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G.R. No.


informing the latter of such rescission. Such rescission, according to Article XV of the contract shall not be construed

June 22, 2006

as a waiver of [respondents] right to recover damages from x x x JDS and the latters sureties.


"[Respondent] alleged that, as a result of x x x JDSs failure to comply with the provisions of the contract, which
resulted in the said contracts rescission, it had to hire another contractor to finish the project, for which it incurred
an additional expense of three million two hundred fifty six thousand, eight hundred seventy four pesos

"On January 6, 1990, [respondent] sent a letter to [petitioner] SICI filing its claim under the bond for not less


thanP795,000.00. On March 22, 1991, [respondent] again sent another letter reiterating its demand for payment
under the aforementioned bond. Both letters allegedly went unheeded.

Asurety companys liability under the performance bond it issues is solidary. The death of the principal obligor does
not, as a rule, extinguish the obligation and the solidary nature of that liability.

"[Respondent] then filed [a] complaint against x x x JDS and SICI. It sought from x x x JDS payment ofP3,256,874.00
representing the additional expenses incurred by [respondent] for the completion of the project using another
contractor, and from x x x JDS and SICI, jointly and severally, payment of P750,000.00 as damages in accordance

The Case

with the performance bond; exemplary damages in the amount of P100,000.00 and attorneys fees in the amount of
at least P100,000.00.

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse the March 13, 2001

Decision of the Court of Appeals (CA) in CA-GR CV No. 41630. The assailed Decision disposed as follows:

"According to the Sheriffs Return dated June 14, 1991, submitted to the lower court by Deputy Sheriff Rene R.
Salvador, summons were duly served on defendant-appellee SICI. However, x x x Jose D. Santos, Jr. died the previous

"WHEREFORE, the Order dated January 28, 1993 issued by the lower court is REVERSED and SET ASIDE. Let the

year (1990), and x x x JDS Construction was no longer at its address at 2nd Floor, Room 208-A, San Buena Bldg.

records of the instant case be REMANDED to the lower court for the reception of evidence of all parties." 3

Cor. Pioneer St., Pasig, Metro Manila, and its whereabouts were unknown.

The Facts

"On July 10, 1991, [petitioner] SICI filed its answer, alleging that the [respondents] money claims against [petitioner
and JDS] have been extinguished by the death of Jose D. Santos, Jr. Even if this were not the case, [petitioner] SICI

The facts of the case are narrated by the CA in this wise:

had been released from its liability under the performance bond because there was no liquidation, with the active
participation and/or involvement, pursuant to procedural due process, of herein surety and contractor Jose D.
Santos, Jr., hence, there was no ascertainment of the corresponding liabilities of Santos and SICI under the

"On May 24, 1989, [respondent] Republic-Asahi Glass Corporation (Republic-Asahi) entered into a contract with x x x

performance bond. At this point in time, said liquidation was impossible because of the death of Santos, who as such

Jose D. Santos, Jr., the proprietor of JDS Construction (JDS), for the construction of roadways and a drainage system

can no longer participate in any liquidation. The unilateral liquidation on the party (sic) of [respondent] of the work

in Republic-Asahis compound in Barrio Pinagbuhatan, Pasig City, where [respondent] was to pay x x x JDS five

accomplishments did not bind SICI for being violative of procedural due process. The claim of [respondent] for the

million three hundred thousand pesos (P5,300,000.00) inclusive of value added tax for said construction, which was

forfeiture of the performance bond in the amount of P795,000.00 had no factual and legal basis, as payment of said

supposed to be completed within a period of two hundred forty (240) days beginning May 8, 1989. In order to

bond was conditioned on the payment of damages which [respondent] may sustain in the event x x x JDS failed to

guarantee the faithful and satisfactory performance of its undertakings x x x JDS, shall post a performance bond of

complete the contracted works. [Respondent] can no longer prove its claim for damages in view of the death of Santos.

seven hundred ninety five thousand pesos (P795,000.00). x x x JDS executed, jointly and severally with [petitioner]

SICI was not informed by [respondent] of the death of Santos. SICI was not informed by [respondent] of the unilateral

Stronghold Insurance Co., Inc. (SICI) Performance Bond No. SICI-25849/g(13)9769.

rescission of its contract with JDS, thus SICI was deprived of its right to protect its interests as surety under the
performance bond, and therefore it was released from all liability. SICI was likewise denied due process when it was

"On May 23, 1989, [respondent] paid to x x x JDS seven hundred ninety five thousand pesos (P795,000.00) by way of

not notified of plaintiff-appellants process of determining and fixing the amount to be spent in the completion of the
unfinished project. The procedure contained in Article XV of the contract is against public policy in that it denies SICI
the right to procedural due process. Finally, SICI alleged that [respondent] deviated from the terms and conditions of
the contract without the written consent of SICI, thus the latter was released from all liability. SICI also prayed for the

"Two progress billings dated August 14, 1989 and September 15, 1989, for the total amount of two hundred seventy

award of P59,750.00 as attorneys fees, andP5,000.00 as litigation expenses.

four thousand six hundred twenty one pesos and one centavo (P274,621.01) were submitted by x x x JDS to
[respondent], which the latter paid. According to [respondent], these two progress billings accounted for only 7.301%
of the work supposed to be undertaken by x x x JDS under the terms of the contract.

"On August 16, 1991, the lower court issued an order dismissing the complaint of [respondent] against x x x JDS and
SICI, on the ground that the claim against JDS did not survive the death of its sole proprietor, Jose D. Santos, Jr. The
dispositive portion of the [O]rder reads as follows:

"Several times prior to November of 1989, [respondents] engineers called the attention of x x x JDS to the alleged
alarmingly slow pace of the construction, which resulted in the fear that the construction will not be finished within
the stipulated 240-day period. However, said reminders went unheeded by x x x JDS.

"On November 24, 1989, dissatisfied with the progress of the work undertaken by x x x JDS, [respondent] RepublicAsahi extrajudicially rescinded the contract pursuant to Article XIII of said contract, and wrote a letter to x x x JDS

ACCORDINGLY, the complaint against the defendants Jose D. Santos, Jr., doing business under trade and style, JDS
Construction and Stronghold Insurance Company, Inc. is ordered DISMISSED.


"On September 4, 1991, [respondent] filed a Motion for Reconsideration seeking reconsideration of the lower courts

The Petition has no merit.

August 16, 1991 order dismissing its complaint. [Petitioner] SICI field its Comment and/or Opposition to the Motion
for Reconsideration. On October 15, 1991, the lower court issued an Order, the dispositive portion of which reads as

Sole Issue:


WHEREFORE, premises considered, the Motion for Reconsideration is hereby given due course. The Order dated 16

Effect of Death on the Suretys Liability

August 1991 for the dismissal of the case against Stronghold Insurance Company, Inc., is reconsidered and hereby
reinstated (sic). However, the case against defendant Jose D. Santos, Jr. (deceased) remains undisturbed.

Petitioner contends that the death of Santos, the bond principal, extinguished his liability under the surety bond.
Consequently, it says, it is automatically released from any liability under the bond.

Motion for Preliminary hearing and Manifestation with Motion filed by [Stronghold] Insurance Company Inc., are set
for hearing on November 7, 1991 at 2:00 oclock in the afternoon.

As a general rule, the death of either the creditor or the debtor does not extinguish the obligation.8 Obligations are
transmissible to the heirs, except when the transmission is prevented by the law, the stipulations of the parties, or
the nature of the obligation.9 Only obligations that are personal10 or are identified with the persons themselves are


extinguished by death.11

"On June 4, 1992, [petitioner] SICI filed its Memorandum for Bondsman/Defendant SICI (Re: Effect of Death of
defendant Jose D. Santos, Jr.) reiterating its prayer for the dismissal of [respondents] complaint.

Section 5 of Rule 8612 of the Rules of Court expressly allows the prosecution of money claims arising from a contract
against the estate of a deceased debtor. Evidently, those claims are not actually extinguished.13 What is extinguished
is only the obligees action or suit filed before the court, which is not then acting as a probate court. 14

"On January 28, 1993, the lower court issued the assailed Order reconsidering its Order dated October 15, 1991, and
ordered the case, insofar as SICI is concerned, dismissed. [Respondent] filed its motion for reconsideration which was
opposed by [petitioner] SICI. On April 16, 1993, the lower court denied [respondents] motion for reconsideration. x x

In the present case, whatever monetary liabilities or obligations Santos had under his contracts with respondent were
not intransmissible by their nature, by stipulation, or by provision of law. Hence, his death did not result in the
extinguishment of those obligations or liabilities, which merely passed on to his estate. 15 Death is not a defense that
he or his estate can set up to wipe out the obligations under the performance bond. Consequently, petitioner as

Ruling of the Court of Appeals

surety cannot use his death to escape its monetary obligation under its performance bond.

The CA ruled that SICIs obligation under the surety agreement was not extinguished by the death of Jose D. Santos,

The liability of petitioner is contractual in nature, because it executed a performance bond worded as follows:

Jr. Consequently, Republic-Asahi could still go after SICI for the bond.
The appellate court also found that the lower court had erred in pronouncing that the performance of the Contract in
question had become impossible by respondents act of rescission. The Contract was rescinded because of the
dissatisfaction of respondent with the slow pace of work and pursuant to Article XIII of its Contract with JDS.

"That we, JDS CONSTRUCTION of 208-A San Buena Building, contractor, of Shaw Blvd., Pasig, MM Philippines, as
principal and the STRONGHOLD INSURANCE COMPANY, INC. a corporation duly organized and existing under and
by virtue of the laws of the Philippines with head office at Makati, as Surety, are held and firmly bound unto the

The CA ruled that "[p]erformance of the [C]ontract was impossible, not because of [respondents] fault, but because of

REPUBLIC ASAHI GLASS CORPORATION and to any individual, firm, partnership, corporation or association

the fault of JDS Construction and Jose D. Santos, Jr. for failure on their part to make satisfactory progress on the

supplying the principal with labor or materials in the penal sum of SEVEN HUNDRED NINETY FIVE THOUSAND

project, which amounted to non-performance of the same. x x x [P]ursuant to the [S]urety [C]ontract, SICI is liable for

(P795,000.00), Philippine Currency, for the payment of which sum, well and truly to be made, we bind ourselves, our

the non-performance of said [C]ontract on the part of JDS Construction."5

heirs, executors, administrators, successors and assigns, jointly and severally, firmly by these presents.

Hence, this Petition.6



"WHEREAS the above bounden principal on the ___ day of __________, 19__ entered into a contract with the
REPUBLIC ASAHI GLASS CORPORATION represented by _________________, to fully and faithfully. Comply with the

Petitioner states the issue for the Courts consideration in the following manner:

"Death is a defense of Santos heirs which Stronghold could also adopt as its defense against obligees claim." 7

site preparation works road and drainage system of Philippine Float Plant at Pinagbuhatan, Pasig, Metro Manila.

"WHEREAS, the liability of the Surety Company under this bond shall in no case exceed the sum of PESOS SEVEN
HUNDRED NINETY FIVE THOUSAND (P795,000.00) Philippine Currency, inclusive of interest, attorneys fee, and
other damages, and shall not be liable for any advances of the obligee to the principal.

More precisely, the issue is whether petitioners liability under the performance bond was automatically extinguished
by the death of Santos, the principal.

"WHEREAS, said contract requires the said principal to give a good and sufficient bond in the above-stated sum to
secure the full and faithfull performance on its part of said contract, and the satisfaction of obligations for materials

The Courts Ruling

used and labor employed upon the work;

"NOW THEREFORE, if the principal shall perform well and truly and fulfill all the undertakings, covenants, terms,


conditions, and agreements of said contract during the original term of said contract and any extension thereof that
may be granted by the obligee, with notice to the surety and during the life of any guaranty required under the
contract, and shall also perform well and truly and fulfill all the undertakings, covenants, terms, conditions, and

G.R. No. L-32599 June 29, 1979

agreements of any and all duly authorized modifications of said contract that may hereinafter be made, without
notice to the surety except when such modifications increase the contract price; and such principal contractor or his
or its sub-contractors shall promptly make payment to any individual, firm, partnership, corporation or association
supplying the principal of its sub-contractors with labor and materials in the prosecution of the work provided for in
the said contract, then, this obligation shall be null and void; otherwise it shall remain in full force and effect. Any
extension of the period of time which may be granted by the obligee to the contractor shall be considered as given,

EDGARDO E. MENDOZA, petitioner

HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court of First Instance of Manila, FELINO
TIMBOL, and RODOLFO SALAZAR, respondents.

and any modifications of said contract shall be considered as authorized, with the express consent of the Surety.
David G. Nitafan for petitioner.
"The right of any individual, firm, partnership, corporation or association supplying the contractor with labor or
materials for the prosecution of the work hereinbefore stated, to institute action on the penal bond, pursuant to the
provision of Act No. 3688, is hereby acknowledge and confirmed."16

As a surety, petitioner is solidarily liable with Santos in accordance with the Civil Code, which provides as follows:

"Art. 2047. By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the obligation of the

Arsenio R. Reyes for respondent Timbol.

Armando M. Pulgado for respondent Salazar.


principal debtor in case the latter should fail to do so.

Petitioner, Edgardo Mendoza, seeks a review on certiorari of the Orders of respondent Judge in Civil Case No. 80803
"If a person binds himself solidarily with the principal debtor, the provisions of Section 4,17 Chapter 3, Title I of this

dismissing his Complaint for Damages based on quasi-delict against respondents Felino Timbol and Rodolfo Salazar.

Book shall be observed. In such case the contract is called a suretyship."

The facts which spawned the present controversy may be summarized as follows:
On October 22, 1969, at about 4:00 o'clock in the afternoon, a three- way vehicular accident occurred along Mac"Art. 1216. The creditor may proceed against any one of the solidary debtors or some or all of them simultaneously.
The demand made against one of them shall not be an obstacle to those which may subsequently be directed against
the others, so long as the debt has not been fully collected."

Arthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and driven by petitioner; a private jeep owned
and driven by respondent Rodolfo Salazar; and a gravel and sand truck owned by respondent Felipino Timbol and
driven by Freddie Montoya. As a consequence of said mishap, two separate Informations for Reckless Imprudence
Causing Damage to Property were filed against Rodolfo Salazar and Freddie Montoya with the Court of First Instance
of Bulacan. The race against truck-driver Montoya, docketed as Criminal Case No. SM-227, was for causing damage

Elucidating on these provisions, the Court in Garcia v. Court of Appeals 18 stated thus:

to the jeep owned by Salazar, in the amount of Pl,604.00, by hitting it at the right rear portion thereby causing said
jeep to hit and bump an oncoming car, which happened to be petitioner's Mercedes Benz. The case against jeep-

"x x x. The suretys obligation is not an original and direct one for the performance of his own act, but merely
accessory or collateral to the obligation contracted by the principal. Nevertheless, although the contract of a surety is

owner-driver Salazar, docketed as Criminal Case No. SM 228, was for causing damage to the Mercedes Benz of
petitioner in the amount of P8,890.00

in essence secondary only to a valid principal obligation, his liability to the creditor or promisee of the principal is
said to be direct, primary and absolute; in other words, he is directly and equally bound with the principal. x x x." 19

At the joint trial of the above cases, petitioner testified that jeep-owner- driver Salazar overtook the truck driven by
Montoya, swerved to the left going towards the poblacion of Marilao, and hit his car which was bound for Manila.

