inquire about his condition. This abject indifference on the part
dispositive portion of which reads: of the defendants continued even after plaintiff was discharged from the hospital when
WHEREFORE, from the foregoing, judgment is hereby rendered ordering: not even a word of consolation was heard from them. Plaintiff waited for more than one
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly and (1) year for the defendants to perform their moral obligation but the wait was fruitless.
severally Joseph Saludaga the amount of P35,298.25 for actual damages with 12% This indifference and total lack of concern of defendants served to exacerbate plaintiff's
interest per annum from the filing of the complaint until fully paid; moral damages of miserable condition.
P300,000.00, exemplary damages of P500,000.00, attorney's fees of P100,000.00 and xxxx
cost of the suit; 11.0. Defendants are responsible for ensuring the safety of its students while the latter are
2. Galaxy Management and Development Corp. and its president, Col. Mariano Imperial within the University premises. And that should anything untoward happens to any of its
to indemnify jointly and severally 3rd party plaintiffs (FEU and Edilberto de Jesus in his students while they are within the University's premises shall be the responsibility of the
capacity as President of FEU) for the above-mentioned amounts; defendants. In this case, defendants, despite being legally and morally bound, miserably
3. And the 4th party complaint is dismissed for lack of cause of action. No failed to protect plaintiff from injury and thereafter, to mitigate and compensate plaintiff
pronouncement as to costs. for said injury;
SO ORDERED.9

20
12.0. When plaintiff enrolled with defendant FEU, a contract was entered into between however, no evidence as to the qualifications of Rosete as a security guard for the
them. Under this contract, defendants are supposed to ensure that adequate steps are university was offered.
taken to provide an atmosphere conducive to study and ensure the safety of the plaintiff Respondents also failed to show that they undertook steps to ascertain and confirm that
while inside defendant FEU's premises. In the instant case, the latter breached this the security guards assigned to them actually possess the qualifications required in the
contract when defendant allowed harm to befall upon the plaintiff when he was shot at Security Service Agreement. It was not proven that they examined the clearances,
by, of all people, their security guard who was tasked to maintain peace inside the psychiatric test results, 201 files, and other vital documents enumerated in its contract
campus.12 with Galaxy. Total reliance on the security agency about these matters or failure to check
In Philippine School of Business Administration v. Court of Appeals,13 we held that: the papers stating the qualifications of the guards is negligence on the part of
When an academic institution accepts students for enrollment, there is established a respondents. A learning institution should not be allowed to completely relinquish or
contract between them, resulting in bilateral obligations which both parties are bound to abdicate security matters in its premises to the security agency it hired. To do so would
comply with. For its part, the school undertakes to provide the student with an education result to contracting away its inherent obligation to ensure a safe learning environment
that would presumably suffice to equip him with the necessary tools and skills to pursue for its students.
higher education or a profession. On the other hand, the student covenants to abide by the Consequently, respondents' defense of force majeure must fail. In order for force
school's academic requirements and observe its rules and regulations. majeure to be considered, respondents must show that no negligence or misconduct was
Institutions of learning must also meet the implicit or "built-in" obligation of providing committed that may have occasioned the loss. An act of God cannot be invoked to protect
their students with an atmosphere that promotes or assists in attaining its primary a person who has failed to take steps to forestall the possible adverse consequences of
undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of such a loss. One's negligence may have concurred with an act of God in producing
physics or higher mathematics or explore the realm of the arts and other sciences when damage and injury to another; nonetheless, showing that the immediate or proximate
bullets are flying or grenades exploding in the air or where there looms around the school cause of the damage or injury was a fortuitous event would not exempt one from liability.
premises a constant threat to life and limb. Necessarily, the school must ensure that When the effect is found to be partly the result of a person's participation - whether by
adequate steps are taken to maintain peace and order within the campus premises and to active intervention, neglect or failure to act - the whole occurrence is humanized and
prevent the breakdown thereof.14 removed from the rules applicable to acts of God.17
It is undisputed that petitioner was enrolled as a sophomore law student in respondent Article 1170 of the Civil Code provides that those who are negligent in the performance
FEU. As such, there was created a contractual obligation between the two parties. On of their obligations are liable for damages. Accordingly, for breach of contract due to
petitioner's part, he was obliged to comply with the rules and regulations of the school. negligence in providing a safe learning environment, respondent FEU is liable to
On the other hand, respondent FEU, as a learning institution is mandated to impart petitioner for damages. It is essential in the award of damages that the claimant must have
knowledge and equip its students with the necessary skills to pursue higher education or a satisfactorily proven during the trial the existence of the factual basis of the damages and
profession. At the same time, it is obliged to ensure and take adequate steps to maintain its causal connection to defendant's acts.18
peace and order within the campus. In the instant case, it was established that petitioner spent P35,298.25 for his
It is settled that in culpa contractual, the mere proof of the existence of the contract and hospitalization and other medical expenses.19 While the trial court correctly imposed
the failure of its compliance justify, prima facie, a corresponding right of relief. 15 In the interest on said amount, however, the case at bar involves an obligation arising from a
instant case, we find that, when petitioner was shot inside the campus by no less the contract and not a loan or forbearance of money. As such, the proper rate of legal interest
security guard who was hired to maintain peace and secure the premises, there is a prima is six percent (6%) per annum of the amount demanded. Such interest shall continue to
facie showing that respondents failed to comply with its obligation to provide a safe and run from the filing of the complaint until the finality of this Decision. 20 After this
secure environment to its students. Decision becomes final and executory, the applicable rate shall be twelve percent (12%)
In order to avoid liability, however, respondents aver that the shooting incident was a per annum until its satisfaction.
fortuitous event because they could not have reasonably foreseen nor avoided the The other expenses being claimed by petitioner, such as transportation expenses and
accident caused by Rosete as he was not their employee; 16and that they complied with those incurred in hiring a personal assistant while recuperating were however not duly
their obligation to ensure a safe learning environment for their students by having supported by receipts.21 In the absence thereof, no actual damages may be awarded.
exercised due diligence in selecting the security services of Galaxy. Nonetheless, temperate damages under Art. 2224 of the Civil Code may be recovered
After a thorough review of the records, we find that respondents failed to discharge the where it has been shown that the claimant suffered some pecuniary loss but the amount
burden of proving that they exercised due diligence in providing a safe learning thereof cannot be proved with certainty. Hence, the amount of P20,000.00 as temperate
environment for their students. They failed to prove that they ensured that the guards damages is awarded to petitioner.
assigned in the campus met the requirements stipulated in the Security Service As regards the award of moral damages, there is no hard and fast rule in the
Agreement. Indeed, certain documents about Galaxy were presented during trial; determination of what would be a fair amount of moral damages since each case must be
governed by its own peculiar circumstances.22 The testimony of petitioner about his

21
physical suffering, mental anguish, fright, serious anxiety, and moral shock resulting We agree with the findings of the Court of Appeals that respondents cannot be held liable
from the shooting incident23 justify the award of moral damages. However, moral for damages under Art. 2180 of the Civil Code because respondents are not the
damages are in the category of an award designed to compensate the claimant for actual employers of Rosete. The latter was employed by Galaxy. The instructions issued by
injury suffered and not to impose a penalty on the wrongdoer. The award is not meant to respondents' Security Consultant to Galaxy and its security guards are ordinarily no more
enrich the complainant at the expense of the defendant, but to enable the injured party to than requests commonly envisaged in the contract for services entered into by a principal
obtain means, diversion, or amusements that will serve to obviate the moral suffering he and a security agency. They cannot be construed as the element of control as to treat
has undergone. It is aimed at the restoration, within the limits of the possible, of the respondents as the employers of Rosete. 28
spiritual status quo ante, and should be proportionate to the suffering inflicted. Trial As held in Mercury Drug Corporation v. Libunao:29
courts must then guard against the award of exorbitant damages; they should exercise In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires and
balanced restrained and measured objectivity to avoid suspicion that it was due to assigns the works of its watchmen or security guards to a client, the employer of such
passion, prejudice, or corruption on the part of the trial court. 24 We deem it just and guards or watchmen is such agency, and not the client, since the latter has no hand in
reasonable under the circumstances to award petitioner moral damages in the amount of selecting the security guards. Thus, the duty to observe the diligence of a good father of a
P100,000.00. family cannot be demanded from the said client:
Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of … [I]t is settled in our jurisdiction that where the security agency, as here, recruits, hires
damages is reasonable in view of Article 2208 of the Civil Code. 25 However, the award of and assigns the work of its watchmen or security guards, the agency is the employer of
exemplary damages is deleted considering the absence of proof that respondents acted in such guards or watchmen. Liability for illegal or harmful acts committed by the security
a wanton, fraudulent, reckless, oppressive, or malevolent manner. guards attaches to the employer agency, and not to the clients or customers of such
We note that the trial court held respondent De Jesus solidarily liable with respondent agency. As a general rule, a client or customer of a security agency has no hand in
FEU. In Powton Conglomerate, Inc. v. Agcolicol,26 we held that: selecting who among the pool of security guards or watchmen employed by the agency
[A] corporation is invested by law with a personality separate and distinct from those of shall be assigned to it; the duty to observe the diligence of a good father of a family in the
the persons composing it, such that, save for certain exceptions, corporate officers who selection of the guards cannot, in the ordinary course of events, be demanded from the
entered into contracts in behalf of the corporation cannot be held personally liable for the client whose premises or property are protected by the security guards.
liabilities of the latter. Personal liability of a corporate director, trustee or officer along xxxx
(although not necessarily) with the corporation may so validly attach, as a rule, only The fact that a client company may give instructions or directions to the security guards
when - (1) he assents to a patently unlawful act of the corporation, or when he is guilty of assigned to it, does not, by itself, render the client responsible as an employer of the
bad faith or gross negligence in directing its affairs, or when there is a conflict of interest security guards concerned and liable for their wrongful acts or omissions. 31
resulting in damages to the corporation, its stockholders or other persons; (2) he consents We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and
to the issuance of watered down stocks or who, having knowledge thereof, does not Rubber Company of the Philippines v. Tempengko,32 we held that:
forthwith file with the corporate secretary his written objection thereto; (3) he agrees to The third-party complaint is, therefore, a procedural device whereby a 'third party' who is
hold himself personally and solidarily liable with the corporation; or (4) he is made by a neither a party nor privy to the act or deed complained of by the plaintiff, may be brought
specific provision of law personally answerable for his corporate action. 27 into the case with leave of court, by the defendant, who acts as third-party plaintiff to
None of the foregoing exceptions was established in the instant case; hence, respondent enforce against such third-party defendant a right for contribution, indemnity,
De Jesus should not be held solidarily liable with respondent FEU. subrogation or any other relief, in respect of the plaintiff's claim. The third-party
Incidentally, although the main cause of action in the instant case is the breach of the complaint is actually independent of and separate and distinct from the plaintiff's
school-student contract, petitioner, in the alternative, also holds respondents vicariously complaint. Were it not for this provision of the Rules of Court, it would have to be filed
liable under Article 2180 of the Civil Code, which provides: independently and separately from the original complaint by the defendant against the
Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own third-party. But the Rules permit defendant to bring in a third-party defendant or so to
acts or omissions, but also for those of persons for whom one is responsible. speak, to litigate his separate cause of action in respect of plaintiff's claim against a third-
xxxx party in the original and principal case with the object of avoiding circuitry of action and
Employers shall be liable for the damages caused by their employees and household unnecessary proliferation of law suits and of disposing expeditiously in one litigation the
helpers acting within the scope of their assigned tasks, even though the former are not entire subject matter arising from one particular set of facts.33
engaged in any business or industry. Respondents and Galaxy were able to litigate their respective claims and defenses in the
xxxx course of the trial of petitioner's complaint. Evidence duly supports the findings of the
The responsibility treated of in this article shall cease when the persons herein mentioned trial court that Galaxy is negligent not only in the selection of its employees but also in
prove that they observed all the diligence of a good father of a family to prevent damage. their supervision. Indeed, no administrative sanction was imposed against Rosete despite
the shooting incident; moreover, he was even allowed to go on leave of absence which

22
led eventually to his disappearance.34 Galaxy also failed to monitor petitioner's condition
or extend the necessary assistance, other than the P5,000.00 initially given to petitioner.
Galaxy and Imperial failed to make good their pledge to reimburse petitioner's medical
expenses.
For these acts of negligence and for having supplied respondent FEU with an unqualified
security guard, which resulted to the latter's breach of obligation to petitioner, it is proper
to hold Galaxy liable to respondent FEU for such damages equivalent to the above-
mentioned amounts awarded to petitioner.
Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for
being grossly negligent in directing the affairs of the security agency. It was Imperial
who assured petitioner that his medical expenses will be shouldered by Galaxy but said
representations were not fulfilled because they presumed that petitioner and his family
were no longer interested in filing a formal complaint against them. 35
WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of
Appeals in CA-G.R. CV No. 87050 nullifying the Decision of the trial court and
dismissing the complaint as well as the August 23, 2007 Resolution denying the Motion
for Reconsideration are REVERSED and SET ASIDE. The Decision of the Regional
Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 finding respondent FEU
liable for damages for breach of its obligation to provide students with a safe and secure
learning atmosphere, is AFFIRMED with the following MODIFICATIONS:
a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual
damages in the amount of P35,298.25, plus 6% interest per annum from the filing of the
complaint until the finality of this Decision. After this decision becomes final and
executory, the applicable rate shall be twelve percent (12%) per annum until its
satisfaction;
b. respondent FEU is also ORDERED to pay petitioner temperate damages in the
amount of P20,000.00; moral damages in the amount of P100,000.00; and attorney's fees
and litigation expenses in the amount of P50,000.00;
c. the award of exemplary damages is DELETED.
The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The
counterclaims of respondents are likewise DISMISSED.
Galaxy Development and Management Corporation (Galaxy) and its president, Mariano
D. Imperial are ORDEREDto jointly and severally pay respondent FEU damages
equivalent to the above-mentioned amounts awarded to petitioner.
SO ORDERED.

23
Republic of the Philippines equipment from the property and vacate the premises; that plaintiff, upon entry of
SUPREME COURT judgment, pay to the Philippine Alien Property Administration the sum of P140,000; and
Manila that the Philippine Alien Property Administration be free from responsibility or liability
EN BANC for any act of the National Coconut Corporation, etc. Pursuant to the agreement the court
G.R. No. L-3756             June 30, 1952 rendered judgment releasing the defendant and the intervenor from liability, but reversing
SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE to the plaintiff the right to recover from the National Coconut Corporation reasonable
FILIPINAS, plaintiff-appellee,  rentals for the use and occupation of the premises. (Exhibit A-1.)
vs. The present action is to recover the reasonable rentals from August, 1946, the date when
NATIONAL COCONUT CORPORATION, defendant-appellant. the defendant began to occupy the premises, to the date it vacated it. The defendant does
First Assistant Corporate Counsel Federico C. Alikpala and Assistant Attorney Augusto not contest its liability for the rentals at the rate of P3,000 per month from February 28,
Kalaw for appellant. 1949 (the date specified in the judgment in civil case No. 5007), but resists the claim
Ramirez and Ortigas for appellee. therefor prior to this date. It interposes the defense that it occupied the property in good
LABRADOR, J.: faith, under no obligation whatsoever to pay rentals for the use and occupation of the
This is an action to recover the possession of a piece of real property (land and warehouse. Judgment was rendered for the plaintiff to recover from the defendant the
warehouses) situated in Pandacan Manila, and the rentals for its occupation and use. The sum of P3,000 a month, as reasonable rentals, from August, 1946, to the date the
land belongs to the plaintiff, in whose name the title was registered before the war. On defendant vacates the premises. The judgment declares that plaintiff has always been the
January 4, 1943, during the Japanese military occupation, the land was acquired by a owner, as the sale of Japanese purchaser was void ab initio; that the Alien Property
Japanese corporation by the name of Taiwan Tekkosho for the sum of P140,00, and Administration never acquired any right to the property, but that it held the same in trust
thereupon title thereto issued in its name (transfer certificate of title No. 64330, Register until the determination as to whether or not the owner is an enemy citizen. The trial court
of Deeds, Manila). After liberation, more specifically on April 4, 1946, the Alien further declares that defendant can not claim any better rights than its predecessor, the
Property Custodian of the United States of America took possession, control, and custody Alien Property Administration, and that as defendant has used the property and had
thereof under section 12 of the Trading with the Enemy Act, 40 Stat., 411, for the reason subleased portion thereof, it must pay reasonable rentals for its occupation.
that it belonged to an enemy national. During the year 1946 the property was occupied by Against this judgment this appeal has been interposed, the following assignment of error
the Copra Export Management Company under a custodianship agreement with United having been made on defendant-appellant's behalf:
States Alien Property Custodian (Exhibit G), and when it vacated the property it was The trial court erred in holding the defendant liable for rentals or compensation for the
occupied by the defendant herein. The Philippine Government made representations with use and occupation of the property from the middle of August, 1946, to December 14,
the Office Alien Property Custodian for the use of property by the Government (see 1948.
Exhibits 2, 2-A, 2-B, and 1). On March 31, 1947, the defendant was authorized to repair 1. Want to "ownership rights" of the Philippine Alien Property Administration did not
the warehouse on the land, and actually spent thereon the repairs the sum of P26,898.27. render illegal or invalidate its grant to the defendant of the free use of property.
In 1948, defendant leased one-third of the warehouse to one Dioscoro Sarile at a monthly 2. the decision of the Court of First Instance of Manila declaring the sale by the plaintiff
rental of P500, which was later raised to P1,000 a month. Sarile did not pay the rents, so to the Japanese purchaser null and void ab initio and that the plaintiff was and has
action was brought against him. It is not shown, however, if the judgment was ever remained as the legal owner of the property, without legal interruption, is not conclusive.
executed. 3. Reservation to the plaintiff of the right to recover from the defendant corporation not
Plaintiff made claim to the property before the Alien Property Custodian of the United binding on the later;
States, but as this was denied, it brought an action in court (Court of First Instance of 4. Use of the property for commercial purposes in itself alone does not justify payment of
Manila, civil case No. 5007, entitled "La Sagrada Orden Predicadores de la Provinicia del rentals.
Santisimo Rosario de Filipinas," vs. Philippine Alien Property Administrator, defendant, 5. Defendant's possession was in good faith.
Republic of the Philippines, intervenor) to annul the sale of property of Taiwan 6. Defendant's possession in the nature of usufruct.
Tekkosho, and recover its possession. The Republic of the Philippines was allowed to In reply, plaintiff-appellee's counsel contends that the Philippine Allien Property
intervene in the action. The case did not come for trial because the parties presented a Administration (PAPA) was a mere administrator of the owner (who ultimately was
joint petition in which it is claimed by plaintiff that the sale in favor of the Taiwan decided to be plaintiff), and that as defendant has used it for commercial purposes and
Tekkosho was null and void because it was executed under threats, duress, and has leased portion of it, it should be responsible therefore to the owner, who had been
intimidation, and it was agreed that the title issued in the name of the Taiwan Tekkosho deprived of the possession for so many years. (Appellee's brief, pp. 20, 23.)
be cancelled and the original title of plaintiff re-issued; that the claims, rights, title, and We can not understand how the trial court, from the mere fact that plaintiff-appellee was
interest of the Alien Property Custodian be cancelled and held for naught; that the the owner of the property and the defendant-appellant the occupant, which used for its
occupant National Coconut Corporation has until February 28, 1949, to recover its own benefit but by the express permission of the Alien Property Custodian of the United

24
States, so easily jumped to the conclusion that the occupant is liable for the value of such on any negligence or offense of the defendant-appellant, or any contract, express or
use and occupation. If defendant-appellant is liable at all, its obligations, must arise from implied, because the Allien Property Administration was neither a trustee of plaintiff-
any of the four sources of obligations, namley, law, contract or quasi-contract, crime, or appellee, nor a privy to the obligations of the Taiwan Tekkosho, its title being based by
negligence. (Article 1089, Spanish Civil Code.) Defendant-appellant is not guilty of any legal provision of the seizure of enemy property. We have also tried in vain to find a law
offense at all, because it entered the premises and occupied it with the permission of the or provision thereof, or any principle in quasi contracts or equity, upon which the claim
entity which had the legal control and administration thereof, the Allien Property can be supported. On the contrary, as defendant-appellant entered into possession without
Administration. Neither was there any negligence on its part. There was also no privity any expectation of liability for such use and occupation, it is only fair and just that it may
(of contract or obligation) between the Alien Property Custodian and the Taiwan not be held liable therefor. And as to the rents it collected from its lessee, the same should
Tekkosho, which had secured the possession of the property from the plaintiff-appellee accrue to it as a possessor in good faith, as this Court has already expressly held.
by the use of duress, such that the Alien Property Custodian or its permittee (defendant- (Resolution, National Coconut Corporation vs. Geronimo, 83 Phil. 467.)
appellant) may be held responsible for the supposed illegality of the occupation of the Lastly, the reservation of this action may not be considered as vesting a new right; if no
property by the said Taiwan Tekkosho. The Allien Property Administration had the right to claim for rentals existed at the time of the reservation, no rights can arise or
control and administration of the property not as successor to the interests of the enemy accrue from such reservation alone.
holder of the title, the Taiwan Tekkosho, but by express provision of law (Trading with Wherefore, the part of the judgment appealed from, which sentences defendant-appellant
the Enemy Act of the United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a to pay rentals from August, 1946, to February 28, 1949, is hereby reversed. In all other
trustee of the former owner, the plaintiff-appellee herein, but a trustee of then respects the judgment is affirmed. Costs of this appeal shall be against the plaintiff-
Government of the United States (32 Op. Atty. Gen. 249; 50 U.S.C.A. 283), in its own appellee.
right, to the exclusion of, and against the claim or title of, the enemy owner.
(Youghioheny & Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis., 347;
U.S.C.A., 282-283.) From August, 1946, when defendant-appellant took possession, to
the late of judgment on February 28, 1948, Allien Property Administration had the
absolute control of the property as trustee of the Government of the United States, with
power to dispose of it by sale or otherwise, as though it were the absolute owner. (U.S vs.
Chemical Foundation [C.C.A. Del. 1925], 5 F. [2d], 191; 50 U.S.C.A., 283.) Therefore,
even if defendant-appellant were liable to the Allien Property Administration for rentals,
these would not accrue to the benefit of the plaintiff-appellee, the owner, but to the
United States Government.
But there is another ground why the claim or rentals can not be made against defendant-
appellant. There was no agreement between the Alien Property Custodian and the
defendant-appellant for the latter to pay rentals on the property. The existence of an
implied agreement to that effect is contrary to the circumstances. The copra Export
Management Company, which preceded the defendant-appellant, in the possession and
use of the property, does not appear to have paid rentals therefor, as it occupied it by
what the parties denominated a "custodianship agreement," and there is no provision
therein for the payment of rentals or of any compensation for its custody and or
occupation and the use. The Trading with the Enemy Act, as originally enacted, was
purely a measure of conversation, hence, it is very unlikely that rentals were demanded
for the use of the property. When the National coconut Corporation succeeded the Copra
Export Management Company in the possession and use of the property, it must have
been also free from payment of rentals, especially as it was Government corporation, and
steps where then being taken by the Philippine Government to secure the property for the
National Coconut Corporation. So that the circumstances do not justify the finding that
there was an implied agreement that the defendant-appellant was to pay for the use and
occupation of the premises at all.
The above considerations show that plaintiff-appellee's claim for rentals before it
obtained the judgment annulling the sale of the Taiwan Tekkosho may not be predicated

