SEBASTIAN SIGA-AN, Petitioner, vs. ALICIA VILLANUEVA, Respondent. DECISION CHICO-NAZARIO, J.

: Before Us is a Petition1 for Review on Certiorari under Rule 45 of the Rules of Court seeking to set aside the Decision,2 dated 16 December 2005, and Resolution,3 dated 19 June 2006 of the Court of Appeals in CA-G.R. CV No. 71814, which affirmed in toto the Decision,4 dated 26 January 2001, of the Las Pinas City Regional Trial Court, Branch 255, in Civil Case No. LP-98-0068. The facts gathered from the records are as follows: On 30 March 1998, respondent Alicia Villanueva filed a complaint5 for sum of money against petitioner Sebastian Siga-an before the Las Pinas City Regional Trial Court (RTC), Branch 255, docketed as Civil Case No. LP-98-0068. Respondent alleged that she was a businesswoman engaged in supplying office materials and equipments to the Philippine Navy Office (PNO) located at Fort Bonifacio, Taguig City, while petitioner was a military officer and comptroller of the PNO from 1991 to 1996. Respondent claimed that sometime in 1992, petitioner approached her inside the PNO and offered to loan her the amount of P540,000.00. Since she needed capital for her business transactions with the PNO, she accepted petitioners proposal. The loan agreement was not reduced in writing. Also, there was no stipulation as to the payment of interest for the loan.6 On 31 August 1993, respondent issued a check worth P500,000.00 to petitioner as partial payment of the loan. On 31 October 1993, she issued another check in the amount of P200,000.00 to petitioner as payment of the remaining balance of the loan. Petitioner told her that since she paid a total amount of P700,000.00 for the P540,000.00 worth of loan, the excess amount of P160,000.00 would be applied as interest for the loan. Not satisfied with the amount applied as interest, petitioner pestered her to pay additional interest. Petitioner threatened to block or disapprove her transactions with the PNO if she would not comply with his demand. As all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO, and fearing that petitioner might block or unduly influence the payment of her vouchers in the PNO, she conceded. Thus, she paid additional amounts in cash and checks as interests for the loan. She asked petitioner for receipt for the payments but petitioner told her that it was not necessary as there was mutual trust and confidence between them. According to her computation, the total amount she paid to petitioner for the loan and interest accumulated to P1,200,000.00.7 Thereafter, respondent consulted a lawyer regarding the propriety of paying interest on the loan despite absence of agreement to that effect. Her lawyer told her that petitioner could not validly collect interest on the loan because there was no agreement between her and petitioner regarding payment of interest. Since she paid petitioner a total amount of P1,200,000.00 for the P540,000.00 worth of loan, and upon being advised by her lawyer that she made overpayment to petitioner, she sent a demand letter to petitioner asking for the return of the excess amount of P660,000.00. Petitioner, despite receipt of the demand letter, ignored her claim for reimbursement.8 Respondent prayed that the RTC render judgment ordering petitioner to pay respondent (1) P660,000.00 plus legal interest from the time of demand; (2) P300,000.00 as moral damages; (3) P50,000.00 as exemplary damages; and (4) an amount equivalent to 25% of P660,000.00 as attorneys fees.9 In his answer10 to the complaint, petitioner denied that he offered a loan to respondent. He averred that in 1992, respondent approached and asked him if he could grant her a loan, as she needed money to finance her business venture with the PNO. At first, he was reluctant to deal with respondent, because the latter had a spotty record as a supplier of the PNO. However, since respondent was an acquaintance of his officemate, he agreed to grant her a loan. Respondent paid the loan in full.11 Subsequently, respondent again asked him to give her a loan. As respondent had been able to pay the previous loan in full, he agreed to grant her another loan. Later, respondent requested him to restructure the payment of the loan because she could not give full payment on the due date. He acceded to her request. Thereafter, respondent pleaded for another restructuring of the payment of the loan. This time he rejected her plea. Thus, respondent proposed to execute a promissory note wherein she would acknowledge her obligation to him, inclusive of interest, and that she would issue several postdated checks to guarantee the payment of her obligation. Upon his approval of respondents request for restructuring of the loan, respondent executed a promissory note dated 12 September 1994 wherein she admitted having borrowed an amount of P1,240,000.00, inclusive of interest, from petitioner and that she would pay said amount in March 1995. Respondent also issued to him six postdated checks amounting to P1,240,000.00 as guarantee of compliance with her obligation. Subsequently, he presented the six checks for encashment but only one check was honored. He demanded that respondent settle her obligation, but the latter failed to do so. Hence, he filed criminal cases for Violation of the Bouncing Checks Law (Batas Pambansa Blg. 22) against respondent. The cases were assigned to the Metropolitan Trial Court of Makati City, Branch 65 (MeTC).12 Petitioner insisted that there was no overpayment because respondent admitted in the latters promissory note that her monetary obligation as of 12 September 1994 amounted to P1,240,000.00 inclusive of interests. He argued that respondent was already estopped from complaining that she should not have paid any interest, because she was given several times to settle her obligation but failed to do so. He maintained that to rule in favor of respondent is tantamount to concluding that the loan was given interest-free. Based on the foregoing averments, he asked the RTC to dismiss respondents complaint. After trial, the RTC rendered a Decision on 26 January 2001 holding that respondent made an overpayment of her loan obligation to petitioner and that the latter should refund the excess amount to the former. It

ratiocinated that respondents obligation was only to pay the loaned amount of P540,000.00, and that the alleged interests due should not be included in the computation of respondents total monetary debt because there was no agreement between them regarding payment of interest. It concluded that since respondent made an excess payment to petitioner in the amount of P660,000.00 through mistake, petitioner should return the said amount to respondent pursuant to the principle of solutio indebiti.13 The RTC also ruled that petitioner should pay moral damages for the sleepless nights and wounded feelings experienced by respondent. Further, petitioner should pay exemplary damages by way of example or correction for the public good, plus attorneys fees and costs of suit. The dispositive portion of the RTC Decision reads: WHEREFORE, in view of the foregoing evidence and in the light of the provisions of law and jurisprudence on the matter, judgment is hereby rendered in favor of the plaintiff and against the defendant as follows: (1) Ordering defendant to pay plaintiff the amount of P660,000.00 plus legal interest of 12% per annum computed from 3 March 1998 until the amount is paid in full; (2) Ordering defendant to pay plaintiff the amount of P300,000.00 as moral damages; (3) Ordering defendant to pay plaintiff the amount of P50,000.00 as exemplary damages; (4) Ordering defendant to pay plaintiff the amount equivalent to 25% of P660,000.00 as attorneys fees; and (5) Ordering defendant to pay the costs of suit.14 Petitioner appealed to the Court of Appeals. On 16 December 2005, the appellate court promulgated its Decision affirming in toto the RTC Decision, thus: WHEREFORE, the foregoing considered, the instant appeal is hereby DENIED and the assailed decision [is] AFFIRMED in toto.15 Petitioner filed a motion for reconsideration of the appellate courts decision but this was denied.16 Hence, petitioner lodged the instant petition before us assigning the following errors: I. THE RTC AND THE COURT OF APPEALS ERRED IN RULING THAT NO INTEREST WAS DUE TO PETITIONER; II. THE RTC AND THE COURT OF APPEALS ERRED IN APPLYING THE PRINCIPLE OF SOLUTIO INDEBITI.17 Interest is a compensation fixed by the parties for the use or forbearance of money. This is referred to as monetary interest. Interest may also be imposed by law or by courts as penalty or indemnity for damages. This is called compensatory interest.18 The right to interest arises only by virtue of a contract or by virtue of damages for delay or failure to pay the principal loan on which interest is demanded.19 Article 1956 of the Civil Code, which refers to monetary interest,20 specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of monetary interest is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of monetary interest. Thus, we have held that collection of interest without any stipulation therefor in writing is prohibited by law.21 It appears that petitioner and respondent did not agree on the payment of interest for the loan. Neither was there convincing proof of written agreement between the two regarding the payment of interest. Respondent testified that although she accepted petitioners offer of loan amounting to P540,000.00, there was, nonetheless, no verbal or written agreement for her to pay interest on the loan.22 Petitioner presented a handwritten promissory note dated 12 September 199423 wherein respondent purportedly admitted owing petitioner "capital and interest." Respondent, however, explained that it was petitioner who made a promissory note and she was told to copy it in her own handwriting; that all her transactions with the PNO were subject to the approval of petitioner as comptroller of the PNO; that petitioner threatened to disapprove her transactions with the PNO if she would not pay interest; that being unaware of the law on interest and fearing that petitioner would make good of his threats if she would not obey his instruction to copy the promissory note, she copied the promissory note in her own handwriting; and that such was the same promissory note presented by petitioner as alleged proof of their written agreement on interest.24 Petitioner did not rebut the foregoing testimony. It is evident that respondent did not really consent to the payment of interest for the loan and that she was merely tricked and coerced by petitioner to pay interest. Hence, it cannot be gainfully said that such promissory note pertains to an express stipulation of interest or written agreement of interest on the loan between petitioner and respondent. Petitioner, nevertheless, claims that both the RTC and the Court of Appeals found that he and respondent agreed on the payment of 7% rate of interest on the loan; that the agreed 7% rate of interest was duly admitted by respondent in her testimony in the Batas Pambansa Blg. 22 cases he filed against respondent; that despite such judicial admission by respondent, the RTC and the Court of Appeals, citing Article 1956 of the Civil Code, still held that no interest was due him since the agreement on interest was not reduced in writing; that the application of Article 1956 of the Civil Code should not be absolute, and an exception to the application of such provision should be made when the borrower admits that a specific rate of interest was

agreed upon as in the present case; and that it would be unfair to allow respondent to pay only the loan when the latter very well knew and even admitted in the Batas Pambansa Blg. 22 cases that there was an agreed 7% rate of interest on the loan.25 We have carefully examined the RTC Decision and found that the RTC did not make a ruling therein that petitioner and respondent agreed on the payment of interest at the rate of 7% for the loan. The RTC clearly stated that although petitioner and respondent entered into a valid oral contract of loan amounting to P540,000.00, they, nonetheless, never intended the payment of interest thereon.26 While the Court of Appeals mentioned in its Decision that it concurred in the RTCs ruling that petitioner and respondent agreed on a certain rate of interest as regards the loan, we consider this as merely an inadvertence because, as earlier elucidated, both the RTC and the Court of Appeals ruled that petitioner is not entitled to the payment of interest on the loan. The rule is that factual findings of the trial court deserve great weight and respect especially when affirmed by the appellate court.27 We found no compelling reason to disturb the ruling of both courts. Petitioners reliance on respondents alleged admission in the Batas Pambansa Blg. 22 cases that they had agreed on the payment of interest at the rate of 7% deserves scant consideration. In the said case, respondent merely testified that after paying the total amount of loan, petitioner ordered her to pay interest.28 Respondent did not categorically declare in the same case that she and respondent made an express stipulation in writing as regards payment of interest at the rate of 7%. As earlier discussed, monetary interest is due only if there was an express stipulation in writing for the payment of interest. There are instances in which an interest may be imposed even in the absence of express stipulation, verbal or written, regarding payment of interest. Article 2209 of the Civil Code states that if the obligation consists in the payment of a sum of money, and the debtor incurs delay, a legal interest of 12% per annum may be imposed as indemnity for damages if no stipulation on the payment of interest was agreed upon. Likewise, Article 2212 of the Civil Code provides that interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent on this point. All the same, the interest under these two instances may be imposed only as a penalty or damages for breach of contractual obligations. It cannot be charged as a compensation for the use or forbearance of money. In other words, the two instances apply only to compensatory interest and not to monetary interest.29 The case at bar involves petitioners claim for monetary interest. Further, said compensatory interest is not chargeable in the instant case because it was not duly proven that respondent defaulted in paying the loan. Also, as earlier found, no interest was due on the loan because there was no written agreement as regards payment of interest. Apropos the second assigned error, petitioner argues that the principle of solutio indebiti does not apply to the instant case. Thus, he cannot be compelled to return the alleged excess amount paid by respondent as interest.30 Under Article 1960 of the Civil Code, if the borrower of loan pays interest when there has been no stipulation therefor, the provisions of the Civil Code concerning solutio indebiti shall be applied. Article 2154 of the Civil Code explains the principle of solutio indebiti. Said provision provides that if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. In such a case, a creditor-debtor relationship is created under a quasi-contract whereby the payor becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive such payment becomes obligated to return the same. The quasi-contract of solutio indebiti harks back to the ancient principle that no one shall enrich himself unjustly at the expense of another.31 The principle of solutio indebiti applies where (1) a payment is made when there exists no binding relation between the payor, who has no duty to pay, and the person who received the payment; and (2) the payment is made through mistake, and not through liberality or some other cause.32 We have held that the principle of solutio indebiti applies in case of erroneous payment of undue interest.33 It was duly established that respondent paid interest to petitioner. Respondent was under no duty to make such payment because there was no express stipulation in writing to that effect. There was no binding relation between petitioner and respondent as regards the payment of interest. The payment was clearly a mistake. Since petitioner received something when there was no right to demand it, he has an obligation to return it. We shall now determine the propriety of the monetary award and damages imposed by the RTC and the Court of Appeals. Records show that respondent received a loan amounting to P540,000.00 from petitioner.34 Respondent issued two checks with a total worth of P700,000.00 in favor of petitioner as payment of the loan.35 These checks were subsequently encashed by petitioner.36 Obviously, there was an excess of P160,000.00 in the payment for the loan. Petitioner claims that the excess of P160,000.00 serves as interest on the loan to which he was entitled. Aside from issuing the said two checks, respondent also paid cash in the total amount of P175,000.00 to petitioner as interest.37 Although no receipts reflecting the same were presented because petitioner refused to issue such to respondent, petitioner, nonetheless, admitted in his Reply-Affidavit38 in the Batas Pambansa Blg. 22 cases that respondent paid him a total amount of P175,000.00 cash in addition to the two checks. Section 26 Rule 130 of the Rules of Evidence provides that the declaration of a party as to a relevant fact may be given in evidence against him. Aside from the amounts of P160,000.00 and P175,000.00 paid as interest, no other proof of additional payment as interest was presented by respondent. Since we have previously found that petitioner is not entitled to payment of interest and that the principle of