Under the law and jurisprudence, respondent may sue, separately or together, the principal debtor and the petitioner
herein, in view of the solidary nature of their liability. The death of the principal debtor will not work to convert,
decrease or nullify the substantive right of the solidary creditor. Evidently, despite the death of the principal debtor,
respondent may still sue petitioner alone, in accordance with the solidary nature of the latters liability under the
performance bond.

Petitioner further testified that before the impact, Salazar had jumped from the jeep and that he was not aware that
Salazar's jeep was bumped from behind by the truck driven by Montoya. Petitioner's version of the accident was
adopted by truck driver Montoya. Jeep-owner-driver Salazar, on the other hand, tried to show that, after overtaking
the truck driven by Montoya, he flashed a signal indicating his intention to turn left towards the poblacion of Marilao
but was stopped at the intersection by a policeman who was directing traffic; that while he was at a stop position, his
jeep was bumped at the rear by the truck driven by Montova causing him to be thrown out of the jeep, which then
swerved to the left and hit petitioner's car, which was coming from the opposite direction.

WHEREFORE, the Petition is DENIED and the Decision of the Court of Appeals AFFIRMED. Costs against petitioner.
On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered judgment, stating in its
decretal portion:


Republic of the Philippines


IN VIEW OF THE FOREGOING, this Court finds the accused Freddie Montoya GUILTY

In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbol's allegations that the civil

beyond reasonable doubt of the crime of damage to property thru reckless imprudence in

suit is barred by the prior joint judgment in Criminal Cases Nos. SM-227 and SM-228, wherein no reservation to file

Crime. Case No. SM-227, and hereby sentences him to pay a fine of P972.50 and to

a separate civil case was made by petitioner and where the latter actively participated in the trial and tried to prove

indemnify Rodolfo Salazar in the same amount of P972.50 as actual damages, with

damages against jeep-driver-Salazar only; and that the Complaint does not state a cause of action against truck-

subsidiary imprisonment in case of insolvency, both as to fine and indemnity, with costs.

owner Timbol inasmuch as petitioner prosecuted jeep-owner-driver Salazar as the one solely responsible for the
damage suffered by his car.

Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in Crime. Case No.
SM-228, with costs de oficio, and his bond is ordered canceled

Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the following requisites
must concur: (1) it must be a final judgment; (2) it must have been rendered by a Court having jurisdiction over the


Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in view of its findings that
the collision between Salazar's jeep and petitioner's car was the result of the former having been bumped from behind
by the truck driven by Montoya. Neither was petitioner awarded damages as he was not a complainant against truckdriver Montoya but only against jeep-owner-driver Salazar.

subject matter and over the parties; (3) it must be a judgment on the merits; and (4) there must be, between the first
and second actions, Identity of parties, Identity of subject matter and Identity of cause of action.

It is conceded that the first three requisites of res judicata are present. However, we agree with petitioner that there is
no Identity of cause of action between Criminal Case No. SM-227 and Civil Case No. 80803. Obvious is the fact that
in said criminal case truck-driver Montoya was not prosecuted for damage to petitioner's car but for damage to the
jeep. Neither was truck-owner Timbol a party in said case. In fact as the trial Court had put it "the owner of the
Mercedes Benz cannot recover any damages from the accused Freddie Montoya, he (Mendoza) being a complainant

On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No. 80803 with the

only against Rodolfo Salazar in Criminal Case No. SM-228.

Court of First Instance of Manila against respondents jeep-owner-driver Salazar and Felino Timbol, the latter being

of action was the enforcement of the civil liability arising from criminal negligence under Article l of the Revised Penal

And more importantly, in the criminal cases, the cause

the owner of the gravel and sand truck driven by Montoya, for indentification for the damages sustained by his car as

Code, whereas Civil Case No. 80803 is based on quasi-delict under Article 2180, in relation to Article 2176 of the Civil

a result of the collision involving their vehicles. Jeep-owner-driver Salazar and truck-owner Timbol were joined as

Code As held in Barredo vs. Garcia, et al.

defendants, either in the alternative or in solidum allegedly for the reason that petitioner was uncertain as to whether
he was entitled to relief against both on only one of them.

The foregoing authorities clearly demonstrate the separate in. individuality of cuasi-delitos or
culpa aquiliana under the Civil Code. Specifically they show that there is a distinction

On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on the grounds that the

between civil liability arising from criminal negligence (governed by the Penal Code) and

Complaint is barred by a prior judgment in the criminal cases and that it fails to state a cause of action. An

responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code, and that

Opposition thereto was filed by petitioner.

the same negligent act may produce either a civil liability arising from a crime under the
Penal Code, or a separate responsibility for fault or negligence under articles 1902 to 1910 of

In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against truck-owner Timbol for
reasons stated in the afore- mentioned Motion to Dismiss On September 30, 1970, petitioner sought before this Court
the review of that dismissal, to which petition we gave due course.

On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also dismissed the case as
against the former. Respondent Judge reasoned out that "while it is true that an independent civil action for liability
under Article 2177 of the Civil Code could be prosecuted independently of the criminal action for the offense from
which it arose, the New Rules of Court, which took effect on January 1, 1964, requires an express reservation of the
civil action to be made in the criminal action; otherwise, the same would be barred pursuant to Section 2, Rule

111 ... Petitioner's Motion for Reconsideration thereof was denied in the order dated February 23, 1971, with
respondent Judge suggesting that the issue be raised to a higher Court "for a more decisive interpretation of the rule.

the Civil Code. Still more concretely, the authorities above cited render it inescapable to
conclude that the employer in this case the defendant- petitioner is primarily and directly
liable under article 1903 of the Civil Code.

That petitioner's cause of action against Timbol in the civil case is based on quasi-delict is evident from the recitals in
the complaint to wit: that while petitioner was driving his car along MacArthur Highway at Marilao, Bulacan, a jeep
owned and driven by Salazar suddenly swerved to his (petitioner's) lane and collided with his car That the sudden
swerving of Salazar's jeep was caused either by the negligence and lack of skill of Freddie Montoya, Timbol's
employee, who was then driving a gravel and sand truck iii the same direction as Salazar's jeep; and that as a
consequence of the collision, petitioner's car suffered extensive damage amounting to P12,248.20 and that he likewise
incurred actual and moral damages, litigation expenses and attorney's fees. Clearly, therefore, the two factors that a
cause of action must consist of, namely: (1) plaintiff's primary right, i.e., that he is the owner of a Mercedes Benz, and
(2) defendant's delict or wrongful act or omission which violated plaintiff's primary right, i.e., the negligence or lack of
skill either of jeep-owner Salazar or of Timbol's employee, Montoya, in driving the truck, causing Salazar's jeep to

On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the last two mentioned

swerve and collide with petitioner's car, were alleged in the Complaint.

Orders, to which we required jeep-owner-driver Salazar to file an Answer.

Consequently, petitioner's cause of action being based on quasi-delict, respondent Judge committed reversible error
The Complaint against

when he dismissed the civil suit against the truck-owner, as said case may proceed independently of the criminal
proceedings and regardless of the result of the latter.

truck-owner Timbol
Art. 31. When the civil action is based on an obligation not arising from the act or omission
We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioner's Complaint against
truck-owner Timbol.

complained of as a felony, such civil action may proceed independently of the criminal
proceedings and regardless of the result of the latter.

But it is truck-owner Timbol's submission (as well as that of jeep-owner-driver Salazar) that petitioner's failure to

The circumstances attendant to the criminal case yields the conclusion that petitioner had opted to base his cause of

make a reservation in the criminal action of his right to file an independent civil action bars the institution of such

action against jeep-owner-driver Salazar on culpa criminal and not on culpa aquiliana as evidenced by his active

separate civil action, invoking section 2, Rule 111, Rules of Court, which says:

participation and intervention in the prosecution of the criminal suit against said Salazar. The latter's civil liability
continued to be involved in the criminal action until its termination. Such being the case, there was no need for

Section 2. Independent civil action. In the cases provided for in Articles 31, 32, 33, 34
and 2177 of the Civil Code of the Philippines, an independent civil action entirely separate

petitioner to have reserved his right to file a separate civil action as his action for civil liability was deemed impliedly
instituted in Criminal Case No. SM-228.

and distinct from the criminal action may be brought by the injured party during the
pendency of the criminal case, provided the right is reserved as required in the preceding

Neither would an independent civil action he. Noteworthy is the basis of the acquittal of jeep-owner-driver Salazar in

section. Such civil action shau proceed independently of the criminal prosecution, and shall

the criminal case, expounded by the trial Court in this wise:

require only a preponderance of evidence.

In view of what has been proven and established during the trial, accused Freddie Montoya
Interpreting the above provision, this Court, in Garcia vs. Florida 7 said:

would be held able for having bumped and hit the rear portion of the jeep driven by the
accused Rodolfo Salazar,

As we have stated at the outset, the same negligent act causing damages may produce a civil
liability arising from crime or create an action for quasi-delict or culpa extra-contractual. The

Considering that the collision between the jeep driven by Rodolfo Salazar and the car owned

former is a violation of the criminal law, while the latter is a distinct and independent

and driven by Edgardo Mendoza was the result of the hitting on the rear of the jeep by the

negligence, having always had its own foundation and individuality. Some legal writers are of

truck driven by Freddie Montoya, this Court behaves that accused Rodolfo Salazar cannot be

the view that in accordance with Article 31, the civil action based upon quasi-delict may

held able for the damages sustained by Edgardo Mendoza's car.

proceed independently of the criminal proceeding for criminal negligence and regardless of
the result of the latter. Hence, 'the proviso in Section 2 of Rule 111 with reference to ...
Articles 32, 33 and 34 of the Civil Code is contrary to the letter and spirit of the said articles,
for these articles were drafted ... and are intended to constitute as exceptions to the general
rule stated in what is now Section 1 of Rule 111. The proviso, which is procedural, may also
be regarded as an unauthorized amendment of substantive law, Articles 32, 33 and 34 of the
Civil Code, which do not provide for the reservation required in the proviso ... .

In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that inasmuch as Articles
2176 and 2177 of the Civil Code create a civil liability distinct and different from the civil action arising from the

Crystal clear is the trial Court's pronouncement that under the facts of the case, jeep-owner-driver Salazar cannot be
held liable for the damages sustained by petitioner's car. In other words, "the fact from which the civil might arise did
not exist. " Accordingly, inasmuch as petitioner's cause of action as against jeep-owner-driver Salazar is ex- delictu,
founded on Article 100 of the Revised Penal Code, the civil action must be held to have been extinguished in
consonance with Section 3(c), Rule 111 of the Rules of Court


which provides:

Sec. 3. Other civil actions arising from offenses. In all cases not included in the preceding
section the following rules shall be observed:

offense of negligence under the Revised Penal Code, no reservation, therefore, need be made in the criminal case; that
Section 2 of Rule 111 is inoperative, "it being substantive in character and is not within the power of the Supreme

xxx xxx xxx

Court to promulgate; and even if it were not substantive but adjective, it cannot stand because of its inconsistency
with Article 2177, an enactment of the legislature superseding the Rules of 1940."

c) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the civil

We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is not barred by the

night arise did not exist. ...

fact that petitioner failed to reserve, in the criminal action, his right to file an independent civil action based on quasidelict.

And even if petitioner's cause of action as against jeep-owner-driver Salazar were not ex-delictu, the end result would
be the same, it being clear from the judgment in the criminal case that Salazar's acquittal was not based upon

The suit against

reasonable doubt, consequently, a civil action for damages can no longer be instituted. This is explicitly provided for
in Article 29 of the Civil Code quoted here under:

jeep-owner-driver Salazar
Art. 29. When the accused in a criminal prosecution is acquitted on the ground that his guilt
The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228, presents a different
picture altogether.

At the outset it should be clarified that inasmuch as civil liability co-exists with criminal responsibility in negligence
cases, the offended party has the option between an action for enforcement of civil liability based on culpa criminal
under Article 100 of the Revised Penal Code, and an action for recovery of damages based on culpa aquiliana under

has not been proved beyond reasonable doubt, a civil action for damages for the same act or
omission may be instituted. Such action requires only a preponderance of evidence ...

If in a criminal case the judgment of acquittal is based upon reasonable doubt, the court
shall so declare. In the absence of any declaration to that effect, it may be inferred from the
text of the decision whether or not the acquittal is due to that ground.

Article 2177 of the Civil Code. The action for enforcement of civil liability based on culpa criminal under section 1 of
Rule 111 of the Rules of Court is deemed simultaneously instituted with the criminal action, unless expressly waived
or reserved for separate application by the offended party.

In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain respondent Judge's Order
dated January 30, 1971 dismissing the complaint, albeit on different grounds.

WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against private respondent

The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13, 1972, and while in

Felino Timbol is set aside, and respondent Judge, or his successor, hereby ordered to proceed with the hearing on the

its auditorium was shot to death by Pablito Daffon, a classmate. On the implications and consequences of these facts,

merits; 2) but the Orders dated January 30, 1971 and February 23, 1971 dismissing the Complaint in Civil Case No.

the parties sharply disagree.

80803 against respondent Rodolfo Salazar are hereby upheld.

The petitioners contend that their son was in the school to show his physics experiment as a prerequisite to his
No costs.

graduation; hence, he was then under the custody of the private respondents. The private respondents submit that
Alfredo Amadora had gone to the school only for the purpose of submitting his physics report and that he was no
longer in their custody because the semester had already ended.


There is also the question of the identity of the gun used which the petitioners consider important because of an
earlier incident which they claim underscores the negligence of the school and at least one of the private respondents.
It is not denied by the respondents that on April 7, 1972, Sergio Damaso, Jr., the dean of boys, confiscated from Jose

G.R. No. L-47745 April 15, 1988

Gumban an unlicensed pistol but later returned it to him without making a report to the principal or taking any
further action . 6 As Gumban was one of the companions of Daffon when the latter fired the gun that killed Alfredo,


the petitioners contend that this was the same pistol that had been confiscated from Gumban and that their son
would not have been killed if it had not been returned by Damaso. The respondents say, however, that there is no
proof that the gun was the same firearm that killed Alfredo.


Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it happens, is

JR., CELESTINO DICON, ANIANO ABELLANA, PABLITO DAFFON thru his parents and natural guardians, MR.

invoked by both parties in support of their conflicting positions. The pertinent part of this article reads as follows:

ALONSO, respondents.

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages
caused by their pupils and students or apprentices so long as they remain in their custody.

Jose S. Amadora & Associates for petitioners.

Three cases have so far been decided by the Court in connection with the above-quoted provision, to wit: Exconde v.
Capuno 7 Mercado v. Court of Appeals,

Padilla Law Office for respondents.

and Palisoc v. Brillantes.

These will be briefly reviewed in this opinion for a

better resolution of the case at bar.


In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy Scout, attended a
Rizal Day parade on instructions of the city school supervisor. After the parade, the boy boarded a jeep, took over its

Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises where he would

wheel and drove it so recklessly that it turned turtle, resulting in the death of two of its passengers. Dante was found

ascend the stage and in the presence of his relatives and friends receive his high school diploma. These ceremonies

guilty of double homicide with reckless imprudence. In the separate civil action flied against them, his father was held

were scheduled on April 16, 1972. As it turned out, though, fate would intervene and deny him that awaited

solidarily liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for the tort committed by

experience. On April 13, 1972, while they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a

the 15-year old boy.

classmate, Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as well. The
victim was only seventeen years old.