25
[G.R. No. L-36840. May 22, 1973.] belonging to its customer, and drove said car for a place or places unknown, abandoning
his post as such security guard on duty inside the plaintiff’s compound, and while so
PEOPLE’S CAR, INC., Plaintiff-Appellant, v. COMMANDO SECURITY driving said car in one of the City streets lost control of said car, causing the same to fall
SERVICE AGENCY, Defendant-Appellee. into a ditch along J.P. Laurel St., Davao City by reason of which the plaintiff’s complaint
for qualified theft against said driver, was blottered in the office of the Davao City Police
Department." 5 
DECISION
As a result of these wrongful acts of defendant’s security guard, the car of plaintiff’s
customer, Joseph Luy, which had been left with plaintiff for servicing and maintenance,
"suffered extensive damage in the total amount of P7,07910" 6 besides the car rental
TEEHANKEE, J.:
value "chargeable to defendant" in the sum of P1,410.00 for a car that plaintiff had to rent
and make available to its said customer to enable him to pursue his business and
occupation for the period of forty-seven (47) days (from April 25 to June 10, 1970) that it
In this appeal from the adverse judgment of the Davao court of first instance limiting took plaintiff to repair the damaged car, 7 or total actual damages incurred by plaintiff in
plaintiff-appellant’s recovery under its complaint to the sum of P1,000.00 instead of the the sum of P8,489.10.
actual damages of P8,489.10 claimed and suffered by it as a direct result of the wrongful
acts of defendant security agency’s guard assigned at plaintiff’s premises in pursuance of Plaintiff claimed that defendant was liable for the entire amount under paragraph 5 of
their "Guard Service Contract", the Court finds merit in the appeal and accordingly their contract whereunder defendant assumed "sole responsibility for the acts done during
reverses the trial court’s judgment. their watch hours" by its guards, whereas defendant contended, without questioning the
amount of the actual damages incurred by plaintiff, that its liability "shall not exceed one
The appeal was certified to this Court by a special division of the Court of Appeals on a thousand (P1,000.00) pesos per guard post" under paragraph 4 of their contract.
four-to-one vote as per its resolution of April 14, 1973 that "since the case was submitted
to the court a quo for decision on the strength of the stipulation of facts, only questions of The parties thus likewise stipulated on this sole issue submitted by them for adjudication,
law can he involved in the present appeal."cralaw virtua1aw library as follows:jgc:chanrobles.com.ph
The Court has accepted such certification and docketed this appeal on the strength of its "Interpretation of the contract, ad to the extent of the liability of the defendant to the
own finding from the records that plaintiff’s notice of appeal was expressly to this Court plaintiff by reason of the acts of the employees of the defendant is the only issue to be
(not to the appellate court) "on pure questions of law" 1 and its record on appeal resolved.
accordingly prayed that "the corresponding records be certified and forwarded to the
Honorable Supreme Court." 2 The trial court so approved the same 3 on July 3, 1971 "The defendant relies on Par. 4 of the contract to support its contention while the plaintiff
instead of having required the filing of a petition for review of the judgment sought to be relies on Par. 5 of the same contract in support of its claims against the defendant. For
appealed from directly with this Court, in accordance with the provisions of Republic Act ready reference they are quoted hereunder:chanrob1es virtual 1aw library
5440. By some unexplained and hitherto undiscovered error of the clerk of court,
furthermore, the record on appeal was erroneously forwarded to the appellate court rather ‘Par. 4. — Party of the Second Part (defendant) through the negligence of its guards, after
than to this Court. an investigation has been conducted by the Party of the First Part (plaintiff) wherein the
Party of the Second Part has been duly represented, shall assume full responsibilities for
The parties submitted the case for judgment on a stipulation of facts. There is thus no any loss or damages that may occur to any property of the Party of the First Part for
dispute as to the factual bases of plaintiff’s complaint for recovery of actual damages which it is accountable, during the watch hours of the Party of the Second Part, provided
against defendant, to wit, that under the subsisting "Guard Service Contract" between the the same is reported to the Party of the Second Part within twenty-four (24) hours of the
parties, defendant-appellee as a duly licensed security service agency undertook in occurrence, except where such loss or damage is due to force majeure, provided however
consideration of the payments made by plaintiff "to safeguard and protect the business that after the proper investigation to be made thereof that the guard on post is found
premises of (plaintiff) from theft, pilferage, robbery, vandalism and all other unlawful negligent and that the amount of the loss shall not exceed ONE THOUSAND (P1,000.00)
acts of any person or persons prejudicial to the interest of (plaintiff)." 4  PESOS per guard post.’
On April 5, 1970 at around 1:00 A.M., however, defendant’s security guard on duty at ‘Par. 5— The party of the Second Part assumes the responsibility for the proper
plaintiff’s premises, "without any authority, consent, approval, knowledge or orders of performance by the guards employed, of their duties and (shall) be solely responsible for
the plaintiff and/or defendant brought out of the compound of the plaintiff a car
26
the acts done during their watch hours, the Party of the First Part being specifically the plaintiff should have filed a crossclaim against the latter," 9 was unduly technical and
released from any and all liabilities to the former’s employee or to the third parties unrealistic and untenable.
arising from the acts or omissions done by the guards during their tour of duty.’" 8 
Plaintiff was in law liable to its customer for the damages caused the customer’s car,
The trial court, misreading the above-quoted contractual provisions, held that "the which had been entrusted into its custody. Plaintiff therefore was in law justified in
liability of the defendant in favor of the plaintiff falls under paragraph 4 of the Guard making good such damages and relying in turn on defendant to honor its contract and
Service Contract" and rendered judgment "funding the defendant liable to the plaintiff in indemnify it for such undisputed damages, which had been caused directly by the
the amount of P1,000.00 with costs."cralaw virtua1aw library unlawful and wrongful acts of defendant’s security guard in breach of their contract. As
ordained in Article 1159, Civil Code, "obligations arising from contracts have the force
Hence, this appeal, which, as already indicated, is meritorious and must be granted. of law between the contracting parties and should be complied with in good faith."cralaw
virtua1aw library
Paragraph 4 of the contract, which limits-defendant’s liability for the amount of loss or
damage to any property of plaintiff to "P1,000.00 per guard post," is by its own terms Plaintiff in law could not tell its customer, as per the trial court’s view, that "under the
applicable only for loss or damage "through the negligence of its guards . . . during the Guard Service Contract it was not liable for the damage but the defendant" — since the
watch hours" provided that the same is duly reported by plaintiff within 24 hours of the customer could not hold defendant to account for the damages as he had no privity of
occurrence and the guard’s negligence is verified after proper investigation with the contract with defendant. Such an approach of telling the adverse party to go to court,
attendance of both contracting parties. Said paragraph is manifestly inapplicable to the notwithstanding his plainly valid claim, aside from its ethical deficiency among others,
stipulated facts of record, which involve neither property of plaintiff that has been lost or could hardly create any goodwill for plaintiff’s business, in the same way that
damaged at its premises nor mere negligence of defendant’s security guard on duty. defendant’s baseless attempt to evade fully discharging its contractual liability to plaintiff
cannot be expected to have brought it more business. Worse, the administration of justice
Here, instead of defendant, through its assigned security guards, complying with its is prejudiced, since the court dockets are unduly burdened with unnecessary litigation.
contractual undertaking "to safeguard and protect the business premises of (plaintiff)
from theft, robbery, vandalism and all other unlawful acts of any person or persons," ACCORDINGLY, the judgment appealed from is hereby reversed and judgment is
defendant’s own guard on duty unlawfully and wrongfully drove out of plaintiff’s hereby rendered sentencing defendant-appellee to pay plaintiff-appellant the sum of
premises a customer’s car, lost control of it on the highway causing it to fall into a ditch, P8,489.10 as and by way of reimbursement of the stipulated actual damages and
thereby directly causing plaintiff to incur actual damages in the total amount of expenses, as well as the costs of suit in both instances. It is so ordered.
P8,489.10.
Makalintal, Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ.,
Defendant is therefore undoubtedly liable to indemnify plaintiff for the entire damages concur.
thus incurred, since under paragraph 5 of their contract it "assumed the responsibility for
the proper performance by the guards employed of their duties and (contracted to) be
solely responsible for the acts done during their watch hours" and "specifically released
(plaintiff) from any and all liabilities . . . to the third parties arising from the acts or
omissions done by the guards during their tour of duty." As plaintiff had duly discharged
its liability to the third party, its customer, Joseph Luy, for the undisputed damages of
P8,489.10 caused said customer, due to the wanton and unlawful act of defendant’s
guard, defendant in turn was clearly liable under the terms of paragraph 5 of their
contract to indemnify plaintiff in the same amount.

The trial court’s approach that "had plaintiff understood the liability of the defendant to
fall under paragraph 5, it should have told Joseph Luy, owner of the car, that under the
Guard Service Contract, it was not liable for the damage but the defendant and had Luy
insisted on the liability of the plaintiff, the latter should have challenged him to bring the
matter to court. If Luy accepted the challenge and instituted an action against the
plaintiff, it should have filed a third-party complaint against the Commando Security
Service Agency. But if Luy instituted the action against the plaintiff and the defendant,

27
38 Phil. 768 once to a certain hospital in the city of Manila where an examination was made and his
arm was amputated. The result of this operation was unsatisfactory, and the plaintiff was
[ GR No. 12191, Oct 14, 1918 ] then carried to another hospital where a second operation was performed and the member
was again amputated higher up near the shoulder. It appears in evidence that the plaintiff
JOSE CANGCO v. MANILA RAILROAD CO. + expended the sum of P790.25 in the form of medical and surgical fees and for other
DECISION expenses in connection with the process of his curation.
Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the
FISHER, J.: city of Manila to recover damages of the defendant company, founding his action upon
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, the negligence vof the servants and employees of the defendant in placing the sacks of
was in the employment of the Manila Railroad Company in the capacity of clerk, with a melons upon the platform and in leaving them so placed as to be a menace to the security
monthly wage of P25. He lived in the pueblo of San Mateo, in the province of Rizal, of passenger alighting from the company's trains. At the hearing in the Court of First
which is located upon the line of the defendant railroad company; and in coming daily by Instance, his Honor, the trial judge, found the facts substantially as above stated, and
train to the company's office in the city of Manila where he worked, he used a pass, drew therefrom his conclusion to the effect that, although negligence was attributable to
supplied by the company, which entitled him to ride upon the company's trains free of the defendant by reason of the fact that the sacks of melons were so placed as to obstruct
charge. Upon the occasion in question, January 20, 1915, the plaintiff was returning passengers passing to and from the cars, nevertheless, the plaintiff himself had failed to
home by rail from his daily labors; and as the train drew up to the station in San Mateo use due caution in alighting from the coach and was therefore precluded from recovering.
the plaintiff arose from his seat in the second class-car where he was riding and, making Judgment was accordingly entered in favor of the defendant company, and the plaintiff
his exit through the door, took his position upon the steps of the coach, seizing the appealed.
upright guardrail with his right hand for support. It can not be doubted that the employees of the railroad company were guilty of
On the side of the train where passengers alight at the San Mateo station there is a cement negligence in piling these sacks on the platform in the manner above stated; that their
platform which begins to rise with a moderate gradient some distance away from the presence caused the plaintiff to fall as he alighted from the train; and that they therefore
company's office and extends along in front of said office for a distance sufficient to constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily
cover the length of several coaches. As the train slowed down another passenger, named follows that the defendant company is liable for the damage thereby occasioned unless
Emilio Zuñiga, also an employee of the railroad company, got off the same car, alighting recovery is barred by the plaintiff's own contributory negligence. In resolving this
safely at the point where the platform begins to rise from the level of the ground. When problem it is necessary that each of these conceptions of liability, to-wit, the primary
the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one responsibility of the defendant company and the contributory negligence of the plaintiff
or both of his feet came in conta'ct with a sack of watermelons with the result that his feet should be separately examined.
slipped from under him and he fell violently on the platform. His body at once rolled It is important to note that the foundation of the legal liability of the defendant is the
from the platform and was drawn under the moving car, where his right arm was badly contract of carriage, and that the obligation to respond for the damage which plaintiff has
crushed and lacerated. It appears that after the plaintiff alighted from the train the car suffered arises, if at all, from the breach of that contract by reason of the failure of
moved forward possibly six meters before it came to a full stop. defendant to exercise due care in its performance. That is to say, its liability is direct and
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station immediate, differing essentially, in the legal viewpoint from that presumptive
was lighted dimly by a single light located some distance away, objects on the platform responsibility for the negligence of its servants, imposed by article 1903 of the Civil
where the accident occurred were difficult to discern, especially to a person emerging Code, which can be rebutted by proof of the exercise of due care in their selection and
from a lighted car. supervision. Article 1903 of the Civil Code is not applicable to obligations arising ex
The explanation of the presence of a sack of melons on the platform where the plaintiff contractu, but only to extra-contractual obligations or to use the technical form of
alighted is found in the fact that it was the customary season for harvesting these melons expression, that article relates only to culpa aquiliana and not to culpa contractual.
and a large lot had been brought to the station for shipment to the market. They were Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil
contained in numerous tow sacks which had been piled on the platform in a row one upon Code, clearly points out this distinction, which was also recognized by this Court in its
another. The testimony shows that this row of sacks was so placed that there was a space decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359). In
of only about two feet between the sacks of melons and the edge of the platform; and it is commenting upon article 1093 (vol. 8, p. 30) Manresa clearly points out the difference
clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of between "culpa, substantive and independent, which of itself constitutes the source of an
these melons at the moment he stepped upon the platform. His statement that he failed to obligation between persons not formerly connected by any legal tie"
see these objects in the darkness is readily to be credited. and culpa considered as an "accident in the performance of an obligation already existing
The plaintiff was drawn from under the car in an unconscious condition, and it appeared * * *."
that the injuries which he had received were very serious. He was therefore brought at

28
In the Rakes case (supra) the decision of this court was made to rest squarely upon the the theory of the extra-contractual liability of the defendant to respond for the damage
proposition that article 1903 of the Civil Code is not applicable to acts of negligence caused by the carelessness of his employee while acting within the scope of his
which constitute the breach of a contract. employment. The Court, after citing the last paragraph of article 1903 of the Civil Code,
Upon this point the Court said: said:
"The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are "From this article two things are apparent: (1) That when an injury is caused by the
understood to be those not growing out of pre-existing duties of the parties to one negligence of a servant or employee there instantly arises a presumption of law that there
another. But where relations already formed give rise to duties, whether springing from was negligence on the part of the master or employer either in the selection of the servant
contract or quasi-contract, then breaches of those duties are subject to articles 1101, 1103 or employee, or in supervision over him after the selection, or both; and (2) that that
and 1104 of the same code." (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It
at p. 365.) follows necessarily that if the employer shows to the satisfaction of the court that in
This distinction is of the utmost importance. The liability, which, under the Spanish law, selection and supervision he has exercised the care and diligence of a good father of a
is, in certain cases imposed upon employers with respect to damages occasioned by the family, the presumption is overcome and he is relieved from liability.
negligence of their employees to persons to whom they are not bound by contract, is not "This theory bases the responsibility of the master ultimately on his ownnegligence and
based, as in the English Common Law, upon the principle of respondeat superior if it not on that of his servant. This is the notable peculiarity of the Spanish law of negligence.
were, the master would be liable in every case and unconditionally but upon the principle It is, of course, in striking contrast to the American doctrine that, in relations with
announced in article 1902 of the Civil Code, which imposes upon all persons who by strangers, the negligence of the servant is conclusively the negligence of the master."
their fault or negligence, do injury to another, the obligation of making good the damage The opinion there expressed by this Court, to the effect that in case of extra-
caused. One who places a powerful automobile in the hands of a servant whom he knows contractual culpa based upon negligence, it is necessary that there shall have been some
to be ignorant of the method of managing such a vehicle, is himself guilty of an act of fault attributable to the defendant personally, and that the last paragraph of article 1903
negligence which makes him liable for all the consequences of his imprudence. The merely establishes a rebuttable presumption, is in complete accord with the authoritative
obligation to make good the damage arises at the very instant that the unskillful servant, opinion of Manresa, who says (vol. 12, p. 611) that the liability created by article 1903 is
while acting within the scope of his employment, causes the injury. The liability of the imposed by reason of the breach of the duties inherent in the special relations of authority
master is personal and direct. But, if the master has not been guilty of any negligence or superiority existing between the person called upon to repair the damage and the one
whatever in the selection and direction ofthe servant, he is not liable for the acts of the who, by his act or omission, was the cause of it.
latter, whether done within the scope of his employment or not, if the damage done by the On the other hand, the liability of masters and employers for the negligent acts or
servant does not amount to a breach of the contract between the master and the person omissions of their servants or agents, when such acts or omissions cause damages which
injured. amount to the breach of a contract, is not based upon a mere presumption of the master's
It is not accurate to say that proof of diligence and care in the selection and control of the negligence in their selection or control, and proof of exercise of the utmost diligence and
servant relieves the master from liability for the latter's acts on the contrary, that proof care in this regard does not relieve the master of his liability for the breach of his
shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the contract.
liability arising from extra-contractual culpa is always based upon a voluntary act or Every legal obligation must of necessity be extra-contractual or contractual. Extra-
omission which, without willful intent, but by mere negligence or inattention, has caused contractual obligation has its source in the breach or omission of those mutual duties
damage to another. A master who exercises all possible care in the selection of his which civilized society imposes upon its members, or which arise from these relations,
servant, taking into consideration the qualifications they should possess for the discharge other than contractual, of certain members of society to others, generally embraced in the
of the duties which it is his purpose to confide to them, and directs them with equal concept of status. The legal rights of each member of society constitute the measure of
diligence, thereby performs his duty to third persons to whom he is bound by no the corresponding legal duties, mainly negative in character, which the existence of those
contractual ties, and he incurs no liability whatever if, by reason of the negligence of his rights imposes upon all other members of society. The breach of these general duties
servants, even within the scope of their employment, such third persons suffer damage. whether due to willful intent or to mere inattention, if productive of injury, gives rise to
True it is that under article 1903 of the Civil Code the law creates a presumption that he an obligation to indemnify the injured party. The fundamental distinction between
has been negligent in the selection or direction of his servant, but the presumption is obligations of this character and those which arise from contract, rests upon the fact that
rebuttable and yields to proof of due care and diligence in this respect. in cases of non-contractual obligation it is the wrongful or negligent act or omission itself
The supreme court of Porto Rico, in interpreting identical provisions, as found in the which creates the vinculum juris, whereas in contractual relations the vinculum exists
Porto Rican Civil Code, has held that these articles are applicable to cases of extra- independently of the breach of the voluntary duty assumed by the parties when entering
contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.) into the contractual relation.
This distinction was again made patent by this Court in its decision in the case of With respect to extra-contractual obligation arising from negligence, whether of act or
Bahia vs. Litonjua and Leynes, (30 Phil. Rep., 624), which was an action brought upon omission, it is competent for the legislature to elect and our Legislature has so elected to

29
limit such liability to cases in which the person upon whom such an obligation is imposed banking corporation as collateral, and they are lost by reason of the negligence of some
is morally culpable or, on the contrary, for reasons of public policy, to extend that clerk employed by the bank, would it be just and reasonable to permit the bank to relieve
liability, without regard to the lack of moral culpability, so as to include responsibility for itself of liability for the breach of its contract to return the collateral upon the payment of
the negligence of those persons whose acts or omissions are imputable, by a legal fiction, the debt by proving that due care had been exercised in the selection and direction of the
to others who are in a position to exercise an absolute or limited control over them. The clerk?
legislature which adopted our Civil Code has elected to limit extra-contractual liability This distinction between culpa aquiliana, as the source of an obligation, and culpa
with certain well-defined exceptions to cases in which moral culpability can be directly contractual as a mere incident to the performance of a contract has frequently been
imputed to the persons to be charged. This moral responsibility may consist in having recognized by the supreme court of Spain. (Sentenciasof June 27, 1894; November 20,
failed to exercise due care in one's own acts, or in having failed to exercise due care in 1896; and December 13, 1896.) In the decision of November 20, 1896, it appeared that
the selection and control of one's agents or servants, or in the control of persons who, by plaintiff's action arose ex contractu, but that defendant sought to avail himself of the
reason of their status, occupy a position of dependency with respect to the person made provisions of article 1902 of the Civil Code as a defense. The Spanish Supreme Court
liable for their conduct. rejected defendant's contention, saying:
The position of a natural or juridical person who has undertaken by contract to render "These are not cases of injury caused, without any pre-existing obligation, by fault or
service to another, is wholly different from that to which article 1903 relates. When the negligence, such as those to which article 1902 of the Civil Code relates, but of damages
source of the obligation upon which plaintiff's cause of action depends is a negligent act caused by the defendant's failure to carry out the undertakings imposed by the contracts *
or omission, the burden of proof rests upon plaintiff to prove the negligence if he does * *."
not his action fails. But when the facts averred show a contractual undertaking by A brief review of the earlier decision of this court involving the liability of employers for
defendant for the benefit of plaintiff, and it is alleged that plaintiff has failed or refused to damage done by the negligent acts of their servants will show that in no case has the
perform the contract, it is not necessary for plaintiff to specify in his pleadings whether court ever decided that the negligence of the defendant's servants [has] been held to
the breach of the contract is due to wilful fault or to negligence on the part of the constitute a defense to an action for damages for breach of contract.
defendant, or of his servants or agents. Proof of the contract and of its nonperformance is In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a
sufficient prima facie to warrant a recovery. carriage was not liable for the damages caused by the negligence of his driver. In that
"As a general rule * * * it is logical that in case of extra-contractual culpa, a suing case the court commented on the fact that no evidence had been adduced in the trial court
creditor should assume the burden of proof of its existence, as the only fact upon which that the defendant had been negligent in the employment of the driver, or that he had any
his action is based; while on the contrary, in a case of negligence which presupposes the knowledge of his lack of skill or carefulness.
existence of a contractual obligation, if the creditor shows that it exists and that it has In the case of Baer Senior & Co.'s Successors vs. Compañia Maritima (6 Phil. Rep., 215),
been broken, it is not necessary for him to prove the negligence." (Manresa, vol. 8, p. 71 the plaintiff sued the defendant for damages caused by the loss of a barge belonging to
[1907 ed., p. 76].) plaintiff which was allowed to get adrift by the negligence of defendant's servants in the
As it is not necessary for the plaintiff in an action for the breach of a contract to show that course of the performance of a contract of towage. The court held, citing Manresa (vol. 8,
the breach was due to the negligent conduct of defendant or of his servants, even though pp. 29, 69) that if the "obligation of the defendant grew out of a contract made between it
such be in fact the actual cause of the breach, it is obvious that proof on the part of and the plaintiff * * * we do not think that the provisions of articles 1902 and 1903 are
defendant that the negligence or omission of his servants or agents caused the breach of applicable to the case."
the contract would not constitute a defense to the action. If the negligence of servants or In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant
agents could be invoked as a means of discharging the liability arising from contract, the to recover damages for personal injuries caused by the negligence of defendant's
anomalous result would be that persons acting through the medium of agents or servants chauffeur while driving defendant's automobile in which defendant was riding at the
in the performance of their contracts, would be in a better position than those acting in time. The court found that the damages were caused by the negligence of the driver of the
person. If one delivers a valuable watch to a watchmaker who contracts to repair it, and automobile, but held that the master was not liable, although he was present at the time,
the bailee, by a personal negligent act causes its destruction, he is unquestionably liable. saying:
Would it be logical to free him from his liability for the breach of his contract, which "* * * unless the negligent acts of the driver are continued for such a length of time as to
involves the duty to exercise due care in the preservation of the watch, if he shows that it give the owner a reasonable opportunity to observe them and to direct the driver to desist
was his servant whose negligence caused the injury? If such a theory could be accepted, therefrom. * * * The act complained of must be continued in the presence of the owner
juridical persons would enjoy practically complete immunity from damages arising from for such a length of time that the owner by his acquiescence, makes the driver's acts his
the breach of their contracts if caused by negligent acts of omission or commission on the own."
part of their servants, as such juridical persons can of necessity only act through agents or In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33
servants, and it would no doubt be true in most instances that reasonable care had been Phil. Rep., 8), it is true that the court rested its conclusion as to the liability of the
taken in the selection and direction of such servants. If one delivers securities to a defendant upon article 1903, although the facts disclosed that the injury complained of by

30
plaintiff constituted a breach of the duty to him arising out of the contract of The railroad company's defense involves the assumption that even granting that the
transportation. The express ground of the decision in this case was that article 1903, in negligent conduct of its servants in placing an obstruction upon the platform was a
dealing with the liability of a master for the negligent acts of his servants "makes the .breach of its contractual obligation to maintain safe means of approaching and leaving its
distinction between private individuals and public enterprise;" that as to the latter the law trains, the direct and proximate cause of the injury suffered by plaintiff was his own
creates a rebuttable presumption of negligence in the selection or direction of the contributory negligence in failing to wait until the train had come to a complete stop
servants; and that in the particular case the presumption of negligence had not been before alighting. Under the doctrine of comparative negligence announced in the Rakes
overcome. case (supra), if the accident was caused by plaintiff's own negligence, no liability is
It is evident, therefore, that in its decision in the Yamada case, the court treated plaintiff's imposed upon defendant, whereas if the accident was caused by defendant's negligence
action as though founded in tort rather than as based upon the breach of the contract of and plaintiff's negligence merely contributed to his injury, the damages should be
carriage, and an examination of the pleadings and of the briefs shows that the questions apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of
of law were in fact discussed upon this theory. Viewed from the standpoint of the negligence.
defendant the practical result must have been the same in any event. The proof disclosed It may be admitted that had plaintiff waited until the train had come to a full stop before
beyond doubt that the defendant's servant was grossly negligent and that his negligence alighting, the particular injury suffered by him could not have occurred. Defendant
was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant contends, and cites many authorities in support of the contention, that it is negligence per
had been guilty of negligence in its failure to exercise proper discretion in the direction of se for a passenger to alight from a moving train. We are not disposed to subscribe to this
the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether doctrine in its absolute form. We are of the opinion that this proposition is too broadly
the breach of the duty were to be regarded as constituting culpa aquilina or culpa stated and is at variance with the experience of every-day life. In this particular instance,
contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs as that the train was barely moving when plaintiff alighted is shown conclusively by the fact
an incident in the course of the performance of a contractual undertaking or is itself the that it came to stop within six meters from the place where he stepped from it. Thousands
source of an extra-contractual obligation, its essential characteristics are identical. There of persons alight from trains under these conditions every day of the year,) and sustain no
is always an act or omission productive of damage due to carelessness or inattention on injury where the company has kept its platform free from dangerous obstructions. There
the part of the defendant. Consequently, when the court holds that a defendant is liable in is no reason to believe that plaintiff would have suffered any injury whatever in alighting
damages for having failed to exercise due care, either directly, or in failing to exercise as he did had it not been for defendant's negligent failure to perform its duty to provide a
proper care in the selection and direction of his servants, the practical result is identical in safe alighting place.
either case. Therefore, it follows that it is not to be inferred, because the court held in the We are of the opinion that the correct doctrine relating to this subject is that expressed in
Yamada case that the defendant was liable for the damages negligently caused by its Thompson's work on Negligence (vol. 3, sec. 3010) as follows:
servant to a person to whom it was bound by contract, and made reference to the fact that "The test by which to determine whether the passenger has been guilty of negligence in
the defendant was negligent in the selection and control of its servants, that in such a case attempting to alight from a moving railway train, is that of ordinary or reasonable care. It
the court would have held that it would have been a good defense to the action, if is to be considered whether an ordinarily prudent person, of the age, sex and condition of
presented squarely upon the theory of the breach of the contract, for defendant to have the passenger, would have acted as the passenger acted under the circumstances disclosed
proved that it did in fact exercise care in the selection and control of the servant. by the evidence. This care has been defined to be, not the care which may or should be
used by the prudent man generally, but the care which a man of ordinary prudence would
The true explanation of such cases is to be found by directing the attention to the relative use under similar circumstances, to avoid injury." (Thompson, Commentaries on
spheres of contractual and extra-contractual obligations. The field of non-contractual Negligence, vol. 3, sec. 3010.)
obligation is much more broader than that of contractual obligation, comprising, as it Or, if we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37
does, the whole extent of juridical human relations. These two fields, figuratively Phil. Rep., 809), we may say that the test is this; Was there anything in the circumstances
speaking, concentric; that is to say, the mere fact that a person is bound to another by surrounding the plaintiff at the time he alighted from the train which would have
contract does not relieve him from extra-contractual liability to such person. When such a admonished a person of average prudence that to get off the train under the conditions
contractual relation exists the obligor may break the contract under such conditions that then existing was dangerous? If so, the plaintiff should have desisted from alighting; and
the same act which constitutes a breach of the contract would have constituted the source his failure so to desist was contributory negligence.
of an extra-contractual obligation had no contract existed between the parties. As the case now before us presents itself, the only fact from which a conclusion can be
The contract of defendant to transport plaintiff carried with it, by implication, the duty to drawn to the effect that the plaintiff was guilty of contributory negligence is that he
carry him in safety and to provide safe means of entering and leaving its trains (Civil stepped off the car without being able to discern clearly the condition of the platform and
Code, article 1258). That duty, being contractual, was direct and immediate, and its non- while the train was yet slowly moving. In considering the situation thus presented, it
performance could not be excused by proof that the fault was morally imputable to should not be overlooked that the plaintiff was, as we find, ignorant of the fact that the
defendant's servants. obstruction which was caused by the sacks of melons piled on the platform existed; and