solutio indebiti applies to the instant case, petitioner should return to respondent the excess amount of P160,000.00 and P175,000.00 or the total amount of P335,000.00. Accordingly, the reimbursable amount to respondent fixed by the RTC and the Court of Appeals should be reduced from P660,000.00 to P335,000.00. As earlier stated, petitioner filed five (5) criminal cases for violation of Batas Pambansa Blg. 22 against respondent. In the said cases, the MeTC found respondent guilty of violating Batas Pambansa Blg. 22 for issuing five dishonored checks to petitioner. Nonetheless, respondents conviction therein does not affect our ruling in the instant case. The two checks, subject matter of this case, totaling P700,000.00 which respondent claimed as payment of the P540,000.00 worth of loan, were not among the five checks found to be dishonored or bounced in the five criminal cases. Further, the MeTC found that respondent made an overpayment of the loan by reason of the interest which the latter paid to petitioner.39 Article 2217 of the Civil Code provides that moral damages may be recovered if the party underwent physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury. Respondent testified that she experienced sleepless nights and wounded feelings when petitioner refused to return the amount paid as interest despite her repeated demands. Hence, the award of moral damages is justified. However, its corresponding amount of P300,000.00, as fixed by the RTC and the Court of Appeals, is exorbitant and should be equitably reduced. Article 2216 of the Civil Code instructs that assessment of damages is left to the discretion of the court according to the circumstances of each case. This discretion is limited by the principle that the amount awarded should not be palpably excessive as to indicate that it was the result of prejudice or corruption on the part of the trial court.40 To our mind, the amount of P150,000.00 as moral damages is fair, reasonable, and proportionate to the injury suffered by respondent. Article 2232 of the Civil Code states that in a quasi-contract, such as solutio indebiti, exemplary damages may be imposed if the defendant acted in an oppressive manner. Petitioner acted oppressively when he pestered respondent to pay interest and threatened to block her transactions with the PNO if she would not pay interest. This forced respondent to pay interest despite lack of agreement thereto. Thus, the award of exemplary damages is appropriate. The amount of P50,000.00 imposed as exemplary damages by the RTC and the Court is fitting so as to deter petitioner and other lenders from committing similar and other serious wrongdoings.41 Jurisprudence instructs that in awarding attorneys fees, the trial court must state the factual, legal or equitable justification for awarding the same.42 In the case under consideration, the RTC stated in its Decision that the award of attorneys fees equivalent to 25% of the amount paid as interest by respondent to petitioner is reasonable and moderate considering the extent of work rendered by respondents lawyer in the instant case and the fact that it dragged on for several years.43 Further, respondent testified that she agreed to compensate her lawyer handling the instant case such amount.44 The award, therefore, of attorneys fees and its amount equivalent to 25% of the amount paid as interest by respondent to petitioner is proper. Finally, the RTC and the Court of Appeals imposed a 12% rate of legal interest on the amount refundable to respondent computed from 3 March 1998 until its full payment. This is erroneous. We held in Eastern Shipping Lines, Inc. v. Court of Appeals,45 that when an obligation, not constituting a loan or forbearance of money is breached, an interest on the amount of damages awarded may be imposed at the rate of 6% per annum. We further declared that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether it is a loan/forbearance of money or not, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed equivalent to a forbearance of credit. In the present case, petitioners obligation arose from a quasi-contract of solutio indebiti and not from a loan or forbearance of money. Thus, an interest of 6% per annum should be imposed on the amount to be refunded as well as on the damages awarded and on the attorneys fees, to be computed from the time of the extra-judicial demand on 3 March 1998,46 up to the finality of this Decision. In addition, the interest shall become 12% per annum from the finality of this Decision up to its satisfaction. WHEREFORE, the Decision of the Court of Appeals in CA-G.R. CV No. 71814, dated 16 December 2005, is hereby AFFIRMED with the following MODIFICATIONS: (1) the amount of P660,000.00 as refundable amount of interest is reduced to THREE HUNDRED THIRTY FIVE THOUSAND PESOS (P335,000.00); (2) the amount of P300,000.00 imposed as moral damages is reduced to ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00); (3) an interest of 6% per annum is imposed on the P335,000.00, on the damages awarded and on the attorneys fees to be computed from the time of the extra-judicial demand on 3 March 1998 up to the finality of this Decision; and (4) an interest of 12% per annum is also imposed from the finality of this Decision up to its satisfaction. Costs against petitioner. SO ORDERED. POWER COMMERCIAL V. CA (June 20, 1997) FACTS: Petitioner asbestos manufacturer Power Commercial and industrial corporation bought the property of spouses Reynaldo and Angelita Quiambao located in Makati City. Since there are lessees occupying the subject land, part of the deed of sale is a warranty of respondents that

will defend its title and peaceful possession in favor of the petitioners. The property is mortgage to PNP and as such, petitioners filed a request to assume responsibility of the mortgage. Because of petitioners failure to produce the required papers, their petition was denied. Petitioners allege that the contract should be rescinded because of failure of delivery. ISSUE: WON the contract is recissible due to breach of contract. HELD: There is no breach of contact in this case since there is no provision in the contract that imposes the obligation to the respondents to eject the people occupying the property. There was also a constructive delivery because the deed of sale was made in a public document. The contention of the petitioners that there could be no constructive delivery because the respondents is not in possession of the property is of no merit. What matters in a constructive delivery is control and not possession. Control was placed in the hands of the petitioners that is why they were able to file an ejectment case. Prior physical delivery or possession is not legally required and the execution of the deed of sale is deemed equivalent to delivery. University of the Philippines vs Philab Industries, Inc. Facts: This case is a petition for review on certiorari of the Decision of the Court of Appeals. In 1979, the University of the Philippines (UP) decided to construct an integrated system of research organization known as the Research Complex. As part of the project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Baos. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof. Renato E. Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to contact a corporation to accomplish the project. On July 23, 1982, Dr. William Padolina, the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to BIOTECH for the BIOTECH Building Project, for the account of the FEMF. On July 13, 1982, Padolina wrote Lirio and requested for the issuance of the purchase order and downpayment for the office and laboratory furniture for the project, thus: 1) Supply and Installation of Laboratory furniture for the BIOTECH Building Project, and 2) Fabrication and Supply of office furniture for the BIOTECH Building Project, and paying the downpayment of 50% or P286,687.50 Ten days after, Padolina informed Hector Navasero, the President of PHILAB, to proceed with the fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio. Subsequently, PHILAB made partial deliveries of office and laboratory furniture to BIOTECH after having been duly inspected by their representatives and FEMF Executive Assistant Lirio. On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture for the BIOTECH project, for which PHILAB issued Official Receipt No. 253 to FEMF. On October 22, 1982, FEMF made another partial payment of P800,000 to PHILAB, for which the latter issued Official Receipt No. 256 to FEMF. The remittances were in the form of checks drawn by FEMF and delivered to PHILAB, through Padolina. On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baos and FEMF, represented by its Executive Officer, Rolando Gapud, executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant financial support and donate sums of money to UP for the construction of buildings, installation of laboratory and other capitalization for the project, not to exceed P29,000,000.00. The Board of Regents of the UP approved the MOA with Philab on November 25, 1982. Later, President Marcos was ousted from office during the February 1986 EDSA Revolution. On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to secure the payment of the amount due from the FEMF. In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract and the MOA for its perusal. PHILAB filed a complaint for sum of money and damages against UP. In the complaint, PHILAB prayed that it be paid the following: (1) P702,939.40 plus an additional amount (as shall be determined during the hearing) to cover the actual cost of money which at the time of transaction the value of the peso was eleven to a dollar (P11.00:$1) and twenty seven (27%) percent interest on the total amount from August 1982 until fully paid; (2) P50,000.00 as and for attorneys fees; and (3) Cost of suit. In its answer, UP denied liability and alleged that PHILAB had no cause of action against it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied obliging itself to pay for the laboratory furniture supplied by PHILAB. Issue: Whether or not the Court of Appeals erred in applying the legal principle of unjust enrichment when it held that UP and not FEMF, is liable to Philab? Held: There is no dispute that the respondent is not privy to the MOA executed by the petitioner and FEMF; hence, it is not bound by the said agreement. Contracts take effect only between the parties and their assigns. A contract cannot be binding upon and cannot be enforced against one who is not a party to it, even if he is aware of such contract and has acted with knowledge thereof. Likewise admitted by the parties, is the fact that there was no written contract executed by the petitioner, the respondent and FEMF relating to the fabrication and delivery of office and laboratory furniture to the BIOTECH. Even the CA failed to specifically