This decision, which was penned by Justice Bautista Angelo on June 29,1957, exculpated the school in an obiter
dictum (as it was not a party to the case) on the ground that it was riot a school of arts and trades. Justice J.B.L.

Daffon was convicted of homicide thru reckless imprudence .

Additionally, the herein petitioners, as the victim's

Reyes, with whom Justices Sabino Padilla and Alex Reyes concurred, dissented, arguing that it was the school

parents, filed a civil action for damages under Article 2180 of the Civil Code against the Colegio de San Jose-

authorities who should be held liable Liability under this rule, he said, was imposed on (1) teachers in general; and

Recoletos, its rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and two

(2) heads of schools of arts and trades in particular. The modifying clause "of establishments of arts and trades"

other students, through their respective parents. The complaint against the students was later dropped. After trial,

should apply only to "heads" and not "teachers."

the Court of First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of P294,984.00,
representing death compensation, loss of earning capacity, costs of litigation, funeral expenses, moral damages,
exemplary damages, and attorney's fees . 3 On appeal to the respondent court, however, the decision was reversed and
all the defendants were completely absolved . 4

Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate with a razor blade
during recess time at the Lourdes Catholic School in Quezon City, and the parents of the victim sued the culprits
parents for damages. Through Justice Labrador, the Court declared in another obiter (as the school itself had also not
been sued that the school was not liable because it was not an establishment of arts and trades. Moreover, the

In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules of Court, the

custody requirement had not been proved as this "contemplates a situation where the student lives and boards with

respondent court found that Article 2180 was not applicable as the Colegio de San Jose-Recoletos was not a school of

the teacher, such that the control, direction and influences on the pupil supersede those of the parents." Justice

arts and trades but an academic institution of learning. It also held that the students were not in the custody of the

J.B.L. Reyes did not take part but the other members of the court concurred in this decision promulgated on May 30,

school at the time of the incident as the semester had already ended, that there was no clear identification of the fatal


gun and that in any event the defendant, had exercised the necessary diligence in preventing the injury.

In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a classmate with fist blows in

is only an updated version of the equivalent terms "preceptores y artesanos" used in the

the laboratory of the Manila Technical Institute. Although the wrongdoer who was already of age was not

Italian and French Civil Codes.

boarding in the school, the head thereof and the teacher in charge were held solidarily liable with him. The Court
declared through Justice Teehankee:

If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903
in someculpa in vigilando that the parents, teachers, etc. are supposed to have incurred in

The phrase used in the cited article "so long as (the students) remain in their custody"

the exercise of their authority, it would seem clear that where the parent places the child

means the protective and supervisory custody that the school and its heads and teachers

under the effective authority of the teacher, the latter, and not the parent, should be the one

exercise over the pupils and students for as long as they are at attendance in the school,

answerable for the torts committed while under his custody, for the very reason/that the

including recess time. There is nothing in the law that requires that for such liability to

parent is not supposed to interfere with the discipline of the school nor with the authority

attach, the pupil or student who commits the tortious act must live and board in the school,

and supervision of the teacher while the child is under instruction. And if there is no

as erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on

authority, there can be no responsibility.

which it relied, must now be deemed to have been set aside by the present decision.
There is really no substantial distinction between the academic and the non-academic schools insofar as torts
This decision was concurred in by five other members,


including Justice J.B.L. Reyes, who stressed, in answer to

committed by their students are concerned. The same vigilance is expected from the teacher over the students under

the dissenting opinion, that even students already of age were covered by the provision since they were equally in the

his control and supervision, whatever the nature of the school where he is teaching. The suggestion in the Exconde

custody of the school and subject to its discipline. Dissenting with three others, 11 Justice Makalintal was for retaining

and Mercado Cases is that the provision would make the teacher or even the head of the school of arts and trades

the custody interpretation in Mercado and submitted that the rule should apply only to torts committed by students

liable for an injury caused by any student in its custody but if that same tort were committed in an academic school,

not yet of age as the school would be acting only in loco parentis.

no liability would attach to the teacher or the school head. All other circumstances being the same, the teacher or the
head of the academic school would be absolved whereas the teacher and the head of the non-academic school would

In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case but added that "since

be held liable, and simply because the latter is a school of arts and trades.

the school involved at bar is a non-academic school, the question as to the applicability of the cited codal provision to
academic institutions will have to await another case wherein it may properly be raised."

The Court cannot see why different degrees of vigilance should be exercised by the school authorities on the basis
only of the nature of their respective schools. There does not seem to be any plausible reason for relaxing that
vigilance simply because the school is academic in nature and for increasing such vigilance where the school is non-

This is the case.

academic. Notably, the injury subject of liability is caused by the student and not by the school itself nor is it a result
of the operations of the school or its equipment. The injury contemplated may be caused by any student regardless of

Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded and is sought to be

the school where he is registered. The teacher certainly should not be able to excuse himself by simply showing that

held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but an academic institution

he is teaching in an academic school where, on the other hand, the head would be held liable if the school were non-

of learning. The parties herein have also directly raised the question of whether or not Article 2180 covers even


establishments which are technically not schools of arts and trades, and, if so, when the offending student is
supposed to be "in its custody."

These questions, though, may be asked: If the teacher of the academic school is to be held answerable for the torts
committed by his students, why is it the head of the school only who is held liable where the injury is caused in a

After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question

school of arts and trades? And in the case of the academic or non- technical school, why not apply the rule also to the

should apply to all schools, academic as well as non-academic. Where the school is academic rather than technical or

head thereof instead of imposing the liability only on the teacher?

vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such
student, following the first part of the provision. This is the general rule. In the case of establishments of arts and
trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other words,
teachers in general shall be liable for the acts of their students except where the school is technical in nature, in
which case it is the head thereof who shall be answerable. Following the canon ofreddendo singula singulis "teachers"
should apply to the words "pupils and students" and "heads of establishments of arts and trades" to the word

The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades
exercised a closer tutelage over his pupils than the head of the academic school. The old schools of arts and trades
were engaged in the training of artisans apprenticed to their master who personally and directly instructed them on
the technique and secrets of their craft. The head of the school of arts and trades was such a master and so was
personally involved in the task of teaching his students, who usually even boarded with him and so came under his
constant control, supervision and influence. By contrast, the head of the academic school was not as involved with
his students and exercised only administrative duties over the teachers who were the persons directly dealing with

The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde where he said in

the students. The head of the academic school had then (as now) only a vicarious relationship with the students.


Consequently, while he could not be directly faulted for the acts of the students, the head of the school of arts and
trades, because of his closer ties with them, could be so blamed.
I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers of arts and
trades and not to academic ones. What substantial difference is there between them insofar

It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of arts and

as concerns the proper supervision and vice over their pupils? It cannot be seriously

trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal

contended that an academic teacher is exempt from the duty of watching that his pupils do

contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the

not commit a tort to the detriment of third Persons, so long as they are in a position to

provision must be interpreted by the Court according to its clear and original mandate until the legislature, taking

exercise authority and Supervision over the pupil. In my opinion, in the phrase "teachers or

into account the charges in the situation subject to be regulated, sees fit to enact the necessary amendment.

heads of establishments of arts and trades" used in Art. 1903 of the old Civil Code, the words
"arts and trades" does not qualify "teachers" but only "heads of establishments." The phrase

The other matter to be resolved is the duration of the responsibility of the teacher or the head of the school of arts

In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco

and trades over the students. Is such responsibility co-extensive with the period when the student is actually

parentis for the law does not require that the offending student be of minority age. Unlike the parent, who wig be

undergoing studies during the school term, as contended by the respondents and impliedly admitted by the

liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under him

petitioners themselves?

regardless of the student's age. Thus, in the Palisoc Case, liability attached to the teacher and the head of the
technical school although the wrongdoer was already of age. In this sense, Article 2180 treats the parent more

From a reading of the provision under examination, it is clear that while the custody requirement, to repeatPalisoc v.

favorably than the teacher.

Brillantes, does not mean that the student must be boarding with the school authorities, it does signify that the
student should be within the control and under the influence of the school authorities at the time of the occurrence

The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting opinion in Palisoc

of the injury. This does not necessarily mean that such, custody be co-terminous with the semester, beginning with

that the school may be unduly exposed to liability under this article in view of the increasing activism among the

the start of classes and ending upon the close thereof, and excluding the time before or after such period, such as the

students that is likely to cause violence and resulting injuries in the school premises. That is a valid fear, to be sure.

period of registration, and in the case of graduating students, the period before the commencement exercises. In the

Nevertheless, it should be repeated that, under the present ruling, it is not the school that will be held directly liable.

view of the Court, the student is in the custody of the school authorities as long as he is under the control and

Moreover, the defense of due diligence is available to it in case it is sought to be held answerable as principal for the

influence of the school and within its premises, whether the semester has not yet begun or has already ended.

acts or omission of its head or the teacher in its employ.

It is too tenuous to argue that the student comes under the discipline of the school only upon the start of classes

The school can show that it exercised proper measures in selecting the head or its teachers and the appropriate

notwithstanding that before that day he has already registered and thus placed himself under its rules. Neither

supervision over them in the custody and instruction of the pupils pursuant to its rules and regulations for the

should such discipline be deemed ended upon the last day of classes notwithstanding that there may still be certain

maintenance of discipline among them. In almost all cases now, in fact, these measures are effected through the

requisites to be satisfied for completion of the course, such as submission of reports, term papers, clearances and the

assistance of an adequate security force to help the teacher physically enforce those rules upon the students. Ms

like. During such periods, the student is still subject to the disciplinary authority of the school and cannot consider

should bolster the claim of the school that it has taken adequate steps to prevent any injury that may be committed

himself released altogether from observance of its rules.

by its students.

As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective,

A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold him directly answerable

in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in the

for the damage caused by his students as long as they are in the school premises and presumably under his

enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues.

influence. In this respect, the Court is disposed not to expect from the teacher the same measure of responsibility

Indeed, even if the student should be doing nothing more than relaxing in the campus in the company of his

imposed on the parent for their influence over the child is not equal in degree. Obviously, the parent can expect more

classmates and friends and enjoying the ambience and atmosphere of the school, he is still within the custody and

obedience from the child because the latter's dependence on him is greater than on the teacher. It need not be

subject to the discipline of the school authorities under the provisions of Article 2180.

stressed that such dependence includes the child's support and sustenance whereas submission to the teacher's
influence, besides being coterminous with the period of custody is usually enforced only because of the students'

During all these occasions, it is obviously the teacher-in-charge who must answer for his students' torts, in
practically the same way that the parents are responsible for the child when he is in their custody. The teacher-in-

desire to pass the course. The parent can instill more las discipline on the child than the teacher and so should be
held to a greater accountability than the teacher for the tort committed by the child.

charge is the one designated by the dean, principal, or other administrative superior to exercise supervision over the
pupils in the specific classes or sections to which they are assigned. It is not necessary that at the time of the injury,

And if it is also considered that under the article in question, the teacher or the head of the school of arts and trades

the teacher be physically present and in a position to prevent it. Custody does not connote immediate and actual

is responsible for the damage caused by the student or apprentice even if he is already of age and therefore less

physical control but refers more to the influence exerted on the child and the discipline instilled in him as a result of

tractable than the minor then there should all the more be justification to require from the school authorities less

such influence. Thus, for the injuries caused by the student, the teacher and not the parent shag be held responsible

accountability as long as they can prove reasonable diligence in preventing the injury. After all, if the parent himself

if the tort was committed within the premises of the school at any time when its authority could be validly exercised

is no longer liable for the student's acts because he has reached majority age and so is no longer under the former's

over him.

control, there is then all the more reason for leniency in assessing the teacher's responsibility for the acts of the

In any event, it should be noted that the liability imposed by this article is supposed to fall directly on the teacher or
the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature, may be

Applying the foregoing considerations, the Court has arrived at the following conclusions:1. At the time Alfredo

held to answer for the acts of its teachers or even of the head thereof under the general principle ofrespondeat

Amadora was fatally shot, he was still in the custody of the authorities of Colegio de San Jose-Recoletos

superior, but then it may exculpate itself from liability by proof that it had exercised the diligence of abonus

notwithstanding that the fourth year classes had formally ended. It was immaterial if he was in the school auditorium


to finish his physics experiment or merely to submit his physics report for what is important is that he was there for a
legitimate purpose. As previously observed, even the mere savoring of the company of his friends in the premises of

Such defense is, of course, also available to the teacher or the head of the school of arts and trades directly held to

the school is a legitimate purpose that would have also brought him in the custody of the school authorities.

answer for the tort committed by the student. As long as the defendant can show that he had taken the necessary
precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by Article 2180,

2. The rector, the high school principal and the dean of boys cannot be held liable because none of them was the

which also states that:

teacher-in-charge as previously defined. Each of them was exercising only a general authority over the student body
and not the direct control and influence exerted by the teacher placed in charge of particular classes or sections and
The responsibility treated of in this article shall cease when the Persons herein mentioned
prove that they observed all the diligence of a good father of a family to prevent damages.

thus immediately involved in its discipline. The evidence of the parties does not disclose who the teacher-in-charge of
the offending student was. The mere fact that Alfredo Amadora had gone to school that day in connection with his
physics report did not necessarily make the physics teacher, respondent Celestino Dicon, the teacher-in-charge of
Alfredo's killer.

3. At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent in enforcing

The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:

discipline upon Daffon or that he had waived observance of the rules and regulations of the school or condoned their
non-observance. His absence when the tragedy happened cannot be considered against him because he was not

Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on

supposed or required to report to school on that day. And while it is true that the offending student was still in the

March 30, 1958.

custody of the teacher-in-charge even if the latter was physically absent when the tort was committed, it has not been
established that it was caused by his laxness in enforcing discipline upon the student. On the contrary, the private
respondents have proved that they had exercised due diligence, through the enforcement of the school regulations, in

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc.,

maintaining that discipline.

issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok,
plaintiff travelled in "first class", but 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.

4. In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable especially in view of

Cuento, there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked

the unrefuted evidence that he had earlier confiscated an unlicensed gun from one of the students and returned the

to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager

same later to him without taking disciplinary action or reporting the matter to higher authorities. While this was

that his seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G.

clearly negligence on his part, for which he deserves sanctions from the school, it does not necessarily link him to the

Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr.

shooting of Amador as it has not been shown that he confiscated and returned pistol was the gun that killed the

Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr.

petitioners' son.

Carrascoso and pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of
May 26, 1959); and plaintiff reluctantly gave his "first class" seat in the plane.3

5. Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable under the article
because only the teacher or the head of the school of arts and trades is made responsible for the damage caused by
the student or apprentice. Neither can it be held to answer for the tort committed by any of the other private
respondents for none of them has been found to have been charged with the custody of the offending student or has
been remiss in the discharge of his duties in connection with such custody.

In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein announced
that none of the respondents is liable for the injury inflicted by Pablito Damon on Alfredo Amadora that resulted in
the latter's death at the auditorium of the Colegio de San Jose-Recoletos on April 13, 1972. While we deeply
sympathize with the petitioners over the loss of their son under the tragic circumstances here related, we
nevertheless are unable to extend them the material relief they seek, as a balm to their grief, under the law they have

1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals.
Petitioner charges that respondent court failed to make complete findings of fact on all the issues properly laid before
it. We are asked to consider facts favorable to petitioner, and then, to overturn the appellate court's decision.

Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without
expressing therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory
demand that a judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on
which it is based"; 6 and that "Every decision of the Court of Appeals shall contain complete findings of fact on all
issues properly raised before it". 7

invoked. WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered.
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely
G.R. No. L-21438

September 28, 1966

insists that a decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of
justice is not hidebound to write in its decision every bit and piece of evidence


presented by one party and the other

upon the issues raised. Neither is it to be burdened with the obligation "to specify in the sentence the facts"which a
AIR FRANCE, petitioner,

Lichauco, Picazo and Agcaoili for petitioner.

Bengzon Villegas and Zarraga for respondent R. Carrascoso.

party "considered as proved".


This is but a part of the mental process from which the Court draws the essential

ultimate facts. A decision is not to be so clogged with details such that prolixity, if not confusion, may result. So long
as the decision of the Court of Appeals contains the necessary facts to warrant its conclusions, it is no error for said
court to withhold therefrom "any specific finding of facts with respect to the evidence for the defense". Because as this
Court well observed, "There is no law that so requires".


Indeed, "the mere failure to specify (in the decision) the

contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the same contrary to
the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was held that
the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into


consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not
vitiate the judgment.


If the court did not recite in the decision the testimony of each witness for, or each item of

evidence presented by, the defeated party, it does not mean that the court has overlooked such testimony or such item
The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of
moral damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class

of evidence.


At any rate, the legal presumptions are that official duty has been regularly performed, and that all the

matters within an issue in a case were laid before the court and passed upon by it.


and tourist class for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from
the date of the filing of the complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement of the
ultimate facts as found by the court ... and essential to support the decision and judgment rendered thereon".

On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to
P383.10, and voted to affirm the appealed decision "in all other respects", with costs against petitioner.

The case is now before us for review on certiorari.

consist of the court's "conclusions" with respect to the determinative facts in issue".


hand, has been declared as "one which does not call for an examination of the probative value of the evidence
presented by the parties."




A question of law, upon the other

2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of


That judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the

facts or to review the questions of fact.


Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff
paid for, and was issued a "first class" airplane ticket, the ticket was subject to confirmation in Hongkong. The court
cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and
plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the testimony of said witnesses, and clearly show that the

With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its

plaintiff was issued, and paid for, a first class ticket without any reservation whatever.

Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a "first
class" accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation

3. Was Carrascoso entitled to the first class seat he claims?

defendant had a verbal understanding with plaintiff that the "first class" ticket issued to him by defendant would be
subject to confirmation in Hongkong.


It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But
petitioner asserts that said ticket did not represent the true and complete intent and agreement of the parties; that
said respondent knew that he did not have confirmed reservations for first class on any specific flight, although he
had tourist class protection; that, accordingly, the issuance of a first class ticket was no guarantee that he would have
a first class ride, but that such would depend upon the availability of first class seats.

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on
Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other
respects. We hold the view that such a judgment of affirmance has merged the judgment of the lower court.



in that affirmance is a determination by the Court of Appeals that the proceeding in the Court of First Instance was
free from prejudicial error and "all questions raised by the assignments of error and all questions that might have

These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals

been raised are to be regarded as finally adjudicated against the appellant". So also, the judgment affirmed "must be

under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed

regarded as free from all error".

reservations for, and a right to, first class seats on the "definite" segments of his journey, particularly that from

Appeals on this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor

Saigon to Beirut".


We reached this policy construction because nothing in the decision of the Court of

was said affirmance by the Court of Appeals upon a ground or grounds different from those which were made the


basis of the conclusions of the trial court.


And, the Court of Appeals disposed of this contention thus:

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact
Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee
that the passenger to whom the same had been issued, would be accommodated in the first-class
compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every
station for the necessary first-class reservation. We are not impressed by such a reasoning. We cannot
understand how a reputable firm like defendant airplane company could have the indiscretion to give out
tickets it never meant to honor at all. It received the corresponding amount in payment of first-class
tickets and yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the

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? It will always be an easy matter for an airline aided by its
employees, to strike out the very stipulations in the ticket, and say that there was a verbal agreement to the contrary.
What if the passenger had a schedule to fulfill? We have long learned that, as a rule, a written document speaks a
uniform language; that spoken word could be notoriously unreliable. If only to achieve stability in the relations
between passenger and air carrier, adherence to the ticket so issued is desirable. Such is the case here. The lower
courts refused to believe the oral evidence intended to defeat the covenants in the ticket.

ordinary course of business that the company should know whether or riot the tickets it issues are to be
The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of

honored or not.22

Appeals predicated the finding that respondent Carrascoso had a first class ticket and was entitled to a first class
Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:

seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight.


We perceive no "welter of distortions by

the Court of Appeals of petitioner's statement of its position", as charged by petitioner.


Nor do we subscribe to

petitioner's accusation that respondent Carrascoso "surreptitiously took a first class seat to provoke an issue".



On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from his

this because, as petitioner states, Carrascoso went to see the Manager at his office in Bangkok "to confirm my seat

testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael

and because from Saigon I was told again to see the Manager".

Altonaga, confirmed plaintiff's testimony and testified as follows:

in the plane at Bangkok, if he had no seat? Or, if another had a better right to the seat?

Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?


Why, then, was he allowed to take a first class seat

4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's
action is planted upon breach of contract; that to authorize an award for moral damages there must be an averment
of fraud or bad faith;31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal

A. That the space is confirmed.

allegations in the complaint bearing on this issue are:

Q. Confirmed for first class?

3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable
consideration, the latter acting as general agents for and in behalf of the defendant, under which said
contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on

A. Yes, "first class". (Transcript, p. 169)

defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point



up to and until plaintiff's return trip to Manila, ... .

4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok,

plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of

defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments

the case, or yet to secure his disposition; but defendant did neither.


and/or insistence were made by the plaintiff with defendant's employees.

The Court of appeals further stated
5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff
only TouristClass accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff has
been compelledby defendant's employees to leave the First Class accommodation berths at Bangkok after
he was already seated.

Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if
the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already
been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences
and to be subjected to the humiliation and indignity of being ejected from his seat in the presence of

6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments

others. Instead of explaining to the white man the improvidence committed by defendant's employees, the

brought by defendant's breach of contract was forced to take a Pan American World Airways plane on his

manager adopted the more drastic step of ousting the plaintiff who was then safely ensconsced in his

return trip from Madrid to Manila. 32

rightful seat. We are strengthened in our belief that this probably was what happened there, by the
testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters


"O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise,


Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of
defendant, testified as follows:

2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered
inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety,
wounded feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00.





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

"Q How does the person in the ticket-issuing office know what reservation the passenger has
arranged with you?

A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:

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

Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right"

the tourist class, by reason of which he suffered inconvenience, embarrassments and humiliations, thereby causing

to the seat occupied by Mr. Carrascoso? The record is silent. The defendant airline did not

him mental anguish, serious anxiety, wounded feelings and social humiliation, resulting in moral damages. It is true

prove "any better", nay, any right on the part of the "white man" to the "First class" seat that

that there is no specific mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may

the plaintiff was occupying and for which he paid and was issued a corresponding "first

be drawn from the facts and circumstances set forth therein.


The contract was averred to establish the relation

class" ticket.

between the parties. But the stress of the action is put on wrongful expulsion.
If there was a justified reason for the action of the defendant's Manager in Bangkok, the
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on guard

defendant could have easily proven it by having taken the testimony of the said Manager by

on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was oustedby

deposition, but defendant did not do so; the presumption is that evidence willfully

petitioner's manager who gave his seat to a white man;


and (b) evidence of bad faith in the fulfillment of the

suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and, under the

contract was presented without objection on the part of the petitioner. It is, therefore, unnecessary to inquire as to

circumstances, the Court is constrained to find, as it does find, that the Manager of the

whether or not there is sufficient averment in the complaint to justify an award for moral damages. Deficiency in the

defendant airline in Bangkok not merely asked but threatened the plaintiff to throw him out

complaint, if any, was cured by the evidence. An amendment thereof to conform to the evidence is not even

of the plane if he did not give up his "first class" seat because the said Manager wanted to



On the question of bad faith, the Court of Appeals declared:

accommodate, using the words of the witness Ernesto G. Cuento, the "white man".38

That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the

defendant Air France while at Bangkok, and was transferred to the tourist class not only without his

term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager

consent but against his will, has been sufficiently established by plaintiff in his testimony before the

not only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his

court, corroborated by the corresponding entry made by the purser of the plane in his notebook which

arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to

notation reads as follows:

the tourist class compartment - just to give way to another passenger whose right thereto has not been
established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different

"First-class passenger was forced to go to the tourist class against his will, and that the
captain refused to intervene",

and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the
plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do
so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the

from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with
furtive design or with some motive of self-interest or will or for ulterior purpose."


And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the
Court of First Instance, thus:

The evidence shows that the defendant violated its contract of transportation with plaintiff in

note that you transferred to the tourist class". I said, "Nothing of that kind. That is tantamount to

bad faith, with the aggravating circumstances that defendant's Manager in Bangkok went to

accepting my transfer." And I also said, "You are not going to note anything there because I am protesting

the extent of threatening the plaintiff in the presence of many passengers to have him thrown

to this transfer".

out of the airplane to give the "first class" seat that he was occupying to, again using the
words of the witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager)
wished to accommodate, and the defendant has not proven that this "white man" had any

Q Was she able to note it?

"better right" to occupy the "first class" seat that the plaintiff was occupying, duly paid for,
and for which the corresponding "first class" ticket was issued by the defendant to him. 40

5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in


A No, because I did not give my ticket.

Q About that purser?

For the willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the

Civil Code says:

A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I
stood up and I went to the pantry that was next to me and the purser was there. He told me, "I have

ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to

recorded the incident in my notebook." He read it and translated it to me because it was recorded in

morals, good customs or public policy shall compensate the latter for the damage.

French "First class passenger was forced to go to the tourist class against his will, and that the captain
refused to intervene."

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article
2219 (10), Civil Code, moral damages are recoverable.



6. A contract to transport passengers is quite different in kind and degree from any other contractual relation.



this, because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling

I move to strike out the last part of the testimony of the witness because the best evidence would be the
notes. Your Honor.

public. It invites people to avail of the comforts and advantages it offers. The contract of air carriage, therefore,
generates a relation attended with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could
give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with


I will allow that as part of his testimony.


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.


Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook reading
"First class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene"
is predicated upon evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of

Thus, "Where a steamship company


had accepted a passenger's check, it was a breach of contract and a tort, giving

a right of action for its agent in the presence of third persons to falsely notify her that the check was worthless and

inquiry is not the entry, but the ouster incident. Testimony on the entry does not come within the proscription of the
best evidence rule. Such testimony is admissible. 49a

demand payment under threat of ejection, though the language used was not insulting and she was not


And this, because, although the relation of passenger and carrier is "contractual both in origin and

nature" nevertheless "the act that breaks the contract may be also a tort".


And in another case, "Where a passenger

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling
occurrence was still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this

on a railroad train, when the conductor came to collect his fare tendered him the cash fare to a point where the train

environment, are admissible as part of the res gestae.

was scheduled not to stop, and told him that as soon as the train reached such point he would pay the cash fare from

physical condition of the declarant".

that point to destination, there was nothing in the conduct of the passenger which justified the conductor in using

spontaneous, and related to the circumstances of the ouster incident. Its trustworthiness has been guaranteed.

insulting language to him, as by calling him a lunatic,"


and the Supreme Court of South Carolina there held the



For, they grow "out of the nervous excitement and mental and

The utterance of the purser regarding his entry in the notebook was


thus escapes the operation of the hearsay rule. It forms part of the res gestae.

carrier liable for the mental suffering of said passenger.1awphl.nt

At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an
Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have

easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was

said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier a case

made, the deposition of the purser could have cleared up the matter.

of quasi-delict. Damages are proper.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.
7. Petitioner draws our attention to respondent Carrascoso's testimony, thus
8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary damages
Q You mentioned about an attendant. Who is that attendant and purser?

in contracts and quasi- contracts. The only condition is that defendant should have "acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner."

A When we left already that was already in the trip I could not help it. So one of the flight
attendants approached me and requested from me my ticket and I said, What for? and she said, "We will


The manner of ejectment of respondent Carrascoso from his first class

seat fits into this legal precept. And this, in addition to moral damages. 54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for
attorneys' fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys'
fees be given.


We do not intend to break faith with the tradition that discretion well exercised as it was here

should not be disturbed.

10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus:
P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees. The task
of fixing these amounts is primarily with the trial court. 56 The Court of Appeals did not interfere with the same. The
dictates of good sense suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the
reasonableness thereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly
vote to affirm the same. Costs against petitioner. So ordered.

August 31, 1954

G.R. No. L-7089
DOMINGO DE LA CRUZ, plaintiff-appellant,
Conrado Rubio for appellant.
Ruiz, Ruiz, Ruiz, Ruiz, and Benjamin Guerrero for appellees. MONTEMAYOR, J.:
The facts in this case based on an agreed statement of facts are simple. In the year 1941 the Northern Theatrical
Enterprises Inc., a domestic corporation operated a movie house in Laoag, Ilocos Norte, and among the persons
employed by it was the plaintiff DOMINGO DE LA CRUZ, hired as a special guard whose duties were to guard the
main entrance of the cine, to maintain peace and order and to report the commission of disorders within the
premises. As such guard he carried a revolver. In the afternoon of July 4, 1941, one Benjamin Martin wanted to crash
the gate or entrance of the movie house. Infuriated by the refusal of plaintiff De la Cruz to let him in without first
providing himself with a ticket, Martin attacked him with a bolo. De la Cruz defendant himself as best he could until
he was cornered, at which moment to save himself he shot the gate crasher, resulting in the latter's death.
For the killing, De la Cruz was charged with homicide in Criminal Case No. 8449 of the Court of First Instance of
Ilocos Norte. After a re-investigation conducted by the Provincial Fiscal the latter filed a motion to dismiss the
complaint, which was granted by the court in January 1943. On July 8, 1947, De la Cruz was again accused of the
same crime of homicide, in Criminal Case No. 431 of the same Court. After trial, he was finally acquitted of the
charge on January 31, 1948. In both criminal cases De la Cruz employed a lawyer to defend him. He demanded from
his former employer reimbursement of his expenses but was refused, after which he filed the present action against
the movie corporation and the three members of its board of directors, to recover not only the amounts he had paid
his lawyers but also moral damages said to have been suffered, due to his worry, his neglect of his interests and his
family as well in the supervision of the cultivation of his land, a total of P15,000. On the basis of the complaint and
the answer filed by defendants wherein they asked for the dismissal of the complaint, as well as the agreed statement
of facts, the Court of First Instance of Ilocos Norte after rejecting the theory of the plaintiff that he was an agent of
the defendants and that as such agent he was entitled to reimbursement of the expenses incurred by him in
connection with the agency (Arts. 1709-1729 of the old Civil Code), found that plaintiff had no cause of action and
dismissed the complaint without costs. De la Cruz appealed directly to this Tribunal for the reason that only
questions of law are involved in the appeal.
We agree with the trial court that the relationship between the movie corporation and the plaintiff was not that of
principal and agent because the principle of representation was in no way involved. Plaintiff was not employed to
represent the defendant corporation in its dealings with third parties. He was a mere employee hired to perform a
certain specific duty or task, that of acting as special guard and staying at the main entrance of the movie house to
stop gate crashers and to maintain peace and order within the premises. The question posed by this appeal is
whether an employee or servant who in line of duty and while in the performance of the task assigned to him,
performs an act which eventually results in his incurring in expenses, caused not directly by his master or employer
or his fellow servants or by reason of his performance of his duty, but rather by a third party or stranger not in the
employ of his employer, may recover said damages against his employer.