31
as the defendant was bound by reason of its duty as a public carrier to afford to its With one sentence in the majority decision, we are of full accord, namely, "It may be
passengers facilities for safe egress from its trains, the plaintiff had a right to assume, in admitted that had plaintiff waited until the train had come to a full stop before alighting,
the absence of some circumstance to warn him to the contrary, that the platform was the particular injury suffered by him could not have occurred." With the general rule
clear. The place, as we have already stated, was dark, or dimly lighted, and this also is relative to a passenger's contributory negligence, we are likewise in full accord, namely,
proof of a failure upon the part of the defendant in the performance of a duty owing by it "An attempt to alight from a moving train is negligence per se." Adding these two points
to the plaintiff; for if it were by any possibility conceded that it had a right to pile these together, we have the logical result the Manila Railroad Co. should be absolved from the
sacks in the path of alighting passengers, the placing of them in that position gave rise to complaint, and judgment affirmed.
the duty to light the premises adequately so that their presence would be revealed.
As pertinent to the question of contributory negligence on the part of the plaintiff in this
case the following circumstances are to be noted: The company's platform was
constructed upon a level higher than that of the roadbed and the surrounding ground. The
distance from the steps of the car to the spot where the alighting passenger would place
his feet on the platform was thus reduced, thereby decreasing the risk incident to stepping
off. The nature of the platform, constructed as it was of cement material, also assured to
the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was
possessed of the vigor and agility of young manhood, and it was by no means so risky for
him to get off while the train was yet moving as the same act would have been in an aged
or feeble person. In determining the question of contributory negligence in performing
such act that is to say, whether the passenger acted prudently or recklessly the age, sex,
and physical condition of the passenger are circumstances necessarily affecting the safety
of the passenger, and should be considered. Women, it has been observed, as a general
rule, are less capable than men of alighting with safety under such conditions, as the
nature of their wearing apparel obstructs the free movement of the limbs. Again, it may
be noted that the place was perfectly familiar to the plaintiff, as it was his daily custom to
get on and off the train at this station. There could, therefore, be no uncertainty in his
mind with regard either to the length of the step which he was required to take or the
character of the platform where he was alighting. Our conclusion is that the conduct of
the plaintiff in undertaking to alight while the train was yet slightly under way was not
characterized by imprudence and that therefore he was not guilty of contributory
negligence.
The evidence shows that the plaintiff, at the time of the accident, was earning P25 a
month as a copyist clerk, and that the injuries he has suffered have permanently disabled
him from continuing that employment. Defendant has not shown that any other gainful
occupation is open to plaintiff. His expectancy of life, according to the standard mortality
tables, is approximately thirty-three years. We are of the opinion that a fair compensation
for the damage suffered by him for his permanent disability is the sum of P2,500, and
that he is also entitled to recover of defendant the additional sum of P790.25 for medical
attention, hospital services, and other incidental expenditures connected with the
treatment of his injuries.
The decision of the lower court is reversed, and judgment is hereby rendered plaintiff for
the sum of P3,290.25, and for the costs of both instances. So ordered.
Arellano, C. J., Torres, Street, and Avanceña, JJ., concur.
Malcolm, J. , dissents with whom concurs Johnson, J.
DISSENTING OPINION
MALCOLM, J., dissenting:

32
[ GR No. 34840, Sep 23, 1931 ] one of his children, whom he designates or permits  to run it, where the car is  occupied
NARCISO GUTIERREZ v. BONIFACIO GUTIERREZ + and being used at the time of the injury for the pleasure of other members of the owner's
DECISION family than the child driving it.  The theory of the law is that the running of the machine
56 Phil. 177 by a child to carry other members of the family is within the scope of  the  owner's
MALCOLM, J.: business,  so that he is liable for the negligence of the  child because of the relationship of
This is an action brought by the plaintiff in the Court of First Instance  of Manila against master and  servant.  (Huddy  On Automobiles,  6th ed., sec. 660; Missell vs.  Hayes
the five defendants, to recover damages  in  the  amount  of P10,000, for physical injuries [1914], 91 Atl., 322.)
suffered as a result of an  automobile accident.  On judgment being rendered as prayed 
for by the  plaintiff, both sets of defendants appealed. The liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo
Velasco rests on a different basis, namely, that of  contract which, we think, has been
On February 2,1930, a passenger truck and an automobile of private ownership collided sufficiently demonstrated  by the  allegations  of the complaint, not controverted, and the
while attempting to pass each other on the Talon  bridge on the Manila South Road in the evidence.  The reason for this conclusion reaches to the findings of the trial court
municipality  of  Las Piñas,  Province  of  Rizal.  The truck was driven by the chauffeur concerning the position of the truck on the bridge, the speed in operating the machine,
Abelardo Velasco, and was owned by Saturnino Cortez.   The  automobile was being and the lack of care employed by the chauffeur.  While these  facts are not  as  clearly
operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacio's evidenced as are those which convict the other defendant, we nevertheless hesitate to
father and mother, Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father disregard the points emphasized by the trial judge.   In its broader  aspects,  the case is
was not in the car, but the mother, together with several other members of the Gutierrez one of two drivers approaching a narrow bridge from  opposite directions, with neither
family, seven in  all, were accommodated therein.  A passenger in the autobus, by the being willing to slow up and give the right of way  to the other, with the inevitable result
name of Narciso  Gutierrez,  was en route from San Pablo, Laguna, to Manila.   The of a collision and an accident.
collision between the bus and the automobile resulted in Narciso Gutierrez suffering a
fractured right leg which required medical attendance  for a considerable period of time, The defendants Velasco and Cortez further contend that there existed  contributory
and which even at the date of the trial appears  not to have healed properly. negligence on the part of the plaintiff, consisting principally of his keeping his foot
outside the  truck, which occasioned his injury.  In this  connection,  it is sufficient to
It is conceded that the  collision  was caused by negligence pure and simple.  The state  that, aside from the  fact that the defense of contributory negligence was not
difference between the parties is that, while the plaintiff blames both sets of defendants, pleaded, the evidence bearing out this theory  of the case is contradictory in the extreme
and the owner of the passenger truck blames the automobile, and the owner of the and leads us far afield into speculative matters.
automobile, in turn, blames the truck.  We have given close attention to these highly
debatable points, and having done so, a majority  of  the court are of the opinion that the The last subject for consideration relates to  the amount of the award.   The appellee
findings of the trial judge on all controversial questions of fact find sufficient support in suggests that the amount  could justly be raised to P16,517, but  naturally is not serious in
the record, and so should be maintained.  With this general statement set down, we turn asking for this sum, since no appeal was taken by him from the judgment.  The other
to consider the respective legal obligations of the defendants. parties unite in challenging the award of P10,000, as excessive.  All facts considered,
including actual expenditures and damages for the injury to the leg of the plaintiff, which 
In amplification of so much of the above pronouncement as  concerns  the Gutierrez  may cause him permanent lameness, in  connection  with other  adjudications of this
family, it  may  be explained that the youth Bonifacio was an incompetent chauffeur, that court, lead us to conclude that a total sum for the plaintiff of P5,000 would be fair  and 
he was driving at an excessive rate of speed, and that, on approaching  the bridge  and  reasonable.  The  difficulty in approximating  the damages by  monetary compensation is
the truck, he  lost his head and so contributed by  his negligence to the accident.  The well elucidated by the divergence of opinion  among the members of the court, three of
guaranty given by the father at the time the son was granted a license to operate motor  whom have inclined to the view that P3,000  would be amply sufficient, while a fourth
vehicles made the father responsible for the acts of his  son.  Based on these facts, member has argued that  P7,500  would be none  too much.
pursuant to the provisions of article 1903 of the Civil Code, the father alone and not the
minor or the mother, would be liable for the damages caused by the minor. In consonance with the foregoing rulings, the judgment appealed from will be modified, 
and the  plaintiff will  have judgment in his favor against the defendants Manuel
We are here dealing with the civil law liability of parties for obligations which  arise Gutierrez, Abelardo Velasco, and Saturnino Cortez, jointly and severally,  for the sum of
from fault or negligence.  At the same time, we believe that,  as has been done  in other P5,000,  and the costs of both instances.
cases,  we can take  cognizance  of the common  law rule on the same subject.  In the
United States, it is uniformly held that the head of a house, the owner of an automobile, Avanceña, C. J., Johnson, Street, Villamor, Ostrand, Romualdez, and Imperial,
who maintains it for the general use of his family is liable for its negligent operation by JJ., concur.

33
 (HSBCL-SRP, plaintiff below). The HSBCL-SRP is a retirement plan established by
SECOND DIVISION HSBC through its Board of Trustees for the benefit of the employees.
   
  On October 1, 1990, petitioner [Editha] Broqueza obtained a car loan in the amount of
HONGKONG AND SHANGHAI   G.R. No. 178610 Php175,000.00. On December 12, 1991, she again applied and was granted an appliance
BANKING CORP., LTD. STAFF    loan in the amount of Php24,000.00. On the other hand, petitioner Gerong applied and
RETIREMENT PLAN, (now HSBC   Present: was granted an emergency loan in the amount of Php35,780.00 on June 2, 1993. These
Retirement Trust Fund, Inc.)    loans are paid through automatic salary deduction.
Petitioner,     
    CARPIO, J., Chairperson, Meanwhile [in 1993], a labor dispute arose between HSBC and its employees.Majority of
  NACHURA, HSBCs employees were terminated, among whom are petitioners Editha Broqueza and
  PERALTA, Fe Gerong. The employees then filed an illegal dismissal case before the National Labor
  ABAD, and Relations Commission (NLRC) against HSBC. The legality or illegality of such
- versus - MENDOZA, JJ. termination is now pending before this appellate Court in CA G.R. CV No. 56797,
     entitled Hongkong Shanghai Banking Corp. Employees Union, et al. vs. National Labor
  Relations Commission, et al.
SPOUSES BIENVENIDO AND EDITHA   Promulgated:  
BROQUEZA,    Because of their dismissal, petitioners were not able to pay the monthly amortizations of
Respondents.   November 17, 2010 their respective loans. Thus, respondent HSBCL-SRP considered the accounts of
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x petitioners delinquent. Demands to pay the respective obligations were made upon
  petitioners, but they failed to pay.[6]
   
DECISION HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro L.
  Custodio, filed Civil Case No. 52400 against the spouses Broqueza on 31 July 1996.On
CARPIO, J.: 19 September 1996, HSBCL-SRP filed Civil Case No. 52911 against Gerong.Both suits
  were civil actions for recovery and collection of sums of money.
G.R. No. 178610 is a petition for review[1] assailing the Decision[2] promulgated on 30  
March 2006 by the Court of Appeals (CA) in CA-G.R. SP No. 62685. The appellate court The Metropolitan Trial Courts Ruling
granted the petition filed by Fe Gerong (Gerong) and Spouses Bienvenido and Editha  
Broqueza (spouses Broqueza) and dismissed the consolidated complaints filed by On 28 December 1999, the MeTC promulgated its Decision[7] in favor of HSBCL-
Hongkong and Shanghai Banking Corporation, Ltd. - Staff Retirement Plan (HSBCL- SRP. The MeTC ruled that the nature of HSBCL-SRPs demands for payment is civil and
SRP) for recovery of sum of money. The appellate court reversed and set aside the has no connection to the ongoing labor dispute. Gerong and Editha Broquezas
Decision[3] of Branch 139 of the Regional Trial Court of Makati City (RTC) in Civil Case termination from employment resulted in the loss of continued benefits under their
No. 00-787 dated 11 December 2000, as well as its Order[4] dated 5 September 2000. The retirement plans. Thus, the loans secured by their future retirement benefits to which they
RTCs decision affirmed the Decision[5] dated 28 December 1999 of Branch 61 of the are no longer entitled are reduced to unsecured and pure civil obligations. As unsecured
Metropolitan Trial Court (MeTC) of Makati City in Civil Case No. 52400 for Recovery and pure obligations, the loans are immediately demandable.
of a Sum of Money.  
  The dispositive portion of the MeTCs decision reads:
The Facts  
  WHEREFORE, premises considered and in view of the foregoing, the Court finds that
The appellate court narrated the facts as follows: the plaintiff was able to prove by a preponderance of evidence the existence and
  immediate demandability of the defendants loan obligations as judgment is hereby
Petitioners Gerong and [Editha] Broqueza (defendants below) are employees of rendered in favor of the plaintiff and against the defendants in both cases, ordering the
Hongkong and Shanghai Banking Corporation (HSBC). They are also members of latter:
respondent Hongkong Shanghai Banking Corporation, Ltd. Staff Retirement Plan  

34
1. In Civil Case No. 52400, to pay the amount of Php116,740.00 at six percent interest  
per annum from the time of demand and in Civil Case No. 52911, to pay the amount of SO ORDERED.[11]
Php25,344.12 at six percent per annum from the time of the filing of these cases, until the  
amount is fully paid;  
  HSBCL-SRP filed a motion for reconsideration which the CA denied for lack of merit in
2. To pay the amount of Php20,000.00 each as reasonable attorneys fees; its Resolution[12] promulgated on 19 June 2007.
   
3. Cost of suit. On 6 August 2007, HSBCL-SRP filed a manifestation withdrawing the petition against
  Gerong because she already settled her obligations. In a Resolution[13] of this Court
SO ORDERED.[8] dated 10 September 2007, this Court treated the manifestation as a motion to withdraw
  the petition against Gerong, granted the motion, and considered the case against Gerong
  closed and terminated.
Gerong and the spouses Broqueza filed a joint appeal of the MeTCs decision before the  
RTC. Gerongs case was docketed Civil Case No. 00-786, while the spouses Broquezas Issues
case was docketed as Civil Case No. 00-787.  
   
The Regional Trial Courts Ruling HSBCL-SRP enumerated the following grounds to support its Petition:
   
The RTC initially denied the joint appeal because of the belated filing of Gerong and the I. The Court of Appeals has decided a question of substance in a way not in accord with
spouses Broquezas memorandum. The RTC later reconsidered the order of denial and law and applicable decisions of this Honorable Court; and
resolved the issues in the interest of justice. II. The Court of Appeals has departed from the accepted and usual course of judicial
  proceedings in reversing the decision of the Regional Trial Court and the Metropolitan
On 11 December 2000, the RTC affirmed the MeTCs decision in toto. [9] Trial Court.[14]
   
The RTC ruled that Gerong and Editha Broquezas termination from employment  
disqualified them from availing of benefits under their retirement plans. As a The Courts Ruling
consequence, there is no longer any security for the loans. HSBCL-SRP has a legal right  
to demand immediate settlement of the unpaid balance because of Gerong and Editha The petition is meritorious. We agree with the rulings of the MeTC and the RTC.
Broquezas continued default in payment and their failure to provide new security for their The Promissory Notes uniformly provide:
loans. Moreover, the absence of a period within which to pay the loan allows HSBCL-  
SRP to demand immediate payment. The loan obligations are considered pure PROMISSORY NOTE
obligations, the fulfillment of which are demandable at once.  
Gerong and the spouses Broqueza then filed a Petition for Review under Rule 42 before P_____ Makati, M.M. ____ 19__
the CA.  
  FOR VALUE RECEIVED, I/WE _____ jointly and severally promise to pay to THE
The Ruling of the Court of Appeals HSBC RETIREMENT PLAN (hereinafter called the PLAN) at its office in the
  Municipality of Makati, Metro Manila, on or before until fully paid the sum of
On 30 March 2006, the CA rendered its Decision[10] which reversed the 11 December PESOS ___ (P___) Philippine Currency without discount, with interest from date hereof
2000 Decision of the RTC. The CA ruled that the HSBCL-SRPs complaints for recovery at the rate of Six per cent (6%) per annum, payable monthly.
of sum of money against Gerong and the spouses Broqueza are premature as the loan  
obligations have not yet matured. Thus, no cause of action accrued in favor of HSBCL- I/WE agree that the PLAN may, upon written notice, increase the interest rate stipulated
SRP. The dispositive portion of the appellate courts Decision reads as follows: in this note at any time depending on prevailing conditions.
   
WHEREFORE, the assailed Decision of the RTC is REVERSED and SET ASIDE.A new I/WE hereby expressly consent to any extensions or renewals hereof for a portion or
one is hereby rendered DISMISSING the consolidated complaints for recovery of sum of whole of the principal without notice to the other(s), and in such a case our liability shall
money. remain joint and several.

35
  Makati City in Civil Case No. 52400 against the spouses Bienvenido and Editha
In case collection is made by or through an attorney, I/WE jointly and severally agree to Broqueza, are AFFIRMED. Costs against respondents.
pay ten percent (10%) of the amount due on this note (but in no case less than P200.00)  
as and for attorneys fees in addition to expenses and costs of suit. SO ORDERED.
 
In case of judicial execution, I/WE hereby jointly and severally waive our rights under
the provisions of Rule 39, Section 12 of the Rules of Court.[15]
 
In ruling for HSBCL-SRP, we apply the first paragraph of Article 1179 of the Civil Code:
Art. 1179. Every obligation whose performance does not depend upon a future or
uncertain event, or upon a past event unknown to the parties, is demandable at once.
 
x x x. (Emphasis supplied.)
 
 
We affirm the findings of the MeTC and the RTC that there is no date of payment
indicated in the Promissory Notes. The RTC is correct in ruling that since the Promissory
Notes do not contain a period, HSBCL-SRP has the right to demand immediate
payment. Article 1179 of the Civil Code applies. The spouses Broquezas obligation to
pay HSBCL-SRP is a pure obligation. The fact that HSBCL-SRP was content with the
prior monthly check-off from Editha Broquezas salary is of no moment. Once Editha
Broqueza defaulted in her monthly payment, HSBCL-SRP made a demand to enforce a
pure obligation.
 
In their Answer, the spouses Broqueza admitted that prior to Editha Broquezas dismissal
from HSBC in December 1993, she religiously paid the loan amortizations, which HSBC
collected through payroll check-off.[16] A definite amount is paid to HSBCL-SRP on a
specific date. Editha Broqueza authorized HSBCL-SRP to make deductions from her
payroll until her loans are fully paid.Editha Broqueza, however, defaulted in her monthly
loan payment due to her dismissal. Despite the spouses Broquezas protestations, the
payroll deduction is merely a convenient mode of payment and not the sole source of
payment for the loans. HSBCL-SRP never agreed that the loans will be paid only through
salary deductions. Neither did HSBCL-SRP agree that if Editha Broqueza ceases to be an
employee of HSBC, her obligation to pay the loans will be suspended. HSBCL-SRP can
immediately demand payment of the loans at anytime because the obligation to pay has
no period. Moreover, the spouses Broqueza have already incurred in default in paying the
monthly installments.
Finally, the enforcement of a loan agreement involves debtor-creditor relations founded
on contract and does not in any way concern employee relations. As such it should be
enforced through a separate civil action in the regular courts and not before the Labor
Arbiter.[17]
 
WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CA-
G.R. SP No. 62685 promulgated on 30 March 2006 is REVERSED and SET
ASIDE. The decision of Branch 139 of the Regional Trial Court of Makati City in Civil
Case No. 00-787, as well as the decision of Branch 61 of the Metropolitan Trial Court of

36
SECOND DIVISION note ."3 After which, came the ruling that the wording of the promissory note being "upon
  demand," the obligation was immediately due. Since it was dated January 30, 1952, it
G.R. No. L-29900 June 28, 1974 was clear that more "than ten (10) years has already transpired from that time until to
IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA, date. The action, therefore, of the creditor has definitely prescribed." 4 The result, as above
Deceased, GEORGE PAY, petitioner-appellant,  noted, was the dismissal of the petition.
vs. In an exhaustive brief prepared by Attorney Florentino B. del Rosario, petitioner did
SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee. assail the correctness of the rulings of the lower court as to the effect of the refusal of the
Florentino B. del Rosario for petitioner-appellant. surviving spouse of the late Justo Palanca to be appointed as administratrix, as to the
Manuel V. San Jose for oppositor-appellee. property sought to be administered no longer belonging to the debtor, the late Justo
Palanca, and as to the rights of petitioner-creditor having already prescribed. As noted at
FERNANDO, J.:p the outset, only the question of prescription need detain us in the disposition of this
There is no difficulty attending the disposition of this appeal by petitioner on questions of appeal. Likewise, as intimated, the decision must be affirmed, considering the clear tenor
law. While several points were raised, the decisive issue is whether a creditor is barred by of the promissory note.
prescription in his attempt to collect on a promissory note executed more than fifteen From the manner in which the promissory note was executed, it would appear that
years earlier with the debtor sued promising to pay either upon receipt by him of his share petitioner was hopeful that the satisfaction of his credit could he realized either through
from a certain estate or upon demand, the basis for the action being the latter alternative. the debtor sued receiving cash payment from the estate of the late Carlos Palanca
The lower court held that the ten-year period of limitation of actions did apply, the note presumptively as one of the heirs, or, as expressed therein, "upon demand." There is
being immediately due and demandable, the creditor admitting expressly that he was nothing in the record that would indicate whether or not the first alternative was fulfilled.
relying on the wording "upon demand." On the above facts as found, and with the law What is undeniable is that on August 26, 1967, more than fifteen years after the execution
being as it is, it cannot be said that its decision is infected with error. We affirm. of the promissory note on January 30, 1952, this petition was filed. The defense
From the appealed decision, the following appears: "The parties in this case agreed to interposed was prescription. Its merit is rather obvious. Article 1179 of the Civil Code
submit the matter for resolution on the basis of their pleadings and annexes and their provides: "Every obligation whose performance does not depend upon a future or
respective memoranda submitted. Petitioner George Pay is a creditor of the Late Justo uncertain event, or upon a past event unknown to the parties, is demandable at once."
Palanca who died in Manila on July 3, 1963. The claim of the petitioner is based on a This used to be Article 1113 of the Spanish Civil Code of 1889. As far back as Floriano
promissory note dated January 30, 1952, whereby the late Justo Palanca and Rosa v. Delgado,5 a 1908 decision, it has been applied according to its express language. The
Gonzales Vda. de Carlos Palanca promised to pay George Pay the amount of P26,900.00, well-known Spanish commentator, Manresa, on this point, states: "Dejando con acierto,
with interest thereon at the rate of 12% per annum. George Pay is now before this Court, el caracter mas teorico y grafico del acto, o sea la perfeccion de este, se fija, para
asking that Segundina Chua vda. de Palanca, surviving spouse of the late Justo Palanca, determinar el concepto de la obligacion pura, en el distinctive de esta, y que es
he appointed as administratrix of a certain piece of property which is a residential consecuencia de aquel: la exigibilidad immediata."6
dwelling located at 2656 Taft Avenue, Manila, covered by Tax Declaration No. 3114 in The obligation being due and demandable, it would appear that the filing of the suit after
the name of Justo Palanca, assessed at P41,800.00. The idea is that once said property is fifteen years was much too late. For again, according to the Civil Code, which is based on
brought under administration, George Pay, as creditor, can file his claim against the Section 43 of Act No. 190, the prescriptive period for a written contract is that of ten
administratrix."1 It then stated that the petition could not prosper as there was a refusal on years.7 This is another instance where this Court has consistently adhered to the express
the part of Segundina Chua Vda. de Palanca to be appointed as administratrix; that the language of the applicable norm.8 There is no necessity therefore of passing upon the
property sought to be administered no longer belonged to the debtor, the late Justo other legal questions as to whether or not it did suffice for the petition to fail just because
Palanca; and that the rights of petitioner-creditor had already prescribed. The promissory the surviving spouse refuses to be made administratrix, or just because the estate was left
note, dated January 30, 1962, is worded thus: " `For value received from time to time with no other property. The decision of the lower court cannot be overturned.
since 1947, we [jointly and severally promise to] pay to Mr. [George Pay] at his office at WHEREFORE, the lower court decision of July 24, 1968 is affirmed. Costs against
the China Banking Corporation the sum of [Twenty Six Thousand Nine Hundred Pesos] George Pay.
(P26,900.00), with interest thereon at the rate of 12% per annum upon receipt by either of
the undersigned of cash payment from the Estate of the late Don Carlos Palanca or upon
demand'. . . . As stated, this promissory note is signed by Rosa Gonzales Vda. de Carlos
Palanca and Justo Palanca."2 Then came this paragraph: "The Court has inquired whether
any cash payment has been received by either of the signers of this promissory note from
the Estate of the late Carlos Palanca. Petitioner informed that he does not insist on this
provision but that petitioner is only claiming on his right under the promissory