declare that the petitioner and the respondent entered into a contract of sale over the said laboratory furniture. The Court of Appeals agreed with the petitioner that, based on the records, an implied-in-fact contract of sale was entered into between the Philab and FEMF. Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution. The essential requisites for the application of Article 22 of the New Civil Code do not obtain in this case. The respondent had a remedy against the FEMF via an action based on an implied-in-fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence, it is entitled to keep the laboratory furniture. The petition is granted. The assailed Decision of the Court of Appeals is reversed and set aside. The Decision of the Regional Trial Court, Makati City, Branch 150, is reinstated with no costs. LAND BANK OF THE PHILIPPINES, Petitioner, v. ALFREDO ONG, Respondent. D E C I S I O N: VELASCO, JR., J.: This is an appeal from the October 20, 2009 Decision of the Court of Appeals (CA) in CA-G.R. CR-CV No. 84445 entitled Alfredo Ong v. Land Bank of the Philippines, which affirmed the Decision of the Regional Trial Court (RTC), Branch 17 in Tabaco City. The Facts On March 18, 1996, spouses Johnson and Evangeline Sy secured a loan from Land Bank Legazpi City in the amount of PhP 16 million. The loan was secured by three (3) residential lots, five (5) cargo trucks, and a warehouse. Under the loan agreement, PhP 6 million of the loan would be short-term and would mature on February 28, 1997, while the balance of PhP 10 million would be payable in seven (7) years. The Notice of Loan Approval dated February 22, 1996 contained an acceleration clause wherein any default in payment of amortizations or other charges would accelerate the maturity of the loan.[1]cralaw Subsequently, however, the Spouses Sy found they could no longer pay their loan. On December 9, 1996, they sold three (3) of their mortgaged parcels of land for PhP 150,000 to Angelina Gloria Ong, Evangelines mother, under a Deed of Sale with Assumption of Mortgage. The relevant portion of the document[2]cra is quoted as follows:chanroblesvirtuallawlibrary WHEREAS, we are no longer in a position to settle our obligation with the bank;chanrobles NOW THEREFORE, for and in consideration of the sum of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00) Philippine Currency, we hereby these presents SELL, CEDE, TRANSFER and CONVEY, by way of sale unto ANGELINA GLORIA ONG, also of legal age, Filipino citizen, married to Alfredo Ong, and also a resident of Tabaco, Albay, Philippines, their heirs and assigns, the above-mentioned debt with the said LAND BANK OF THE PHILIPPINES, and by reason hereof they can make the necessary representation with the bank for the proper restructuring of the loan with the said bank in their favor;chanrobles That as soon as our obligation has been duly settled, the bank is authorized to release the mortgage in favor of the vendees and for this purpose VENDEES can register this instrument with the Register of Deeds for the issuance of the titles already in their names. IN WITNESS WHEREOF, we have hereunto affixed our signatures this 9th day of December 1996 at Tabaco, Albay, Philippines. (signed) EVANGELINE O. SY Vendor (signed) JOHNSON B. SY Vendor Evangelines father, petitioner Alfredo Ong, later went to Land Bank to inform it about the sale and assumption of mortgage.[3]cra Atty. Edna Hingco, the Legazpi City Land Bank Branch Head, told Alfredo and his counsel Atty. Ireneo de Lumen that there was nothing wrong with the agreement with the Spouses Sy but provided them with requirements for the assumption of mortgage. They were also told that Alfredo should pay part of the principal which was computed at PhP 750,000 and to update due or accrued interests on the promissory notes so that Atty. Hingco could easily approve the assumption of mortgage. Two weeks later, Alfredo issued a check for PhP 750,000 and personally gave it to Atty. Hingco. A receipt was issued for his payment. He also submitted the other documents required by Land Bank, such as financial statements for 1994 and 1995. Atty. Hingco then informed Alfredo that the certificate of title of the Spouses Sy would be transferred in his name but this never materialized. No notice of transfer was sent to him.[4] Alfredo later found out that his application for assumption of mortgage was not approved by Land Bank. The bank learned from its credit investigation report that the Ongs had a real estate mortgage in the amount of

PhP 18,300,000 with another bank that was past due. Alfredo claimed that this was fully paid later on. Nonetheless, Land Bank foreclosed the mortgage of the Spouses Sy after several months. Alfredo only learned of the foreclosure when he saw the subject mortgage properties included in a Notice of Foreclosure of Mortgage and Auction Sale at the RTC in Tabaco, Albay. Alfredos other counsel, Atty. Madrilejos, subsequently talked to Land Banks lawyer and was told that the PhP 750,000 he paid would be returned to him.[5] On December 12, 1997, Alfredo initiated an action for recovery of sum of money with damages against Land Bank in Civil Case No. T-1941, as Alfredos payment was not returned by Land Bank. Alfredo maintained that Land Banks foreclosure without informing him of the denial of his assumption of the mortgage was done in bad faith. He argued that he was lured into believing that his payment of PhP 750,000 would cause Land Bank to approve his assumption of the loan of the Spouses Sy and the transfer of the mortgaged properties in his and his wifes name.[6] He also claimed incurring expenses for attorneys fees of PhP 150,000, filing fee of PhP 15,000, and PhP 250,000 in moral damages.[7] Testifying for Land Bank, Atty. Hingco claimed during trial that as branch manager she had no authority to approve loans and could not assure anybody that their assumption of mortgage would be approved. She testified that the breakdown of Alfredos payment was as follows: PhP 101,409.59 applied to principal 216,246.56 accrued interests receivable 396,571.77 interests 18,766.10 penalties 16,805.98 accounts receivable ---------------Total: 750,000.00 According to Atty. Hingco, the bank processes an assumption of mortgage as a new loan, since the new borrower is considered a new client. They used character, capacity, capital, collateral, and conditions in determining who can qualify to assume a loan. Alfredos proposal to assume the loan, she explained, was referred to a separate office, the Lending Center. [8]cralaw During cross-examination, Atty. Hingco testified that several months after Alfredo made the tender of payment, she received word that the Lending Center rejected Alfredos loan application. She stated that it was the Lending Center and not her that should have informed Alfredo about the denial of his and his wifes assumption of mortgage. She added that although she told Alfredo that the agreement between the spouses Sy and Alfredo was valid between them and that the bank would accept payments from him, Alfredo did not pay any further amount so the foreclosure of the loan collaterals ensued. She admitted that Alfredo demanded the return of the PhP 750,000 but said that there was no written demand before the case against the bank was filed in court. She said that Alfredo had made the payment of PhP 750,000 even before he applied for the assumption of mortgage and that the bank received the said amount because the subject account was past due and demandable; and the Deed of Assumption of Mortgage was not used as the basis for the payment. [9]cralaw The Ruling of the Trial Court The RTC held that the contract approving the assumption of mortgage was not perfected as a result of the credit investigation conducted on Alfredo. It noted that Alfredo was not even informed of the disapproval of the assumption of mortgage but was just told that the accounts of the spouses Sy had matured and gone unpaid. It ruled that under the principle of equity and justice, the bank should return the amount Alfredo had paid with interest at 12% per annum computed from the filing of the complaint. The RTC further held that Alfredo was entitled to attorneys fees and litigation expenses for being compelled to litigate.[10] The dispositive portion of the RTC Decision reads: WHEREFORE, premises considered, a decision is rendered, ordering defendant bank to pay plaintiff, Alfredo Ong the amount of P750,000.00 with interest at 12% per annum computed from Dec. 12, 1997 and attorneys fees and litigation expenses of P50,000.00. Costs against defendant bank. SO ORDERED.[11] The Ruling of the Appellate Court On appeal, Land Bank faulted the trial court for (1) holding that the payment of PhP 750,000 made by Ong was one of the requirements for the approval of his proposal to assume the mortgage of the Sy spouses; (2) erroneously ordering Land Bank to return the amount of PhP 750,000 to Ong on the ground of its failure to effect novation; and (3) erroneously affirming the award of PhP 50,000 to Ong as attorneys fees and litigation expenses. The CA affirmed the RTC Decision.[12]cra It held that Alfredos recourse is not against the Sy spouses. According to the appellate court, the payment of PhP 750,000 was for the approval of his assumption of mortgage and not for payment of arrears incurred by the Sy spouses. As such, it ruled that it would be incorrect to consider Alfredo a third person with no interest in the fulfillment of the obligation under Article 1236 of the Civil Code. Although Land Bank was not bound by the Deed between Alfredo and the Spouses Sy, the appellate court found that Alfredo and Land Banks active preparations for Alfredos assumption of mortgage essentially novated the agreement.

On January 5, 2010, the CA denied Land Banks motion for reconsideration for lack of merit. Hence, Land Bank appealed to us. The Issues I. Whether the Court of Appeals erred in holding that Art. 1236 of the Civil Code does not apply and in finding that there is no novation. II. Whether the Court of Appeals misconstrued the evidence and the law when it affirmed the trial court decisions ordering Land Bank to pay Ong the amount of Php750,000.00 with interest at 12% annum. III. Whether the Court of Appeals committed reversible error when it affirmed the award of Php50,000.00 to Ong as attorneys fees and expenses of litigation. The Ruling of this Court We affirm with modification the appealed decision. Recourse is against Land Bank Land Bank contends that Art. 1236 of the Civil Code backs their claim that Alfredo should have sought recourse against the Spouses Sy instead of Land Bank. Art. 1236 provides: The creditor is not bound to accept payment or performance by a third person who has no interest in the fulfillment of the obligation, unless there is a stipulation to the contrary. Whoever pays for another may demand from the debtor what he has paid, except that if he paid without the knowledge or against the will of the debtor, he can recover only insofar as the payment has been beneficial to the debtor. We agree with Land Bank on this point as to the first part of paragraph 1 of Art. 1236. Land Bank was not bound to accept Alfredos payment, since as far as the former was concerned, he did not have an interest in the payment of the loan of the Spouses Sy. However, in the context of the second part of said paragraph, Alfredo was not making payment to fulfill the obligation of the Spouses Sy. Alfredo made a conditional payment so that the properties subject of the Deed of Sale with Assumption of Mortgage would be titled in his name. It is clear from the records that Land Bank required Alfredo to make payment before his assumption of mortgage would be approved. He was informed that the certificate of title would be transferred accordingly. He, thus, made payment not as a debtor but as a prospective mortgagor. But the trial court stated: [T]he contract was not perfected or consummated because of the adverse finding in the credit investigation which led to the disapproval of the proposed assumption. There was no evidence presented that plaintiff was informed of the disapproval. What he received was a letter dated May 22, 1997 informing him that the account of spouses Sy had matured but there [were]cra no payments. This was sent even before the conduct of the credit investigation on June 20, 1997 which led to the disapproval of the proposed assumption of the loans of spouses Sy.[13]cralaw Alfredo, as a third person, did not, therefore, have an interest in the fulfillment of the obligation of the Spouses Sy, since his interest hinged on Land Banks approval of his application, which was denied. The circumstances of the instant case show that the second paragraph of Art. 1236 does not apply. As Alfredo made the payment for his own interest and not on behalf of the Spouses Sy, recourse is not against the latter. And as Alfredo was not paying for another, he cannot demand from the debtors, the Spouses Sy, what he has paid. Novation of the loan agreement Land Bank also faults the CA for finding that novation applies to the instant case. It reasons that a substitution of debtors was made without its consent; thus, it was not bound to recognize the substitution under the rules on novation. On the matter of novation, Spouses Benjamin and Agrifina Lim v. M.B. Finance Corporation[14]cra provides the following discussion:chanroblesvirtuallawlibrary Novation, in its broad concept, may either be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. An extinctive novation results either by changing the object or principal conditions (objective or real), or by substituting the person of the debtor or subrogating a third person in the rights of the creditor (subjective or personal). Under this mode, novation would have dual functions - one to extinguish an existing obligation, the other to substitute a new one in its place - requiring a conflux of four essential requisites: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation. x x x In order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. x x x (Emphasis supplied.) Furthermore, Art. 1293 of the Civil Code states: Novation which consists in substituting a new debtor in the place of the original one, may be made even