The learned trial court in the last paragraph of its decision dismissing the complaint said that "after studying many
laws or provisions of law to find out what law is applicable to the facts submitted and admitted by the parties, has
found none and it has no other alternative than to dismiss the complaint." The trial court is right. We confess that we
are not aware of any law or judicial authority that is directly applicable to the present case, and realizing the
importance and far-reaching effect of a ruling on the subject-matter we have searched, though vainly, for judicial
authorities and enlightenment. All the laws and principles of law we have found, as regards master and servants, or
employer and employee, refer to cases of physical injuries, light or serious, resulting in loss of a member of the body
or of any one of the senses, or permanent physical disability or even death, suffered in line of duty and in the course
of the performance of the duties assigned to the servant or employee, and these cases are mainly governed by the
Employer's Liability Act and the Workmen's Compensation Act. But a case involving damages caused to an employee
by a stranger or outsider while said employee was in the performance of his duties, presents a novel question which
under present legislation we are neither able nor prepared to decide in favor of the employee.
In a case like the present or a similar case of say a driver employed by a transportation company, who while in the
course of employment runs over and inflicts physical injuries on or causes the death of a pedestrian; and such driver
is later charged criminally in court, one can imagine that it would be to the interest of the employer to give legal help
to and defend its employee in order to show that the latter was not guilty of any crime either deliberately or through
negligence, because should the employee be finally held criminally liable and he is found to be insolvent, the employer
would be subsidiarily liable. That is why, we repeat, it is to the interest of the employer to render legal assistance to
its employee. But we are not prepared to say and to hold that the giving of said legal assistance to its employees is a
legal obligation. While it might yet and possibly be regarded as a normal obligation, it does not at present count with
the sanction of man-made laws.
If the employer is not legally obliged to give, legal assistance to its employee and provide him with a lawyer, naturally
said employee may not recover the amount he may have paid a lawyer hired by him.
Viewed from another angle it may be said that the damage suffered by the plaintiff by reason of the expenses incurred
by him in remunerating his lawyer, is not caused by his act of shooting to death the gate crasher but rather by the
filing of the charge of homicide which made it necessary for him to defend himself with the aid of counsel. Had no
criminal charge been filed against him, there would have been no expenses incurred or damage suffered. So the
damage suffered by plaintiff was caused rather by the improper filing of the criminal charge, possibly at the instance
of the heirs of the deceased gate crasher and by the State through the Fiscal. We say improper filing, judging by the
results of the court proceedings, namely, acquittal. In other words, the plaintiff was innocent and blameless. If
despite his innocence and despite the absence of any criminal responsibility on his part he was accused of homicide,
then the responsibility for the improper accusation may be laid at the door of the heirs of the deceased and the State,
and so theoretically, they are the parties that may be held responsible civilly for damages and if this is so, we fail to
see now this responsibility can be transferred to the employer who in no way intervened, much less initiated the
criminal proceedings and whose only connection or relation to the whole affairs was that he employed plaintiff to
perform a special duty or task, which task or duty was performed lawfully and without negligence.
Still another point of view is that the damages incurred here consisting of the payment of the lawyer's fee did not flow
directly from the performance of his duties but only indirectly because there was an efficient, intervening cause,
namely, the filing of the criminal charges. In other words, the shooting to death of the deceased by the plaintiff was
not the proximate cause of the damages suffered but may be regarded as only a remote cause, because from the
shooting to the damages suffered there was not that natural and continuous sequence required to fix civil
In view of the foregoing, the judgment of the lower court is affirmed. No costs.
G.R. No. L-46179 January 31, 1978

DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.

Remulla, Estrella & Associates for petitioners

rather than that which is literal that killeth the intent of the lawmaker should be observed in

Exequil C. Masangkay for respondents.

applying the same. And considering that the preliminary chapter on human relations of the
new Civil Code definitely establishes the separability and independence of liability in a civil


action for acts criminal in character (under Articles 29 to 32) from the civil responsibility
arising from crime fixed by Article 100 of the Penal Code, and, in a sense, the Rules of Court,
under Sections 2 and 3(c), Rule 111, contemplate also the same separability, it is 'more

This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in Civil Case No. B-

congruent' with the spirit of law, equity and justice, and more in harmony with modern

134 granting the motion of the defendants to dismiss the complaint on the ground that there is another action
pending between the same parties for the same cause.

progress', to borrow the felicitous language in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil.

to 359, to hod as We do hold, that Article 2176, where it refers to 'fault covers not only acts
'not punishable by law' but also criminal in character, whether intentional and voluntary or

The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been bumped while

consequently, a separate civil action lies against the in a criminal act, whether or not he is

walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo Borilla and registered in the name Of

criminally prosecuted and found guilty and acquitted, provided that the offended party is not

Victoria Ochoa; that Borilla is the employer of Ochoa; that for the death of Arsenio Virata, a action for homicide

allowed, if he is actually charged also criminally, to recover damages on both scores, and

through reckless imprudence was instituted on September 25, 1975 against Maximo Borilla in the Court of First

would be entitled in such eventuality only to the bigger award of the, two assuming the

Instance of Rizal at Pasay City, docketed as C Case No. 3162-P of said court; that at the hearing of the said criminal

awards made in the two cases vary. In other words the extinction of civil liability refereed to

case on December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to file a separate civil

in Par. (c) of Section 13, Rule 111, refers exclusively to civil liability founded on Article 100 of

action for damages against the driver on his criminal liability; that on February 19, 1976 Atty. Julio Francisco filed a

the Revised Penal Code, whereas the civil liability for the same act considered as a quasi-

motion in said c case to withdraw the reservation to file a separate civil action; that thereafter, the private prosecutor

delict only and not as a crime is not extinguished even by a declaration in the criminal case

actively participated in the trial and presented evidence on the damages; that on June 29, 1976 the heirs of Arsenio

that the criminal act charged has not happened or has not been committed by the accused.

Virata again reserved their right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata,

Brief stated, We hold, in reitration of Garcia, that culpa aquilina includes voluntary and

petitioners herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for

negligent acts which may be punishable by law.

damages based on quasi-delict against the driver Maximo Borilla and the registered owner of the jeepney, Victorio

Ochoa; that on August 13, 1976 the defendants, private respondents filed a motion to dismiss on the ground that
there is another action, Criminal Case No. 3162-P, pending between the same parties for the same cause; that on

The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case No. 3162-P was

September 8, 1976 the Court of First Instance of Rizal at Pasay City a decision in Criminal Case No. 3612-P

decided, they manifested in said criminal case that they were filing a separate civil action for damages against the

acquitting the accused Maximo Borilla on the ground that he caused an injury by name accident; and that on

owner and driver of the passenger jeepney based on quasi-delict. The acquittal of the driver, Maximo Borilla, of the

January 31, 1977, the Court of First Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for

crime charged in Criminal Case No. 3162-P is not a bar to the prosecution of Civil Case No. B-134 for damages based


on quasi-delict The source of the obligation sought to be enforced in Civil Case No. B-134 isquasi-delict, not an act or

omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or
The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the damages based on

omission punishable by law are two different sources of obligation.

quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner, respectively on the passenger jeepney that
Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have only to establish

bumped Arsenio Virata.

their cause of action by preponderance of the evidence.

It is settled that in negligence cases the aggrieved parties may choose between an action under the Revised Penal
Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines. What is prohibited by Article 2177 of

WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is reinstated and

the Civil Code of the Philippines is to recover twice for the same negligent act.

remanded to the lower court for further proceedings, with costs against the private respondents.

The Supreme Court has held that:


According to the Code Commission: 'The foregoing provision (Article 2177) though at first
sight startling, is not so novel or extraordinary when we consider the exact nature of criminal
and civil negligence. The former is a violation of the criminal law, while the latter is a 'culpa
aquiliana' or quasi-delict, of ancient origin, having always had its own foundation and
individuality, separate from criminal negligence. Such distinction between criminal
negligence and 'culpa extra-contractual' or quasi-delito has been sustained by decision of the
Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura, an
outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an
accusation of criminal negligence, whether on reasonable doubt or not, shall not be a bar to
a subsequent civil action, not for civil liability arising from criminal negligence, but for
damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double
recovery. (Report of the Code Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the
same argument of Justice Bocobo about construction that upholds 'the spirit that given life'


and General Manager,
- versus HON. PHILADELFA B. PAGAPONG-AGRAVIADOR, in her capacity as
Presiding Judge of Regional Trial Court, Branch 43, Bacolod City,

G.R. No. 158995

PUNO, J., Chairperson,

In the herein assailed decision [8] dated April 25, 2003, the CA denied the petition and upheld the trial court.
Partly says the CA in its challenged issuance:

September 26, 2006


It is clear that the complaint neither represents nor implies that the
responsibility charged was the petitioners subsidiary liability under Art. 103, Revised Penal
Code. As pointed out [by the trial court] in the Order of September 4, 2001,
the complaint does not even allege the basic elements for such a liability, like the conviction
of the accused employee and his insolvency. Truly enough, a civil action to enforce
subsidiary liability separate and distinct from the criminal action is even unnecessary.


Assailed and sought to be set aside in this petition for review on certiorari is the Decision[1]dated April 25, 2003
of the Court of Appeals (CA), as reiterated in its Resolution of July 10, 2003, [2]in CA-G.R. SP No. 67600, affirming an
earlier Order of the Regional Trial Court (RTC) of Bacolod City, Branch 43, which denied the petitioners motion to
dismiss in Civil Case No. 99-10845, an action for damages arising from a vehicular accident thereat instituted by the
herein private respondents - the spouses Florentino Vallejera and Theresa Vallejera - against the petitioners.
The antecedent facts may be briefly stated as follows:
On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and Theresa
Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time by their employee, Vincent
Norman Yeneza y Ferrer. Charles died as a result of the accident.
In time, an Information for Reckless Imprudence Resulting to Homicide was filed against the driver before the
Municipal Trial Court in Cities (MTCC), Bacolod City, docketed as Criminal Case No. 67787, entitled People of
the Philippines v. Vincent Norman Yeneza.
Unfortunately, before the trial could be concluded, the accused driver committed suicide, evidently bothered by
conscience and remorse. On account thereof, the MTCC, in its order ofSeptember 30, 1998, dismissed the criminal
On June 23, 1999, in the RTC of Bacolod City, the spouses Vallejera filed a complaint [3] for damages against the
petitioners as employers of the deceased driver, basically alleging that as such employers, they failed to exercise due
diligence in the selection and supervision of their employees. Thereat docketed as Civil Case No. 99-10845, the
complaint was raffled to Branch 43 of the court.

In their Answer with Compulsory Counterclaim,[4] the petitioners as defendants denied liability for the death of
the Vallejeras 7-year old son, claiming that they had exercised the required due diligence in the selection and
supervision of their employees, including the deceased driver. They thus prayed in their Answer for the dismissal of
the complaint for lack of cause of action on the part of the Vallejera couple.
During pre-trial, the defendant petitioners insisted that their dismissal prayer be resolved. Hence, the trial
court required them to file within ten days a memorandum of authorities supportive of their position.
Instead, however, of the required memorandum of authorities, the defendant petitioners filed aMotion to
Dismiss, principally arguing that the complaint is basically a claim for subsidiary liability against an employer
under the provision of Article 103 [5] of the Revised Penal Code. Prescinding therefrom, they contend that there must
first be a judgment of conviction against their driver as a condition sine qua non to hold them liable. Ergo, since the
driver died during the pendency of the criminal action, the sine qua non condition for their subsidiary liability was
not fulfilled, hence the of lack of cause of action on the part of the plaintiffs. They further argue that since the
plaintiffs did not make a reservation to institute a separate action for damages when the criminal case was filed, the
damage suit in question is thereby deemed instituted with the criminal action. which was already dismissed.
In an Order dated September 4, 2001,[6] the trial court denied the motion to dismiss for lack of merit and set
the case for pre-trial. With their motion for reconsideration having been denied by the same court in its subsequent
order[7] of September 26, 2001, the petitioners then went on certiorari to the CA in CA-G.R. SP No. 67600, imputing
grave abuse of discretion on the part of the trial judge in refusing to dismiss the basic complaint for damages in Civil
Case No. 99-10845.



Specifically, Civil Case No. 99-10845 exacts responsibility for fault or negligence
under Art. 2176, Civil Code, which is entirely separate and distinct from the civil liability
arising from negligence under the Revised Penal Code. Verily, therefore, the liability under
Art. 2180, Civil Code, is direct and immediate, and not conditioned upon prior recourse
against the negligent employee or prior showing of the latters insolvency . (Underscoring in
the original.)

In time, the petitioners moved for a reconsideration but their motion was denied by the CA in its
resolution[9] of July 10, 2003. Hence, the petitioners present recourse on their submission that the appellate court
committed reversible error in upholding the trial courts denial of their motion to dismiss.
As the Court sees it, the sole issue for resolution is whether the spouses Vallejeras cause of action in
Civil Case No. 99-10845 is founded on Article 103 of the Revised Penal Code, as maintained by the petitioners, or
derived from Article 2180[10] of the Civil Code, as ruled by the two courts below.
It thus behooves us to examine the allegations of the complaint for damages in Civil Case No. 9910845. That complaint alleged, inter alia, as follows:



That defendant [LG Food Corporation] is the registered owner of a Ford Fiera
Van with Plate No. NMS 881 and employer sometime February of 1996 of one Vincent
Norman Yeneza y Ferrer, a salesman of said corporation;
sometime February
1996 at
around 2:00
P.M. at Rosario
St., Bacolod City, the minor son of said plaintiffs [now respondents], Charles Vallejera, 7
years old, was hit and bumped by above-described vehicle then driven by said employee,
Vincent Norman Yeneza y Ferrer;
That the mishap was due to the gross fault and negligence of defendants
employee, who drove said vehicle, recklessly, negligently and at a high speed without regard
to traffic condition and safety of other road users and likewise to the fault and negligence of
the owner employer, herein defendants LG Food Corporation who failed to exercise due
diligence in the selection and supervision of his employee, Vincent Norman Yeneza y Ferrer;
That as a result of said incident, plaintiffs son suffered multiple body
injuries which led to his untimely demise on that very day;
That a criminal case was filed against the defendants employee, docketed as
Criminal Case No. 67787, (earlier filed as Crim. Case No. 96-17570 before RTC) before MTCBranch III, entitled People v. Yeneza for Reckless Imprudence resulting to Homicide, but
the same was dismissed because pending litigation, then remorse-stricken [accused]
committed suicide;
That the injuries and complications as well as the resultant death suffered by
the late minor Charles Vallejera were due to the negligence and imprudence of defendants

That defendant LG Foods Corporation is civilly liable for the
negligence/imprudence of its employee since it failed to exercise the necessary diligence
required of a good father of the family in the selection and supervision of his employee,
Vincent Norman Yeneza y Ferrer which diligence if exercised, would have prevented said
incident. (Bracketed words and emphasis ours.)