37
44 Phil. 874 sum of fifty thousand pesos (P50,000), the price of the said goods, with legal interest
thereon from July 26, 1919, and costs."
[ GR No. 16570, Mar 09, 1922 ] Both parties appeal from this judgment, each assigning several errors in the findings of
the lower court.
SMITH v. VICENTE SOTELO MATTI + The principal point at issue in this case is whether or not, under the contracts entered into
DECISION and the circumstances established in the record, the plaintiff has fulfilled, in due time, its
obligation to bring the goods in question to Manila. If it has, then it is entitled to the relief
ROMUALDEZ, J.: prayed for; otherwise, it must be held guilty of delay and liable for the consequences
In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered thereof.
into contracts whereby the former obligated itself to sell, and the latter to purchase from To solve this question, it is necessary to determine what period was fixed for the delivery
it/two steel tanks, for the total price of twenty-one thousand pesos (P21,000), the same to of the goods.
be shipped from New York and delivered at Manila "within three or four months;" two As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar,
expellers at the price of twenty-five thousand pesos (P25,000) each, which were to be and in both of them we find this clause:
shipped from San Francisco in the month of September, 1918, or as soon as possible; and "To be delivered within 3 or 4 months-The promise or indication of shipment carries with
two electric motors at the price of two thousand pesos (P2,000) each, as to the delivery of it absolutely no obligation on our part-Government regulations, railroad embargoes, lack
which stipulation was made, couched in these words: "Approximate delivery within of vessel space, the exigencies of the requirements of the United States Government, or a
ninety days.-This is not guaranteed." number of causes may act to entirely vitiate the indication of shipment as stated. In other
The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of words, the order is accepted on the basis of shipment at Mill's convenience, time of
October, 1918; and the motors on the 27th of February, 1919. shipment bejng merely an indication of what we hope to accomplish."
The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, In the contract Exhibit C (page 63 of the record), with reference to the expellers, the
but Mr. Sotelo refused to receive them and to pay the prices stipulated. following stipulation appears:
The plaintiff brought suit against the defendant based on four separate causes of action, "The following articles, hereinbelow more particularly described, to be shipped at San
alleging, among other facts, that it immediately notified the defendant of the arrival of the Francisco within the month of September /18, or as soon as possible.-Two Anderson oil
goods, and asked instructions from him as to the delivery thereof, and that the defendant expellers * * *."
refused to receive any of them and to pay their price. The plaintiff, further, alleged that And in the contract relative to the motors (Exhibit D, page 64, rec.) the following
the expellers and the motors were in good condition. (Amended complaint, pages 16-30, appears:
Bill of Exceptions.) "Approximate delivery within ninety days.-This is not guaranteed.-This sale is subject to
In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining our being, able to obtain Priority Certificate, subject to the United States Government
and By-Products Co., Inc., denied the plaintiff's allegations as to the shipment of these requirements and also subject to confirmation of manufacturers."
goods and their arrival at Manila, the notification to the defendant, Mr. Sotelo, the latter's In all these contracts, there is a final qlause as follows:
refusal to receive them and pay their price, and the good condition of the expellers and "The sellers are not responsible for delays caused by fires, riots on land or on the sea,
the motors, alleging as special defense that Mr. Sotelo had made the contracts in question strikes or other causes known as 'Force Majeure' entirely beyond the control of the sellers
as manager of the intervenor, the Manila Oil Refining and By-products Co., Inc., which or their representatives."
fact was known to the plaintiff, and that "it was only in May, 1919, that it notified the Under these stipulations, it cannot be said that any definite date was fixed for the delivery
intervenor that said tanks had arrived, the motors and the expellers having arrived of the goods. As to the tanks, the agreement was that the delivery was to be made "within
incomplete and long after the date stipulated." As a counterclaim or set-off, they also 3 or 4 months," but that period was subject to the contingencies referred to in a
allege that, as a consequence of the plaintiff's delay in making delivery of the goods, subsequent clause. With regard to the expellers, the contract says "within the month of
which the intervenor intended to use in the manufacture of cocoanut oil, the intervenor September, 1918," but to this is added "or as soon as possible." And with reference to the
suffered damages in the sums of one hundred sixteen thousand seven hundred eighty- motors, the contract contains this expression, "Approximate; delivery within ninety
three pesos and ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and days," but right after this, it is noted that "this is not guaranteed."
twenty-one thousand two hundred and fifty pesos (P21,250) on account of the expeliers The oral evidence falls short of fixing such period.
and the motors not having arrived in due time. From the record it appears that these contracts were executed at,the time of the world war
The case having been tried, the court below absolved the defendants from the complaint when there existed rigid restrictions on the export from the United States of articles like
insofar/as the tanks and the electric motors were concerned, but rendered judgment the machinery jn question, and maritime, as well as railroad, transportation was difficult,
against them, ordering them to "receive the aforesaid expeliers and pay the plaintiff the which fact was known to the parties; hence clauses were inserted in the contracts,
regarding "Government regulations, railroad embargoes, lack of vessel space, the

38
exigencies of the requirements of the United States Government," in connection with the "Second. That when the fulfillment of the condition does not depend on the will of the
tanks and "Priority Certificate, subject to the United States Government requirements," obligor, but on that of a third person, who can in no way be compelled to carry it out, the
with respect to the motors. At the time of the execution of the contracts, the parties were obligor's part of the contract is complied with if he does all that is in his power, and has
not unmindful of the contingency of the United States Government not allowing the the right to demand performance of the contract by the other party, which is the doctrine
export of the goods, nor of the fact that the other foreseen circumstances therein stated laid down also by the supreme court." (The same publication [1871], vol. 23, page 492.)
might prevent it. It is sufficiently proven in the record that the plaintiff has made all the efforts it could
Considering these contracts in the light of the civil law, we cannot but conclude that the possibly be expected to make under the circumstances, to bring the goods in question to
term which the parties attempted to fix is so uncerjmn that one cannot tell just whether, as Manila, as soon as possible. And, as a matter of fact, through such efforts, it succeeded in
a matter of fact, those articles could be brought to Manila or not. If that is the case, as we importing them and placing them at the disposal of the defendant, Mr. Sotelo, in April,
think it is, the obligation must be regarded as conditional. 1919. Under the doctrine just cited, which, as we have seen, is of the same juridical origin
"Obligations for the performance of which a day certain has been fixed shall be as our Civil Code, it is obvious that the plaintiff has complied with its obligation.
demandable only when the day arrives. In connection with this obligation to deliver, occurring in a contract of sale like those in
"A day certain is understood to be one which must necessarily arrive, even though its question, the rule in North America is that when the time of delivery is not fixed in the
date be unknown. contract, time is regarded unessential.
"If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is "When the time of delivery is not fixed or is stated in general and indefinite terms, time is
conditional and shall be governed by the rules of the next preceding section" (referring to not of the essence of the contract." (35 Cyc., 179. And see Montgomery vs. Thompson,
pure and conditional obligations). (Art. 1125, Civ. Code.) 152 Cal, 319; 92 Pac, 866; O'Brien vs. Higley, 162 Ind., 316; 70 N. E., 242; Pratt vs.
And as the export of the machinery in question was, as stated in the contract, contingent Lincoln [Me. 1888], 13 Atl., 689; White vs. McMillan, 114 N. C, 349; 19 S. E., 234;
upon the sellers obtaining certificate of priority and permission of the United States Ballantyne vs. Watson, 30 U. C. C. P., 529.)
Government, subject to the rules and regulations, as well as to railroad embargoes, then In such cases, the delivery must be made within a reasonable time.
the delivery was subject to a condition the fulfillment of which depended not only upon "The law implies, however, that if no time is fixed, delivery shall be made within a
the effort of the herein plaintiff, but upon the will of third persons who could in no way reasonable time, in the absence of anything to show that an immediate delivery is
be compelled to fulfill the condition. In cases like this, which are not expressly provided intended." (35 Cyc, 179, 180.)
for, but impliedly covered, by the Civil Code, the obligor will be deemed to have "When the contract provides for delivery 'as soon as possible' the seller is entitled to a
sufficiently performed his part of the obligation, if he has done all that was in his power, reasonable time, in view of all the circumstances, such as the necessities of manufacture,
even if the condition has not been fulfilled in reality. or of putting the goods in condition for delivery. The term does not mean immediately or
"In such cases, the decisions prior to the Civil Code have held that the obligee having that the seller must stop all his other work and devote himself to that particular order. But
done all that was in his power, was entitled to enforce performance of the obligation. This the seller must nevertheless act with all reasonable diligence or without unreasonable
performance, which is fictitious-not real-is not expressly authorized by the Code, which delay. It has been held that a requirement that the shipment of goods should be the
limits itself only to declare valid those conditions and the obligation thereby affected; but 'earliest possible' must be construed as meaning that the goods should be sent as soon as
it is neither disallowed, and the Code being thus silent, the old view can be maintained as the seller could possibly send them, and that it signified rather more than that the goods
a doctrine." (Manresa's commentaries on the Civil Code [1907], vol. 8, page 132.) should be sent within a reasonable time.
The decisions referred to by Mr. Manresa are those rendered by the supreme court of "Delivery 'Shortly.'-In a contract for the sale of personal property to be delivered 'shortly/
Spain on November 19, 1866, and February 23, 1871. it is the duty of the seller to tender delivery within a reasonable time and if he tenders
In the former it is held: delivery after such time the buyer may reject.
"First. That when the fulfillment of the condition does not depend on the will of the ****
obligor, but on that of a third person who can in no way be compelled to carry it out, and "The question as to what is a reasonable time for the delivery of the goods by the seller is
it is found by the lower court that the obligor has, done all in his power to comply with to be determined by the circumstances attending the particular transaction, such as the
the obligation, the judgment of the said court, ordering the other party to comply with his character of the goods, and the purpose for which they are intended, the ability of the
part of the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10, of seller to produce the goods if they are to be manufactured, the facilities available for
the 'Novisima Recopilacion,' or Law 12, Tit. 11, of Partida 5, when in the said finding of transportation, and the distance the goods must be carried, and the usual course of
the lower court, no law or precedent is alleged to have been violated." (Jurisprudencia business in the particular trade." (35 Cyc, 181-184.)
Civil published by the directors of the Revista General de Legislation y Jurisprudencia Whether or not the delivery of the machinery in litigation was offered to the defendant
[1866], vol. 14, page 656.) within a reasonable time, is a question to be determined by the court.
In the second decision, the following doctrine is laid down: "Applications of rule.-A contract for delivery 'about Nov. 1' is complied with by delivery
on November 10 (Whilte vs. McMillan, 114 N. C, 349; 19 S. E., 234. And see O'Brien

39
vs. Higley, 162 Ind., 316; 70 N. E., 242); and a contract to deliver 'about the last of May Wherefore, the judgment appealed from is modified, and the defendant, Mr. Vicente
or June' is complied with by delivery on the last day of June (New Bedford Copper Co. Sotelo Matti, sentenced to accept and receive from the plaintiff the tanks, the expellers
vs. Southard, 95 Me., 209; 49 Atl., 1062, holding also that if the goods were to be used and the motors in question, and to pay the, plaintiff the sum of ninety-six thousand pesos
for a ship to arrive 'about April' and the vessel was delayed, the seller might deliver (P96,000), with legal interest thereon from July 17, 1919, the date of the filing of the
within a reasonable time after her arrival, although such reasonable time extended beyond complaint, until fully paid, and the costs of both instances. So ordered.
the last of June) ; so under a contract to deliver goods sold 'about June, 1906', delivery
may be made during the month of June, or in a reasonable time thereafter (Loomis vs.
Norman Printers' Supply Co., 81 Conn., 343; 71 Atl., 358)," (35 Cyc., 18,0, note 16.)
The record shows, as we have stated, that the plaintiff did all within its power to have the
machinery arrive at Manila as soon as possible, and immediately upon its arrival it
notified the purchaser of the fact and offered to deliver it to him. Taking these
circumstances into account, we hold that the said machinery was brought to Manila by
the plaintiff within a reasonable time.
Therefore, the plaintiff has not been guilty of any delay in the fulfillment of its
obligation, and, consequently, it could not have incurred any of the liabilities mentioned
by the intervenor in its counterclaim or set-off.
Besides, it does not appear that the intervenor, the Manila Oil Refining and By-Products
Co., Inc., has in any way taken part in these contracts. These contracts were signed by the
defendant, Mr, Vicente Sotelo, in his individual capacity and own name. If he was then
acting as agent of the intervenor, the latter has no right of action against the herein
plaintiff.
"When an agent acts in his own name, the principal shall have no right of action against
the persons with whom the agent has contracted, or such persons against the principal.
"In such case, the agent is directly liable to the person with whom he has contracted, as if
the transaction were his own. Cases involving things belonging to the principal are
excepted.
"The provisions of this article shall be understood to be without prejudice to actions
between principal and Agent." (Civil Code, art. 1717.)
"When the agent transacts business in his own name, it shall not be necessary for him to
state who is the principal and he shall be directly liable, as if the business were for his
own account, to the persons with whom he transacts the same, said persons not having
any right of action against the principal, nor the latter against the former, the liabilities of
the principal and of the agent to each other always being reserved." (Code of Com., art.
246.)
"If the agent transacts business in the name of the principal, he must state that fact; and if
the contract is in writing, he must state it therein or in the subscribing clause, giving the
name, surname, and domicile of said principal.
"In the case prescribed in the foregoing paragraph, the contract and the actions arising
therefrom shall be effective between the principal and the persons or person who may
have transacted business with the agent; but the latter shall be liable to the persons with
whom he transacted business during the time he does not prove the commission, if the
principal should deny it, without prejudice to the obligation and proper actions between
the principal and agent." (Code of Com., art. 247.)
The foregoing provisions lead us to the conclusion that the plaintiff is entitled to the relief
prayed for in its complaint, and that the interverior has no right of action, the damages
alleged to have been sustained by it not being imputable to the plaintiff.

40
 SUPREME COURT; ONLY QUESTIONS OF LAW REVIEWABLE.— Where the
EN BANC appellant directly appeals from the decision of the trial court to the Supreme Court on
questions of law, he is bound by the judgment of the court a quo on its findings of fact.
[G.R. No. L-27454. April 30, 1970.]

ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO DECISION

GONZALES, Defendant-Appellee.

Chaves, Elio, Chaves & Associates, for Plaintiff-Appellant.

REYES, J.B.L., J.:
Sulpicio E. Platon, for Defendant-Appellee.
This is a direct appeal by the party who prevailed in a suit for breach of oral contract and
recovery of damages but was unsatisfied with the decision rendered by the Court of First
SYLLABUS
Instance of Manila, in its Civil Case No. 65138, because it awarded him only P31.10 out
of his total claim of P690 00 for actual, temperate and moral damages and attorney’s fees.

1. CIVIL LAW; CONTRACTS; BREACH OF CONTRACT FOR NON- The appealed judgment, which is brief, is hereunder quoted in full:jgc:chanrobles.com.ph
PERFORMANCE; FIXING OF PERIOD BEFORE FILING OF COMPLAINT FOR
NON-PERFORMANCE, ACADEMIC.— Where the time for compliance had expired "In the early part of July, 1963, the plaintiff delivered to the defendant, who is a
and there was breach of contract by non-performance, it was academic for the plaintiff to typewriter repairer, a portable typewriter for routine cleaning and servicing. The
have first petitioned the court to fix a period for the performance of the contract before defendant was not able to finish the job after some time despite repeated reminders made
filing his complaint. by the plaintiff. The defendant merely gave assurances, but failed to comply with the
same. In October, 1963, the defendant asked from the plaintiff the sum of P6.00 for the
2. ID.; ID.; ID.; DEFENDANT CANNOT INVOKE ARTICLE 1197 OF THE CIVIL purchase of spare parts, which amount the plaintiff gave to the defendant. On October 26,
CODE OF THE PHILIPPINES.— Where the defendant virtually admitted non- 1963, after getting exasperated with the delay of the repair of the typewriter, the plaintiff
performance of the contract by returning the typewriter that he was obliged to repair in a went to the house of the defendant and asked for the return of the typewriter. The
non-working condition, with essential parts missing, Article 1197 of the Civil Code of the defendant delivered the typewriter in a wrapped package. On reaching home, the plaintiff
Philippines cannot be invoked. The fixing of a period would thus be a mere formality and examined the typewriter returned to him by the defendant and found out that the same
would serve no purpose than to delay. was in shambles, with the interior cover and some parts and screws missing. On October
29, 1963. the plaintiff sent a letter to the defendant formally demanding the return of the
3. ID.; ID.; ID.; DAMAGES RECOVERABLE; CASE AT BAR.— Where the missing parts, the interior cover and the sum of P6.00 (Exhibit D). The following day, the
defendant-appellee contravened the tenor of his obligation because he not only did not defendant returned to the plaintiff some of the missing parts, the interior cover and the
repair the typewriter but returned it "in shambles,’’ he is liable for the cost of the labor or P6.00.
service expended in the repair of the typewriter, which is in the amount of P58.75,
because the obligation or contract was to repair it. In addition, he is likewise liable under "On August 29, 1964, the plaintiff had his typewriter repaired by Freixas Business
Art. 1170 of the Code, for the cost of the missing parts, in the amount of P31.10, for in Machines, and the repair job cost him a total of P89.85, including labor and materials
his obligation to repair the typewriter he was bound, but failed or neglected, to return it in (Exhibit C).
the same condition it was when he received it.
"On August 23, 1965, the plaintiff commenced this action before the City Court of
4. ID.; ID.; ID.; CLAIMS FOR DAMAGES OR ATTORNEY’S FEES NOT Manila, demanding from the defendant the payment of P90.00 as actual and
RECOVERABLE; NOT ALLEGED OR PROVED IN INSTANT CASE.— Claims for compensatory damages, P100.00 for temperate damages, P500.00 for moral damages,
damages and attorney’s fees must be pleaded, and the existence of the actual basis thereof and P500.00 as attorney’s fees.
must be proved. As no findings of fact were made on the claims for damages and
attorney’s fees, there is no factual basis upon which to make an award therefor. "In his answer as well as in his testimony given before this court, the defendant made no
denials of the facts narrated above, except the claim of the plaintiff that the typewriter
5. REMEDIAL LAW; APPEALS; APPEAL FROM COURT OF FIRST INSTANCE TO was delivered to the defendant through a certain Julio Bocalin, which the defendant
41
denied allegedly because the typewriter was delivered to him personally by the plaintiff. compensation for the work he had already done. The time for compliance having
evidently expired, and there being a breach of contract by non-performance, it was
"The repair done on the typewriter by Freixas Business Machines with the total cost of academic for the plaintiff to have first petitioned the court to fix a period for the
P89.85 should not, however, be fully chargeable against the defendant. The repair performance of the contract before filing his complaint in this case. Defendant cannot
invoice, Exhibit C, shows that the missing parts had a total value of only P31.10. invoke Article 1197 of the Civil Code for he virtually admitted non-performance by
returning the typewriter that he was obliged to repair in a non-working condition, with
"WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff essential parts missing. The fixing of a period would thus be a mere formality and would
the sum of P31.10, and the costs of suit. serve no purpose than to delay (cf. Tiglao. Et. Al. V. Manila Railroad Co. 98 Phil. 18l).

"SO ORDERED."cralaw virtua1aw library It is clear that the defendant-appellee contravened the tenor of his obligation because he
not only did not repair the typewriter but returned it "in shambles", according to the
The error of the court a quo, according to the plaintiff-appellant, Rosendo O. Chaves, is appealed decision. For such contravention, as appellant contends, he is liable under
that it awarded only the value of the missing parts of the typewriter, instead of the whole Article 1167 of the Civil Code. jam quot, for the cost of executing the obligation in a
cost of labor and materials that went into the repair of the machine, as provided for in proper manner. The cost of the execution of the obligation in this case should be the cost
Article 1167 of the Civil Code, reading as follows:jgc:chanrobles.com.ph of the labor or service expended in the repair of the typewriter, which is in the amount of
P58.75. because the obligation or contract was to repair it.
"ART. 1167. If a person obliged to do something fails to do it, the same shall be executed
at his cost. In addition, the defendant-appellee is likewise liable, under Article 1170 of the Code, for
the cost of the missing parts, in the amount of P31.10, for in his obligation to repair the
This same rule shall be observed if he does it in contravention of the tenor of the typewriter he was bound, but failed or neglected, to return it in the same condition it was
obligation. Furthermore it may be decreed that what has been poorly done he when he received it.
undone."cralaw virtua1aw library
Appellant’s claims for moral and temperate damages and attorney’s fees were, however,
On the other hand, the position of the defendant-appellee, Fructuoso Gonzales, is that he correctly rejected by the trial court, for these were not alleged in his complaint (Record
is not liable at all, not even for the sum of P31.10, because his contract with plaintiff- on Appeal, pages 1-5). Claims for damages and attorney’s fees must be pleaded, and the
appellant did not contain a period, so that plaintiff-appellant should have first filed a existence of the actual basis thereof must be proved. 2 The appealed judgment thus made
petition for the court to fix the period, under Article 1197 of the Civil Code, within which no findings on these claims, nor on the fraud or malice charged to the appellee. As no
the defendant appellee was to comply with the contract before said defendant-appellee findings of fact were made on the claims for damages and attorney’s fees, there is no
could be held liable for breach of contract. factual basis upon which to make an award therefor. Appellant is bound by such
judgment of the court, a quo, by reason of his having resorted directly to the Supreme
Because the plaintiff appealed directly to the Supreme Court and the appellee did not Court on questions of law.
interpose any appeal, the facts, as found by the trial court, are now conclusive and non-
reviewable. 1  IN VIEW OF THE FOREGOING REASONS, the appealed judgment is hereby
modified, by ordering the defendant-appellee to pay, as he is hereby ordered to pay, the
The appealed judgment states that the "plaintiff delivered to the defendant . . . a portable plaintiff-appellant the sum of P89.85, with interest at the legal rate from the filing of the
typewriter for routine cleaning and servicing" ; that the defendant was not able to finish complaint. Costs in all instances against appellee Fructuoso Gonzales.
the job after some time despite repeated reminders made by the plaintiff" ; that the
"defendant merely gave assurances, but failed to comply with the same" ; and that "after Concepcion, C.J., Dizon, Makalintal, Zaldivar, Castro, Fernando, Teehankee and
getting exasperated with the delay of the repair of the typewriter", the plaintiff went to Villamor, JJ., concur.
the house of the defendant and asked for its return, which was done. The inferences
derivable from these findings of fact are that the appellant and the appellee had a Barredo, J., did not take part.
perfected contract for cleaning and servicing a typewriter; that they intended that the
defendant was to finish it at some future time although such time was not specified; and
that such time had passed without the work having been accomplished, far the defendant
returned the typewriter cannibalized and unrepaired, which in itself is a breach of his
obligation, without demanding that he should be given more time to finish the job, or

42
[ G.R. No. L-264, October 04, 1946 ] sole and exclusive will of one of the contracting parties (defendants in this case) the
VICENTE SINGSON ENCARNACION, PLAINTIFF AND APPELLEE, VS. JACINTA validity and fulfillment of the contract of lease, within the meaning of article 1256 of the
BALDOMAR ET AL., DEFENDANTS AND APPELLANTS. Civil Code, since the continuance and fulfillment of the contract would then depend
solely and exclusively upon their free and uncontrolled choice between continuing paying
DECISION the rentals or not, completely depriving the owner of all say in the matter. If this defense
HILADO, J.: were to be allowed, so long as defendants elected to continue the lease by continuing the
Vicente Singson Encarnacion, owner of the house numbered 589 Legarda Street, Manila, payment of the rentals, the owner would never be able to discontinue it; conversely,
some six years ago leased said house to Jacinta Baldomar and her son, Lefrado Fernando, although the owner should desire the lease to continue, the lessees could effectively
upon a month-to-month basis for the monthly rental of P35. After Manila was liberated in thwart his purpose if they should prefer to terminate the contract by the simple expedient
the last war, specifically on March l6, 1945 and on April 7, of the same year, plaintiff of stopping payment of the rentals. This, of course, is prohibited by the aforesaid article
Singson Encarnacion notified defendants, the said mother and son, to vacate the house of the Civil Code. (8 Manresa, 3d ed., pp. 626, 627; Cuyugan vs. Santos, 34 Phil. 100).
above-mentioned on or before April 15, 1945, because plaintiff needed it for his offices During the pendency of the appeal in the Court of First Instance and before the judgment
as a result of the destruction of the building where said plaintiff had said offices before. appealed from was rendered on October 31, 1945, the rentals in arrears were those
Despite this demand, defendants insisted on continuing their occupancy. When the pertaining to the month of August, 1945, to the date of said Judgment at the rate of P35 a
original action was lodged with the municipal court of Manila on April 20, 19455 month. During the pendency of the appeal in that court, certain deposits wers made by
defendants were in arrears in the payment of the rental corresponding to said month, the defendants on account of rentals with the Clerk of said Court, and in said judgment it is
agreed rental being payable within tha first five days of each month. That rental was paid disposed that the amounts thus depositad should be delivered to plaintiff.
prior to the hearing of the case in the municipal court, as a consequence of which said Upon the whole, we are clearly of opinion that the judgment appealed from should be, as
court entered judgment for restitution and payment of rentals at the rate of P35 a month it is hereby, affirmed, with the costs of the three instances to appellants. So ordered.
from May 1, 1945, until defendants completely vacate the premises. Although plaintiff
included in said original complaint a claim for P500 damages per month, that clam was
waived by him before the hearing in the municipal court, on account of which nothing
was said regarding said damages in the municipal court's decision.
When the case reached the Court of First Instance of Manila upon appeal, defendants
filed therein a motion to dismiss (which was similar to a motion to dismiss filed them in
the municipal court; based upon the ground that the municipal court had no jurisdiction
over the subject matter due to the aforesaid claim for damages and that, therefore, the
Court of First Instance had no appellate jurisdiction over the subject matter of the action.
That motion to dismiss was denied by His Honor, Judge Mamerto Roxas, by order dated
July 21, 1945, on the ground that in the municipal court plaintiff had waived said claim
for damages and that, therefore, the same waiver was understood also to have been made
in the Court of First Instance.
In the Court of First Instance the gravamen of the defense interposed by defendants, as it
was expressed by defendant Lefrado Fernando during the trial, was that the contract
which they had celebrated with plaintiff since the beginning authorized them to continue
occupying the house indefinitely and while they should faithfully fulfill their obligation
as respects the payment of the rentals, and that this agreement had been ratified when
another ejectment case between the parties filed during the Japanese regime concerning
the same house was allegedly compounded in the municipal court. The Court of First
Instance gave more credit to plaintiff's witness, Vicente Singson Encarnacion, Jr., who
testified that the lease had always said since the beginning been upon a month-to-month
basis. The Court added in its decision that this defense which was put up by defendant
ado Fernando during the trial had not been alleged in defendant's answer, for which
reason the Court considered it as indicative of an eleventh-hour theory. We think that the
Court of First Instance was right in so declaring. Furthermore, carried to its logical
conclusion, the defense thus set up by defendant Lefrado Fernando would leave to the