without the knowledge or against the will of the latter, but not without the consent of the creditor. Payment by the new debtor gives him rights mentioned in articles 1236 and 1237. We do not agree, then, with the CA in holding that there was a novation in the contract between the parties. Not all the elements of novation were present. Novation must be expressly consented to. Moreover, the conflicting intention and acts of the parties underscore the absence of any express disclosure or circumstances with which to deduce a clear and unequivocal intent by the parties to novate the old agreement.[15]cra Land Bank is thus correct when it argues that there was no novation in the following: [W]hether or not Alfredo Ong has an interest in the obligation and payment was made with the knowledge or consent of Spouses Sy, he may still pay the obligation for the reason that even before he paid the amount of P750,000.00 on January 31, 1997, the substitution of debtors was already perfected by and between Spouses Sy and Spouses Ong as evidenced by a Deed of Sale with Assumption of Mortgage executed by them on December 9, 1996. And since the substitution of debtors was made without the consent of Land Bank a requirement which is indispensable in order to effect a novation of the obligation, it is therefore not bound to recognize the substitution of debtors. Land Bank did not intervene in the contract between Spouses Sy and Spouses Ong and did not expressly give its consent to this substitution.[16]cralaw Unjust enrichment Land Bank maintains that the trial court erroneously applied the principle of equity and justice in ordering it to return the PhP 750,000 paid by Alfredo. Alfredo was allegedly in bad faith and in estoppel. Land Bank contends that it enjoyed the presumption of regularity and was in good faith when it accepted Alfredos tender of PhP 750,000. It reasons that it did not unduly enrich itself at Alfredos expense during the foreclosure of the mortgaged properties, since it tendered its bid by subtracting PhP 750,000 from the Spouses Sys outstanding loan obligation. Alfredos recourse then, according to Land Bank, is to have his payment reimbursed by the Spouses Sy. We rule that Land Bank is still liable for the return of the PhP 750,000 based on the principle of unjust enrichment. Land Bank is correct in arguing that it has no obligation as creditor to recognize Alfredo as a person with interest in the fulfillment of the obligation. But while Land Bank is not bound to accept the substitution of debtors in the subject real estate mortgage, it is estopped by its action of accepting Alfredos payment from arguing that it does not have to recognize Alfredo as the new debtor. The elements of estoppel are: First, the actor who usually must have knowledge, notice or suspicion of the true facts, communicates something to another in a misleading way, either by words, conduct or silence; second, the other in fact relies, and relies reasonably or justifiably, upon that communication; third, the other would be harmed materially if the actor is later permitted to assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or foresees that the other would act upon the information given or that a reasonable person in the actors position would expect or foresee such action.[17]cralaw By accepting Alfredos payment and keeping silent on the status of Alfredos application, Land Bank misled Alfredo to believe that he had for all intents and purposes stepped into the shoes of the Spouses Sy. The defense of Land Bank Legazpi City Branch Manager Atty. Hingco that it was the banks Lending Center that should have notified Alfredo of his assumption of mortgage disapproval is unavailing. The Lending Centers lack of notice of disapproval, the Tabaco Branchs silence on the disapproval, and the banks subsequent actions show a failure of the bank as a whole, first, to notify Alfredo that he is not a recognized debtor in the eyes of the bank; and second, to apprise him of how and when he could collect on the payment that the bank no longer had a right to keep. We turn then on the principle upon which Land Bank must return Alfredos payment. Unjust enrichment exists when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.[18]cra There is unjust enrichment under Art. 22 of the Civil Code when (1) a person is unjustly benefited, and (2) such benefit is derived at the expense of or with damages to another.[19] Additionally, unjust enrichment has been applied to actions called accion in rem verso. In order that the accion in rem verso may prosper, the following conditions must concur: (1) that the defendant has been enriched; (2) that the plaintiff has suffered a loss; (3) that the enrichment of the defendant is without just or legal ground; and (4) that the plaintiff has no other action based on contract, quasi-contract, crime, or quasidelict.[20] The principle of unjust enrichment essentially contemplates payment when there is no duty to pay, and the person who receives the payment has no right to receive it.[21] The principle applies to the parties in the instant case, as, Alfredo, having been deemed disqualified from assuming the loan, had no duty to pay petitioner bank and the latter had no right to receive it. Moreover, the Civil Code likewise requires under Art. 19 that [e]very person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Land Bank, however, did not even bother to inform Alfredo that it was no longer approving his assumption of the Spouses Sys mortgage. Yet it acknowledged his interest in the loan when the branch head of the bank wrote to tell him that his daughters loan had not been paid.[22]cra Land Bank made Alfredo believe that with the payment of PhP 750,000, he would be able to assume the mortgage of the Spouses Sy. The act of receiving payment without returning it when demanded is contrary to the adage of giving someone what is due to him. The outcome of the application would have been different had Land Bank first conducted the credit investigation before accepting Alfredos payment. He would have been notified that his assumption of mortgage had been disapproved; and he would not have taken the futile action of paying PhP 750,000. The procedure Land Bank took in acting on Alfredos application cannot be said to have been fair

and proper. As to the claim that the trial court erred in applying equity to Alfredos case, we hold that Alfredo had no other remedy to recover from Land Bank and the lower court properly exercised its equity jurisdiction in resolving the collection suit. As we have held in one case Equity, as the complement of legal jurisdiction, seeks to reach and complete justice where courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent to do so. Equity regards the spirit and not the letter, the intent and not the form, the substance rather than the circumstance, as it is variously expressed by different courts. [23]cralaw Another claim made by Land Bank is the presumption of regularity it enjoys and that it was in good faith when it accepted Alfredos tender of PhP 750,000. The defense of good faith fails to convince given Land Banks actions. Alfredo was not treated as a mere prospective borrower. After he had paid PhP 750,000, he was made to sign bank documents including a promissory note and real estate mortgage. He was assured by Atty. Hingco that the titles to the properties covered by the Spouses Sys real estate mortgage would be transferred in his name, and upon payment of the PhP 750,000, the account would be considered current and renewed in his name.[24]cralaw Land Bank posits as a defense that it did not unduly enrich itself at Alfredos expense during the foreclosure of the mortgaged properties, since it tendered its bid by subtracting PhP 750,000 from the Spouses Sys outstanding loan obligation. It is observed that this is the first time Land Bank is revealing this defense. However, issues, arguments, theories, and causes not raised below may no longer be posed on appeal.[25] Land Banks contention, thus, cannot be entertained at this point. Land Bank further questions the lower courts decision on the basis of the inconsistencies made by Alfredo on the witness stand. It argues that Alfredo was not a credible witness and his testimony failed to overcome the presumption of regularity in the performance of regular duties on the part of Land Bank. This claim, however, touches on factual findings by the trial court, and we defer to these findings of the trial court as sustained by the appellate court. These are generally binding on us. While there are exceptions to this rule, Land Bank has not satisfactorily shown that any of them is applicable to this issue.[26]cra Hence, the rule that the trial court is in a unique position to observe the demeanor of witnesses should be applied and respected[27] in the instant case. In sum, we hold that Land Bank may not keep the PhP 750,000 paid by Alfredo as it had already foreclosed on the mortgaged lands. Interest and attorneys fees As to the applicable interest rate, we reiterate the guidelines found in Eastern Shipping Lines, Inc. v. Court of Appeals:[28] II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows: 1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. No evidence was presented by Alfredo that he had sent a written demand to Land Bank before he filed the collection suit. Only the verbal agreement between the lawyers of the parties on the return of the payment was mentioned.[29]cra Consequently, the obligation of Land Bank to return the payment made by Alfredo upon the formers denial of the latters application for assumption of mortgage must be reckoned from the date of judicial demand on December 12, 1997, as correctly determined by the trial court and affirmed by the appellate court. The next question is the propriety of the imposition of interest and the proper imposable rate of applicable interest. The RTC granted the rate of 12% per annum which was affirmed by the CA. From the above-quoted guidelines, however, the proper imposable interest rate is 6% per annum pursuant to Art. 2209 of the Civil Code. Sunga-Chan v. Court of Appeals is illuminating in this regard In Reformina v. Tomol, Jr., the Court held that the legal interest at 12% per annum under Central Bank (CB)

Circular No. 416 shall be adjudged only in cases involving the loan or forbearance of money. And for transactions involving payment of indemnities in the concept of damages arising from default in the performance of obligations in general and/or for money judgment not involving a loan or forbearance of money, goods, or credit, the governing provision is Art. 2209 of the Civil Code prescribing a yearly 6% interest. Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. The term forbearance, within the context of usury law, has been described as a contractual obligation of a lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay the loan or debt then due and payable. Eastern Shipping Lines, Inc. synthesized the rules on the imposition of interest, if proper, and the applicable rate, as follows: The 12% per annum rate under CB Circular No. 416 shall apply only to loans or forbearance of money, goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit, while the 6% per annum under Art. 2209 of the Civil Code applies when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general, with the application of both rates reckoned from the time the complaint was filed until the [adjudged]cra amount is fully paid. In either instance, the reckoning period for the commencement of the running of the legal interest shall be subject to the condition that the courts are vested with discretion, depending on the equities of each case, on the award of interest.[30]cra (Emphasis supplied.) Based on our ruling above, forbearance of money refers to the contractual obligation of the lender or creditor to desist for a fixed period from requiring the borrower or debtor to repay the loan or debt then due and for which 12% per annum is imposed as interest in the absence of a stipulated rate. In the instant case, Alfredos conditional payment to Land Bank does not constitute forbearance of money, since there was no agreement or obligation for Alfredo to pay Land Bank the amount of PhP 750,000, and the obligation of Land Bank to return what Alfredo has conditionally paid is still in dispute and has not yet been determined. Thus, it cannot be said that Land Banks alleged obligation has become a forbearance of money. On the award of attorneys fees, attorneys fees and expenses of litigation were awarded because Alfredo was compelled to litigate due to the unjust refusal of Land Bank to refund the amount he paid. There are instances when it is just and equitable to award attorneys fees and expenses of litigation.[31]cra Art. 2208 of the Civil Code pertinently states: In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except: xxxx (2) When the defendants act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest. Given that Alfredo was indeed compelled to litigate against Land Bank and incur expenses to protect his interest, we find that the award falls under the exception above and is, thus, proper given the circumstances. On a final note. The instant case would not have been litigated had Land Bank been more circumspect in dealing with Alfredo. The bank chose to accept payment from Alfredo even before a credit investigation was underway, a procedure worsened by the failure to even inform him of his credit standings impact on his assumption of mortgage. It was, therefore, negligent to a certain degree in handling the transaction with Alfredo. It should be remembered that the business of a bank is affected with public interest and it should observe a higher standard of diligence when dealing with the public.[32]cralaw WHEREFORE, the appeal is DENIED. The CA Decision in CA-G.R. CR-CV No. 84445 is AFFIRMED with MODIFICATION in that the amount of PhP 750,000 will earn interest at 6% per annum reckoned from December 12, 1997, and the total aggregate monetary awards will in turn earn 12% per annum from the finality of this Decision until fully paid. SO ORDERED. EULOGIO OCCENA vs. HON. PEDRO M. ICAMINA, PEOPLE OF THE PHILS., & VEGAFRIA (Kinds of Damages) FERNAN, C.J.: Facts: Petitioner Occena filed a criminal complaint for Grave Oral Defamation against private respondent Cristina Vegrafia for allegedly openly, publicly and maliciously uttering the following insulting words and statements: "Gago ikaw nga Barangay Captain, montisco, traidor, malugus, Hudas." Private respondent as accused therein entered a plea of not guilty. After trial, private respondent was convicted of the offense of Slight Oral Defamation and was sentenced to pay a fine of Fifty Pesos (P50.00) with subsidiary imprisonment in case of insolvency and to pay the costs. No damages were awarded to petitioner. Issue: WON petitioner is entitled to an award of damages arising from the remarks uttered by private respondent and found by the trial court to be defamatory. Ruling: PETITION GRANTED. The decision of the RTC is MODIFIED and private respondent is ordered to pay petitioner the amount of P5,000.00 as moral damages and another P5,000.00 as exemplary damages.