Nothing in the foregoing allegations suggests, even remotely, that the herein petitioners are being made to
account for their subsidiary liability under Article 103 of the Revised Penal Code. As correctly pointed out by the
trial court in its order of September 4, 2001 denying the petitionersMotion to Dismiss, the complaint did not even
aver the basic elements for the subsidiary liability of an employer under Article 103 of the Revised Penal Code, such
as the prior conviction of the driver in the criminal case filed against him nor his insolvency.
Admittedly, the complaint did not explicitly state that plaintiff Vallejeras were suing the defendant petitioners
for damages based on quasi-delict. Clear it is, however, from the allegations of the complaint that quasi-delict was
their choice of remedy against the petitioners. To stress, the plaintiff spouses alleged in their complaint gross fault
and negligence on the part of the driver and the failure of the petitioners, as employers, to exercise due diligence in
the selection and supervision of their employees. The spouses further alleged that the petitioners are civilly liable for
the negligence/imprudence of their driver since they failed to exercise the necessary diligence required of a good
father of the family in the selection and supervision of their employees, which diligence, if exercised, could have
prevented the vehicular accident that resulted to the death of their 7-year old son.
Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of action as the act or omission by which
a party violates the right of another. Such act or omission gives rise to an obligation which may come from law,
contracts, quasi contracts, delicts or quasi-delicts.[11]
Corollarily, an act or omission causing damage to another may give rise to two separate civil liabilities on the
part of the offender, i.e., 1) civil liability ex delicto;[12] and 2) independent civil liabilities, such as those (a) not arising
from an act or omission complained of as felony (e.g., culpa contractual or obligations arising from law;[13] the
intentional torts;[14] and culpa aquiliana[15]); or (b) where the injured party is granted a right to file an action
independent and distinct from the criminal action.[16] Either of these two possible liabilities may be enforced against
the offender.[17]
Stated otherwise, victims of negligence or their heirs have a choice between an action to enforce the civil
liability arising from culpa criminal under Article 100 of the Revised Penal Code, and an action for quasi-delict (culpa
aquiliana) under Articles 2176 to 2194 of the Civil Code. If, as here, the action chosen is for quasi-delict, the plaintiff
may hold the employer liable for the negligent act of its employee, subject to the employers defense of exercise of the
diligence of a good father of the family. On the other hand, if the action chosen is for culpa criminal, the plaintiff can
hold the employer subsidiarily liable only upon proof of prior conviction of its employee.[18]
Article 1161[19] of the Civil Code provides that civil obligation arising from criminal offenses shall be governed
by penal laws subject to the provision of Article 2177 [20] and of the pertinent provision of Chapter 2, Preliminary Title
on Human Relation, and of Title XVIII of this Book, regulating damages. Plainly, Article 2177 provides for the
alternative remedies the plaintiff may choose from in case the obligation has the possibility of arising indirectly from
the delict/crime or directly from quasi-delict/tort. The choice is with the plaintiff who makes known his cause of
action in his initiatory pleading or complaint, [21] and not with the defendant who can not ask for the dismissal of the
plaintiffs cause of action or lack of it based on the defendants perception that the plaintiff should have opted to file a
claim under Article 103 of the Revised Penal Code.
Under Article 2180 of the Civil Code, the liability of the employer is direct or immediate. It is not conditioned
upon prior recourse against the negligent employee and a prior showing of insolvency of such employee. [22]
minor son was caused by the negligent act of the petitioners driver; and that the petitioners themselves were
civilly liable for the negligence of their driver for failing to exercise the necessary diligence required of a good father of
the family in the selection and supervision of [their] employee, the driver, which diligence, if exercised, would have
prevented said accident.
Had the respondent spouses elected to sue the petitioners based on Article 103 of the Revised Penal
Code, they would have alleged that the guilt of the driver had been proven beyond reasonable doubt; that such
accused driver is insolvent; that it is the subsidiary liability of the defendant petitioners as employers to pay for the
damage done by their employee (driver) based on the principle that every person criminally liable is also civilly liable.
Since there was no conviction in the criminal case against the driver, precisely because death intervened prior to
the termination of the criminal proceedings, the spouses recourse was, therefore, to sue the petitioners for their
direct and primary liability based on quasi-delict.

Besides, it is worthy to note that the petitioners, in their Answer with Compulsory Counter-Claim,[24] repeatedly
made mention of Article 2180 of the Civil Code and anchored their defense on their allegation that they had
exercised due diligence in the selection and supervision of [their] employees. The Court views this defense as an
admission that indeed the petitioners acknowledged the private respondents cause of action as one for quasi-delict
under Article 2180 of the Civil Code.
All told, Civil Case No. 99-10845 is a negligence suit brought under Article 2176 - Civil Code to recover
damages primarily from the petitioners as employers responsible for their negligent driver pursuant to Article 2180 of
the Civil Code. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but
also for those of persons for whom one is responsible. Thus, the employer is liable for damages caused by his
employees and household helpers acting within the scope of their assigned tasks, even though the former is not
engaged in any business or industry.
Citing Maniago v. CA,[25] petitioner would argue that Civil Case No. 99-10845 should have been dismissed for
failure of the respondent spouses to make a reservation to institute a separate civil action for damages when the
criminal case against the driver was filed.
The argument is specious.
To start with, the petitioners reliance on Maniago is obviously misplaced. There, the civil case was filed while
the criminal case against the employee was still pending. Here, the criminal case against the employee driver was
prematurely terminated due to his death. Precisely, Civil Case No. 99-10845 was filed by the respondent spouses
because no remedy can be obtained by them against the petitioners with the dismissal of the criminal case against
their driver during the pendency thereof.
The circumstance that no reservation to institute a separate civil action for damages was made when the
criminal case was filed is of no moment for the simple reason that the criminal case was dismissed without any
pronouncement having been made therein. In reality, therefor, it is as if there was no criminal case to speak of in the
first place. And for the petitioners to insist for the conviction of their driver as a condition sine qua non to hold them
liable for damages is to ask for the impossible.
IN VIEW WHEREOF, the instant petition is DENIED for lack of merit.
Costs against the petitioners.



G.R. No. 133347


October 15, 2008

At bar is a petition for certiorari under Rule 65 of the Rules of Court challenging the Joint
Resolution[1] dated May 2, 1997 of then Ombudsman Aniano Desierto in OMB-0-94-1109, dismissing the complaint
filed by petitioners against private respondents, and the Order [2] denying their motion for reconsideration.
This case stems from an all too familiar chapter in Philippine history, i.e., the declaration of martial law
by then President Ferdinand Marcos and the simultaneous sequestration of not a few private corporations, including
one of the petitioners herein, ABS-CBN Broadcasting Corporation (ABS-CBN).
On April 18 and 26, 1994, petitioners Eugenio, Jr., Oscar and Augusto Almeda, all surnamed Lopez, as officers
and on behalf of ABS-CBN, executed separate complaint-affidavits charging private respondents Roberto S.
Benedicto, Exequiel B. Garcia, Miguel V. Gonzalez, and Salvador (Buddy) Tan with the following crimes penalized
under the Revised Penal Code (RPC): (a) Article 298 - Execution of Deeds by Means of Violence or Intimidation; (b)
Article 315 paragraphs 1[b], 2[a], 3[a] - Estafa; (c) Article 308 - Theft; (d) Article 302 - Robbery; (e) Article 312 Occupation of Real Property or Usurpation of Real Rights in Property; and (f) Article 318 - Other Deceits.
Individual petitioners complaint-affidavits[3] uniformly narrated the following facts:
The day after the declaration of martial law, or on September 22, 1972, just before midnight, military
troops arrived at the ABS-CBN Broadcast Center in Bohol Avenue, Quezon City, and informed the officers and
personnel thereat of the seizure and closure of the premises by virtue of Letter of Instruction (LOI) No. 1 issued by
President Marcos ordering the closure of all radio and television stations in the country.
LOI No. 1 authorized the Secretary of National Defense to take over or control, or cause the taking over
and control of all x x x newspapers, magazines, radio and television facilities and all other media of communications
throughout the country. Consequently, a total of seven (7) television stations owned and operated by ABS-CBN were
closed down by the government.[4]
When it became apparent that petitioners would not be granted a permit to re-open, ABS-CBN on
October 31, 1972, terminated the services of all its employees, giving each employee his/her retirement benefits.
Corollary thereto, sometime in November 1972, Eugenio Lopez, Jr., then president of ABS-CBN, wrote then Secretary
of National Defense, Juan Ponce Enrile, [5] of their desire to sell ABS-CBN to the government. In that same month,
however, Eugenio Lopez, Jr. was arrested by the military, and detained at Fort Bonifacio for almost five (5) years until
his escape therefrom on September 30, 1977.
Subsequently, after the proposal to sell ABS-CBN to the Marcos government did not materialize, ABSCBN started negotiations with then Governor of Leyte, Benjamin Kokoy Romualdez, who expressed his desire and
intention to acquire the former. However, the negotiations with Kokoy Romualdez in 1973 likewise did not result in
the sale and re-opening of ABS-CBN.
On June 6, 1973, the television and radio stations of Kanlaon Broadcasting System (KBS) on Roxas
Boulevard, Pasay City were consumed by fire. KBS was the umbrella corporation of the Benedicto Group of
broadcasting companies, including Radio Philippines Network (RPN), [6] which operated TV Channel 9, the only
television station allowed to continue operating during the early years of the martial law regime. Respondent
Benedicto, then Philippine Ambassador to Japan, managed, controlled, and was one of the principal stockholders of
On even date, both Benedicto and Alfredo Montelibano, who at that time was Chairperson of the Board
of Directors (BOD) of ABS-CBN, were in Bacolod. Benedicto constituted Montelibano as his emissary to the Lopezes,
relaying his plan to temporarily use ABS-CBNs broadcast studios in Quezon City, from which to operate TV Channel

On June 8, 1973, Montelibano met with other officers and executives of ABS-CBN, including herein
petitioners Oscar and Augusto Lopez, informing them of Benedictos request. Oscar and Augusto, and the rest of the
ABS-CBN management team, strongly opposed the request. Eventually, however, when Montelibano mentioned that
Malacaang and Romualdez had cleared said request, the possibility of a government-ordered confiscation of ABSCBN, and not least of all, the possible release of Eugenio Lopez, Jr., petitioners Oscar and Augusto, as with the rest of
ABS-CBNs executives, acquiesced to Benedictos request.
Thus, at noontime on the same day, representatives of KBS headed by Jose Montalvo arrived at
the Meralco Building to finalize the proposed arrangement with ABS-CBN. The transaction between ABS-CBN and
KBS is evidenced by a letter-agreement dated June 8, 1973, which reads in relevant part:
This is to confirm the agreement arrived at between RPN and ABS-CBN to the
following effect:
Commencing on the date hereof, ABS-CBN hereby conveys to RPN by way of
lease its TV and radio equipment (excluding TV channels and radio frequencies) and its
premises at the ABS-CBN Broadcast Center, Bohol Avenue, Quezon City (collectively called
the leased facilities) listed in the schedule attached hereto and marked as Annex A.
RPN shall pay ABS-CBN monthly rental as is reasonable compensation for
the use of the leased facilities. The amount of the rental shall be determined after a
discussion with Ambassador Roberto Benedicto.
The term of this lease shall commence on the date hereof and continue for
such reasonable time as may be normally necessary for the rehabilitation of RPNs facilities
unless an earlier period may be fixed by RPN and ABS-CBN after discussion with
Ambassador Benedicto.
RPN hereby assumes full and complete responsibility for the leased facilities
and shall be answerable for any and all losses and damages to such facilities.
Upon termination of this lease, RPN shall return the possession of the leased
facilities to ABS-CBN and vacate the same without the need of notice or demand.
ABS-CBN, through its Chairman, Mr. Alfredo Montelibano, shall have the
right to select and designate the personnel (not to exceed 20 at any one time) to maintain and
operate all specialized TV and radio equipment.
ABS-CBN shall have the right to enter the Broadcast Center at any
reasonable time during the term of this lease for the purpose of determining compliance by
RPN of the terms hereof.
RPN shall not, without the prior written consent of ABS-CBN, sub-lease the
leased facilities or any part thereof nor shall any part be removed from the premises except
the equipment, which are intended for operation the Broadcast Center in due course of

Meanwhile, it appears that the parties were hard pressed to negotiate and fix the monthly rental rate.
Several attempts by Oscar to set up a meeting with Benedicto for the fixing of the monthly rentals proved
After more than four months of trying, a meeting between Oscar and Benedicto finally materialized
on October 31, 1973. At that meeting, the discussion not only covered fixing of reasonable rentals for the lease of the
ABS-CBN studios, but likewise included the possibility of an outright sale.

Thereafter, the discussions and negotiations stopped as none of the petitioners were able to meet anew
with Benedicto who had supposedly referred the matter to people above and the man on top.
Frustrated, then Senator Lorenzo Taada, as counsel for ABS-CBN, in May 1976, wrote Benedicto
demanding vacation of the ABS-CBN Broadcast Center and payment of back rentals for the use of the ABS-CBN
studios and facilities.
In response, Senator Estanislao Fernandez, on behalf of Benedicto, met with Senator Taada in June
1976. Another meeting took place between the parties respective counsels which included respondent Gonzales,
another counsel for Benedicto. Despite these meetings, no agreement was reached between Benedicto and ABS-CBN.
On the whole, from June 8, 1973, the time KBS occupied the ABS-CBN studios in Quezon City, no rental was paid by
the former to the latter.
In the years following until the Marcos government was toppled in 1986, the ABS-CBN stations were
transferred to the National Media Production Center (NMPC) headed by Gregorio Cendaa of the Ministry of
Information. Starting in January 1980, KBS, on a staggered basis, transferred possession, control and management
of ABS-CBNs provincial television stations to NMPC. Some of the radio stations of ABS-CBN were turned over to the
governments Bureau of Broadcast, while some were retained by KBS thru the Banahaw Broadcasting Corporation
(BBC) and Radio Philippines Network (RPN).
Parenthetically, during a military inventory in 1979-1980, and a visit by ABS-CBN executives at ABSCBNs radio transmitting stations in Meycauayan, Bulacan, headed by petitioner Augusto, on August 13, 1984, ABSCBN properties and massive equipment were found to be missing. In addition, the musical records and radio dramas
accumulated by ABS-CBN in a span of twenty-five (25) years and stored in its library were now gone.
In June 1986, President Corazon Aquino, acting on the request of ABS-CBN through Senator Taada,
returned to ABS-CBN these radio and TV stations on a gradual and scheduled basis.


As required by the Ombudsman, the respondents, except for Garcia, filed their respective counter-affidavits,
with Benedicto adopting that of Gonzales, denying petitioners charges, and averring that:

The execution of the June 8, 1973 letter-agreement was a free and voluntary act of ABS-CBN which
agreed thereto fully expecting remuneration in the form of rentals, thus:
2. RPN shall pay ABS-CBN monthly rental as is reasonable compensation for the use
of the lease facilities. The amount of the rental shall be determined after a discussion with
Ambassador Roberto Benedicto.