43
EN BANC G.R. No. 967            May 19, 1903 in subsidium to cover a case in which the parties have made no agreement whatsoever
DARIO AND GAUDENCIO ELEIZEGUI, plaintiffs-appellees,  with respect to the duration of the lease. In this case the law interprets the presumptive
vs. intention of the parties, they having said nothing in the contract with respect to its
THE MANILA LAWN TENNIS CLUB, defendant-appellant. duration. "Obligations arising from contracts have the force of law between the
ARELLANO, C. J.: contracting parties and must be complied with according to the tenor of the contracts."
This suit concerns the lease of a piece of land for a fixed consideration and to endure at (Art. 1091 of the Civil Code.)
the will of the lessee. By the contract of lease the lessee is expressly authorized to make The obligations which, with the force of law, the lessors assumed by the contract entered
improvements upon the land, by erecting buildings of both permanent and temporary into, so far as pertaining to the issues, are the following: "First. . . . They lease the above-
character, by making fills, laying pipes, and making such other improvements as might be described land to Mr. Williamson, who takes it on lease, . . . for all the time the members
considered desirable for the comfort and amusement of the members. of the said club may desire to use it . . . Third. . . . the owners of the land undertake to
With respect to the term of the lease the present question has arisen. In its decision three maintain the club as tenant as long as the latter shall see fit, without altering in the
theories have been presented: One which makes the duration depend upon the will of the slightest degree the conditions of this contract, even though the estate be sold."
lessor, who, upon one month's notice given to the lessee, may terminate the lease so It is necessary, therefore, to answer the first question: Was there, or was there not, a
stipulated; another which, on the contrary, makes it dependent upon the will of the lessee, conventional term, a duration, agreed upon in the contract in question? If there was an
as stipulated; and the third, in accordance with which the right is reversed to the courts to agreed duration, a conventional term, then the legal term — the term fixed in article 1581
fix the duration of the term. — has no application; the contract is the supreme law of the contracting parties. Over and
The first theory is that which has prevailed in the judgment below, as appears from the above the general law is the special law, expressly imposed upon themselves by the
language in which the basis of the decision is expressed: "The court is of the opinion that contracting parties. Without these clauses 1 and 3, the contract would contain no
the contract of lease was terminated by the notice given by the plaintiff on August 28 of stipulation with respect to the duration of the lease, and then article 1581, in connection
last year . . . ." And such is the theory maintained by the plaintiffs, which expressly rests with article 1569, would necessarily be applicable. In view of these clauses, however, it
upon article 1581 of the Civil Code, the law which was in force at the time the contract can not be said that there is no stipulation with respect to the duration of the lease, or that,
was entered into (January 25, 1890). The judge, in giving to this notice the effect of notwithstanding these clauses, article 1581, in connection with article 1569, can be
terminating the lease, undoubtedly considers that it is governed by the article relied upon applied. If this were so, it would be necessary to hold that the lessors spoke in vain —
by the plaintiffs, which is of the following tenor: "When the term has not been fixed for that their words are to be disregarded — a claim which can not be advanced by the
the lease, it is understood to be for years when an annual rental has been fixed, for plaintiffs nor upheld by any court without citing the law which detracts all legal force
months when the rent is monthly. . . ." The second clause of the contract provides as from such words or despoils them of their literal sense.
follows: "The rent of the said land is fixed at 25 pesos per month." (P. 11, Bill of It having been demonstrated that the legal term can not be applied, there being a
Exceptions.) conventional term, this destroys the assumption that the contract of lease was wholly
In accordance with such a theory, the plaintiffs might have terminated the lease the terminated by the notice given by the plaintiffs, this notice being necessary only when it
month following the making of the contract — at any time after the first month, which, becomes necessary to have recourse to the legal term. Nor had the plaintiffs, under the
strictly speaking, would be the only month with respect to which they contract, any right to give such notice. It is evident that they had no intention of
were expressly bound, they not being bound for each successive month except by stipulating that they reserved the right to give such notice. Clause 3 begins as follows:
a tacit renewal (art. 1566) — an effect which they might prevent by giving the required "Mr. Williamson, or whoever may succeed him as secretary of said club, may terminate
notice. this lease whenever desired without other formality than that of giving a month's notice.
Although the relief asked for in the complaint, drawn in accordance with the new form of The owners of the land undertake to maintain the club as tenant as long as the latter shall
procedure established by the prevailing Code, is the restitution of the land to the plaintiffs see fit." The right of the one and the obligation of the others being thus placed in
(a formula common to various actions), nevertheless the action which is maintained can antithesis, there is something more, much more, than the inclusio unius, exclusio alterius.
be no other than that of desahucio, in accordance with the substantive law governing the It is evident that the lessors did not intend to reserve to themselves the right to rescind
contract. The lessor — says article 1569 of the Civil Code — may judicially dispossess that which they expressly conferred upon the lessee by establishing it exclusively in favor
the lessee upon the expiration of the conventional term or of the legal term; of the latter.
the conventional term — that is, the one agreed upon by the parties; the legal term, in It would be the greatest absurdity to conclude that in a contract by which the lessor has
defect of the conventional, fixed for leases by articles 1577 and 1581. We have already left the termination of the lease to the will of the lessee, such a lease can or should be
seen what this legal term is with respect to urban properties, in accordance with article terminated at the will of the lessor.
1581. It would appear to follow, from the foregoing, that, if such is the force of the agreement,
Hence, it follows that the judge has only to determine whether there is or is not there can be no other mode of terminating the lease than by the will of the lessee, as
conventional term. If there be a conventional term, he can not apply the legal term fixed stipulated in this case. Such is the conclusion maintained by the defendant in the

44
demonstration of the first error of law in the judgment, as alleged by him. He goes so far, On the other hand, it can not be concluded that the termination of the contract is to be left
under this theory, as to maintain the possibility of a perpetual lease, either as such lease, completely at the will of the lessee, because it has been stipulated that its duration is to be
if the name can be applied, or else as an innominate contract, or under any other left to his will.
denomination, in accordance with the agreement of the parties, which is, in fine, the law The Civil Code has made provision for such a case in all kinds of obligations. In speaking
of the contract, superior to all other law, provided that there be no agreement against any in general of obligations with a term it has supplied the deficiency of the former law with
prohibitive statute, morals, or public policy. respect to the "duration of the term when it has been left to the will of the debtor," and
It is unnecessary here to enter into a discussion of a perpetual lease in accordance with provides that in this case the term shall be fixed by the courts. (Art. 1128, sec. 2.) In
the law and doctrine prior to the Civil Code now in force, and which has been operative every contract, as laid down by the authorities, there is always a creditor who is entitled
since 1889. Hence the judgment of the supreme court of Spain of January 2, 1891, with to demand the performance, and a debtor upon whom rests the obligation to perform the
respect to a lease made in 1887, cited by the defendant, and a decision stated by him to undertaking. In bilateral contracts the contracting parties are mutually creditors and
have been rendered by the Audiencia of Pamplona in 1885 (it appears to be rather a debtors. Thus, in this contract of lease, the lessee is the creditor with respect to the rights
decision by the head office of land registration of July 1, 1885), and any other decision enumerated in article 1554, and is the debtor with respect to the obligations imposed by
which might be cited based upon the constitutions of Cataluna, according to which a articles 1555 and 1561. The term within which performance of the latter obligation is due
lease of more than ten years is understood to create a life tenancy, or even a perpetual is what has been left to the will of the debtor. This term it is which must be fixed by the
tenancy, are entirely out of point in this case, in which the subject-matter is a lease courts.
entered into under the provisions of the present Civil Code, in accordance with the The only action which can be maintained under the terms of the contract is that by which
principles of which alone can this doctrine be examined. it is sought to obtain from the judge the determination of this period, and not the unlawful
It is not to be understood that we admit that the lease entered into was stipulated as a life detainer action which has been brought — an action which presupposes the expiration of
tenancy, and still less as a perpetual lease. The terms of the contract express nothing to the term and makes it the duty of the judge to simply decree an eviction. To maintain the
this effect. They do, whatever, imply this idea. If the lease could last during such time as latter action it is sufficient to show the expiration of the term of the contract, whether
the lessee might see fit, because it has been so stipulated by the lessor, it would last, first, conventional or legal; in order to decree the relief to be granted in the former action it is
as long as the will of the lessee — that is, all his life; second, during all the time that he necessary for the judge to look into the character and conditions of the mutual
may have succession, inasmuch as he who contracts does so for himself and his heirs. undertakings with a view to supplying the lacking element of a time at which the lease is
(Art. 1257 of the Civil Code.) The lease in question does not fall within any of the cases to expire. In the case of a loan of money or a commodatum of furniture, the payment or
in which the rights and obligations arising from a contract can not be transmitted to heirs, return to be made when the borrower "can conveniently do so" does not mean that he is
either by its nature, by agreement, or by provision of law. Furthermore, the lessee is an to be allowed to enjoy the money or to make use of the thing indefinitely or perpetually.
English association. The courts will fix in each case, according to the circumstances, the time for the payment
Usufruct is a right of superior degree to that which arises from a lease. It is a real right or return. This is the theory also maintained by the defendant in his demonstration of the
and includes all the jus utendi and jus fruendi. Nevertheless, the utmost period for which fifth assignment of error. "Under article 1128 of the Civil Code," thus his proposition
a usufruct can endure, if constituted in favor a natural person, is the lifetime of the concludes, "contracts whose term is left to the will of one of the contracting parties must
usufructuary (art. 513, sec. 1); and if in favor of juridical person, it can not be created for be fixed by the courts, . . . the conditions as to the term of this lease has a direct
more than thirty years. (Art. 515.) If the lease might be perpetual, in what would it be legislative sanction," and he cites articles 1128. "In place of the ruthless method of
distinguished from an emphyteusis? Why should the lessee have a greater right than the annihilating a solemn obligation, which the plaintiffs in this case have sought to pursue,
usufructuary, as great as that of an emphyteuta, with respect to the duration of the the Code has provided a legitimate and easily available remedy. . . . The Code has
enjoyment of the property of another? Why did they not contract for a usufruct or an provided for the proper disposition of those covenants, and a case can hardly arise more
emphyteusis? It was repeatedly stated in the document that it was a lease, and nothing but clearly demonstrating the usefulness of that provision than the case at bar." (Pp. 52 and
a lease, which was agreed upon: "Being in the full enjoyment of the necessary legal 53 of appellant's brief.)
capacity to enter into this contract of lease . . . they have agreed upon the lease of said The plaintiffs, with respect to this conclusion on the part of their opponents, only say that
estate . . . They lease to Mr. Williamson, who receives it as such. . . . The rental is fixed article 1128 "expressly refers to obligations in contracts in general, and that it is well
at 25 pesos a month. . . . The owners bind themselves to maintain the club as tenant. . . . known that a lease is included among special contracts." But they do not observe that if
Upon the foregoing conditions they make the present contract of lease. . . ." (Pp. 9, 11, contracts, simply because special rules are provided for them, could be excepted from the
and 12, bill of exceptions.) If it is a lease, then it must be for a determinate period. (Art. provisions of the articles of the Code relative to obligations and contracts in general, such
1543.) By its very nature it must be temporary, just as by reason of its nature an general provisions would be wholly without application. The system of the Code is that
emphyteusis must be perpetual, or for an unlimited period. (Art. 1608.) of establishing general rules applicable to all obligations and contracts, and then special
provisions peculiar to each species of contract. In no part of Title VI of Book IV, which
treats of the contract of lease, are there any special rules concerning pure of conditional

45
obligations which may be stipulated in a lease, because, with respect to these matters, the
provisions of section 1, chapter 3, Title I, on the subject of obligations are wholly
sufficient. With equal reason should we refer to section 2, which deals with obligations
with a term, in the same chapter and title, if a question concerning the term arises out of a
contract of lease, as in the present case, and within this section we find article 1128,
which decides the question.
The judgment was entered below upon the theory of the expiration of a legal term which
does not exist, as the case requires that a term be fixed by the courts under the provisions
of article 1128 with respect to obligations which, as is the present, are terminable at the
will of the obligee. It follows, therefore, that the judgment below is erroneous.
The judgment is reversed and the case will be remanded to the court below with
directions to enter a judgment of dismissal of the action in favor of the defendant, the
Manila Lawn Tennis Club, without special allowance as to the recovery of costs. So
ordered.

46
EN BANC however, that this application for naturalization was withdrawn when it was discovered
G.R. No. L-17587             September 12, 1967 that he was not a resident of Rizal. On October 28, 1958 she filed a petition to adopt him
PHILIPPINE BANKING CORPORATION, representing the estate of JUSTINA and his children on the erroneous belief that adoption would confer on them Philippine
SANTOS Y CANON FAUSTINO, deceased, plaintiff-appellant,  citizenship. The error was discovered and the proceedings were abandoned.
vs. On November 18, 1958 she executed two other contracts, one (Plff Exh. 5) extending the
LUI SHE in her own behalf and as administratrix of the intestate estate of Wong term of the lease to 99 years, and another (Plff Exh. 6) fixing the term of the option of 50
Heng, deceased, defendant-appellant. years. Both contracts are written in Tagalog.
Nicanor S. Sison for plaintiff-appellant. In two wills executed on August 24 and 29, 1959 (Def Exhs. 285 & 279), she bade her
Ozaeta, Gibbs & Ozaeta for defendant-appellant. legatees to respect the contracts she had entered into with Wong, but in a codicil (Plff
Exh. 17) of a later date (November 4, 1959) she appears to have a change of heart.
Claiming that the various contracts were made by her because of machinations and
CASTRO, J.: inducements practiced by him, she now directed her executor to secure the annulment of
Justina Santos y Canon Faustino and her sister Lorenzo were the owners in common of a the contracts.
piece of land in Manila. This parcel, with an area of 2,582.30 square meters, is located on On November 18 the present action was filed in the Court of First Instance of Manila.
Rizal Avenue and opens into Florentino Torres street at the back and Katubusan street on The complaint alleged that the contracts were obtained by Wong "through fraud,
one side. In it are two residential houses with entrance on Florentino Torres street and the misrepresentation, inequitable conduct, undue influence and abuse of confidence and
Hen Wah Restaurant with entrance on Rizal Avenue. The sisters lived in one of the trust of and (by) taking advantage of the helplessness of the plaintiff and were made to
houses, while Wong Heng, a Chinese, lived with his family in the restaurant. Wong had circumvent the constitutional provision prohibiting aliens from acquiring lands in the
been a long-time lessee of a portion of the property, paying a monthly rental of P2,620. Philippines and also of the Philippine Naturalization Laws." The court was asked to
On September 22, 1957 Justina Santos became the owner of the entire property as her direct the Register of Deeds of Manila to cancel the registration of the contracts and to
sister died with no other heir. Then already well advanced in years, being at the time 90 order Wong to pay Justina Santos the additional rent of P3,120 a month from November
years old, blind, crippled and an invalid, she was left with no other relative to live with. 15, 1957 on the allegation that the reasonable rental of the leased premises was P6,240 a
Her only companions in the house were her 17 dogs and 8 maids. Her otherwise dreary month.
existence was brightened now and then by the visits of Wong's four children who had In his answer, Wong admitted that he enjoyed her trust and confidence as proof of which
become the joy of her life. Wong himself was the trusted man to whom she delivered he volunteered the information that, in addition to the sum of P3,000 which he said she
various amounts for safekeeping, including rentals from her property at the corner of had delivered to him for safekeeping, another sum of P22,000 had been deposited in a
Ongpin and Salazar streets and the rentals which Wong himself paid as lessee of a part of joint account which he had with one of her maids. But he denied having taken advantage
the Rizal Avenue property. Wong also took care of the payment; in her behalf, of taxes, of her trust in order to secure the execution of the contracts in question. As counterclaim
lawyers' fees, funeral expenses, masses, salaries of maids and security guard, and her he sought the recovery of P9,210.49 which he said she owed him for advances.
household expenses. Wong's admission of the receipt of P22,000 and P3,000 was the cue for the filing of an
"In grateful acknowledgment of the personal services of the lessee to her," Justina Santos amended complaint. Thus on June 9, 1960, aside from the nullity of the contracts, the
executed on November 15, 1957 a contract of lease (Plff Exh. 3) in favor of Wong, collection of various amounts allegedly delivered on different occasions was sought.
covering the portion then already leased to him and another portion fronting Florentino These amounts and the dates of their delivery are P33,724.27 (Nov. 4, 1957); P7,344.42
Torres street. The lease was for 50 years, although the lessee was given the right to (Dec. 1, 1957); P10,000 (Dec. 6, 1957); P22,000 and P3,000 (as admitted in his answer).
withdraw at any time from the agreement; the monthly rental was P3,120. The contract An accounting of the rentals from the Ongpin and Rizal Avenue properties was also
covered an area of 1,124 square meters. Ten days later (November 25), the contract was demanded.
amended (Plff Exh. 4) so as to make it cover the entire property, including the portion on In the meantime as a result of a petition for guardianship filed in the Juvenile and
which the house of Justina Santos stood, at an additional monthly rental of P360. For his Domestic Relations Court, the Security Bank & Trust Co. was appointed guardian of the
part Wong undertook to pay, out of the rental due from him, an amount not exceeding properties of Justina Santos, while Ephraim G. Gochangco was appointed guardian of her
P1,000 a month for the food of her dogs and the salaries of her maids. person.
On December 21 she executed another contract (Plff Exh. 7) giving Wong the option to In his answer, Wong insisted that the various contracts were freely and voluntarily
buy the leased premises for P120,000, payable within ten years at a monthly installment entered into by the parties. He likewise disclaimed knowledge of the sum of P33,724.27,
of P1,000. The option, written in Tagalog, imposed on him the obligation to pay for the admitted receipt of P7,344.42 and P10,000, but contended that these amounts had been
food of the dogs and the salaries of the maids in her household, the charge not to exceed spent in accordance with the instructions of Justina Santos; he expressed readiness to
P1,800 a month. The option was conditioned on his obtaining Philippine citizenship, a comply with any order that the court might make with respect to the sums of P22,000 in
petition for which was then pending in the Court of First Instance of Rizal. It appears, the bank and P3,000 in his possession.

47
The case was heard, after which the lower court rendered judgment as follows: rentals." Here, in contrast, the right of the lessee to continue the lease or to terminate it is
[A]ll the documents mentioned in the first cause of action, with the exception of the first so circumscribed by the term of the contract that it cannot be said that the continuance of
which is the lease contract of 15 November 1957, are declared null and void; Wong Heng the lease depends upon his will. At any rate, even if no term had been fixed in the
is condemned to pay unto plaintiff thru guardian of her property the sum of P55,554.25 agreement, this case would at most justify the fixing of a period 5 but not the annulment of
with legal interest from the date of the filing of the amended complaint; he is also ordered the contract.
to pay the sum of P3,120.00 for every month of his occupation as lessee under the Nor is there merit in the claim that as the portion of the property formerly owned by the
document of lease herein sustained, from 15 November 1959, and the moneys he has sister of Justina Santos was still in the process of settlement in the probate court at the
consigned since then shall be imputed to that; costs against Wong Heng. time it was leased, the lease is invalid as to such portion. Justina Santos became the
From this judgment both parties appealed directly to this Court. After the case was owner of the entire property upon the death of her sister Lorenzo on September 22, 1957
submitted for decision, both parties died, Wong Heng on October 21, 1962 and Justina by force of article 777 of the Civil Code. Hence, when she leased the property on
Santos on December 28, 1964. Wong was substituted by his wife, Lui She, the other November 15, she did so already as owner thereof. As this Court explained in upholding
defendant in this case, while Justina Santos was substituted by the Philippine Banking the sale made by an heir of a property under judicial administration:
Corporation. That the land could not ordinarily be levied upon while in custodia legis does not mean
Justina Santos maintained — now reiterated by the Philippine Banking Corporation — that one of the heirs may not sell the right, interest or participation which he has or might
that the lease contract (Plff Exh. 3) should have been annulled along with the four other have in the lands under administration. The ordinary execution of property in custodia
contracts (Plff Exhs. 4-7) because it lacks mutuality; because it included a portion which, legis is prohibited in order to avoid interference with the possession by the court. But the
at the time, was in custodia legis; because the contract was obtained in violation of the sale made by an heir of his share in an inheritance, subject to the result of the pending
fiduciary relations of the parties; because her consent was obtained through undue administration, in no wise stands in the way of such administration. 6
influence, fraud and misrepresentation; and because the lease contract, like the rest of the It is next contended that the lease contract was obtained by Wong in violation of his
contracts, is absolutely simulated. fiduciary relationship with Justina Santos, contrary to article 1646, in relation to article
Paragraph 5 of the lease contract states that "The lessee may at any time withdraw from 1941 of the Civil Code, which disqualifies "agents (from leasing) the property whose
this agreement." It is claimed that this stipulation offends article 1308 of the Civil Code administration or sale may have been entrusted to them." But Wong was never an agent
which provides that "the contract must bind both contracting parties; its validity or of Justina Santos. The relationship of the parties, although admittedly close and
compliance cannot be left to the will of one of them." confidential, did not amount to an agency so as to bring the case within the prohibition of
We have had occasion to delineate the scope and application of article 1308 in the early the law.
case of Taylor v. Uy Tieng Piao.1 We said in that case: Just the same, it is argued that Wong so completely dominated her life and affairs that the
Article 1256 [now art. 1308] of the Civil Code in our opinion creates no impediment to contracts express not her will but only his. Counsel for Justina Santos cites the testimony
the insertion in a contract for personal service of a resolutory condition permitting the of Atty. Tomas S. Yumol who said that he prepared the lease contract on the basis of data
cancellation of the contract by one of the parties. Such a stipulation, as can be readily given to him by Wong and that she told him that "whatever Mr. Wong wants must be
seen, does not make either the validity or the fulfillment of the contract dependent upon followed."7
the will of the party to whom is conceded the privilege of cancellation; for where the The testimony of Atty. Yumol cannot be read out of context in order to warrant a finding
contracting parties have agreed that such option shall exist, the exercise of the option is as that Wong practically dictated the terms of the contract. What this witness said was:
much in the fulfillment of the contract as any other act which may have been the subject Q Did you explain carefully to your client, Doña Justina, the contents of this document
of agreement. Indeed, the cancellation of a contract in accordance with conditions agreed before she signed it?
upon beforehand is fulfillment.2 A I explained to her each and every one of these conditions and I also told her these
And so it was held in Melencio v. Dy Tiao Lay  3 that a "provision in a lease contract that conditions were quite onerous for her, I don't really know if I have expressed my opinion,
the lessee, at any time before he erected any building on the land, might rescind the lease, but I told her that we would rather not execute any contract anymore, but to hold it as it
can hardly be regarded as a violation of article 1256 [now art. 1308] of the Civil Code." was before, on a verbal month to month contract of lease.
The case of Singson Encarnacion v. Baldomar  4 cannot be cited in support of the claim of Q But, she did not follow your advice, and she went with the contract just the same?
want of mutuality, because of a difference in factual setting. In that case, the lessees A She agreed first . . .
argued that they could occupy the premises as long as they paid the rent. This is of course Q Agreed what?
untenable, for as this Court said, "If this defense were to be allowed, so long as A Agreed with my objectives that it is really onerous and that I was really right, but after
defendants elected to continue the lease by continuing the payment of the rentals, the that, I was called again by her and she told me to follow the wishes of Mr. Wong Heng.
owner would never be able to discontinue it; conversely, although the owner should xxx     xxx     xxx
desire the lease to continue the lessees could effectively thwart his purpose if they should Q So, as far as consent is concerned, you were satisfied that this document was perfectly
prefer to terminate the contract by the simple expedient of stopping payment of the proper?

48
xxx     xxx     xxx But the lower court set aside all the contracts, with the exception of the lease contract of
A Your Honor, if I have to express my personal opinion, I would say she is not, because, November 15, 1957, on the ground that they are contrary to the expressed wish of Justina
as I said before, she told me — "Whatever Mr. Wong wants must be followed." 8 Santos and that their considerations are fictitious. Wong stated in his deposition that he
Wong might indeed have supplied the data which Atty. Yumol embodied in the lease did not pay P360 a month for the additional premises leased to him, because she did not
contract, but to say this is not to detract from the binding force of the contract. For the want him to, but the trial court did not believe him. Neither did it believe his statement
contract was fully explained to Justina Santos by her own lawyer. One incident, related that he paid P1,000 as consideration for each of the contracts (namely, the option to buy
by the same witness, makes clear that she voluntarily consented to the lease contract. This the leased premises, the extension of the lease to 99 years, and the fixing of the term of
witness said that the original term fixed for the lease was 99 years but that as he doubted the option at 50 years), but that the amount was returned to him by her for safekeeping.
the validity of a lease to an alien for that length of time, he tried to persuade her to enter Instead, the court relied on the testimony of Atty. Alonzo in reaching the conclusion that
instead into a lease on a month-to-month basis. She was, however, firm and unyielding. the contracts are void for want of consideration.
Instead of heeding the advice of the lawyer, she ordered him, "Just follow Mr. Wong Atty. Alonzo declared that he saw no money paid at the time of the execution of the
Heng."9 Recounting the incident, Atty. Yumol declared on cross examination: documents, but his negative testimony does not rule out the possibility that the
Considering her age, ninety (90) years old at the time and her condition, she is a wealthy considerations were paid at some other time as the contracts in fact recite. What is more,
woman, it is just natural when she said "This is what I want and this will be done." In the consideration need not pass from one party to the other at the time a contract is
particular reference to this contract of lease, when I said "This is not proper," she said — executed because the promise of one is the consideration for the other. 16
"You just go ahead, you prepare that, I am the owner, and if there is any illegality, I am With respect to the lower court's finding that in all probability Justina Santos could not
the only one that can question the illegality."10 have intended to part with her property while she was alive nor even to lease it in its
Atty. Yumol further testified that she signed the lease contract in the presence of her entirety as her house was built on it, suffice it to quote the testimony of her own witness
close friend, Hermenegilda Lao, and her maid, Natividad Luna, who was constantly by and lawyer who prepared the contracts (Plff Exhs. 4-7) in question, Atty. Alonzo:
her side.11 Any of them could have testified on the undue influence that Wong supposedly The ambition of the old woman, before her death, according to her revelation to me, was
wielded over Justina Santos, but neither of them was presented as a witness. The truth is to see to it that these properties be enjoyed, even to own them, by Wong Heng because
that even after giving his client time to think the matter over, the lawyer could not make Doña Justina told me that she did not have any relatives, near or far, and she considered
her change her mind. This persuaded the lower court to uphold the validity of the lease Wong Heng as a son and his children her grandchildren; especially her consolation in life
contract against the claim that it was procured through undue influence. was when she would hear the children reciting prayers in Tagalog. 17
Indeed, the charge of undue influence in this case rests on a mere inference 12 drawn from She was very emphatic in the care of the seventeen (17) dogs and of the maids who
the fact that Justina Santos could not read (as she was blind) and did not understand the helped her much, and she told me to see to it that no one could disturb Wong Heng from
English language in which the contract is written, but that inference has been overcome those properties. That is why we thought of the ninety-nine (99) years lease; we thought
by her own evidence. of adoption, believing that thru adoption Wong Heng might acquire Filipino citizenship;
Nor is there merit in the claim that her consent to the lease contract, as well as to the rest being the adopted child of a Filipino citizen. 18
of the contracts in question, was given out of a mistaken sense of gratitude to Wong who, This is not to say, however, that the contracts (Plff Exhs. 3-7) are valid. For the testimony
she was made to believe, had saved her and her sister from a fire that destroyed their just quoted, while dispelling doubt as to the intention of Justina Santos, at the same time
house during the liberation of Manila. For while a witness claimed that the sisters were gives the clue to what we view as a scheme to circumvent the Constitutional prohibition
saved by other persons (the brothers Edilberto and Mariano Sta. Ana) 13 it was Justina against the transfer of lands to aliens. "The illicit purpose then becomes the
Santos herself who, according to her own witness, Benjamin C. Alonzo, said "very illegal causa"19 rendering the contracts void.
emphatically" that she and her sister would have perished in the fire had it not been for Taken singly, the contracts show nothing that is necessarily illegal, but considered
Wong.14 Hence the recital in the deed of conditional option (Plff Exh. 7) that "[I]tong si collectively, they reveal an insidious pattern to subvert by indirection what the
Wong Heng ang siyang nagligtas sa aming dalawang magkapatid sa halos ay tiyak na Constitution directly prohibits. To be sure, a lease to an alien for a reasonable period is
kamatayan", and the equally emphatic avowal of gratitude in the lease contract (Plff Exh. valid. So is an option giving an alien the right to buy real property on condition that he is
3). granted Philippine citizenship. As this Court said in Krivenko v. Register of Deeds:20
As it was with the lease contract (Plff Exh. 3), so it was with the rest of the contracts (Plff [A]liens are not completely excluded by the Constitution from the use of lands for
Exhs. 4-7) — the consent of Justina Santos was given freely and voluntarily. As Atty. residential purposes. Since their residence in the Philippines is temporary, they may be
Alonzo, testifying for her, said: granted temporary rights such as a lease contract which is not forbidden by the
[I]n nearly all documents, it was either Mr. Wong Heng or Judge Torres and/or both. Constitution. Should they desire to remain here forever and share our fortunes and
When we had conferences, they used to tell me what the documents should contain. But, misfortunes, Filipino citizenship is not impossible to acquire.
as I said, I would always ask the old woman about them and invariably the old woman But if an alien is given not only a lease of, but also an option to buy, a piece of land, by
used to tell me: "That's okay. It's all right."15 virtue of which the Filipino owner cannot sell or otherwise dispose of his property, 21 this