What gives rise to the civil liability is really the obligation of everyone to repair or to make whole the damage caused to another by reason of his act or omission, whether done intentionally or negligently and whether or not punishable by law. The offense of which private respondent was found guilty is not one of those felonies where no civil liability results because either there is no offended party or no damage was caused to a private person. Article 2219, par. (7) of the Civil Code allows the recovery of moral damages in case of libel, slander or any other form of defamation. This provision of law establishes the right of an offended party in a case for oral defamation to recover from the guilty party damages for injury to his feelings and reputation. The offended party is likewise allowed to recover punitive or exemplary damages. Banal vs. Tadeo Facts: Petitioner herein is one of the complainants in the criminal cases filed against Rosario Claudio. Claudio is charged with 15 separate information for violation of BP 22. Claudio pleaded not guilty, thus trial ensued. Petitioner moved to intervene through private prosecutor but it was rejected by respondent judge on the ground that the charge is for the violation of Batas Pambansa Blg. 22 which does not provide for any civil liability or indemnity and hence, it is not a crime against property but public order. Petitioner filed a motion for reconsideration but was denied by the respondent judge. Hence this appeal. Issue: Whether or not a private prosecutor may intervene in the prosecution for violation of BP 22 which does not provide for civil liability. Held: Yes. Under Art. 100 of the RPC, every person criminally liable for a felony is also civilly liable. Thus a person committing a felony offends namely (1) the society in which he lives in or the political entity called the State whose law he had violated; and (2) the individual member of that society whose person, right, honor, chastity or property was actually or directly injured or damaged by the same punishable act or omission. While an act or omission is felonious because it is punishable by law, it gives rise to civil liability not so much because it is a crime but because it caused damage to another. Viewing things pragmatically, we can readily see that what gives rise to the civil liability is really the obligation and the moral duty of everyone to repair or make whole the damage caused to another by reason of his own act or omission, done intentionally or negligently, whether or not the same be punishable by law. In other words, criminal liability will give rise to civil liability only if the same felonious act or omission results in damage or injury to another and is the direct and proximate cause thereof. Damage or injury to another is evidently the foundation of the civil action. Such is not the case in criminal actions for, to be criminally liable, it is enough that the act or omission complained of is punishable, regardless of whether or not it also causes material damage to another. Article 20 of the New Civil Code provides: Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Regardless, therefore, of whether or not a special law so provides, indemnification of the offended party may be had on account of the damage, loss or injury directly suffered as a consequence of the wrongful act of another. Manantan vs CA Civil Liability

On June 1, 1983, the provincial fiscal of Isabela filed an information charging petitioner Manantan with reckless imprudence resulting in homicide. On arraignment, petitioner pleaded not guilty to the charge. The prosecutions evidence, as summarized by the trial court indicated that Manantan was driving 40 km/hr along the highway (although according to Charles Cudamon, the car was running at a speed of 80 to 90 kkm/hr on the wrong lane of the highway because the car was overtaking a tricycle, when they met a passenger jeepney with bright lights on). The defense version was essentially the same as that of the prosecution, except that defense witness Miguel Tabangin declared that Manantan did not drink beer that night. RTC found the accused not guilty but on appeal the court modified the decision in favor of the private respondents. ISSUE: 1.Did the acquittal of petitioner over foreclose any further injury by the court of appeals as to his negligence of reckless imprudence? 2.Did the court a quo err in finding that petitioners acquittal did not extinguish his civil liability? HELD: On the first issue, our law recognizes two kinds of acquittal, with different effects on the civil liability of the accused. First is an acquittal on the ground that the accused is not the author of the act or omission complained of. The second is an acquittal based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of the accused has not been satisfactorily established, he is not exempt from civil liability which may be proved by preponderance of evidence only. On the second issue, our scrutiny of the lower courts decision in this case supports the conclusion of the appellate court that the acquittal was based on reasonable doubt; hence petitioners civil liability was not extinguished by his discharge. The court note that the trial courts declaration that did not discount the possibility that the accused was really negligent. The foregoing clearly shows that petitioners acquittal was predicated on the conclusion that his guilt had not

been established with moral certainty. Stated differently, it is an acquittal based on reasonable doubt and a suit to enforce civil liability for the same act or omission lies. Therefore, the instant petition was hereby dismissed.

PADILLA v. COURT OF APPEALS [269 SCRA 402 (1997)] November 10, 2010 Nature: Petition for review on certiorari of a decision of the CA. Facts: Padilla figured in a hit and run accident in Oct 26, 1992. He was later on apprehended with the help pf a civilian witness. Upon arrest following high powered firearms were found in his possession: 1. .357 caliber revolver with 6 live ammunition 2. M-16 Baby Armalite magazine with ammo 3. .380 pietro beretta with 8 ammo 4. 6 live double action ammo of .38 caliber revolver Padilla claimed papers of guns were at home. His arrest for hit and run incident modified to include grounds of Illegal Possession of firearms. He had no papers. On Dec. 3, 1994, Padilla was found guilty of Illegal Possession of Firearms under PD 1866 by the RTC of Angeles City. He was convicted and sentenced to an indeterminate penalty from 17 years. 4 months, 1 day of reclusion temporal as minimum to 21 years of reclusion perpetua as maximum. The Court of Appeals confirmed decision and cancelled bailbond. RTC of Angeles City was directed to issue order of arrest. Motion for reconsideration was denied by Court of Appeals. Padilla filed lots of other petitions and all of a sudden, the Solicitor General made a complete turnaround and filed Manifestation in Lieu of Comment praying for acquittal (nabayaran siguro). Issues: 1. WARRANTLESS ARREST: WON his was illegal and consequently, the firearms and ammunitions taken in the course thereof are inadmissible in evidence under the exclusionary rule No. Anent the first defense, petitioner questions the legality of his arrest. There is no dispute that no warrant was issued for the arrest of petitioner, but that per se did not make his apprehension at the Abacan Bridge illegal. Warrantless arrests are sanctioned in Sec. 5, Rule 113 of the Revised Rules on Criminal Procedurea peace officer or a private person may, without a warrant, arrest a person (a) when in his presence the person to be arrested has committed, is actually committing, or is attempting to commit an offense. When caught in flagrante delicto with possession of an unlicensed firearm and ammo, petitioners warrantless arrest was proper since he was actually committing another offence in the presence of all those officers. There was no supervening event or a considerable lapse of time between the hit and run and the actual apprehension. Because arrest was legal, the pieces of evidence are admissible. Instances when warrantless search and seizure of property is valid: ? Seizure of evidence in plain view, elements of which are (a) prior valid intrusion based on valid warrantless arrest in which police are legally present in pursuit of official duties, (b) evidence inadvertedly discovered by police who had the right to be there, (c) evidence immediately apparent, and (d) plain view justified mere seizure of evidence without further search (People v. Evaristo: objects whose possession are prohibited by law inadvertedly found in plain view are subject to seizure even without a warrant) ? Search of moving vehicle ? Warrantless search incidental to lawful arrest recognized under section 12, Rule 126 of Rules of Court and by prevailing jurisprudence where the test of incidental search (not excluded by exclusionary rule) is that item to be searched must be within arrestees custody or area of immediate control and search contemporaneous with arrest. Petitioner would nonetheless insist on the illegality of his arrest by arguing that the policemen who actually arrested him were not at the scene of the hit and run. The court begs to disagree. It is a reality that curbing lawlessness gains more success when law enforcers function in collaboration with private citizens. Furthermore, in accordance with settled jurisprudence, any objection, defect or irregularity attending an arrest must be made before the accused enters his plea. 2. LICENSE TO CARRY: WON the petitioner is authorized, under a Mission Order and Memorandum Receipt, to carry the subject firearms No. In crimes involving illegal possession of firearm, two requisites must be established, viz.: (1) the existence of the subject firearm and, (2) the fact that the accused who owned or possessed the firearm does not have the corresponding license or permit to possess. The first element is beyond dispute as the subject firearms and ammunitions were seized from petitioners possession via a valid warrantless search, identified and offered in evidence during trial. As to the second element, the same was convincingly proven by the prosecution. Indeed, petitioners purported Mission Order and Memorandum Receipt are inferior in the face of the more formidable evidence for the prosecution as our meticulous review of the records reveals that the Mission Order and Memorandum Receipt were mere afterthoughts contrived and issued under suspicious circumstances. On this score, we lift from respondent courts incisive observation. Furthermore, the Memorandum Receipt is also unsupported by a certification as required by the March 5, 1988 Memorandum of the Secretary of Defense. Petitioner is not in the Plantilla of Non-Uniform personnel or in list of Civilian Agents of Employees of the PNP, which would justify issuance of mission order (as stated in PD 1866). Lastly, the M-16 and any short firearms higher than 0.38 caliber cannot be licensed to a civilian. 3. PENALTY: WON penalty for simple illegal possession constitutes excessive and cruel punishment

proscribed by the 1987 Constitution Anent his third defense, petitioner faults respondent court in applying P.D. 1866 in a democratic ambience (sic) and a non-subversive context and adds that respondent court should have applied instead the previous laws on illegal possession of firearms since the reason for the penalty imposed under P.D. 1866 no longer exists. He stresses that the penalty of 17 years and 4 months to 21 years for simple illegal possession of firearm is cruel and excessive in contravention of the Constitution. The contentions do not merit serious consideration. The trial court and the respondent court are bound to apply the governing law at the time of appellants commission of the offense for it is a rule that laws are repealed only by subsequent ones. Indeed, it is the duty of judicial officers to respect and apply the law as it stands. And until its repeal, respondent court can not be faulted for applying P.D. 1866 which abrogated the previous statutes adverted to by petitioner. Equally lacking in merit is appellants allegation that the penalty for simple illegal possession is unconstitutional. The penalty for simple possession of firearm, it should be stressed, ranges from reclusion temporal maximum to reclusion perpetua contrary to appellants erroneous averment. The severity of a penalty does not ipso facto make the same cruel and excessive. Moreover, every law has in its favor the presumption of constitutionality. The burden of proving the invalidity of the statute in question lies with the appellant which burden, we note, was not convincingly discharged. To justify nullification of the law, there must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative implication, as in this case. In fact, the constitutionality of P.D. 1866 has been upheld twice by this Court. Just recently, the Court declared that the pertinent laws on illegal possession of firearms [are not] contrary to any provision of the Constitution Appellants grievances on the wisdom of the prescribed penalty should not be addressed to us. Courts are not concerned with the wisdom, efficacy or morality of laws. That question falls exclusively within the province of Congress which enacts them and the Chief Executive who approves or vetoes them. The only function of the courts, we reiterate, is to interpret and apply the laws Held: WHEREFORE, premises considered, the decision of the CA sustaining petitioners conviction by the lower court of the crime of simple illegal possession of firearms & ammunitions is AFFIRMED EXCEPT that petitioners indeterminate penalty is MODIFIED to 10 yrs & 1 day, as min. to 18 yrs, 8 months & 1 day, as maximum. People v. Simon Doctrine: Although PD 1866 is a special law, the penalties therein were taken from the RPC, hence the rules in said code for graduating by degrees of determining the proper period should be applied. EMMA P. NUGUID vs. CLARITA S. NICDAO EXTINCTION OF CIVIL LIABILITY Justice Corona FACTS: Accused Clarita S. Nicdao is charged with having committed the crime of Violation of BP 22 in fourteen (14) counts. The criminal complaints allege that respondent and her husband approached petitioner and asked her if they could borrow money to settle some obligations. Having been convinced by them and because of the close relationship of respondent to petitioner, the latter lent the former her money. Thus, every month, she was persuaded to release P100,000.00 to the accused until the total amount reached P1,150,000.00. As security for the P1,150,000.00, respondent gave petitioner open dated checks with the assurance that if the entire amount is not paid within one (1) year, petitioner can deposit the checks. Subsequently, petitioner demanded payment of the sums above-mentioned, but respondent refused to acknowledge the indebtedness. Thereafter, petitioner deposited all aforementioned checks in the bank totaling P1,150,000.00. The checks were all returned for having been drawn against insufficient funds. A verbal and written demand was made upon respondent to pay the amount represented by the bounced checks, but to no avail. Hence, a complaint for violation of BP 22 was filed against the respondent. The trial court convicted the defendant. The CA reversed the decision, thus acquitting Nicdao. Petitioner now contends that the civil liability of the defendant was not extinguished by the acquittal. ISSUE: Whether respondent remains civilly liable to petitioner despite her acquittal. HELD: No. From the standpoint of its effects, a crime has a dual character: (1) as an offense against the State because of the disturbance of the social order and (2) as an offense against the private person injured by the crime unless it involves the crime of treason, rebellion, espionage, contempt and others (wherein no civil liability arises on the part of the offender either because there are no damages to be compensated or there is no private person injured by the crime. What gives rise to the civil liability is really the obligation of everyone to repair or to make whole the damage caused to another by reason of his act or omission, whether done intentionally or negligently and whether or not punishable by law. Extinction of penal action does not carry with it the eradication of civil liability, unless the extinction proceeds from a declaration in the final judgment that the fact from which the civil liability might arise did not exist. The basic principle in civil liability ex delicto is that every person criminally liable is also civilly liable, crime being one of the five sources of obligations under the Civil Code. A person acquitted of a criminal charge, however, is not necessarily civilly free because the quantum of proof required in criminal prosecution (proof beyond reasonable doubt) is greater than that required for civil liability (mere preponderance of evidence). In order to be completely free from civil liability, a person's acquittal must be based on the fact that he did not commit the offense. If the acquittal is based merely on reasonable doubt, the accused may still be held civilly liable since this does not mean he did not commit the act complained of. It may only be