In that regard, respondent Gonzales, counsel for KBS, RPN and Benedicto, participated in the
negotiations and was present at three (3) meetings for the fixing of rentals. Also in attendance were former Senator
Estanislao Fernandez, specially engaged to represent RPN and Benedicto, and Senator Taada and petitioner Augusto
for ABS-CBN.
Initially, the discussions centered on the possible formulas for the fixing of rentals. Later on, however,
before an agreement on the rental rate could be reached, the discussions shifted to the possibility of an outright sale.
The discussions on the sale were expanded as various creditors of ABS-CBN had made and presented claims before
respondent Garcia, then Comptroller of KBS-RPN.
However, the discussions were discontinued when then Secretary of National Defense Juan Ponce Enrile
reminded KBS of the sequestered status of ABS-CBN facilities such that arrangements undertaken for the use and
lease thereof should be taken up with the government.[8]
Meanwhile, in July 1974, Secretary Ponce Enrile authorized KBS, acting on behalf of BBC, to make use
of the ABS-CBN provincial stations which were not covered by the June 8, 1973letter-agreement. The authorization
was granted in connection with the increased undertakings assigned by the Department of National Defense (DND) to
KBS, specifically, for the governments mass-media developmental peace and order nationwide campaign.
Thereafter, in October 1977, RPN vacated the ABS-CBN studios and turned over the properties to George
Viduya, the general manager of the government station GTV-4. Viduya continued operations of GTV-4 at the ABSCBN properties, after which, the properties were all delivered in 1979 to the NMPC headed by Cendaa. The
provincial stations were delivered and turned over on a staggered basis, with the DZRI station in Dagupan handed
over in 1979. The successive transfer of all ABS-CBN studios and stations, in Quezon City and the provinces, were
covered by receipts which were collated by the law firm of respondent Gonzales retained by KBS for that purpose.

The use of the ABS-CBN studios involved only three (3) juridical entities, RPN, ABS-CBN and the
government. The charges leveled by petitioners in their complaint-affidavits merely point to civil liability as specified
in the letter-agreement itself:
4. RPN hereby assumes full and complete responsibility for the leased facilities and
shall be answerable for any and all losses and damages to such facilities.

On the whole, the allegations of petitioners do not support the elements of the crimes charged.
Lastly, respondents invoke the grant of absolute immunity to Benedicto as part of the Compromise
Agreement in Sandiganbayan Civil Case No. 34 which states:
The Government hereby extends absolute immunity, as authorized under the
pertinent provisions of Executive Orders Nos. 1, 2, 14 and 14-A, to Benedicto, the members
of his family, officers and employees of the corporations above mentioned, who are included
in past, present and future cases and investigations of the Philippine Government, such that
there shall be no criminal investigation or prosecution against said persons for acts,
omissions committed prior to February 25, 1986 that may be alleged to have violated any
penal law, including but not limited to Republic Act No. 3019, in relation to the acquisition of
any asset treated, mentioned or included in this Agreement.

Expectedly, the petitioners in their joint reply-affidavit refuted respondents counter-affidavits. Contrary to
respondents allegations, petitioners reiterated Benedictos over-all ploy, in conspiracy with the other respondents who
were officers of KBS and/or RPN, to use and occupy ABS-CBN properties without paying compensation therefor.
Petitioners maintain that respondents grand scheme was to take-over ABS-CBN, albeit ostensibly covered by the
letter-lease agreement, giving the take over a semblance of legality.
Thereafter, with the issues having been joined, the Ombudsman issued the herein assailed Joint Resolution
dismissing petitioners complaints. To the Ombudsman, the following circumstances did not give rise to probable
cause necessary to indict respondents for the various felonies charged:
The Letter-Agreement of June 8, 1973 belie any illegal take-over of the ABS-CBN
While the Lopezes are now complaining that the letter-agreement was virtually forced
unto them thru intimidation, hence, the vitiated consent of Mr. Montelibano, there is nothing
however which the complainants adduced to prove this allegation except their threadbare
allegations of threats. On the contrary, it appears that the Lopezes blessed the letteragreement hoping that their financial difficulties with respect to the affairs of the ABS-CBN
and their problem concerning the continued detention of Eugenio Lopez, Jr. by the military,
would at least be mitigated. x x x
It is thus clear that the ABS-CBN complex was freely leased by Montelibano upon
consultation with the Lopezes who entertained some ulterior motives of their own which they
expect would result from the agreement, either directly or indirectly. Of course, the Lopezes
may not have realized some of these expectations (i.e., the rentals, the release of Eugenio, Jr.
from detention) but this does not change the fact that the parties consent to the contract
appears to have been freely given. Perforce, the complaint under Article 298 of the Revised
Penal Code of the Philippines must fail.
Other TV and radio stations were taken over pursuant to LOI 1-A, hence no
violations of Art. 312, 302 and 308 of RPC.
To the alleged violation of Art. 312 of the Revised Penal Code, the respondents
contended that their use of ABS-CBNs facilities other than those included in the leaseagreement, was in fact with the authority of the then Department of National Defense (DND).
There is no denying that all of the ABS-CBN properties including the provincial ones are
under sequestration pursuant to Presidential Letter of Instruction No. 1-A, issued on
September 28, 1972. It was under the strength of this Presidential Letter of Instruction that
KBS-RPN was authorized to enter, occupy and operate the facilities of ABS-CBN. This was
also confirmed by DND Secretary Juan Ponce Enrile in his letter to RPN dated June 26,
1976. Unmistakably, KBS-RPNs possession of the ABS-CBNs property other than those in
the ABS-CBN complex is primarily anchored on the authority pursuant to LOI 1-A. With this

apparent authority, this investigation can not see in any which way how the respondents
could have illegally taken over the properties of the [petitioners], particularly those in the
province; there is therefore no convincing proof to support a charge under Article 312 of the
Revised Penal Code. It may come to mind that occupation of real property or usurpation of
real rights in property under Article 312 requires as one of its elements the presence of
violence against or intimidation of persons as a means in securing real property or rights
belonging to another. Plainly, this element is not shown. The complainants may have felt
intimidated by the sequestration order, but it is in the nature of such Order to be coercive. It
was an act flowing from the martial law powers of then President Marcos.

No unlawful taking as to justify charges for Robbery or Theft.

Robbery and Theft under Articles 302 and 308 of the Revised Penal Code were also
attributed by the [petitioners] against the respondents. From the records, it is clear that
KBS-RPN has juridical possession of the ABS-CBN properties subject of this complaint; a
right which can be validly set-up even against ABS-CBN itself. It can be recalled that KBSRPN was authorized to enter, occupy and operate ABS-CBN facilities by virtue of the
the Broadcast Center itself was covered by the lease-agreement. Under these situations,
there is obviously no basis to charge the respondents for robbery and theft; for these penal
offense require as an element the act of unlawful taking or asportation. Asportation is simply
poles apart from the juridical possession which KBS-RPN enjoyed over the properties.
No deceit was employed to gain possession of the Broadcast Center and the provincial
TV and radio stations.

officers of his corporations as therein mentioned, such that there shall be no criminal
investigation or prosecution against said persons for acts or omissions committed prior to
February 25, 1986 that may be alleged to have violated any penal law, including but not
limited to Republic Act No. 3019, in relation to the acquisition of any asset treated or
included in this Agreement.
In effect, the People of the Philippines as the offended party in criminal cases has
waived its right to proceed criminally against Benedicto, et. al., for whatever crime they may
have committed relative to, among others, the alleged plunder of ABS-CBN properties. Again,
whatever liability that remains thereabout on respondents part is perforce only civil in

Hence, this recourse by the petitioners alleging grave abuse of discretion in the Ombudsmans Joint Resolution
and Order.
Before anything else, we note that on April 5, 1999 and June 13, 2000, the respective counsel for respondents
Tan and Benedicto, in compliance with Section 16,[11] Rule 3 of the Rules of Court, filed pleadings informing the Court
of their clients demise. Benedictos counsel filed a Notice of Death (With Prayer for Dismissal) [12] moving that
Benedicto be dropped as respondent in the instant case for the reason that the pending criminal cases subject of
this appeal are actions which do not survive the death of the party accused.
Petitioners opposed the move to drop Benedicto as respondent, citing Torrijos v. Court of Appeals [13] which held
that civil liability of the accused survives his death; because death is not a valid cause for the extinguishment of civil

In the prosecution for estafa under [Articles 315, paragraphs 2(a), 3(a) and 318] of
the Revised Penal Code, it is indispensable that the element of deceit, consisting in the false
statement of fraudulent representation of the accused, be made prior to, or, at least
simultaneously with, the delivery of the thing by the complainants, it being essential that
such false statement or fraudulent representation constitutes the very cause or the only
motive which induces the complainants to part with the thing. If there be no such prior or
simultaneous false statement or fraudulent representation, any subsequent act of the
respondent, however fraudulent or suspicious it may appear, can not serve as basis for the
prosecution of these crimes.

Our ruling on this issue need not be arduous. The rules on whether the civil liability of an accused, upon
death, is extinguished together with his criminal liability, has long been clarified and settled in the case of People v.

[From petitioners complaint-affidavits], it is very clear that the late Alfredo

Montelibano was the one who talked with Roberto Benedicto, preparatory to the signing of
the lease-agreement. As the complainants did not identify exactly which constitute the
deceitful act (or the intimidation) which could have induced the Lopezes into accepting the
lease agreement, in most probability, the occurrences which vitiated their consent happened
during this preliminary discussion. Noticeably however, it is not Alfredo Montelibano, the one
who supposedly talked with Benedicto, who is testifying on the alleged veiled threat or
deceits, if there are. Precisely, because he is already dead.

Corollarily, the claim for civil liability survives notwithstanding the death of 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:

x x x [I]t is submitted that the Lopezes can not now testify on something which are
not derived from their own personal perception. The bottomline is that what they are now
trying to adduce, pertaining to the alleged deceits [or intimidation] attending the negotiation
of the lease agreement are purely hearsay. This is a matter which only Alfredo Montelibano
could testify competently.[9]

The Ombudsman saw no need to discuss the defenses of prescription and immunity from suit raised by the
respondents given his dismissal of the complaint-affidavits on the merits. However, in a subsequent Order denying
petitioners Motion for Reconsideration of the Joint Resolution, the Ombudsman lifted the Office of the Chief Legal
Counsels ratiocination for dismissing the complaint-affidavits, thus:

Death of an 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 directlyarising from and based solely on the offense committed, i.e.,
civil liability ex delicto in senso strictiore.



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 [15] as amended. The 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

Incidentally, RPN has been identified as among the corporation in which respondent
Benedicto has substantial interests. In fact, it was one of the subject matters of the
Compromise Agreement reached by the government and respondent Benedicto in
Sandiganbayan Civil Case no. 34.

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 provisions of Article 1155 of the
Civil Code, that should thereby avoid any apprehension on a possible [de]privation of right by

In that Compromise Agreement, for and in consideration of respondent Benedictos

cession of equities, and assignment of his rights and interest in corporations therein listed,
among them RPN, the government extended absolute immunity to Benedicto, including

Applying the foregoing rules, ABS-CBNs insistence that the case at bench survives because the civil liability of
the respondents subsists is stripped of merit.

To begin with, there is no criminal case as yet against the respondents. The Ombudsman did not find
probable cause to prosecute respondents for various felonies in the RPC. As such, the rule that a civil action is
deemed instituted along with the criminal action unless the offended party: (a) waives the civil action, (b) reserves the
right to institute it separately, or (c) institutes the civil action prior to the criminal action, [16] is not applicable.
In any event, consistent with People v. Bayotas,[17] the death of the accused necessarily calls for the dismissal of
the criminal case against him, regardless of the institution of the civil case with it. The civil action which survives the
death of the accused must hinge on other sources of obligation provided in Article 1157 of the Civil Code. In such a
case, a surviving civil action against the accused founded on other sources of obligation must be prosecuted in a
separate civil action. In other words, civil liability based solely on the criminal action is extinguished, and a different
civil action cannot be continued and prosecuted in the same criminal action.
Significantly, this Court in Benedicto v. Court of Appeals,[18] taking cognizance of respondent Benedictos
death on May 15, 2000, has ordered that the latter be dropped as a party, and declared extinguished any criminal as
well as civil liability ex delicto that might be attributable to him in Criminal Cases Nos. 91-101879 to 91-101883, 91101884 to 101892, and 92-101959 to 92-101969 pending before the Regional Trial Court of Manila.
Lastly, we note that petitioners appear to have already followed our ruling in People v. Bayotas[19] by filing
a separate civil action to enforce a claim against the estate of respondent Benedicto. [20] The claim against the estate of
Benedicto is based on contractthe June 8, 1973letter- agreementin consonance with Section 5, [21] Rule 86 of the
Rules of Court. Plainly, the dropping of respondents Benedicto and Tan as parties herein is in order.
We now come to the core issue of whether the Ombudsman committed grave abuse of discretion in
dismissing petitioners complaint against the respondents. We rule in the negative and, accordingly, dismiss the
We cannot overemphasize the fact that the Ombudsman is a constitutional officer duty bound to
investigate on its own, or on complaint by any person, any act or omission of any public official, employee, office or
agency, when such act or omission appears to be illegal, unjust, improper, or inefficient. [22] The raison d etre for its
creation and endowment of broad investigative authority is to insulate it from the long tentacles of officialdom that
are able to penetrate judges and fiscals offices, and others involved in the prosecution of erring public officials, and
through the execution of official pressure and influence, quash, delay, or dismiss investigations into malfeasances
and misfeasances committed by public officers.[23]
In Presidential Commission on Good Government (PCGG) v. Desierto,[24] we dwelt on the powers, functions
and duties of the Ombudsman, to wit:
The prosecution of offenses committed by public officers is vested primarily in the
Office of the Ombudsman. It bears emphasis that the Office has been given a wide latitude of
investigatory and prosecutory powers under the Constitution and Republic Act No. 6770 (The
Ombudsman Act of 1989). This discretion is all but free from legislative, executive or judicial
intervention to ensure that the Office is insulated from any outside pressure and improper
Indeed, the Ombudsman is empowered to determine whether there exist reasonable
grounds to believe that a crime has been committed and that the accused is probably guilty
thereof and, thereafter, to file the corresponding information with the appropriate courts. The
Ombudsman may thus conduct an investigation if the complaint filed is found to be in the
proper form and substance. Conversely, the Ombudsman may also dismiss the complaint
should it be found insufficient in form or substance.
Unless there are good and compelling reasons to do so, the Court will refrain from
interfering with the exercise of the Ombudsmans powers, and respect the initiative and
independence inherent in the latter who, beholden to no one, acts as the champion of the
people and the preserver of the integrity of public service.
The pragmatic basis for the general rule was explained in Ocampo v. Ombudsman:
The rule is based not only upon respect for the investigatory
and prosecutory powers granted by the Constitution to the Office of
the Ombudsman but upon practicality as well. Otherwise, the
functions of the courts will be grievously hampered by innumerable
petitions assailing the dismissal of investigatory proceedings
conducted by the Office of the Ombudsman with regard to

complaints filed before it, in much the same way that the courts
would be extremely swamped if they would be compelled to review
the exercise of discretion on the part of the fiscals or prosecuting
attorneys each time they decide to file an information in court or
dismiss a complaint by private complainants.[25]