49
to last for 50 years, then it becomes clear that the arrangement is a virtual transfer of P10,000 on December 6, 1957 (Plff Exh. 14) ; and P18,928.50 on August 26, 1959 (Def.
ownership whereby the owner divests himself in stages not only of the right to enjoy the Exh. 246), or a total of P70,007.19. He claims, however, that he settled his accounts and
land ( jus possidendi, jus utendi, jus fruendi and jus abutendi) but also of the right to that the last amount of P18,928.50 was in fact payment to him of what in the liquidation
dispose of it ( jus disponendi) — rights the sum total of which make up ownership. It is was found to be due to him.
just as if today the possession is transferred, tomorrow, the use, the next day, the He made disbursements from this account to discharge Justina Santos' obligations for
disposition, and so on, until ultimately all the rights of which ownership is made up are taxes, attorneys' fees, funeral services and security guard services, but the checks (Def
consolidated in an alien. And yet this is just exactly what the parties in this case did Exhs. 247-278) drawn by him for this purpose amount to only P38,442.84. 27 Besides, if
within the space of one year, with the result that Justina Santos' ownership of her he had really settled his accounts with her on August 26, 1959, we cannot understand
property was reduced to a hollow concept. If this can be done, then the Constitutional ban why he still had P22,000 in the bank and P3,000 in his possession, or a total of P25,000.
against alien landholding in the Philippines, as announced in Krivenko v. Register of In his answer, he offered to pay this amount if the court so directed him. On these two
Deeds,22 is indeed in grave peril. grounds, therefore, his claim of liquidation and settlement of accounts must be rejected.
It does not follow from what has been said, however, that because the parties are in pari After subtracting P38,442.84 (expenditures) from P70,007.19 (receipts), there is a
delicto they will be left where they are, without relief. For one thing, the original parties difference of P31,564 which, added to the amount of P25,000, leaves a balance of
who were guilty of a violation of the fundamental charter have died and have since been P56,564.3528 in favor of Justina Santos.
substituted by their administrators to whom it would be unjust to impute their guilt. 23 For As to the second account, the evidence shows that the monthly income from the Ongpin
another thing, and this is not only cogent but also important, article 1416 of the Civil property until its sale in Rizal Avenue July, 1959 was P1,000, and that from the Rizal
Code provides, as an exception to the rule on pari delicto, that "When the agreement is Avenue property, of which Wong was the lessee, was P3,120. Against this account the
not illegal per se but is merely prohibited, and the prohibition by law is designed for the household expenses and disbursements for the care of the 17 dogs and the salaries of the
protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he 8 maids of Justina Santos were charged. This account is contained in a notebook (Def.
has paid or delivered." The Constitutional provision that "Save in cases of hereditary Exh. 6) which shows a balance of P9,210.49 in favor of Wong. But it is claimed that the
succession, no private agricultural land shall be transferred or assigned except to rental from both the Ongpin and Rizal Avenue properties was more than enough to pay
individuals, corporations, or associations qualified to acquire or hold lands of the public for her monthly expenses and that, as a matter of fact, there should be a balance in her
domain in the Philippines"24 is an expression of public policy to conserve lands for the favor. The lower court did not allow either party to recover against the other. Said the
Filipinos. As this Court said in Krivenko: court:
It is well to note at this juncture that in the present case we have no choice. We are [T]he documents bear the earmarks of genuineness; the trouble is that they were made
construing the Constitution as it is and not as we may desire it to be. Perhaps the effect of only by Francisco Wong and Antonia Matias, nick-named Toning, — which was the way
our construction is to preclude aliens admitted freely into the Philippines from owning she signed the loose sheets, and there is no clear proof that Doña Justina had authorized
sites where they may build their homes. But if this is the solemn mandate of the these two to act for her in such liquidation; on the contrary if the result of that was a
Constitution, we will not attempt to compromise it even in the name of amity or deficit as alleged and sought to be there shown, of P9,210.49, that was not what Doña
equity . . . . Justina apparently understood for as the Court understands her statement to the
For all the foregoing, we hold that under the Constitution aliens may not acquire private Honorable Judge of the Juvenile Court . . . the reason why she preferred to stay in her
or public agricultural lands, including residential lands, and, accordingly, judgment is home was because there she did not incur in any debts . . . this being the case, . . . the
affirmed, without costs.25 Court will not adjudicate in favor of Wong Heng on his counterclaim; on the other hand,
That policy would be defeated and its continued violation sanctioned if, instead of setting while it is claimed that the expenses were much less than the rentals and there in fact
the contracts aside and ordering the restoration of the land to the estate of the deceased should be a superavit, . . . this Court must concede that daily expenses are not easy to
Justina Santos, this Court should apply the general rule of pari delicto. To the extent that compute, for this reason, the Court faced with the choice of the two alternatives will
our ruling in this case conflicts with that laid down in Rellosa v. Gaw Chee Hun  26 and choose the middle course which after all is permitted by the rules of proof, Sec. 69, Rule
subsequent similar cases, the latter must be considered as pro tanto qualified. 123 for in the ordinary course of things, a person will live within his income so that the
The claim for increased rentals and attorney's fees, made in behalf of Justina Santos, must conclusion of the Court will be that there is neither deficit nor superavit and will let the
be denied for lack of merit. matter rest here.
And what of the various amounts which Wong received in trust from her? It appears that Both parties on appeal reiterate their respective claims but we agree with the lower court
he kept two classes of accounts, one pertaining to amount which she entrusted to him that both claims should be denied. Aside from the reasons given by the court, we think
from time to time, and another pertaining to rentals from the Ongpin property and from that the claim of Justina Santos totalling P37,235, as rentals due to her after deducting
the Rizal Avenue property, which he himself was leasing. various expenses, should be rejected as the evidence is none too clear about the amounts
With respect to the first account, the evidence shows that he received P33,724.27 on spent by Wong for food29 masses30 and salaries of her maids.31 His claim for P9,210.49
November 8, 1957 (Plff Exh. 16); P7,354.42 on December 1, 1957 (Plff Exh. 13);

50
must likewise be rejected as his averment of liquidation is belied by his own admission
that even as late as 1960 he still had P22,000 in the bank and P3,000 in his possession.
ACCORDINGLY, the contracts in question (Plff Exhs. 3-7) are annulled and set aside;
the land subject-matter of the contracts is ordered returned to the estate of Justina Santos
as represented by the Philippine Banking Corporation; Wong Heng (as substituted by the
defendant-appellant Lui She) is ordered to pay the Philippine Banking Corporation the
sum of P56,564.35, with legal interest from the date of the filing of the amended
complaint; and the amounts consigned in court by Wong Heng shall be applied to the
payment of rental from November 15, 1959 until the premises shall have been vacated by
his heirs. Costs against the defendant-appellant.

51
G.R. No. L-34338 November 21, 1984 LOURDES VALERIO LIM, petitioner,  vs. evidenced by the receipt Exh. 2, dated April 18, 1967, or a total of P240.00. As no further
PEOPLE OF THE PHILIPPINES, respondent. amount was paid, the complainant filed a complaint against the appellant for estafa. (pp. 14,
RELOVA, J.: 15, 16, Rollo)
Petitioner Lourdes Valerio Lim was found guilty of the crime of estafa and was sentenced "to In this petition for review by certiorari, Lourdes Valerio Lim poses the following questions of
suffer an imprisonment of four (4) months and one (1) day as minimum to two (2) years and law, to wit:
four (4) months as maximum, to indemnify the offended party in the amount of P559.50, with 1. Whether or not the Honorable Court of Appeals was legally right in holding that the
subsidize imprisonment in case of insolvency, and to pay the costs." (p. 14, Rollo)From this foregoing document (Exhibit "A") "fixed a period" and "the obligation was therefore,
judgment, appeal was taken to the then Court of Appeals which affirmed the decision of the immediately demandable as soon as the tobacco was sold" (Decision, p. 6) as against the
lower court but modified the penalty imposed by sentencing her "to suffer an indeterminate theory of the petitioner that the obligation does not fix a period, but from its nature and the
penalty of one (1) month and one (1) day of arresto mayor as minimum to one (1) year and circumstances it can be inferred that a period was intended in which case the only action that
one (1) day of prision correccional as maximum, to indemnify the complainant in the amount can be maintained is a petition to ask the court to fix the duration thereof;
of P550.50 without subsidiary imprisonment, and to pay the costs of suit." (p. 24, Rollo) 2. Whether or not the Honorable Court of Appeals was legally right in holding that "Art. 1197
The question involved in this case is whether the receipt, Exhibit "A", is a contract of agency of the New Civil Code does not apply" as against the alternative theory of the petitioner that
to sell or a contract of sale of the subject tobacco between petitioner and the complainant, the fore. going receipt (Exhibit "A") gives rise to an obligation wherein the duration of the
Maria de Guzman Vda. de Ayroso, thereby precluding criminal liability of petitioner for the period depends upon the will of the debtor in which case the only action that can be
crime charged. maintained is a petition to ask the court to fix the duration of the period; and
The findings of facts of the appellate court are as follows: 3. Whether or not the honorable Court of Appeals was legally right in holding that the
... The appellant is a businesswoman. On January 10, 1966, the appellant went to the house of foregoing receipt is a contract of agency to sell as against the theory of the petitioner that it is
Maria Ayroso and proposed to sell Ayroso's tobacco. Ayroso agreed to the proposition of the a contract of sale. (pp. 3-4, Rollo)
appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was to It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should be
receive the overprice for which she could sell the tobacco. This agreement was made in the turned over to the complainant as soon as the same was sold, or, that the obligation was
presence of plaintiff's sister, Salud G. Bantug. Salvador Bantug drew the document, Exh. A, immediately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the
dated January 10, 1966, which reads: New Civil Code, which provides that the courts may fix the duration of the obligation if it
To Whom It May Concern: does not fix a period, does not apply.
This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of Gapan, Anent the argument that petitioner was not an agent because Exhibit "A" does not say that she
Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per kilo. The proceed would be paid the commission if the goods were sold, the Court of Appeals correctly resolved
in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P 799.50) will be given to her the matter as follows:
as soon as it was sold.This was signed by the appellant and witnessed by the complainant's ... Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent
sister, Salud Bantug, and the latter's maid, Genoveva Ruiz. The appellant at that time was in selling Ayroso's tobacco, the appellant herself admitted that there was an agreement that
bringing a jeep, and the tobacco was loaded in the jeep and brought by the appellant. Of the upon the sale of the tobacco she would be given something. The appellant is a
total value of P799.50, the appellant had paid to Ayroso only P240.00, and this was paid on businesswoman, and it is unbelievable that she would go to the extent of going to Ayroso's
three different times. Demands for the payment of the balance of the value of the tobacco were house and take the tobacco with a jeep which she had brought if she did not intend to make a
made upon the appellant by Ayroso, and particularly by her sister, Salud Bantug. Salud profit out of the transaction. Certainly, if she was doing a favor to Maria Ayroso and it was
Bantug further testified that she had gone to the house of the appellant several times, but the Ayroso who had requested her to sell her tobacco, it would not have been the appellant who
appellant often eluded her; and that the "camarin" the appellant was empty. Although the would have gone to the house of Ayroso, but it would have been Ayroso who would have
appellant denied that demands for payment were made upon her, it is a fact that on October gone to the house of the appellant and deliver the tobacco to the appellant. (p. 19, Rollo)
19, 1966, she wrote a letter to Salud Bantug which reads as follows: The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be
Dear Salud, given to complainant as soon as it was sold, strongly negates transfer of ownership of the
Hindi ako nakapunta dian noon a 17 nitong nakaraan, dahil kokonte pa ang nasisingil kong goods to the petitioner. The agreement (Exhibit "A') constituted her as an agent with the
pera, magintay ka hanggang dito sa linggo ito at tiak na ako ay magdadala sa iyo. Gosto ko obligation to return the tobacco if the same was not sold.
Salud ay makapagbigay man lang ako ng marami para hindi masiadong kahiyahiya sa iyo. ACCORDINGLY, the petition for review on certiorari is dismissed for lack of merit. With
Ngayon kung gosto mo ay kahit konte muna ay bibigyan kita. Pupunta lang kami ni Mina sa costs. SO ORDERED.
Maynila ngayon. Salud kung talagang kailangan mo ay bukas ay dadalhan kita ng pera.
Medio mahirap ang maningil sa palengke ng Cabanatuan dahil nagsisilipat ang mga suki ko ng
puesto. Huwag kang mabahala at tiyak na babayaran kita.
Patnubayan tayo ng mahal na panginoon Dios. (Exh. B).
Ludy
Pursuant to this letter, the appellant sent a money order for P100.00 on October 24, 1967, Exh.
4, and another for P50.00 on March 8, 1967; and she paid P90.00 on April 18, 1967 as

52
EN BANC Defendant Gregorio Araneta, Inc. opposed said motion, maintaining that plaintiff's
G.R. No. L-22558             May 31, 1967 complaint did not expressly or impliedly allege and pray for the fixing of a period to
GREGORIO ARANETA, INC., petitioner,  comply with its obligation and that the evidence presented at the trial was insufficient to
vs. warrant the fixing of such a period.
THE PHILIPPINE SUGAR ESTATES DEVELOPMENT CO., LTD., respondent. On July 16, 1960, the lower court, after finding that "the proven facts precisely warrants
Araneta and Araneta for petitioner. the fixing of such a period," issued an order granting plaintiff's motion for
Rosauro Alvarez and Ernani Cruz Paño for respondent. reconsideration and amending the dispositive portion of the decision of May 31, 1960, to
REYES, J.B.L., J.: read as follows:
Petition for certiorari to review a judgment of the Court of Appeals, in its CA-G.R. No. WHEREFORE, judgment is hereby rendered giving defendant Gregorio Araneta, Inc., a
28249-R, affirming with modification, an amendatory decision of the Court of First period of two (2) years from notice hereof, within which to comply with its obligation
Instance of Manila, in its Civil Case No. 36303, entitled "Philippine Sugar Estates under the contract, Annex "A".
Development Co., Ltd., plaintiff, versus J. M. Tuason & Co., Inc. and Gregorio Araneta, Defendant Gregorio Araneta, Inc. presented a motion to reconsider the above quoted
Inc., defendants." order, which motion, plaintiff opposed.
As found by the Court of Appeals, the facts of this case are: On August 16, 1960, the lower court denied defendant Gregorio Araneta, Inc's. motion;
J. M. Tuason & Co., Inc. is the owner of a big tract land situated in Quezon City, and the latter perfected its appeal Court of Appeals.
otherwise known as the Sta. Mesa Heights Subdivision, and covered by a Torrens title in In said appellate court, defendant-appellant Gregorio Araneta, Inc. contended mainly that
its name. On July 28, 1950, through Gregorio Araneta, Inc., it (Tuason & Co.) sold a the relief granted, i.e., fixing of a period, under the amendatory decision of July 16, 1960,
portion thereof with an area of 43,034.4 square meters, more or less, for the sum of was not justified by the pleadings and not supported by the facts submitted at the trial of
P430,514.00, to Philippine Sugar Estates Development Co., Ltd. The parties stipulated, the case in the court below and that the relief granted in effect allowed a change of theory
among in the contract of purchase and sale with mortgage, that the buyer will — after the submission of the case for decision.
Build on the said parcel land the Sto. Domingo Church and Convent Ruling on the above contention, the appellate court declared that the fixing of a period
while the seller for its part will — was within the pleadings and that there was no true change of theory after the submission
Construct streets on the NE and NW and SW sides of the land herein sold so that the of the case for decision since defendant-appellant Gregorio Araneta, Inc. itself squarely
latter will be a block surrounded by streets on all four sides; and the street on the NE side placed said issue by alleging in paragraph 7 of the affirmative defenses contained in its
shall be named "Sto. Domingo Avenue;" answer which reads —
The buyer, Philippine Sugar Estates Development Co., Ltd., finished the construction of 7. Under the Deed of Sale with Mortgage of July 28, 1950, herein defendant has a
Sto. Domingo Church and Convent, but the seller, Gregorio Araneta, Inc., which began reasonable time within which to comply with its obligations to construct and complete
constructing the streets, is unable to finish the construction of the street in the Northeast the streets on the NE, NW and SW sides of the lot in question; that under the
side named (Sto. Domingo Avenue) because a certain third-party, by the name of Manuel circumstances, said reasonable time has not elapsed;
Abundo, who has been physically occupying a middle part thereof, refused to vacate the Disposing of the other issues raised by appellant which were ruled as not meritorious and
same; hence, on May 7, 1958, Philippine Sugar Estates Development Co., Lt. filed its which are not decisive in the resolution of the legal issues posed in the instant appeal
complaint against J. M. Tuason & Co., Inc., and instance, seeking to compel the latter to before us, said appellate court rendered its decision dated December 27, 1963, the
comply with their obligation, as stipulated in the above-mentioned deed of sale, and/or to dispositive part of which reads —
pay damages in the event they failed or refused to perform said obligation. IN VIEW WHEREOF, judgment affirmed and modified; as a consequence, defendant is
Both defendants J. M. Tuason and Co. and Gregorio Araneta, Inc. answered the given two (2) years from the date of finality of this decision to comply with the
complaint, the latter particularly setting up the principal defense that the action was obligation to construct streets on the NE, NW and SW sides of the land sold to plaintiff
premature since its obligation to construct the streets in question was without a definite so that the same would be a block surrounded by streets on all four sides.
period which needs to he fixed first by the court in a proper suit for that purpose before a Unsuccessful in having the above decision reconsidered, defendant-appellant Gregorio
complaint for specific performance will prosper. Araneta, Inc. resorted to a petition for review by certiorari to this Court. We gave it due
The issues having been joined, the lower court proceeded with the trial, and upon its course.
termination, it dismissed plaintiff's complaint (in a decision dated May 31, 1960), We agree with the petitioner that the decision of the Court of Appeals, affirming that of
upholding the defenses interposed by defendant Gregorio Araneta, Inc.1äwphï1.ñët the Court of First Instance is legally untenable. The fixing of a period by the courts under
Plaintiff moved to reconsider and modify the above decision, praying that the court fix a Article 1197 of the Civil Code of the Philippines is sought to be justified on the basis that
period within which defendants will comply with their obligation to construct the streets petitioner (defendant below) placed the absence of a period in issue by pleading in its
in question. answer that the contract with respondent Philippine Sugar Estates Development Co., Ltd.
gave petitioner Gregorio Araneta, Inc. "reasonable time within which to comply with its

53
obligation to construct and complete the streets." Neither of the courts below seems to resort to legal processes in evicting the squatters, they must have realized that the
have noticed that, on the hypothesis stated, what the answer put in issue was not whether duration of the suits to be brought would not be under their control nor could the same be
the court should fix the time of performance, but whether or not the parties agreed that determined in advance. The conclusion is thus forced that the parties must have intended
the petitioner should have reasonable time to perform its part of the bargain. If the to defer the performance of the obligations under the contract until the squatters were
contract so provided, then there was a period fixed, a "reasonable time;" and all that the duly evicted, as contended by the petitioner Gregorio Araneta, Inc.
court should have done was to determine if that reasonable time had already elapsed The Court of Appeals objected to this conclusion that it would render the date of
when suit was filed if it had passed, then the court should declare that petitioner had performance indefinite. Yet, the circumstances admit no other reasonable view; and this
breached the contract, as averred in the complaint, and fix the resulting damages. On the very indefiniteness is what explains why the agreement did not specify any exact periods
other hand, if the reasonable time had not yet elapsed, the court perforce was bound to or dates of performance.
dismiss the action for being premature. But in no case can it be logically held that under It follows that there is no justification in law for the setting the date of performance at
the plea above quoted, the intervention of the court to fix the period for performance was any other time than that of the eviction of the squatters occupying the land in question;
warranted, for Article 1197 is precisely predicated on the absence of any period fixed by and in not so holding, both the trial Court and the Court of Appeals committed reversible
the parties. error. It is not denied that the case against one of the squatters, Abundo, was still pending
Even on the assumption that the court should have found that no reasonable time or no in the Court of Appeals when its decision in this case was rendered.
period at all had been fixed (and the trial court's amended decision nowhere declared any In view of the foregoing, the decision appealed from is reversed, and the time for the
such fact) still, the complaint not having sought that the Court should set a period, the performance of the obligations of petitioner Gregorio Araneta, Inc. is hereby fixed at the
court could not proceed to do so unless the complaint in as first amended; for the original date that all the squatters on affected areas are finally evicted therefrom.
decision is clear that the complaint proceeded on the theory that the period for Costs against respondent Philippine Sugar Estates Development, Co., Ltd. So ordered.
performance had already elapsed, that the contract had been breached and defendant was
already answerable in damages.
Granting, however, that it lay within the Court's power to fix the period of performance,
still the amended decision is defective in that no basis is stated to support the conclusion
that the period should be set at two years after finality of the judgment. The list paragraph
of Article 1197 is clear that the period can not be set arbitrarily. The law expressly
prescribes that —
the Court shall determine such period as may under the circumstances been probably
contemplated by the parties.
All that the trial court's amended decision (Rec. on Appeal, p. 124) says in this respect is
that "the proven facts precisely warrant the fixing of such a period," a statement
manifestly insufficient to explain how the two period given to petitioner herein was
arrived at.
It must be recalled that Article 1197 of the Civil Code involves a two-step process. The
Court must first determine that "the obligation does not fix a period" (or that the period is
made to depend upon the will of the debtor)," but from the nature and the circumstances
it can be inferred that a period was intended" (Art. 1197, pars. 1 and 2). This preliminary
point settled, the Court must then proceed to the second step, and decide what period was
"probably contemplated by the parties" (Do., par. 3). So that, ultimately, the Court can
not fix a period merely because in its opinion it is or should be reasonable, but must set
the time that the parties are shown to have intended. As the record stands, the trial Court
appears to have pulled the two-year period set in its decision out of thin air, since no
circumstances are mentioned to support it. Plainly, this is not warranted by the Civil
Code.
In this connection, it is to be borne in mind that the contract shows that the parties were
fully aware that the land described therein was occupied by squatters, because the fact is
expressly mentioned therein (Rec. on Appeal, Petitioner's Appendix B, pp. 12-13). As the
parties must have known that they could not take the law into their own hands, but must