that the facts proved did not constitute the offense charged. Acquittal will not bar a civil action in the following cases: (1) where the acquittal is based on reasonable doubt as only preponderance of evidence is required in civil cases; (2) where the court declared the accused's liability is not criminal but only civil in nature and (3) where the civil liability does not arise from or is not based upon the criminal act of which the accused was acquitted. In this petition, we find no reason to ascribe any civil liability to respondent. As found by the CA, her supposed civil liability had already been fully satisfied and extinguished by payment. The statements of the appellate court leave no doubt that respondent, who was acquitted from the charges against her, had already been completely relieved of civil liability. People vs Bayotas Extinction of Civil Liability Rogelio Bayotas y Cordova was charged with Rape and eventually convicted thereof on June 19, 1991. Pending appeal of his conviction, Bayotas died on February 4, 1992 at the National Bilibid Hospital due to cardio respiratory arrest. Consequently, the Supreme Court in its Resolution of May 20, 1992 dismissed the criminal aspect of the appeal. However, it required the Solicitor General to file its comment with regard to Bayotas civil liability arising from his commission of the offense charged. In his comment, the Solicitor General expressed his view that the death of the accused-appellant did not extinguish his civil liability. Counsel for the accused-appellant on the other hand, opposed the view of the Solicitor General arguing that death of the accused while judgment of the conviction is pending appeal extinguishes both his criminal and civil penalties. ISSUE: Whether or not the death of the accused pending appeal of his conviction extinguish his civil liability. HELD: Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. Corollary, the claim for civil liability survives notwithstanding the death of the accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission: a) Law b) Contracts c) Quasi-contracts d) Quasi-delicts. Where the civil liability survives, as explained above, an action for recovery therefore may be pursued but only by way of filing a separate civil action and subject to Sec.1, Rule 111 of the 1985 Rules on Criminal procedure as amended. This separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation upon which the same is based as explained above. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case, conformably with the provisions of Article 1155 of the Civil Code that should thereby avoid any apprehension on a possible privation of right by prescription. Applying this set of rules the court ruled that the death of appellant Bayotas extinguished his criminal liability and the civil liability based solely on the act complained of, rape. Consequently, the appeal was hereby dismissed. PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, - versus - JAIME AYOCHOK y TAULI, AccusedAppellant. DECISION LEONARDO-DE CASTRO, J.: Before Us is an appeal filed by Jaime Ayochok y Tauli (Ayochok) assailing the Decision[1] dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949, entitled People of the Philippines v. Jaime Ayochok y Tauli, which affirmed with modifications the Decision dated August 13, 2003 of the Regional Trial Court (RTC) of Baguio City, Branch 6, in Criminal Case No. 18658-R.[2] The RTC found Ayochok guilty beyond reasonable doubt of the crime of Murder. In an Amended Information[3] dated September 21, 2001, Prosecutor Benedicto T. Carantes charged Ayochok with Murder, committed as follows: That on or about the 15th day of July, 2001, in the City of Baguio, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused, being then armed with a gun, with intent to kill and with evident premeditation and by means of treachery and with cruelty by deliberately and inhumanly outraging at the victim, did then and there willfully, unlawfully and feloniously attack, assault and shoot SPO1 CLAUDIO CALIGTAN y NGODO in the following manner, to wit: that while the victim was relieving himself with his back turned to the accused, the latter coming from the blind side of the victim, shoot him several times hitting him on the different parts of his body and there was no opportunity or means to defend himself from the treacherous act of the assailant, thereby inflicting upon the latter: hypovolemic shock due to massive hemorrhage; multiple gunshot wounds on the head, neck, and upper extremities which directly caused his death. When arraigned, Ayochok pleaded not guilty. After trial on the merits of Criminal Case No. 18658-R, the RTC rendered a Decision on August 13, 2003, the dispositive portion of which reads: WHEREFORE, the Court finds the accused Jaime Ayochok guilty beyond reasonable doubt of the offense of Murder, defined and penalized under Article 248 of the Revised Penal Code as amended, qualified by

treachery as charged in the Information and hereby sentences him to reclusion perpetua; to indemnify the heirs of the deceased SPO1 Claudio Caligtan the sum of P75,000.00 as civil indemnity for his death; P200,000.00 as moral damages; P378,956.50 as actual damages in connection with his death; P2,573,096.40 as unearned income, all indemnifications being without subsidiary imprisonment in case of insolvency; and to pay the costs. The accused Jaime Ayochok being a detention prisoner is entitled to be credited 4/5 of his preventive imprisonment in the service of his sentence in accordance with Article 29 of the Revised Penal Code.[4] Ayochok was committed at the New Bilibid Prison in Muntinlupa City on October 31, 2003. The case was directly elevated to us for automatic review and was docketed as G.R. No. 161469. However, pursuant to our decision in People v. Mateo[5] which modified the pertinent provisions of the Revised Rules on Criminal Procedure on direct appeals from the RTC to the Supreme Court in cases where the penalty imposed is death, reclusion perpetua or life imprisonment G.R. No. 161469 was transferred to the Court of Appeals,[6] where it was docketed as CA-G.R. CR No. 00949. In its Decision dated June 28, 2005, the Court of Appeals affirmed with modifications the RTC judgment, to wit: WHEREFORE, in view of the foregoing premises, the Decision subject of this review is hereby AFFIRMED, save for several modifications in the civil aspect. Accordingly, the civil indemnity is reduced to P50,000.00; moral damages reduced to P50,000.00; actual damages reduced to P144,375.75 and unearned income reduced to P2,571,696.10.[7] Initially, Ayochok filed a Motion for Reconsideration[8] of the foregoing Decision of the Court of Appeals. Subsequently, however, Ayochok filed a Motion to Withdraw Motion for Reconsideration with Notice of Appeal[9] since he believed there was no chance that the appellate court would reverse itself, and prayed that the case already be forwarded to us instead. In a Resolution dated June 14, 2006, the Court of Appeals denied Ayochoks Motion to Withdraw Motion for Reconsideration with Notice of Appeal. In another Resolution dated August 11, 2006, the appellate court denied Ayochoks Motion for Reconsideration of the Decision dated June 28, 2005. Ayochok, through counsel, filed a Notice of Appeal with the Court of Appeals conveying his intention to appeal to us the Decision dated June 28, 2005 of said court. On December 29, 2006, the Judicial Records Division of the Court of Appeals elevated to us the original records of CA-G.R. CR No. 00949,[10] and Ayochoks appeal was docketed as G.R. No. 175784. On February 12, 2007, we required the parties in G.R. No. 175784 to file their supplemental briefs. [11] Ayochok filed his Supplemental Appellants Brief[12] on May 31, 2007, while the Office of the Solicitor General filed a Manifestation[13] on March 29, 2007, stating that it would no longer file a supplemental brief given that its Appellees Brief, originally filed in G.R. No. 161469, is adequate to ventilate the Peoples cause. On August 6, 2007, we submitted G.R. No. 175784 for resolution.[14] However, in a letter dated February 16, 2010, Julio A. Arciaga, the Assistant Director for Prisons and Security of the Bureau of Corrections, informed us that Ayochok had died on January 15, 2010 at the Philippine General Hospital, Manila. A copy of the death report signed by a medical officer of the New Bilibid Prison Hospital was attached to said letter. In a Resolution dated April 28, 2010, we noted the letter and required the Director of the Bureau of Corrections to submit a certified true copy of Ayochoks death certificate from the local civil registrar within five days from notice of the said resolution. On June 22, 2010, Melind M. Alipe, Head of the Medical and Dental Division of the New Bilibid Prison, Muntinlupa City, submitted a certified true copy of the death certificate of Ayochok. Given Ayochoks death, we are now faced with the question of the effect of such death on the present appeal. Ayochoks death on January 15, 2010, during the pendency of his appeal, extinguished not only his criminal liability for the crime of murder committed against Senior Police Officer 1 Claudio N. Caligtan, but also his civil liability solely arising from or based on said crime. According to Article 89(1) of the Revised Penal Code, criminal liability is totally extinguished: 1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability therefor is extinguished only when the death of the offender occurs before final judgment. Applying the foregoing provision, we laid down the following guidelines in People v. Bayotas[15]: 1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, the death of the accused prior to final judgment terminates his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso strictiore. 2. Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the civil liability may arise as a result of the same act or omission: a) Law b) Contracts c) Quasi-contracts xxxx e) Quasi-delicts 3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case, conformably with the provisions of Article 1155 of the Civil Code that should thereby avoid any apprehension on a possible privation of right by prescription.[16] Clearly, in view of a supervening event, it is unnecessary for the Court to rule on Ayochoks appeal. Whether or not he was guilty of the crime charged has become irrelevant since, following Article 89(1) of the Revised Penal Code and our disquisition in Bayotas, even assuming Ayochok had incurred any criminal liability, it was totally extinguished by his death. Moreover, because Ayochoks appeal was still pending and no final judgment of conviction had been rendered against him when he died, his civil liability arising from the crime, being civil liability ex delicto, was likewise extinguished by his death. Consequently, the appealed Decision dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949 finding Ayochok guilty of Murder, sentencing him to imprisonment, and ordering him to indemnify his victim had become ineffectual.[17] WHEREFORE, in view of the death of accused-appellant Jaime Ayochok y Tauli, the Decision dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949 is SET ASIDE and Criminal Case No. 18658-R before the Regional Trial Court of Baguio City is DISMISSED. Costs de oficio. SO ORDERED. Elcano vs Hill Torts and Damages Civil Liability from Quasi Delicts vs Civil Liability from Crimes Reginald Hill, a minor, caused the death of Agapito (son of Elcano). Elcano filed a criminal case against Reginald but Reginald was acquitted for lack of intent coupled with mistake. Elcano then filed a civil action against Reginald and his dad (Marvin Hill) for damages based on Article 2180 of the Civil Code. Hill argued that the civil action is barred by his sons acquittal in the criminal case; and that if ever, his civil liability as a parent has been extinguished by the fact that his son is already an emancipated minor by reason of his marriage. ISSUE: Whether or not Marvin Hill may be held civilly liable under Article 2180. HELD: Yes. The acquittal of Reginald in the criminal case does not bar the filing of a separate civil action. A separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if accused is actually charged also criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, culpa aquiliana includes voluntary and negligent acts which may be punishable by law. While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article 397, emancipation takes place by the marriage of the minor child, it is, however, also clear that pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus Emancipation by marriage or by voluntary concession shall terminate parental authority over the childs person. It shall enable the minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian. Therefore, Article 2180 is applicable to Marvin Hill the SC however ruled since at the time of the decision, Reginald is already of age, Marvins liability should be subsidiary only as a matter of equity. DY TEBAN TRADING, INC., - versus - JOSE CHING AND/OR LIBERTY FOREST, INC. and CRESILITO M. LIMBAGA, FACTS: On July 4, 1995, at around 4:45 a.m., Rogelio Ortiz, with helper Romeo Catamora, was driving a Nissan van owned by petitioner Dy Teban Trading, Inc. along the National Highway in Barangay Sumilihon, Butuan City, going to Surigao City. They were delivering commercial while a Joana Paula passenger bus was cruising on the opposite lane towards the van. In between the two vehicles was a parked prime mover with a trailer, owned by private respondent Liberty Forest, Inc. as the trailer suffered a tire blowout the night before. The driver Cresilito Limbaga, parked the prime mover askew occupying a substantial portion of the national highway, on the lane of the passenger bus. The prime mover was not equipped with triangular, collapsible reflectorized plates, the early warning device as substitute, Limbaga placed a banana trunk with leaves on the front and the rear portion of the prime mover to warn incoming motorists. It is alleged that Limbaga likewise placed kerosene lighted tin cans on the front and rear of the trailer. To avoid hitting the parked prime mover , the incoming passenger bus swerved to the right, onto the lane of the approaching Nissan van. Ortiz saw two bright and glaring headlights and the approaching passenger bus. He pumped his break slowly, swerved to the left to avoid the oncoming bus but the van hit the front of the stationary prime mover. The passenger bus hit the rear of the

prime mover. Ortiz and Catamora only suffered minor injuries. The Nissan van, however, became inoperable as a result of the incident. On October 31, 1995, petitioner Nissan van owner filed a complaint for damages against prime mover owner and driver with the RTC in Butuan City. The Joana Paula passenger bus was not impleaded as defendant in the complaint. ISSUE: Whether or not PrimeMover is liable for the damages suffered by the Nissan Van HELD: YES, Defendant Liberty Forest, Inc. did not exercise the diligence of a good father of a family in managing and running its business. The evidence on record shows that it failed to provide its prime mover and trailer with the required early warning devices with reflectors and it did not keep proper maintenance and condition of the prime mover and the trailer. The circumstances show that the trailer were provided with wornout tires and with only one (1) piece of spare tire. We find that Limbaga was utterly negligent in parking the prime mover askew on the right side of the national highway. The vehicle occupied a substantial portion of the national road on the lane of the passenger bus. It is common sense that the skewed parking of the prime mover on the national road posed a serious risk to oncoming motorists. It was incumbent upon Limbaga to take some measures to prevent that risk, or at least minimize it. We find that private respondent Liberty Forest, Inc. was utterly negligent in allowing a novice driver, like Limbaga, to operate a vehicle, such as a truck loaded with a bulldozer, which required highly specialized driving skills. The employer clearly failed to properly supervise Limbaga in driving the prime mover. Limbaga was negligent in parking the prime mover on the national highway. Liberty Forest, Inc. was also negligent in failing to supervise Limbaga and in ensuring that the prime mover was in proper condition. ** Facts of the case reveal that when Ortiz, the driver of the truck, failed to give the Joana Paula bus the space on the road it needed, the latter vehicle scraped its rear right side on the protruded bulldozer blade and the impact threw the bus directly on the path of the oncoming truck. This made plaintiffsappellants/ appellees conclude that the Joana Paula bus occupied its lane which forced Ortiz, the driver of the truck, to swerve to its left and ram the front of the parked trailer. ** To sustain a claim based on quasi-delict, the following requisites must concur: (a) damage suffered by plaintiff; (b) fault or negligence of defendant; and (c) connection of cause and effect between the fault or negligence of defendant and the damage incurred by plaintiff. **The two (2) flat tires suffered by the trailer and these two (2) tires were attached to one of the two (2) Ibeams or axles attached to the rear of the trailer which axle is very near but behind the other axle and with the location , it would have the other beam suffer the flat tires as it has to bear the brunt of weight of the D-8 bulldozer. Barredo vs Garcia and Almario Torts and Damages Civil Liability from Quasi Delicts vs Civil Liability from Crimes At about 1:30am on May 3, 1936, Fontanillas taxi collided with a kalesa thereby killing the 16 year old Faustino Garcia. Faustinos parents filed a criminal suit against Fontanilla and reserved their right to file a separate civil suit. Fontanilla was eventually convicted. After the criminal suit, Garcia filed a civil suit against Barredo the owner of the taxi (employer of Fontanilla). The suit was based on Article 1903 of the civil code (negligence of employers in the selection of their employees). Barredo assailed the suit arguing that his liability is only subsidiary and that the separate civil suit should have been filed against Fontanilla primarily and not him. ISSUE: Whether or not Barredo is just subsidiarily liable. HELD: No. He is primarily liable under Article 1903 which is a separate civil action against negligent employers. Garcia is well within his rights in suing Barredo. He reserved his right to file a separate civil action and this is more expeditious because by the time of the SC judgment Fontanilla is already serving his sentence and has no property. It was also proven that Barredo is negligent in hiring his employees because it was shown that Fontanilla had had multiple traffic infractions already before he hired him something he failed to overcome during hearing. Had Garcia not reserved his right to file a separate civil action, Barredo would have only been subsidiarily liable. Further, Barredo is not being sued for damages arising from a criminal act (his drivers negligence) but rather for his own negligence in selecting his employee (Article 1903). Safeguard Security Agency, Inc. vs Tangco Facts: On November 3, 1997, at about 2:50 p.m., Evangeline Tangco (Evangeline) went to Ecology Bank, Katipunan Branch, Quezon City, to renew her time deposit per advise of the bank's cashier as she would sign a specimen card. Evangeline, a duly licensed firearm holder with corresponding permit to carry the same outside her residence, approached security guard Pajarillo, who was stationed outside the bank, and pulled out her firearm from her bag to deposit the same for safekeeping. Suddenly, Pajarillo shot Evangeline with his service shotgun hitting her in the abdomen instantly causing her death. Lauro Tangco, Evangeline's husband, together with his six minor children (respondents) filed with the Regional Trial Court (RTC) of Quezon City, a criminal case of Homicide against Pajarillo, docketed as Criminal Case No. 0-97-73806 and assigned to Branch 78. Respondents reserved their right to file a separate civil action in the said criminal case. The RTC of Quezon City subsequently convicted Pajarillo of Homicide in its Decision dated January 19, 2000. On appeal to the CA, the RTC decision was affirmed with modification as to the penalty in a Decision dated July 31, 2000. Entry of Judgment was made on August 25, 2001.

Meanwhile, on January 14, 1998, respondents filed with RTC, Branch 273, Marikina City, a complaint for damages against Pajarillo for negligently shooting Evangeline and against Safeguard for failing to observe the diligence of a good father of a family to prevent the damage committed by its security guard. Respondents prayed for actual, moral and exemplary damages and attorney's fees. In their Answer, petitioners denied the material allegations in the complaint and alleged that Safeguard exercised the diligence of a good father of a family in the selection and supervision of Pajarillo; that Evangeline's death was not due to Pajarillo's negligence as the latter acted only in self-defense. Petitioners set up a compulsory counterclaim for moral damages and attorney's fees. Issues: (a) Whether respondent can file civil liability ex delito under Article 100 of the Revised Penal Code? (b) Whether independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code? (c) Whether the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code. Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the offended party cannot recover damages twice for the same act or omission or under both causes? Held: The RTC found respondents to be entitled to damages. It rejected Pajarillo's claim that he merely acted in self-defense. It gave no credence to Pajarillo's bare claim that Evangeline was seen roaming around the area prior to the shooting incident since Pajarillo had not made such report to the head office and the police authorities. The RTC further ruled that being the guard on duty, the situation demanded that he should have exercised proper prudence and necessary care by asking Evangeline for him to ascertain the matter instead of shooting her instantly; that Pajarillo had already been convicted of Homicide in Criminal Case No. 0-97-73806; and that he also failed to proffer proof negating liability in the instant case. The RTC also found Safeguard as employer of Pajarillo to be jointly and severally liable with Pajarillo. It ruled that while it may be conceded that Safeguard had perhaps exercised care in the selection of its employees, particularly of Pajarillo, there was no sufficient evidence to show that Safeguard exercised the diligence of a good father of a family in the supervision of its employee; that Safeguard's evidence simply showed that it required its guards to attend trainings and seminars which is not the supervision contemplated under the law; that supervision includes not only the issuance of regulations and instructions designed for the protection of persons and property, for the guidance of their servants and employees, but also the duty to see to it that such regulations and instructions are faithfully complied with. In finding that Safeguard is only subsidiarily liable, the CA held that the applicable provisions are not Article 2180 in relation to Article 2176 of the Civil Code, on quasi-delicts, but the provisions on civil liability arising from felonies under the Revised Penal Code; that since Pajarillo had been found guilty of Homicide in a final and executory judgment and is said to be serving sentence in Muntinlupa, he must be adjudged civilly liable under the provisions of Article 100 of the Revised Penal Code since the civil liability recoverable in the criminal action is one solely dependent upon conviction, because said liability arises from the offense charged and no other; that this is also the civil liability that is deemed extinguished with the extinction of the penal liability with a pronouncement that the fact from which the civil action might proceed does not exist; that unlike in civil liability arising from quasi-delict, the defense of diligence of a good father of a family in the employment and supervision of employees is inapplicable and irrelevant in civil liabilities based on crimes or ex-delicto; that Article 103 of the Revised Penal Code provides that the liability of an employer for the civil liability of their employees is only subsidiary, not joint or solidary. WHEREFORE, the petition for review is DENIED. The Decision dated July 16, 2004 of the Court of Appeals is AFFIRMED with MODIFICATION that the civil liability of petitioner Safeguard Security Agency, Inc. is SOLIDARY and PRIMARY under Article 2180 of the Civil Code. AIR FRANCE, - versus - RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, FACTS: On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. Rafael Carrascoso was one of the 48 Filipino pilgrims who left Manila for Lourdes. However, at Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white man". ISSUE: Whether or not damages may be recovered on the basis of the expulsion HELD: Yes, the contract of air carriage generates a relation attended with public duty. Passengers should be protected and insured a pleasant trip. Thus, the wrongful expulsion is a violation of public duty by the air carrier- a quasi delict. Damages are proper.

** If, as petitioner underscores, a firstclass- ticket holder is not entitled to a first class seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What security then can a passenger have? The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and circumstances set forth therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful expulsion. ** Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for damages against the carrier. JULIAN SINGSON and RAMONA DEL CASTILLO vs. BANK OF THE PHILIPPINE ISLANDS and SANTIAGO FREIXAS (Pres. Of BPI) Facts: Appeal by plaintiffs from a decision of the CFI Mla dismissing their complaint against defendants. On May 8, 1963, the Singsong commenced the present action against the Bank and its president, Freixas, for damages in consequence of said illegal freezing of plaintiffs' account. After appropriate proceedings, the CFI Mla rendered judgment dismissing the complaint upon the ground that plaintiffs cannot recover from the defendants upon the basis of a quasi-delict, because the relation between the parties is contractual in nature. Issue: WON the existence of a contractual relation between the parties bar recovery of damages. Ruling: The judgment appealed from is reversed holding defendant BPI to pay to the plaintiffs nominal damages, and attorney's fees, apart from the costs. The SC have repeatedly held that the existence of a contract between the parties does not bar the commission of a tort by the one against the order and the consequent recovery of damages therefore. In view, of the facts obtaining in the case at bar, and considering, particularly, the circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank realized the mistake they had committed, the Court finds that an award of nominal damages the amount of which need not be proven in the sum of P1,000, in addition to attorney's fees in the sum of P500, would suffice to vindicate plaintiff's rights. LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, versus MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY AGENCY FACTS: Nicanor Navidad, then drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security guard assigned to the area approached him. A misunderstanding or an altercation between the two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how the fight started or who, between the two, delivered the first blow or how Navidad later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously. The widow of Nicanor, Marjorie Navidad, along with her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. Trial court ruled in favor Navidads wife and against the defendants Prudent Security and Junelito Escartin . LRTA and Rodolfo Roman were dismissed for lack of merit. CA held LRTA and Roman liable, hence the petition. ISSUE: Whether or not there was a perfected contract of carriage between Navidad and LRTA HELD: AFFIRMED with MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is absolved from liability Contract of carriage was deemed created from the moment Navidad paid the fare at the LRT station and entered the premises of the latter, entitling Navidad to all the rights and protection under a contractual relation. The appellate court had correctly held LRTA and Roman liable for the death of Navidad in failing to exercise extraordinary diligence imposed upon a common carrier. While the deceased might not have then as yet boarded the train, a contract of carriage theretofore had already existed when the victim entered the place where passengers were supposed to be after paying the fare and getting the corresponding token therefor. The law requires common carriers to carry passengers safely using the utmost diligence of very cautious persons with due regard for all circumstances.