54
FIRST DIVISION spouses Co, defendants therein, sut)sequently set up lis pendens as a Civil Case No. 661.
June 30, 1987 The spouses Co, defendants therein, subsequently set up lis pendens as a defense against
G.R. No. L-55480 the complaint for ejectment.
PACIFICA MILLARE, petitioner,  Mrs. Millare, defendant in Civil Case No. 1434, countered with an Omnibus Motion to
vs. Dismiss6 rounded on (a) lack of cause of action due to plaintiffs' failure to establish a
HON. HAROLD M. HERNANDO, In his capacity as Presiding Judge, Court of valid renewal of the Contract of Lease, and (b) lack of jurisdiction by the trial court over
Instance of Abra, Second Judicial District, Branch I, ANTONIO CO and ELSA the complaint for failure of plaintiffs to secure a certification from the Lupong
CO, respondents. Tagapayapa of the barangay wherein both disputants reside attesting that no amicable
settlement between them had been reached despite efforts to arrive at one, as required by
Section 6 of Presidential Decree No. 1508. The Co spouses opposed the motion to
FELICIANO, J.: dismiss. 7
On 17 June 1975, a five-year Contract of Lease 1 was executed between petitioner In an Order dated 15 October 1980, respondent judge denied the motion to dismiss and
Pacifica Millare as lessor and private respondent Elsa Co, married to Antonio Co, as ordered the renewal of the Contract of Lease. Furthermore plaintiffs were allowed to
lessee. Under the written agreement, which was scheduled to expire on 31 May 1980, the deposit all accruing monthly rentals in court, while defendant Millare was directed to
lessor-petitioner agreed to rent out to thelessee at a monthly rate of P350.00 the "People's submit her answer to the complaint. 8 A motion for reconsideration 9 was subsequently
Restaurant", a commercial establishment located at the corner of McKinley and Pratt filed which, however, was likewise denied. 10 Hence, on 13 November 1980, Mrs. Millare
Streets in Bangued, Abra. filed the instant Petition for Certiorari, Prohibition and Mandamus, seeking injunctive
The present dispute arose from events which transpired during the months of May and relief from the abovementioned orders. This Court issued a temporary restraining order
July in 1980. According to the Co spouses, sometime during the last week of May 1980, on 21 November 1980 enjoining respondent, judge from conducting further proceedings
the lessor informed them that they could continue leasing the People's Restaurant so long in Civil Case No. 1434. 11 Apparently, before the temporary restraining order could be
as they were amenable to paying creased rentals of P1,200.00 a month. In response, a served on the respondent judge, he rendered a "Judgment by Default" dated 26 November
counteroffer of P700.00 a month was made by the Co spouses. At this point, the lessor 1980 ordering the renewal of the lease contract for a term of 5 years counted from the
allegedly stated that the amount of monthly rentals could be resolved at a later time since expiration date of the original lease contract, and fixing monthly rentals thereunder at
"the matter is simple among us", which alleged remark was supposedly taken by the P700.00 a month, payable in arrears. On18 March 1981, this Court gave due course to the
spouses Co to mean that the Contract of Lease had been renewed, prompting them to Petition for Certiorari, Prohibition and Mandamus. 12
continue occupying the subject premises and to forego their search for a substitute place Two issues are presented for resolution: (1) whether or not the trial court acquired
to rent. 2 In contrast, the lessor flatly denied ever having considered, much less offered, a jurisdiction over Civil Case No. 1434; and (2) whether or not private respondents have a
renewal of the Contract of Lease. valid cause of action against petitioner.
The variance in versions notwithstanding, the record shows that on 22 July 1980, Mrs. Turning to the first issue, petitioner's attack on the jurisdiction of the trial court must fail,
Millare wrote the Co spouses requesting them to vacate the leased premises as she had no though for reasons different from those cited by the respondent judge. 13 We would note
intention of renewing the Contract of Lease which had, in the meantime, already firstly that the conciliation procedure required under P.D. 1508 is not a jurisdictional
expirecl. 3 In reply, the Co spouses reiterated their unwillingness to pay the Pl,200.00 requirement in the sense that failure to have prior recourse to such procedure would not
monthly rentals supposedly sought bv Mrs. Millare which they considered "highly deprive a court of its jurisdiction either over the subject matter or over the person of the
excessive, oppressive and contrary to existing laws". They also signified their intention to defendant.14 Secondly, the acord shows that two complaints were submitted to the
deposit the amount of rentals in court, in view of Mrs. Millare's refusal to accept their barangay authorities for conciliation — one by petitioner for ejectment and the other by
counter-offer.4 Another letter of demand from Mrs. Millare was received on 28 July 1980 private respondents for renewal of the Contract of Lease. It appears further that both
by the Co spouses, who responded by depositing the rentals for June and July (at 700.00 a complaints were, in fact, heard by the Lupong Tagapayapa in the afternoon of 30 August
month) in court. 1980. After attempts at conciliation had proven fruitless, Certifications to File Action
On 30 August 1980, a Saturday, the Co spouses jumped the gun, as it were, and filed a authorizing the parties to pursue their respective claims in court were then issued at 5:20
Complaint 5 (docketed as Civil Case No. 1434) with the then Court of First Instance of p.m. of that same aftemoon, as attested to by the Barangay Captain in a Certification
Abra against Mrs. Millare and seeking judgment (a) ordering the renewal of the Contract presented in evidence by petitioner herself. 15
of Lease at a rental rate of P700.00 a nionth and for a period of ten years, (b) ordering the Petitioner would, nonetheless, assail the proceedings in the trial court on a technicaety,
defendant to collect the sum of P1,400.00 deposited by plaintiffs with the court, and (c) i.e., private respondents allegedly filed their complaint at 4:00 p.m. of 30 August 1980, or
ordering the defendant to pay damages in the amount of P50,000.00. The following one hour and twenty minutes before the issuance of the requisite certification by
Monday, on 1 September 1980, Mrs. Millare filed an ejectment case against the Co the Lupng Tagapayapa. The defect in procedure admittedly initially present at that
spouses in the Municipal Court of Bangued, Abra, docketed as Civil Case No. 661. The particular moment when private respondents first filed the complaint in the trial court,

55
was cured by the subsequent issuance of the Certifications to File Action by the its equivalent to a promise made by the lessor to the lessee, and as a unilateral stipulation,
barangay Lupong Tagapayapa Such certifications in any event constituted substantial obliges the lessor to fulfill her promise; of course the lessor is free to comply and honor
comphance with the requirement of P.D. 1508. her commitment or back-out from her promise to renew the lease contract; but, once
We turn to the second issue, that is, whether or not the complaint in Civil Case No. 1434 expressly stipulated, the lessor shall not be allowed to evade or violate the obligation to
filed by the respondent Co spouses claiming renewal of the contract of lease stated a renew the lease because, certainly, the lessor may be held hable for damages caused to
valid cause of action. Paragraph 13 of the Contract of Lease reads as follows: the lessee as a consequence of the unjustifiable termination of the lease or renewal of the
13. This contract of lease is subject to the laws and regulations ofthe goverrunent; and same; In other words, the lessor is guilty of breach of contract: Since the original lease
that this contract of lease may be renewed after a period of five (5) years under the terms was fixed for five (5) years, it follows, therefore, that the lease contract is renewable for
and conditions as will be mutually agreed upon by the parties at the time of renewal; ... another five (5) years and the lessee is not required before hand to give express notice of
(Emphasis supplied.) this fact to the lessor because it was expressly stipulated in the original lease contract to
The respondent judge, in his Answer and Comment to the Petition, urges that under be renewed; Wherefore, the bare refusal of the lessor to renew the lease contract unless
paragraph 13 quoted above. the monthly rental is P1,200.00 is contrary to law, morals, good customs, public policy,
there was already a consummated and finished mutual agreement of the parties to renew justice and equity because no one should unjustly enrich herself at the expense of
the contract of lease after five years; what is only left unsettled between the parties to the another. Article 1197 and 1670 of the New Civil Code must therefore govern the case at
contract of lease is the amount of the monthly rental; the lessor insists Pl,200 a month, bar and whereby this Court is authorized to fix the period thereof by ordering the renewal
while the lessee is begging P700 a month which doubled the P350 monthly rental under of the lease contract to another fixed term of five (5) years. 17
the original contract .... In short, the lease contract has never expired because paragraph Clearly, the respondent judge's grasp of both the law and the Enghsh language is tenuous
13 thereof had expressly mandated that it is renewable. ... 16 at best. We are otherwise unable to comprehend how he arrived at the reading set forth
In the "Judgment by Default" he rendered, the respondent Judge elaborated his views — above. Paragraph 13 of the Contract of Lease can only mean that the lessor and lessee
obviously highly emotional in character — in the following extraordinary tatements: may agree to renew the contract upon their reaching agreement on the terms and
However, it is now the negative posture of the defendant-lessor to block, reject and refuse conditions to be embodied in such renewal contract. Failure to reach agreement on the
to renew said lease contract. It is the defendant-lessor's assertion and position that she can terms and conditions of the renewal contract will of course prevent the contract from
at the mere click of her fingers, just throw-out the plaintiffs-lessees from the leased being renewed at all. In the instant case, the lessor and the lessee conspicuously failed to
premises and any time after the original term of the lease contract had already expired; reach agreement both on the amount of the rental to be payable during the renewal term,
This negative position of the defendantlessor, to the mind of this Court does not conform and on the term of the renewed contract.
to the principles and correct application of the philosophy underlying the law of lease; for The respondent judge cited Articles 1197 and 1670 of the Civil Code to sustain the
indeed, the law of lease is impressed with public interest, social justice and equity; reason "Judgment by Default" by which he ordered the renewal of the lease for another term of
for which, this Court cannot sanction lot owner's business and commercial speculations five years and fixed monthly rentals thereunder at P700.00 a month. Article 1197 of the
by allowing them with "unbridled discretion" to raise rentals even to the extent of Civil Code provides as follows:
"extraordinary gargantuan proportions, and calculated to unreasonably and unjustly If the obligation does not fix a period, but from its nature and the circumstances it can be
eject the helpless lessee because he cannot afford said inflated monthly rental and inferred that a period was intended, the courts may fix the duration thereof.
thereby said lessee is placed without any alternative, except to surrender and vacate the The courts shall also fix the duration of the period when it depends upon the will of the
premises mediately,-" Many business establishments would be closed and the public debtor.
would directly suffer the direct consequences; Nonetheless, this is not the correct concept In every case, the courts shall determine such period as may, under the circumstances,
or perspective the law of lease, that is, to place the lessee always at the mercy of the have been probably contemplated by the parties. Once fixed by the courts, the period
lessor's "Merchant of Venice" and to agit the latter's personal whims and caprices; the cannot be changed by them. (Emphasis supplied.)
defendant-lessor's hostile attitude by imposing upon the lessee herein an "unreasonable The first paragraph of Article 1197 is clearly inapplicable, since the Contract of Lease did
and extraordinary gargantuan monthly rental of P1,200.00", to the mind of this Court, is in fact fix an original period of five years, which had expired. It is also clear from
"fly-by night unjust enrichment" at the expense of said lessees; but, no Man should paragraph 13 of the Contract of Lease that the parties reserved to themselves the faculty
unjustly enrich himself at the expense of another; under these facts and circumstances of agreeing upon the period of the renewal contract. The second paragraph of Article
surrounding this case, the action therefore to renew the lease contract! is "tenable" 1197 is equally clearly inapplicable since the duration of the renewal period was not left
because it falls squarely within the coverage and command of Articles 1197 and 1670 of to the wiu of the lessee alone, but rather to the will of both the lessor and the lessee. Most
the New Civil Code, to wit: importantly, Article 1197 applies only where a contract of lease clearly exists. Here, the
x x x           x x x          x x x contract was not renewed at all, there was in fact no contract at all the period of which
The term "to be renewed" as expressly stipulated by the herein parties in the original could have been fixed.
contract of lease means that the lease may be renewed for another term of five (5) years; Article 1670 of the Civil Code reads thus:

56
If at the end of the contract the lessee should continue enjoying the thing left for 15 days
with the acquiescence of the lessor and unless a notice to the contrary by either party has
previously been given. It is understood that there is an implied new lease, not for the
period of the original contract but for the time established in Articles 1682 and 1687. The
ther terms of the original contract shall be revived. (Emphasis suplied.)
The respondents themselves, public and private, do not pretend that the continued
occupancy of the leased premises after 31 May 1980, the date of expiration of the
contract, was with the acquiescence of the lessor. Even if it be assumed that tacite
reconduccion had occurred, the implied new lease could not possibly have a period of
five years, but rather would have been a month-to-month lease since the rentals (under
the original contract) were payable on a monthly basis. At the latest, an implied new lease
(had one arisen) would have expired as of the end of July 1980 in view of the written
demands served by the petitioner upon the private respondents to vacate the previously
leased premises.
It follows that the respondent judge's decision requiring renewal of the lease has no basis
in law or in fact. Save in the limited and exceptional situations envisaged inArticles ll97
and 1670 of the Civil Code, which do not obtain here, courts have no authority to
prescribe the terms and conditions of a contract for the parties. As pointed out by Mr.
Justice J.B.L. Reyes in Republic vs. Philippine Long Distance Telephone,Co.,[[18
[P]arties cannot be coerced to enter into a contract where no agreement is had between
them as to the principal terms and conditions of the contract. Freedom to stipulate such
terms and conditions is of the essence of our contractual system, and by express provision
of the statute, a contract may be annulled if tainted by violence, intimidation or undue
influence (Article 1306, 1336, 1337, Civil Code of the Philippines).
Contractual terms and conditions created by a court for two parties are a contradiction in
terms. If they are imposed by a judge who draws upon his own private notions of what
morals, good customs, justice, equity and public policy" demand, the resulting
"agreement" cannot, by definition, be consensual or contractual in nature. It would also
follow that such coerced terms and conditions cannot be the law as between the parties
themselves. Contracts spring from the volition of the parties. That volition cannot be
supplied by a judge and a judge who pretends to do so, acts tyrannically, arbitrarily and in
excess of his jurisdiction. 19
WHEREFORE, the Petition for Certiorari, Prohibition and mandamus is granted. The
Orders of the respondent judge in Civil Case No. 1434 dated 26 September 1980
(denying petitioner's motion to dismiss) and 4 November 1980 (denying petitioner's
motion for reconsideration), and the "Judgment by Default" rendered by the respondent
judge dated 26 November 1980, are hereby annulled and set aside and Civil Case No.
1434 is hereby dismissed. The temporary restraining order dated 21 November 1980
issued by this ourt, is hereby made permanent. No pronouncement as to costs.
SO ORDERED.

57
THIRD DIVISION Philtranco, jointly and severally, to pay P50,000.00 as death indemnity to the heirs of
  Armando; P50,000.00 as death indemnity to the heirs of Mabansag; and P90,083.93 as
  actual damages to the private complainants.
ROLITO CALANG and PHILTRANCO G.R. No. 190696  
SERVICE ENTERPRISES, INC.,   The petitioners appealed the RTC decision to the Court of Appeals (CA), docketed as
Petitioners, Present: CA-G.R. CR No. 25522. The CA, in its decision dated November 20, 2009, affirmed the
    RTC decision in toto. The CA ruled that petitioner Calang failed to exercise due care and
  CARPIO MORALES, J., Chairperson,precaution in driving the Philtranco bus. According to the CA, various eyewitnesses
-         versus - BRION, testified that the bus was traveling fast and encroached into the opposite lane when it
  BERSAMIN, evaded a pushcart that was on the side of the road. In addition, he failed to slacken his
*
  ABAD, and speed, despite admitting that he had already seen the jeep coming from the opposite
PEOPLE OF THE PHILIPPINES, VILLARAMA, JR., JJ. direction when it was still half a kilometer away. The CA further ruled that Calang
Respondent. -- -   demonstrated a reckless attitude when he drove the bus, despite knowing that it was
Promulgated: suffering from loose compression, hence, not roadworthy.
   
August 3, 2010 The CA added that the RTC correctly held Philtranco jointly and severally liable with
x-----------------------------------------------------------------------------------------x petitioner Calang, for failing to prove that it had exercised the diligence of a good father
  of the family to prevent the accident.
RESOLUTION  
  The petitioners filed with this Court a petition for review on certiorari. In our Resolution
BRION, J.: dated February 17, 2010, we denied the petition for failure to sufficiently show any
  reversible error in the assailed decision to warrant the exercise of this Courts
We resolve the motion for reconsideration filed by the petitioners, Philtranco Service discretionary appellate jurisdiction.
Enterprises, Inc. (Philtranco) and Rolito Calang, to challenge our Resolution of February  
17, 2010. Our assailed Resolution denied the petition for review on certiorari for failure The Motion for Reconsideration
to show any reversible error sufficient to warrant the exercise of this Courts discretionary  
appellate jurisdiction. In the present motion for reconsideration, the petitioners claim that there was no basis to
  hold Philtranco jointly and severally liable with Calang because the former was not a
Antecedent Facts party in the criminal case (for multiple homicide with multiple serious physical injuries
At around 2:00 p.m. of April 22, 1989, Rolito Calang was driving Philtranco Bus No. and damage to property thru reckless imprudence) before the RTC.
7001, owned by Philtranco along Daang Maharlika Highway in BarangayLambao, Sta.  
Margarita, Samar when its rear left side hit the front left portion of a Sarao jeep coming The petitioners likewise maintain that the courts below overlooked several relevant facts,
from the opposite direction. As a result of the collision, Cresencio Pinohermoso, the jeeps supported by documentary exhibits, which, if considered, would have shown that Calang
driver, lost control of the vehicle, and bumped and killed Jose Mabansag, a bystander was not negligent, such as the affidavit and testimony of witness Celestina Cabriga; the
who was standing along the highways shoulder. The jeep turned turtle three (3) times testimony of witness Rodrigo Bocaycay; the traffic accident sketch and report; and the
before finally stopping at about 25 meters from the point of impact. Two of the jeeps jeepneys registration receipt. The petitioners also insist that the jeeps driver had the last
passengers, Armando Nablo and an unidentified woman, were instantly killed, while the clear chance to avoid the collision.
other passengers sustained serious physical injuries.  
  We partly grant the motion.
The prosecution charged Calang with multiple homicide, multiple serious physical  
injuries and damage to property thru reckless imprudence before the Regional Trial Court  
(RTC), Branch 31, Calbayog City. The RTC, in its decision dated May 21, 2001, found  
Calang guilty beyond reasonable doubt of reckless imprudence resulting to multiple  
homicide, multiple physical injuries and damage to property, and sentenced him to suffer Liability of Calang
an indeterminate penalty of thirty days of arresto menor, as minimum, to four years and  
two months of prision correccional, as maximum. The RTC ordered Calang and

58
We see no reason to overturn the lower courts finding on Calangs culpability. The finding The provisions of the Revised Penal Code on subsidiary liability Articles 102 and 103 are
of negligence on his part by the trial court, affirmed by the CA, is a question of fact that deemed written into the judgments in cases to which they are applicable. Thus, in the
we cannot pass upon without going into factual matters touching on the finding of dispositive portion of its decision, the trial court need not expressly pronounce
negligence. In petitions for review on certiorari underRule 45 of the Revised Rules of the subsidiary liability of the employer.[3] Nonetheless, before the employers
Court, this Court is limited to reviewing only errors of law, not of fact, unless the factual subsidiary liability is enforced, adequate evidence must exist establishing that (1) they are
findings complained of are devoid of support by the evidence on record, or the assailed indeed the employers of the convicted employees; (2) they are engaged in some kind of
judgment is based on a misapprehension of facts. industry; (3) the crime was committed by the employees in the discharge of their duties;
  and (4) the execution against the latter has not been satisfied due to insolvency. The
Liability of Philtranco determination of these conditions may be done in the same criminal action in which the
  employees liability, criminal and civil, has been pronounced, in a hearing set for that
We, however, hold that the RTC and the CA both erred in holding Philtranco jointly and precise purpose, with due notice to the employer, as part of the proceedings for the
severally liable with Calang. We emphasize that Calang was charged criminally before execution of the judgment.[4]
the RTC. Undisputedly, Philtranco was not a direct party in this case. Since the cause of  
action against Calang was based on delict, both the RTC and the CA erred in holding WHEREFORE, we PARTLY GRANT the present motion. The Court of Appeals
Philtranco jointly and severally liable with Calang, based on quasi-delict under Articles decision that affirmed in toto the RTC decision, finding Rolito Calang guilty beyond
2176[1] and 2180[2] of the Civil Code. Articles 2176 and 2180 of the Civil Code pertain to reasonable doubt of reckless imprudence resulting in multiple homicide, multiple serious
the vicarious liability of an employer for quasi-delicts that an employee has committed. physical injuries and damage to property, is AFFIRMED, with
Such provision of law does not apply to civil liability arising from delict. the MODIFICATION that Philtrancos liability should only be subsidiary. No costs.
   
If at all, Philtrancos liability may only be subsidiary. Article 102 of the Revised Penal SO ORDERED.
Code states the subsidiary civil liabilities of innkeepers, tavernkeepers and proprietors of
establishments, as follows:
 
In default of the persons criminally liable, innkeepers, tavernkeepers, and any other
persons or corporations shall be civilly liable for crimes committed in their
establishments, in all cases where a violation of municipal ordinances or some general or
special police regulations shall have been committed by them or their employees.
 
Innkeepers are also subsidiary liable for the restitution of goods taken by robbery or theft
within their houses from guests lodging therein, or for the payment of the value thereof,
provided that such guests shall have notified in advance the innkeeper himself, or the
person representing him, of the deposit of such goods within the inn; and shall
furthermore have followed the directions which such innkeeper or his representative may
have given them with respect to the care of and vigilance over such goods. No liability
shall attach in case of robbery with violence against or intimidation of persons unless
committed by the innkeepers employees.
 
The foregoing subsidiary liability applies to employers, according to Article 103 of the
Revised Penal Code, which reads:
 
The subsidiary liability established in the next preceding article shall also apply to
employers, teachers, persons, and corporations engaged in any kind of industry for
felonies committed by their servants, pupils, workmen, apprentices, or employees in the
discharge of their duties.
 

59
SECOND DIVISION his prorata share in the P55,000.00 initial payment. Another defendant, Pilar P. Tan,
G.R. No. L-55138 September 28, 1984 offered to pay the same amount. Because private respondent refused to accept their
ERNESTO V. RONQUILLO, petitioner,  payments, demanding from them the full initial installment of P 55,000.00, petitioner and
vs. Pilar Tan instead deposited the said amount with the Clerk of Court. The amount
HONORABLE COURT OF APPEALS AND ANTONIO P. SO, respondents. deposited was subsequently withdrawn by private respondent. 3
Gloria A. Fortun for petitioner. On the same day, January 16, 1980, the lower court ordered the issuance of a writ of
Roselino Reyes Isler for respondents. execution for the balance of the initial amount payable, against the other two defendants,
Offshore Catertrade Inc. and Johnny Tan 4 who did not pay their shares.
CUEVAS, J.: On January 22, 1980, private respondent moved for the reconsideration and/or
This is a petition to review the Resolution dated June 30, 1980 of the then Court of modification of the aforesaid Order of execution and prayed instead for the "execution of
Appeals (now the Intermediate Appellate Court) in CA-G.R. No. SP-10573, the decision in its entirety against all defendants, jointly and severally." 5 Petitioner
entitled "Ernesto V. Ronquillo versus the Hon. Florellana Castro-Bartolome, etc." and opposed the said motion arguing that under the decision of the lower court being
the Order of said court dated August 20, 1980, denying petitioner's motion for executed which has already become final, the liability of the four (4) defendants was not
reconsideration of the above resolution. expressly declared to be solidary, consequently each defendant is obliged to pay only his
Petitioner Ernesto V. Ronquillo was one of four (4) defendants in Civil Case No. 33958 own pro-rata or 1/4 of the amount due and payable.
of the then Court of First Instance of Rizal (now the Regional Trial Court), Branch XV On March 17, 1980, the lower court issued an Order reading as follows:
filed by private respondent Antonio P. So, on July 23, 1979, for the collection of the sum ORDER
of P17,498.98 plus attorney's fees and costs. The other defendants were Offshore Regardless of whatever the compromise agreement has intended the payment whether
Catertrade Inc., Johnny Tan and Pilar Tan. The amount of P117,498.98 sought to be jointly or individually, or jointly and severally, the fact is that only P27,500.00 has been
collected represents the value of the checks issued by said defendants in payment for paid. There appears to be a non-payment in accordance with the compromise agreement
foodstuffs delivered to and received by them. The said checks were dishonored by the of the amount of P27,500.00 on or before December 24, 1979. The parties are reminded
drawee bank. that the payment is condition sine qua non to the lifting of the preliminary attachment and
On December 13, 1979, the lower court rendered its Decision 1 based on the compromise the execution of an affidavit of desistance.
agreement submitted by the parties, the pertinent portion of which reads as follows: WHEREFORE, let writ of execution issue as prayed for
1. Plaintiff agrees to reduce its total claim of P117,498-95 to only P11,000 .00 and On March 17, 1980, petitioner moved for the reconsideration of the above order, and the
defendants agree to acknowledge the validity of such claim and further bind themselves same was set for hearing on March 25,1980.
to initially pay out of the total indebtedness of P10,000.00 the amount of P55,000.00 on Meanwhile, or more specifically on March 19, 1980, a writ of execution was issued for
or before December 24, 1979, the balance of P55,000.00, defendants individually and the satisfaction of the sum of P82,500.00 as against the properties of the defendants
jointly agree to pay within a period of six months from January 1980, or before June 30, (including petitioner), "singly or jointly hable." 6
1980; (Emphasis supplied) On March 20, 1980, Special Sheriff Eulogio C. Juanson of Rizal, issued a notice of
xxx xxx xxx sheriff's sale, for the sale of certain furnitures and appliances found in petitioner's
4. That both parties agree that failure on the part of either party to comply with the residence to satisfy the sum of P82,500.00. The public sale was scheduled for April 2,
foregoing terms and conditions, the innocent party will be entitled to an execution of the 1980 at 10:00 a.m. 7
decision based on this compromise agreement and the defaulting party agrees and hold Petitioner's motion for reconsideration of the Order of Execution dated March 17, 1980
themselves to reimburse the innocent party for attorney's fees, execution fees and other which was set for hearing on March 25, 1980, was upon motion of private respondent
fees related with the execution. reset to April 2, 1980 at 8:30 a.m. Realizing the actual threat to property rights poised by
xxx xxx xxx the re-setting of the hearing of s motion for reconsideration for April 2, 1980 at 8:30 a.m.
On December 26, 1979, herein private respondent (then plaintiff filed a Motion for such that if his motion for reconsideration would be denied he would have no more time
Execution on the ground that defendants failed to make the initial payment of P55,000.00 to obtain a writ from the appellate court to stop the scheduled public sale of his personal
on or before December 24, 1979 as provided in the Decision. Said motion for execution properties at 10:00 a.m. of the same day, April 2, 1980, petitioner filed on March 26,
was opposed by herein petitioner (as one of the defendants) contending that his inability 1980 a petition for certiorari and prohibition with the then Court of Appeals (CA-G.R.
to make the payment was due to private respondent's own act of making himself scarce No. SP-10573), praying at the same time for the issuance of a restraining order to stop the
and inaccessible on December 24, 1979. Petitioner then prayed that private respondent be public sale. He raised the question of the validity of the order of execution, the writ of
ordered to accept his payment in the amount of P13,750.00. 2 execution and the notice of public sale of his properties to satisfy fully the entire unpaid
During the hearing of the Motion for Execution and the Opposition thereto on January obligation payable by all of the four (4) defendants, when the lower court's decision
16, 1980, petitioner, as one of the four defendants, tendered the amount of P13,750.00, as