Such duty of a common carrier to provide safety to its passengers so obligates it not only during the course of the trip but for so long as the passengers are within its premises and where they ought to be in pursuance to the contract of carriage. The statutory provisions render a common carrier liable for death of or injury to passengers (a) through the negligence or willful acts of its employees or b) on account of willful acts or negligence of other passengers or of strangers if the common carriers employees through the exercise of due diligence could have prevented or stopped the act or omission. In case of such death or injury, a carrier is presumed to have been at fault or been negligent, and by simple proof of injury, the passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen event or to force majeure. The liability of the common carrier and that of the independent contractor is solidary. FGU INSURANCE CORPORATION vs. G.P.S TRUCKING CORPORATION and LAMBERT M. EROLES FACTS OF THE CASE: G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994 thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck, driven by Lambert Eroles. While the truck was traversing the north diversion road along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck, causing it to fall into a deep canal, resulting in damage to the cargoes. FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion Industries, Inc., the value of the covered cargoes: P204, 450.00. FGU, in turn, being the subrogee of the rights and interests of the insured sought reimbursement of the amount, from GPS. Since GPS failed to heed the claim, FGU filed a complaint for damages and breach of contract of carriage against GPS and its driver with the Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988, and it was not so engaged in business as a common carrier. Respondents further claimed that the cause of damage was purely accidental. GPS, instead of submitting its evidence, filed with leave of court a motion to dismiss the complaint by way of demurrer to evidence on the ground that petitioner had failed to prove that it was a common carrier. The RTC and CA both ruled in favor of the Respondent. ISSUES OF THE CASE: WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION. - In culpa contractual, upon which the action of petitioner rests as being the subrogee of Concepcion Industries, Inc., the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of relief. Thus, FGU has a claim for the amount paid out. - The law, recognizing the obligatory force of contracts, will not permit a party to be set free from liability for any kind of misperformance of the contractual undertaking or a contravention of the tenor thereof - GPS recognizes the existence of a contract of carriage between it and petitioners assured, and admits that the cargoes it has assumed to deliver have been lost or damaged while in its custody. In such a situation, a default on, or failure of compliance with, the obligation in this case, the delivery of the goods in its custody to the place of destination - gives rise to a presumption of lack of care and corresponding liability on the part of the contractual obligor the burden being on him to establish otherwise. GPS has failed to do so. HELD: The decision of the lower courts insofar as Lambert M. Eroles is concerned is affirmed but assailed decision with regard to GPS trucking is reversed. It, is hereby ordered to pay FGU Insurance Corporation the value of the damaged and lost cargoes in the amount of P204, 450.00 Obligations and Contracts Terms: expectation interest- the interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed reliance interest- the interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made Restitution interest- which is his interest in having restored to him any benefit that he has conferred on the other party. Subrogee- the person or entity that assumes the legal right to attempt to collect a claim of another (subrogor) in return for paying the other's expenses or debts which the other claims against a third party. A subrogee is usually the insurance company which has insured the party whose expenses were paid. ROLITO CALANG and PHILTRANCO SERVICE ENTERPRISES, INC., Petitioners,- versus -PEOPLE OF THE PHILIPPINES, Respondent. BRION, J.: We resolve the motion for reconsideration filed by the petitioners, Philtranco Service 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 to show any reversible error sufficient to warrant the exercise of this Courts discretionary appellate jurisdiction.

Antecedent Facts At around 2:00 p.m. of April 22, 1989, Rolito Calang was driving Philtranco Bus No. 7001, owned by Philtranco along Daang Maharlika Highway in Barangay Lambao, Sta. Margarita, Samar when its rear left side hit the front left portion of a Sarao jeep coming from the opposite direction. As a result of the collision, Cresencio Pinohermoso, the jeeps driver, lost control of the vehicle, and bumped and killed Jose Mabansag, a bystander who was standing along the highways shoulder. The jeep turned turtle three (3) times before finally stopping at about 25 meters from the point of impact. Two of the jeeps passengers, Armando Nablo and an unidentified woman, were instantly killed, while the other passengers sustained serious physical injuries. 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 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 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. The petitioners appealed the RTC decision to the Court of Appeals (CA), docketed as 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 precaution in driving the Philtranco bus. According to the CA, various eyewitnesses testified that the bus was traveling fast and encroached into the opposite lane when it evaded a pushcart that was on the side of the road. In addition, he failed to slacken his speed, despite admitting that he had already seen the jeep coming from the opposite direction when it was still half a kilometer away. The CA further ruled that Calang demonstrated a reckless attitude when he drove the bus, despite knowing that it was suffering from loose compression, hence, not roadworthy. The CA added that the RTC correctly held Philtranco jointly and severally liable with petitioner Calang, for failing to prove that it had exercised the diligence of a good father of the family to prevent the accident. The petitioners filed with this Court a petition for review on certiorari. In our Resolution 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 discretionary appellate jurisdiction. The Motion for Reconsideration 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 party in the criminal case (for multiple homicide with multiple serious physical injuries and damage to property thru reckless imprudence) before the RTC. The petitioners likewise maintain that the courts below overlooked several relevant facts, supported by documentary exhibits, which, if considered, would have shown that Calang was not negligent, such as the affidavit and testimony of witness Celestina Cabriga; the testimony of witness Rodrigo Bocaycay; the traffic accident sketch and report; and the jeepneys registration receipt. The petitioners also insist that the jeeps driver had the last clear chance to avoid the collision. We partly grant the motion. Liability of Calang We see no reason to overturn the lower courts finding on Calangs culpability. The finding of negligence on his part by the trial court, affirmed by the CA, is a question of fact that we cannot pass upon without going into factual matters touching on the finding of negligence. In petitions for review on certiorari under Rule 45 of the Revised Rules of Court, this Court is limited to reviewing only errors of law, not of fact, unless the factual findings complained of are devoid of support by the evidence on record, or the assailed judgment is based on a misapprehension of facts. Liability of Philtranco We, however, hold that the RTC and the CA both erred in holding Philtranco jointly and severally liable with Calang. We emphasize that Calang was charged criminally before 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 Philtranco jointly and severally liable with Calang, based on quasi-delict under Articles 2176[1] and 2180[2] of the Civil Code. Articles 2176 and 2180 of the Civil Code pertain to the vicarious liability of an employer for quasi-delicts that an employee has committed. Such provision of law does not apply to civil liability arising from delict. If at all, Philtrancos liability may only be subsidiary. Article 102 of the Revised Penal 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. The provisions of the Revised Penal Code on subsidiary liability Articles 102 and 103 are deemed written into the judgments in cases to which they are applicable. Thus, in the dispositive portion of its decision, the trial court need not expressly pronounce the subsidiary liability of the employer.[3] Nonetheless, before the employers subsidiary liability is enforced, adequate evidence must exist establishing that (1) they are indeed the employers of the convicted employees; (2) they are engaged in some kind of 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 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 precise purpose, with due notice to the employer, as part of the proceedings for the execution of the judgment.[4] WHEREFORE, we PARTLY GRANT the present motion. The Court of Appeals decision that affirmed in toto the RTC decision, finding Rolito Calang guilty beyond reasonable doubt of reckless imprudence resulting in multiple homicide, multiple serious physical injuries and damage to property, is AFFIRMED, with the MODIFICATION that Philtrancos liability should only be subsidiary. No costs.

Castilex vs. Vasquez | Kapunan FACTS: On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was driving a Honda motorcycle around Fuente Osmea Rotunda. He was traveling counter-clockwise, (the normal flow of traffic in a rotunda) but without any protective helmet or goggles. He was also only carrying a Student's Permit to Drive at the time. Upon the other hand, Benjamin Abad was a production manager of Castilex Industrial Corporation, registered owner of the Toyota Hi-Lux Pick-up with plate no. GBW-794 which Abad drove car out of a parking lot. Instead of going around the Osmea rotunda he went against the flow of the traffic in proceeding to his route to General Maxilom St. or to Belvic St.. The motorcycle of Vasquez and the pick-up of Abad collided with each other causing severe injuries to Vasquez. Abad stopped his vehicle and brought Vasquez to the Southern Islands Hospital and later to the Cebu Doctor's Hospital. On September 5, 1988, Vasquez died at the Cebu Doctor's Hospital. Abad signed an acknowledgment of Responsible Party wherein he agreed to pay whatever hospital bills, professional fees and other incidental charges Vasquez may incur. ISSUES & ARGUMENTS: W/N Castilex as employer of Abad can be held liable with Abad. HOLDING & RATIO DECIDENDI: No. The fifth paragraph of article 2180 states Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. In order for this paragraph to apply, it must be shown that the employee was acting within the scope of his assigned tasks. Here it was not sufficiently proven that such was the case. Jurisprudence provides: An employee who uses his employer's vehicle in going from his work to a place where he intends to eat or in returning to work from a meal is not ordinarily acting within the scope of his employment in the absence of evidence of some special business benefit to the employer. Evidence that by using the employer's vehicle to go to and from meals, an employee is enabled to reduce his time-off and so devote more time to the performance of his duties supports the finding that an employee is acting within the scope of his employment while so driving the vehicle. o Traveling to and from the place of work is ordinarily a personal problem or concern of the employee, and not a part of his services to his employer. Hence, in the absence of some special benefit to the employer other than the mere performance of the services available at the place where he is needed, the employee is not acting within the scope of his employmenteven though he uses his employer's motor vehicle. o An employer who loans his motor vehicle to an employee for the latter's personal use outside of regular working hours is generally not liable for the employee's negligent operation of the vehicle during the period of permissive use, even where the employer contemplates that a regularly assigned motor vehicle will be used by the employee for personal as well as business purposes and there is some incidental benefit to the employer. Even where the employee's personal purpose in using the vehicle has been accomplished and he has started the return trip to his house where the vehicle is normally kept, it has been held that he has not resumed his employment, and the employer is not liable for the employee's negligent operation of the vehicle during the return trip. In this case , ABAD did some overtime work at the petitioner's office, which was located in Cabangcalan, Mandaue City. Thereafter, he went to Goldie's Restaurant in Fuente Osmea, Cebu City, which is about seven kilometers away from petitioner's place of business. At the Goldie's Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD was leaving the restaurant that the incident in question occurred. Thus ABAD was engaged in affairs of his own or was carrying out a personal purpose not in line with his duties at the time he figured in a vehicular accident.

Tiu vs. Arriesgado Facts: A passenger bus had an accident wherein respondent Pedro Arriesgado suffered injury and his wife died. The bus, owned by William Tiu is covered by common carrier liability insurance with Certificate of Cover No. 05490 issued by Philippine Phoenix Surety and Insurance, Inc.,(PPSII) Cebu City Branch, in favor of thirdparty plaintiff William Tiu which covers the period from July 22, 1986 to July 22, 1987 and that the said insurance coverage was valid, binding and subsisting during the time of the said accident. Tiu informed said insurance company of the alleged incident but to no avail. The respondent PPSII admitted it had existing contract with Tiu but averred that it already attended to and settled the claims of those who were injured during the incident. It could not accede to the claim of the respondent Arriesgado as such claim was way beyond the scheduled `indemnity as contained in the contract of insurance. The trial court in this case did not rule on the liability of respondent PPSII, while appellate court ruled that, as no evidence was presented against it, the insurance company is not liable. Issue: WON Philippine Phoenix Surety Insurance, Inc. is liable to Arriesgado or William Tiu? Held: Yes, PPSII and petitioner William Tiu are ordered to pay, jointly and severally, respondent Pedro A. Arriesgado the total amount of P13, 113.80. As provided in Insurance Memorandum Circular, the maximum indemnity for death was twelve thousand pesos per victim plus medical expenses for injured. While it is true that where the insurance contract provides for indemnity against liability to third persons, and such persons can directly sue the insurer, the direct liability of the insurer under indemnity contracts against third party does not mean that the insurer be held in solidum with the insured and or the other parties found at fault. For the liability of the insurer is based on contract; that of the insured carrier or vehicle owner is based on tort.