60
based on the compromise agreement did not specifically state the liability of the four (4) 1. Was the filing of a petition for certiorari before the then Court of Appeals against the
defendants to be solidary. Order of Execution issued by the lower court, dated March 17, 1980, proper, despite the
On April 2, 1980, the lower court denied petitioner's motion for reconsideration but the pendency of a motion for reconsideration of the same questioned Order?
scheduled public sale in that same day did not proceed in view of the pendency of a 2. What is the nature of the liability of the defendants (including petitioner), was it
certiorari proceeding before the then Court of Appeals. merely joint, or was it several or solidary?
On June 30, 1980, the said court issued a Resolution, the pertinent portion of which reads Anent the first issue raised, suffice it to state that while as a general rule, a motion for
as follows: reconsideration should precede recourse to certiorari in order to give the trial court an
This Court, however, finds the present petition to have been filed prematurely. The rule is opportunity to correct the error that it may have committed, the said rule is not
that before a petition for certiorari can be brought against an order of a lower court, all absolutes 9 and may be dispensed with in instances where the filing of a motion for
remedies available in that court must first be exhausted. In the case at bar, herein reconsideration would serve no useful purpose, such as when the motion for
petitioner filed a petition without waiting for a resolution of the Court on the motion for reconsideration would raise the same point stated in the motion 10 or where the error is
reconsideration, which could have been favorable to the petitioner. The fact that the patent for the order is void 11 or where the relief is extremely urgent, as in cases where
hearing of the motion for reconsideration had been reset on the same day the public sale execution had already been ordered 12 where the issue raised is one purely of law. 13
was to take place is of no moment since the motion for reconsideration of the Order of In the case at bar, the records show that not only was a writ of execution issued but
March 17, 1980 having been seasonably filed, the scheduled public sale should be petitioner's properties were already scheduled to be sold at public auction on April 2,
suspended. Moreover, when the defendants, including herein petitioner, defaulted in their 1980 at 10:00 a.m. The records likewise show that petitioner's motion for reconsideration
obligation based on the compromise agreement, private respondent had become entitled of the questioned Order of Execution was filed on March 17, 1980 and was set for
to move for an execution of the decision based on the said agreement. hearing on March 25, 1980 at 8:30 a.m., but upon motion of private respondent, the
WHEREFORE, the instant petition for certiorari and prohibition with preliminary hearing was reset to April 2, 1980 at 8:30 a.m., the very same clay when petitioner's
injunction is hereby denied due course. The restraining order issued in our resolution properties were to be sold at public auction. Needless to state that under the
dated April 9, 1980 is hereby lifted without pronouncement as to costs. circumstances, petitioner was faced with imminent danger of his properties being
SO ORDERED. immediately sold the moment his motion for reconsideration is denied. Plainly, urgency
Petitioner moved to reconsider the aforesaid Resolution alleging that on April 2, 1980, prompted recourse to the Court of Appeals and the adequate and speedy remedy for
the lower court had already denied the motion referred to and consequently, the legal petitioner under the situation was to file a petition for certiorari with prayer for
issues being raised in the petition were already "ripe" for determination. 8 The said restraining order to stop the sale. For him to wait until after the hearing of the motion for
motion was however denied by the Court of Appeals in its Resolution dated August 20, reconsideration on April 2, 1980 before taking recourse to the appellate court may
1980. already be too late since without a restraining order, the public sale can proceed at 10:00
Hence, this petition for review, petitioner contending that the Court of Appeals erred in that morning. In fact, the said motion was already denied by the lower court in its order
(a) declaring as premature, and in denying due course to the petition to restrain dated April 2, 1980 and were it not for the pendency of the petition with the Court of
implementation of a writ of execution issued at variance with the final decision of the Appeals and the restraining order issued thereafter, the public sale scheduled that very
lower court filed barely four (4) days before the scheduled public sale of the attached same morning could have proceeded.
movable properties; The other issue raised refers to the nature of the liability of petitioner, as one of the
(b) denying reconsideration of the Resolution of June 30, 1980, which declared as defendants in Civil Case No. 33958, that is whether or not he is liable jointly or
premature the filing of the petition, although there is proof on record that as of April 2, solidarily.
1980, the motion referred to was already denied by the lower court and there was no In this regard, Article 1207 and 1208 of the Civil Code provides —
more motion pending therein; Art. 1207. The concurrence of two or more debtors in one and the same obligation does
(c) failing to resolve the legal issues raised in the petition and in not declaring the not imply that each one of the former has a right to demand, or that each one of the latter
liabilities of the defendants, under the final decision of the lower court, to be only joint; is bound to render, entire compliance with the prestation. Then is a solidary liability only
(d) not holding the lower court's order of execution dated March 17, 1980, the writ of when the obligation expressly so states, or when the law or the nature of the obligation
execution and the notice of sheriff's sale, executing the lower court's decision against "all requires solidarity.
defendants, singly and jointly", to be at variance with the lower court's final decision Art. 1208. If from the law,or the nature or the wording of the obligation to which the
which did not provide for solidary obligation; and preceding article refers the contrary does not appear, the credit or debt shall be presumed
(e) not declaring as invalid and unlawful the threatened execution, as against the to be divided into as many equal shares as there are creditors and debtors, the credits or
properties of petitioner who had paid his pro-rata share of the adjudged obligation, of the debts being considered distinct from one another, subject to the Rules of Court governing
total unpaid amount payable by his joint co-defendants. the multiplicity of quits.
The foregoing assigned errors maybe synthesized into the more important issues of — The decision of the lower court based on the parties' compromise agreement, provides:

61
1. Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and
defendants agree to acknowledge the validity of such claim and further bind themselves
to initially pay out of the total indebtedness of P110,000.00, the amount of P5,000.00 on
or before December 24, 1979, the balance of P55,000.00, defendants individually and
jointly agree to pay within a period of six months from January 1980 or before June 30,
1980. (Emphasis supply)
Clearly then, by the express term of the compromise agreement and the decision based
upon it, the defendants obligated themselves to pay their obligation "individually and
jointly".
The term "individually" has the same meaning as "collectively", "separately",
"distinctively", respectively or "severally". An agreement to be "individually liable"
undoubtedly creates a several obligation, 14 and a "several obligation is one by which
one individual binds himself to perform the whole obligation. 15
In the case of Parot vs. Gemora 16 We therein ruled that "the phrase juntos or
separadamente or in the promissory note is an express statement making each of the
persons who signed it individually liable for the payment of the fun amount of the
obligation contained therein." Likewise in Un Pak Leung vs. Negorra 17 We held that "in
the absence of a finding of facts that the defendants made themselves individually hable
for the debt incurred they are each liable only for one-half of said amount
The obligation in the case at bar being described as "individually and jointly", the same is
therefore enforceable against one of the numerous obligors.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the instant petition is hereby
DISMISSED. Cost against petitioner.
SO ORDERED.

62
SECOND DIVISION Defendant Sio Choy and the petitioner insurance company, in their answer, also denied
G.R. No. L-36413 September 26, 1988 liability to the plaintiff, claiming that the fault in the accident was solely imputable to the
MALAYAN INSURANCE CO., INC., petitioner,  PANTRANCO.
vs. Sio Choy, however, later filed a separate answer with a cross-claim against the herein
THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, petitioner wherein he alleged that he had actually paid the plaintiff, Martin C. Vallejos,
SIO CHOY, SAN LEON RICE MILL, INC. and PANGASINAN the amount of P5,000.00 for hospitalization and other expenses, and, in his cross-claim
TRANSPORTATION CO., INC., respondents. against the herein petitioner, he alleged that the petitioner had issued in his favor a private
Freqillana Jr. for petitioner. car comprehensive policy wherein the insurance company obligated itself to indemnify
B.F. Estrella & Associates for respondent Martin Vallejos. Sio Choy, as insured, for the damage to his motor vehicle, as well as for any liability to
Vicente Erfe Law Office for respondent Pangasinan Transportation Co., Inc. third persons arising out of any accident during the effectivity of such insurance contract,
Nemesio Callanta for respondent Sio Choy and San Leon Rice Mill, Inc. which policy was in full force and effect when the vehicular accident complained of
occurred. He prayed that he be reimbursed by the insurance company for the amount that
PADILLA, J.: he may be ordered to pay.
Review on certiorari of the judgment * of the respondent appellate court in CA-G.R. No. Also later, the herein petitioner sought, and was granted, leave to file a third-party
47319-R, dated 22 February 1973, which affirmed, with some modifications, the complaint against the San Leon Rice Mill, Inc. for the reason that the person driving the
decision, ** dated 27 April 1970, rendered in Civil Case No. U-2021 of the Court of First jeep of Sio Choy, at the time of the accident, was an employee of the San Leon Rice Mill,
Instance of Pangasinan. Inc. performing his duties within the scope of his assigned task, and not an employee of
The antecedent facts of the case are as follows: Sio Choy; and that, as the San Leon Rice Mill, Inc. is the employer of the deceased
On 29 March 1967, herein petitioner, Malayan Insurance Co., Inc., issued in favor of driver, Juan P. Campollo, it should be liable for the acts of its employee, pursuant to Art.
private respondent Sio Choy Private Car Comprehensive Policy No. MRO/PV-15753, 2180 of the Civil Code. The herein petitioner prayed that judgment be rendered against
effective from 18 April 1967 to 18 April 1968, covering a Willys jeep with Motor No. the San Leon Rice Mill, Inc., making it liable for the amounts claimed by the plaintiff
ET-03023 Serial No. 351672, and Plate No. J-21536, Quezon City, 1967. The insurance and/or ordering said San Leon Rice Mill, Inc. to reimburse and indemnify the petitioner
coverage was for "own damage" not to exceed P600.00 and "third-party liability" in the for any sum that it may be ordered to pay the plaintiff.
amount of P20,000.00. After trial, judgment was rendered as follows:
During the effectivity of said insurance policy, and more particularly on 19 December WHEREFORE, in view of the foregoing findings of this Court judgment is hereby
1967, at about 3:30 o'clock in the afternoon, the insured jeep, while being driven by one rendered in favor of the plaintiff and against Sio Choy and Malayan Insurance Co., Inc.,
Juan P. Campollo an employee of the respondent San Leon Rice Mill, Inc., collided with and third-party defendant San Leon Rice Mill, Inc., as follows:
a passenger bus belonging to the respondent Pangasinan Transportation Co., Inc. (a) P4,103 as actual damages;
(PANTRANCO, for short) at the national highway in Barrio San Pedro, Rosales, (b) P18,000.00 representing the unearned income of plaintiff Martin C. Vallejos for the
Pangasinan, causing damage to the insured vehicle and injuries to the driver, Juan P. period of three (3) years;
Campollo, and the respondent Martin C. Vallejos, who was riding in the ill-fated jeep. (c) P5,000.00 as moral damages;
As a result, Martin C. Vallejos filed an action for damages against Sio Choy, Malayan (d) P2,000.00 as attomey's fees or the total of P29,103.00, plus costs.
Insurance Co., Inc. and the PANTRANCO before the Court of First Instance of The above-named parties against whom this judgment is rendered are hereby held jointly
Pangasinan, which was docketed as Civil Case No. U-2021. He prayed therein that the and severally liable. With respect, however, to Malayan Insurance Co., Inc., its liability
defendants be ordered to pay him, jointly and severally, the amount of P15,000.00, as will be up to only P20,000.00.
reimbursement for medical and hospital expenses; P6,000.00, for lost income; As no satisfactory proof of cost of damage to its bus was presented by defendant
P51,000.00 as actual, moral and compensatory damages; and P5,000.00, for attorney's Pantranco, no award should be made in its favor. Its counter-claim for attorney's fees is
fees. also dismissed for not being proved. 1
Answering, PANTRANCO claimed that the jeep of Sio Choy was then operated at an On appeal, the respondent Court of Appeals affirmed the judgment of the trial court that
excessive speed and bumped the PANTRANCO bus which had moved to, and stopped at, Sio Choy, the San Leon Rice Mill, Inc. and the Malayan Insurance Co., Inc. are jointly
the shoulder of the highway in order to avoid the jeep; and that it had observed the and severally liable for the damages awarded to the plaintiff Martin C. Vallejos. It ruled,
diligence of a good father of a family to prevent damage, especially in the selection and however, that the San Leon Rice Mill, Inc. has no obligation to indemnify or reimburse
supervision of its employees and in the maintenance of its motor vehicles. It prayed that it the petitioner insurance company for whatever amount it has been ordered to pay on its
be absolved from any and all liability. policy, since the San Leon Rice Mill, Inc. is not a privy to the contract of insurance
between Sio Choy and the insurance company. 2
Hence, the present recourse by petitioner insurance company.

63
The petitioner prays for the reversal of the appellate court's judgment, or, in the The responsibility treated in this article shall cease when the persons herein mentioned
alternative, to order the San Leon Rice Mill, Inc. to reimburse petitioner any amount, in proved that they observed all the diligence of a good father of a family to prevent
excess of one-half (1/2) of the entire amount of damages, petitioner may be ordered to damage.
pay jointly and severally with Sio Choy. It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are the principal
The Court, acting upon the petition, gave due course to the same, but "only insofar as it tortfeasors who are primarily liable to respondent Vallejos. The law states that the
concerns the alleged liability of respondent San Leon Rice Mill, Inc. to petitioner, it responsibility of two or more persons who are liable for a quasi-delict is solidarily.4
being understood that no other aspect of the decision of the Court of Appeals shall be On the other hand, the basis of petitioner's liability is its insurance contract with
reviewed, hence, execution may already issue in favor of respondent Martin C. Vallejos respondent Sio Choy. If petitioner is adjudged to pay respondent Vallejos in the amount
against the respondents, without prejudice to the determination of whether or not of not more than P20,000.00, this is on account of its being the insurer of respondent Sio
petitioner shall be entitled to reimbursement by respondent San Leon Rice Mill, Inc. for Choy under the third party liability clause included in the private car comprehensive
the whole or part of whatever the former may pay on the P20,000.00 it has been adjudged policy existing between petitioner and respondent Sio Choy at the time of the complained
to pay respondent Vallejos." 3 vehicular accident.
However, in order to determine the alleged liability of respondent San Leon Rice Mill, In Guingon vs. Del Monte, 5 a passenger of a jeepney had just alighted therefrom, when
Inc. to petitioner, it is important to determine first the nature or basis of the liability of he was bumped by another passenger jeepney. He died as a result thereof. In the damage
petitioner to respondent Vallejos, as compared to that of respondents Sio Choy and San suit filed by the heirs of said passenger against the driver and owner of the jeepney at
Leon Rice Mill, Inc. fault as well as against the insurance company which insured the latter jeepney against
Therefore, the two (2) principal issues to be resolved are (1) whether the trial court, as third party liability, the trial court, affirmed by this Court, adjudged the owner and the
upheld by the Court of Appeals, was correct in holding petitioner and respondents Sio driver of the jeepney at fault jointly and severally liable to the heirs of the victim in the
Choy and San Leon Rice Mill, Inc. "solidarily liable" to respondent Vallejos; and (2) total amount of P9,572.95 as damages and attorney's fees; while the insurance company
whether petitioner is entitled to be reimbursed by respondent San Leon Rice Mill, Inc. for was sentenced to pay the heirs the amount of P5,500.00 which was to be applied as
whatever amount petitioner has been adjudged to pay respondent Vallejos on its partial satisfaction of the judgment rendered against said owner and driver of the jeepney.
insurance policy. Thus, in said Guingon case, it was only the owner and the driver of the jeepney at fault,
As to the first issue, it is noted that the trial court found, as affirmed by the appellate not including the insurance company, who were held solidarily liable to the heirs of the
court, that petitioner and respondents Sio Choy and San Leon Rice Mill, Inc. are jointly victim.
and severally liable to respondent Vallejos. While it is true that where the insurance contract provides for indemnity against liability
We do not agree with the aforesaid ruling. We hold instead that it is only respondents Sio to third persons, such third persons can directly sue the insurer, 6 however, the direct
Choy and San Leon Rice Mill, Inc, (to the exclusion of the petitioner) that are solidarily liability of the insurer under indemnity contracts against third party liability does not
liable to respondent Vallejos for the damages awarded to Vallejos. mean that the insurer can be held solidarily liable with the insured and/or the other parties
It must be observed that respondent Sio Choy is made liable to said plaintiff as owner of found at fault. The liability of the insurer is based on contract; that of the insured is based
the ill-fated Willys jeep, pursuant to Article 2184 of the Civil Code which provides: on tort.
Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the In the case at bar, petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it
former, who was in the vehicle, could have, by the use of due diligence, prevented the cannot, as incorrectly held by the trial court, be made "solidarily" liable with the two
misfortune it is disputably presumed that a driver was negligent, if he had been found principal tortfeasors namely respondents Sio Choy and San Leon Rice Mill, Inc. For if
guilty of reckless driving or violating traffic regulations at least twice within the next petitioner-insurer were solidarily liable with said two (2) respondents by reason of the
preceding two months. indemnity contract against third party liability-under which an insurer can be directly
If the owner was not in the motor vehicle, the provisions of article 2180 are applicable. sued by a third party — this will result in a violation of the principles underlying solidary
On the other hand, it is noted that the basis of liability of respondent San Leon Rice Mill, obligation and insurance contracts.
Inc. to plaintiff Vallejos, the former being the employer of the driver of the Willys jeep at In solidary obligation, the creditor may enforce the entire obligation against one of the
the time of the motor vehicle mishap, is Article 2180 of the Civil Code which reads: solidary debtors. 7 On the other hand, insurance is defined as "a contract whereby one
Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own undertakes for a consideration to indemnify another against loss, damage, or liability
acts or omissions, but also for those of persons for whom one is responsible. arising from an unknown or contingent event." 8
xxx xxx xxx In the case at bar, the trial court held petitioner together with respondents Sio Choy and
Employers shall be liable for the damages caused by their employees and household San Leon Rice Mills Inc. solidarily liable to respondent Vallejos for a total amount of
helpers acting within the scope of their assigned tasks, even though the former are not P29,103.00, with the qualification that petitioner's liability is only up to P20,000.00. In
engaged ill any business or industry. the context of a solidary obligation, petitioner may be compelled by respondent Vallejos
xxx xxx xxx to pay the entire obligation of P29,013.00, notwithstanding the qualification made by the

64
trial court. But, how can petitioner be obliged to pay the entire obligation when the In accordance with Article 1217, petitioner, upon payment to respondent Vallejos and
amount stated in its insurance policy with respondent Sio Choy for indemnity against thereby becoming the subrogee of solidary debtor Sio Choy, is entitled to reimbursement
third party liability is only P20,000.00? Moreover, the qualification made in the decision from respondent San Leon Rice Mill, Inc.
of the trial court to the effect that petitioner is sentenced to pay up to P20,000.00 only To recapitulate then: We hold that only respondents Sio Choy and San Leon Rice Mill,
when the obligation to pay P29,103.00 is made solidary, is an evident breach of the Inc. are solidarily liable to the respondent Martin C. Vallejos for the amount of
concept of a solidary obligation. Thus, We hold that the trial court, as upheld by the P29,103.00. Vallejos may enforce the entire obligation on only one of said solidary
Court of Appeals, erred in holding petitioner, solidarily liable with respondents Sio Choy debtors. If Sio Choy as solidary debtor is made to pay for the entire obligation
and San Leon Rice Mill, Inc. to respondent Vallejos. (P29,103.00) and petitioner, as insurer of Sio Choy, is compelled to pay P20,000.00 of
As to the second issue, the Court of Appeals, in affirming the decision of the trial court, said entire obligation, petitioner would be entitled, as subrogee of Sio Choy as against
ruled that petitioner is not entitled to be reimbursed by respondent San Leon Rice Mill, San Leon Rice Mills, Inc., to be reimbursed by the latter in the amount of P14,551.50
Inc. on the ground that said respondent is not privy to the contract of insurance existing (which is 1/2 of P29,103.00 )
between petitioner and respondent Sio Choy. We disagree. WHEREFORE, the petition is GRANTED. The decision of the trial court, as affirmed by
The appellate court overlooked the principle of subrogation in insurance contracts. Thus the Court of Appeals, is hereby AFFIRMED, with the modification above-mentioned.
— Without pronouncement as to costs.
... Subrogation is a normal incident of indemnity insurance (Aetna L. Ins. Co. vs. Moses, SO ORDERED.
287 U.S. 530, 77 L. ed. 477). Upon payment of the loss, the insurer is entitled to be
subrogated pro tanto to any right of action which the insured may have against the third
person whose negligence or wrongful act caused the loss (44 Am. Jur. 2nd 745, citing
Standard Marine Ins. Co. vs. Scottish Metropolitan Assurance Co., 283 U.S. 284, 75 L.
ed. 1037).
The right of subrogation is of the highest equity. The loss in the first instance is that of
the insured but after reimbursement or compensation, it becomes the loss of the insurer
(44 Am. Jur. 2d, 746, note 16, citing Newcomb vs. Cincinnati Ins. Co., 22 Ohio St. 382).
Although many policies including policies in the standard form, now provide for
subrogation, and thus determine the rights of the insurer in this respect, the equitable
right of subrogation as the legal effect of payment inures to the insurer without any
formal assignment or any express stipulation to that effect in the policy" (44 Am. Jur. 2nd
746). Stated otherwise, when the insurance company pays for the loss, such payment
operates as an equitable assignment to the insurer of the property and all remedies which
the insured may have for the recovery thereof. That right is not dependent upon , nor
does it grow out of any privity of contract (emphasis supplied) or upon written
assignment of claim, and payment to the insured makes the insurer assignee in equity
(Shambley v. Jobe-Blackley Plumbing and Heating Co., 264 N.C. 456, 142 SE 2d 18). 9
It follows, therefore, that petitioner, upon paying respondent Vallejos the amount of riot
exceeding P20,000.00, shall become the subrogee of the insured, the respondent Sio
Choy; as such, it is subrogated to whatever rights the latter has against respondent San
Leon Rice Mill, Inc. Article 1217 of the Civil Code gives to a solidary debtor who has
paid the entire obligation the right to be reimbursed by his co-debtors for the share which
corresponds to each.
Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation. If
two or more solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment is
made before the debt is due, no interest for the intervening period may be demanded.
xxx xxx xxx

65
FIRST DIVISION the claim is not presented within the time provided by the rules, the same will be barred
as against the estate. It is evident from the foregoing that Section 6 of Rule 87 (now Rule
G.R. No. L-28046 May 16, 1983 86) provides the procedure should the creditor desire to go against the deceased debtor,
but there is certainly nothing in the said provision making compliance with such
PHILIPPINE NATIONAL BANK, plaintiff-appellant, procedure a condition precedent before an ordinary action against the surviving solidary
vs. debtors, should the creditor choose to demand payment from the latter, could be
INDEPENDENT PLANTERS ASSOCIATION, INC., ANTONIO DIMAYUGA, entertained to the extent that failure to observe the same would deprive the court
DELFIN FAJARDO, CEFERINO VALENCIA, MOISES CARANDANG, LUCIANO jurisdiction to take cognizance of the action against the surviving debtors. Upon the other
CASTILLO, AURELIO VALENCIA, LAURO LEVISTE, GAVINO GONZALES, hand, the Civil Code expressly allows the creditor to proceed against any one of the
LOPE GEVANA and BONIFACIO LAUREANA, defendants-appellees. solidary debtors or some or all of them simultaneously. There is, therefore, nothing
improper in the creditor's filing of an action against the surviving solidary debtors alone,
PLANA, J.: instead of instituting a proceeding for the settlement of the estate of the deceased debtor
wherein his claim could be filed.
Appeal by the Philippine National Bank (PNB) from the Order of the defunct Court of Similarly, in PNB vs. Asuncion, 80 SCRA 321 at 323-324, this Court, speaking thru Mr.
First Instance of Manila (Branch XX) in its Civil Case No. 46741 dismissing PNB's Justice Makasiar, reiterated the doctrine.
complaint against several solidary debtors for the collection of a sum of money on the A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court reveals that
ground that one of the defendants (Ceferino Valencia) died during the pendency of the nothing therein prevents a creditor from proceeding against the surviving solidary
case (i.e., after the plaintiff had presented its evidence) and therefore the complaint, being debtors. Said provision merely sets up the procedure in enforcing collection in case a
a money claim based on contract, should be prosecuted in the testate or intestate creditor chooses to pursue his claim against the estate of the deceased solidary, debtor.
proceeding for the settlement of the estate of the deceased defendant pursuant to Section It is crystal clear that Article 1216 of the New Civil Code is the applicable provision in
6 of Rule 86 of the Rules of Court which reads: this matter. Said provision gives the creditor the right to 'proceed against anyone of the
SEC. 6. Solidary obligation of decedent.— the obligation of the decedent is solidary with solidary debtors or some or all of them simultaneously.' The choice is undoubtedly left to
another debtor, the claim shall be filed against the decedent as if he were the only debtor, the solidary, creditor to determine against whom he will enforce collection. In case of the
without prejudice to the right of the estate to recover contribution from the other debtor. death of one of the solidary debtors, he (the creditor) may, if he so chooses, proceed
In a joint obligation of the decedent, the claim shall be confined to the portion belonging against the surviving solidary debtors without necessity of filing a claim in the estate of
to him. the deceased debtors. It is not mandatory for him to have the case dismissed against the
The appellant assails the order of dismissal, invoking its right of recourse against one, surviving debtors and file its claim in the estate of the deceased solidary debtor . . .
some or all of its solidary debtors under Article 1216 of the Civil Code — As correctly argued by petitioner, if Section 6, Rule 86 of the Revised Rules of Court
ART. 1216. The creditor may proceed against any one of the solidary debtors or some or were applied literally, Article 1216 of the New Civil Code would, in effect, be repealed
all of them simultaneously. The demand made against one of them shall not be an since under the Rules of Court, petitioner has no choice but to proceed against the estate
obstacle to those which may subsequently be directed against the others, so long as the of Manuel Barredo only. Obviously, this provision diminishes the Bank's right under the
debt has not been fully collected. New Civil, Code to proceed against any one, some or all of the solidary debtors. Such a
The sole issue thus raised is whether in an action for collection of a sum of money based construction is not sanctioned by the principle, which is too well settled to require
on contract against all the solidary debtors, the death of one defendant deprives the court citation, that a substantive law cannot be amended by a procedural rule. Otherwise stared,
of jurisdiction to proceed with the case against the surviving defendants. Section 6, Rule 86 of the Revised Rules of Court cannot be made to prevail over Article
It is now settled that the quoted Article 1216 grants the creditor the substantive right to 1216 of the New Civil Code, the former being merely procedural, while the latter,
seek satisfaction of his credit from one, some or all of his solidary debtors, as he deems substantive.
fit or convenient for the protection of his interests; and if, after instituting a collection suit WHEREFORE the appealed order of dismissal of the court a quo in its Civil Case No.
based on contract against some or all of them and, during its pendency, one of the 46741 is hereby set aside in respect of the surviving defendants; and the case is remanded
defendants dies, the court retains jurisdiction to continue the proceedings and decide the to the corresponding Regional Trial Court for proceedings. proceedings. No costs.
case in respect of the surviving defendants. Thus in Manila Surety & Fidelity Co., Inc. vs. SO ORDERED.
Villarama et al., 107 Phil. 891 at 897, this Court ruled:
Construing Section 698 of the Code of Civil Procedure from whence the aforequoted
provision (Sec. 6, Rule 86) was taken, this Court held that where two persons are bound
in solidum for the same debt and one of them dies, the whole indebtedness can be proved
against the estate of the latter, the decedent's liability being absolute and primary; and if

66