From the foregoing, it is crystal clear that we do not interfere with the Ombudsmans exercise of his
investigatory and prosecutory powers vested by the Constitution. In short, we do not review the Ombudsmans
exercise of discretion in prosecuting or dismissing a complaint except when the exercise thereof is tainted with grave
abuse of discretion.
By grave abuse of discretion is meant such capricious and whimsical exercise of judgment tantamount to lack
of jurisdiction. The abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a
virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is
exercised in an arbitrary and despotic manner by reason of passion or hostility. [26] In this regard, petitioners utterly
failed to demonstrate the Ombudsmans abuse, much less grave abuse, of discretion.
Apart from a blanket and general charge that remaining respondents herein, Gonzales and Garcia, are officers
of KBS/RPN and/or alter egos of Benedicto, petitioners complaint-affidavits are bereft of sufficient ground to
engender a well-founded belief that crimes have been committed and the respondents, namely, Gonzales and Garcia,
are probably guilty thereof and should be held for trial. [27] Certainly, the Ombudsman did not commit grave abuse of
discretion in dismissing petitioners complaint-affidavits.
From the entirety of the records, it is beyond cavil that petitioners seek to attach criminal liability to an
unequivocally civil undertaking gone awry. As pointed out by the Ombudsman, although the petitioners may not have
realized their expectations in entering into the June 8, 1973letter-agreement, such does not render their consent
thereto defective.
The execution and validity of this letter-agreement is connected with respondents culpability for the felonies
charged as these include the element of whether they had juridical possession of the ABS-CBN properties.
Essentially, petitioners claim they did not freely give their consent to the letter-agreement. However, on more than one
occasion, petitioners have invoked the letter-agreements provisions, and made claims thereunder.
First, petitioners met and discussed with respondents the fixing of the rental rate for the ABS-CBN studios
in Quezon City as provided in paragraph 2 of the letter-lease agreement. Next, petitioners counsel wrote a demand
letter to respondents for the payment of rentals for the latters occupation and use of ABS-CBN properties pursuant to
the letter-agreement. Last and most importantly, petitioners have made a claim against the estate of Benedicto based
on the same June 8, 1973 letter-agreement.
This action of petitioners clearly evinces their ratification of the letter-agreement. As previously discussed, the
civil liability of respondents Benedicto and Tan hinging on the charged criminal acts herein was extinguished upon
their death. But other civil liabilities founded on other sources of obligations under Article 1157 of the Civil Code may
still be prosecuted either against the estate of the deceased if based on contract, [28] or against the executors and
administrators of the deceaseds estate if based on quasi-delict.[29]
As petitioners have ratified the letter-agreement, even after the lifting of martial law and the toppling of
the Marcos government, and advanced the validity of the letter-agreement in their claim against the estate of
Benedicto, they cannot, in the same breath, aver that respondents actuations in the execution of the letter-agreement
were criminal in nature, or that the letter-agreement was more ostensible than real and to insist on the prosecution of
respondents for felonies supposedly committed in connection with this ubiquitous letter-agreement.[30]
In fine, the Ombudsman did not abuse his discretion in determining that the allegations of petitioners
against respondents are civil in nature, bereft of criminal character. Perforce, he was correct in dismissing petitioners
WHEREFORE, premises considered, the petition is hereby DISMISSED. Roberto S. Benedicto and
Salvador Tan are dropped as private respondents without prejudice to the filing of separate civil actions against their
respective estates. The assailed Joint Resolution and Order of the Ombudsman in OMB-0-94-1109 are AFFIRMED.
G.R. No. L-24033
February 22, 1968

PHOENIX ASSURANCE CO., LTD., plaintiff-appellant,

On March 25, 1963, the United States Lines, through the Columbian Rope Company, by letter informed the
Davao Parts and Service, Inc. that it was filing a claim for the undelivered crates with the Manila Port Service. And

UNITED STATES LINES, defendant-appellee.

Quasha, Asperilla, Blanco & Associates for plaintiff-appellant.

Enriquez D. Perez for defendant-appellee.

true to its word, it filed on March 30, 1963 a formal claim with the Manila Port Service for the value of Crates Nos.
3648 and 3649, but the latter declined to honor the same.

On June 26, 1963, United States Lines, through Columbian Rope Company, its Davao agent, informed the
Davao Parts and Service, Inc., inter alia, that the Manila Port Service had not yet settled its claim, and that the oneyear period provided by law within which to bring action against the Manila Port Service for the two crates (Nos. 3648


The facts antecedent to this appeal from a decision dated October 31, 1964 of the Court of First Instance of
Manila, are as follows:

and 3649) would expire on July 28, 1963.

Phoenix Assurance Co., Ltd., through Ker & Company Ltd., its agent in the Philippines, wrote on July 24, 1963
the United States Lines expressing its appreciation to the latter for taking action against the Manila Port Service. In
the same letter it requested for an extension of time to file suit against the United States Lines (the prescriptive period

On June 29, 1962, General Motors shipped and consigned on a CIF basis to Davao Parts and Service, Inc. at
Davao City from New York aboard the United States Lines' vessel SS "Pioneer Moor" a cargo of truck spare parts in 25
cases and 4 crates (2 pieces unboxed), for which United States Lines issues a short form bill of lading No. T-1 (Annex

for doing so being set to expire on July 28, 1963), explaining that it could not file suit against any entity (including
the Manila Port Service) except the United States Lines with whom its subrogee the Davao Parts and Service, Inc.,
was in contract.

"A" and Exh. "1"), and which shipment was insured against loss and damage with Phoenix Assurance Co., Ltd.
The short form bill of lading No. T-1 indicated Manila as the port of discharge and Davao City as the place where the

No reply having been received by it from the United States Lines, the Phoenix Assurance Co., Ltd. on July 29,

goods were to be transshipped, and expressly incorporated by reference the provisions contained in the

1963 filed a suit praying that judgment be rendered against the former for the sum of P552.12, with interest at the

carrier's regular long form bill of lading (Annex "B" and Exh. "2").

legal rate, plus attorney's fees and expenses of litigation.

The SS "Pioneer Moor" on July 28, 1962 discharged at Manila to the custody of the Manila Port Service which
was then the operator of the arrastre service at the Port of Manila, the above described cargo, complete but with the

On August 16, 1963, the United States Lines filed its answer with counterclaim, 2 while Phoenix Assurance Co.,
Ltd. filed its answer to said counterclaim on August 26, 1963.

exception of two crates, namely, Crates Nos. 3139 and 3148 valued at P1,498.25.
On March 9, 1964, the parties submitted a Partial Stipulation of Facts.

On July 30, 1962, the Luzon Brokerage Corporation, Customs broker hired by the United States Lines, filed in
behalf of the latter a provisional claim against the Manila Port Service for short landed, short-delivered and/or landed
in bad order cargo ex-United States Lines' vessel.

On August 30, 1962, the afore-described cargo, with the exception of Crates Nos. 3139 and 3148 which were
not discharged at the Manila Port, and Crates Nos. 3648 and 3649 which were discharged at the Manila Port but were

After trial, the lower court on October 31, 1964 rendered a decision dismissing plaintiff's complaint. 4

Thus this appeal, raising the sole issue of whether or not the lower court erred in dismissing the complaint and
in exonerating defendant-appellee from liability for the value of the two undelivered crates Nos. 3648 and 3649.

lost in the custody of the Manila Port Service, was transshipped by United States Lines to Davao through a vessel of
its Davao agent, Columbian Rope Company, and duly received in good order by the Davao Parts and Service, Inc.

It must be stated at the outset that a bill of lading operates both as a receipt and as a contract. It is a receipt
for the goods shipped and a contract to transport and deliver the same as therein stipulated. As a receipt, it recites

Davao Parts and Service, Inc. filed on December 26, 1962 a formal claim with the United States Lines through
the latter's agent, Columbian Rope Company, for the value of Crates Nos. 3139, 3148, 3648 and 3649 in the total
sum of P2,010.37.

The United States Lines, after proper verification, paid Davao Parts and Service, Inc. the sum of P1,458.25,
representing the value of Crates Nos. 3139 and 3148, when it was discovered that these two crates had been
overlanded in Honolulu, but refused to pay for the value of Crates Nos. 3648 and 3649 for the reason that these

the date and place of shipment, describes the goods as to quantity, weight, dimensions, identification marks and
condition, quality, and value. As a contract, it names the contracting parties, which include the consignee, fixes the
route, destination, and freight rate or charges, and stipulates the rights and obligations assumed by the parties. 5

In this jurisdiction, it is a statutory and decisional rule of law that a contract is the law between the
contracting parties, 6 and where there is nothing in it which is contrary to law, morals, good customs, public policy, or
public order, the validity of the contract must be sustained. 7

crates had been lost while in the custody of the Manila Port Service.
The Bill of Lading (short form) No. T-1 dated June 29, 1962 (Annex "A" and Exh. 1) provides under Section 1
The two crates (Nos. 3139 and 3148) which were overlanded in Honolulu and for which United States Lines
paid Davao Parts and Service, Inc. the sum of P1,458.25, were later recovered and returned to Davao Parts and
Service, Inc. and the latter refunded United States Lines for the sum it paid.

thereof (Exh. that, "It is agreed that the receipt, custody carriage, delivery and transshipping of the goods are subject
to the norms appearing on the face and back hereof and also to the terms contained in the carrier's regular long form,
bill of lading, used in this service, including any clauses presently being stamped or endorsed thereon which shall be
deemed to be incorporated in this bill of lading, which shall govern the relations whatsoever they may be between
shipper, consignee, carrier and ship in every contingency, wheresoever and whensoever occurring and whether the

In view of United States Lines' refusal to pay for the two crates (Nos. 3648 and 3649) which were lost while in

carrier be acting as such or as bailee, . . . . (Emphasis supplied.)

the custody of the Manila Port Service, Ker & Company, Ltd., agent of Phoenix Assurance Co., Ltd., in the Philippines,
and insurer of Davao Parts and Service, Inc., paid to the latter the value of said crates in the sum of P552.12.

On the other hand, the regular long form Bill of Lading (Annex "B" and Exh. "2") provides, inter alia,

Contrary to appellant's stand, the appellee did not undertake to carry and deliver safely the cargo to the

The carrier shall not be liable in any capacity whatsoever for any loss or damage to the goods while
the goods are not in its actual custody. (Par. 2, last subpar. Emphasis supplied.)

consignee in Davao City. The short form Bill of Lading (Annex "A" and Exh. "1") states in no uncertain terms that the
port of discharge of the cargo is Manila, but that the same was to be transshipped beyond the port of discharge to

The carrier or master, in the exercise of its or his discretion and altho' transshipment or forwarding
of the goods may have been contemplated or provided for herein, may at port of discharge or any other
place whatsoever transship or forward the goods or any part thereof by any means at the risk and
expense of the goods and at any time, whether before or after loading on the ship named and by any
route, whether within or outside the scope of the voyage or beyond the port of discharge or destination of
the goods and without notice to the shipper or consignee. The carrier or master may delay such
transshipping or forwarding for any reason, including but not limited to awaiting a vessel or other means

Davao City. Pursuant to the terms of the long form Bill of Lading (Annex "B" and Exh. "2"), appellee's responsibility as
a common carrier ceased the moment the goods were unloaded in Manila; and in the matter of transshipment,
appellee acted merely as an agent of the shipper and consignee. Contrary likewise to appellant's contention, the cargo
was not transshipped with the use of transportation used or operated by appellee. It is true that the vessel used for
transshipment is owned and operated by appellee's Davao agent, the Columbian Rope Company, but there is no proof
that said vessel is owned or operated by appellee. The vessels of appellee's agent are being erroneously presumed by
appellant to be owned and operated by appellee.

of transportation whether by the carrier or others.

Appellant argues that the provisions of the Bill of Lading exculpating the appellee from liability for cargo losses,
The carrier or master in making arrangements with any person for or in connection with all
transshipping or forwarding of the goods or the use of any means of transportation not used or operated by
the carrier shall be considered solely the agent of the shipper and consignee and without any other
responsibility whatsoever or for the cost thereof . The receipt, custody, carriage and delivery of the goods
by any such person or on carrier and all transshipping and forwarding shall be subject to all the
provisions whatsoever of such person's or on carrier's form of bill of lading or agreement then in use,
whether or not issued and even though such provisions may be less favorable to the shipper or consignee
in any respect than the provisions of this bill of lading. The shipper and consignee authorize the carrier
or master to arrange with any such person or on-carrier that the lowest valuation or limitation of liability
contained in the bill of lading or other agreement of such person or on-carrier shall apply.

All responsibility of the carrier in any capacity shall altogether cease and the goods shall be deemed
delivered by it and this contract of carriage shall be deemed fully performed on actual or constructive
delivery of the goods to itself as such agent of the shipper and consignee or to any such person or on carrier
at port of discharge from ship or elsewhere in case of an earlier transshipment.

do not apply where full cargo freight is paid up to and beyond the point of stipulated discharge, and here defendantappellee agreed to absorb all costs of forwarding and transshipment freight having been prepaid up to Davao City.
But the receipt of full cargo freight up to Davao City cannot render inoperative the provisions of the Bill of Lading
relied upon by appellee inasmuch as such a situation is not provided therein as an exception. In fact, one searches
the Bills of Lading (short and long forms) in vain for such an exception. Besides, it is for the convenience of both
parties that full freight up to Davao City had been prepaid, otherwise there would have been need to make further
arrangements regarding the transshipment of the cargo to Davao City. After all, the long form Bill of Lading provides
that, "The shipper and consignee shall be liable to this carrier for and shall indemnify it against all expense of
forwarding and transshipping, including any increase in or additional freight or other charge whatsoever." (Annex "B"
and Exh. "2", par. 6, subpar. 4)

The filing of a claim by defendant-appellee with the Manila Port Service for the value of the losses cannot be
considered as an indication that it is answerable for cargo losses up to Davao City. On the contrary, it is a convincing
proof that said party was not remiss in its duties as agent of the consignee. That appellee captioned its claim against
the Manila Port Service as "SS 'Pioneer Moor' Voy. 25, Reb. 1067 New York/Davao via Manila B/L T-1 31 Packages
Truck Spare Parts Cons: Davao Parts and Service," likewise, is no proof that appellee knowingly assumed liability for
cargo losses up to Davao City. It merely showed that the goods would have to be, as indeed they were, first unloaded

The shipper and consignee shall be liable to this carrier for and shall indemnify it against all

in Manila and thereafter transshipped to Davao City.

expense of forwarding and transshipping, including any increase in or additional freight or other charges

Through the short form Bill of Lading (Annex "A" and Exh. "1"), incorporating by reference the terms of the
regular long form bill of lading (Annex "B" and Exh. "2"), the United States Lines acknowledged the receipt of the cargo

Pending or during forwarding or transshipping this carrier or the master may store the goods

of truck spare parts that it carried, and stated the conditions under which it was to carry the cargo, the place where

ashore or afloat solely as agent of the shipper and at the risk and expense of the goods and this carrier

it was to be transshipped, the entity to which delivery is to be made, and the rate of compensation for the carriage.

shall not be responsible for the acts, neglect, delay or failure to act of anyone to whom the goods are

This it delivered to the Davao Parts and Service, Inc. as evidence of a contract between them. By receiving the bill of

entrusted or delivered for storage, handling, or any service incidental thereto.

lading, Davao Parts and Service, Inc. assented to the terms of the consignment contained therein, and became bound
thereby, so far as the conditions named are reasonable in the eyes of the law. Since either appellant nor appellee

In case the carrier issues a bill of lading covering transportation by a local or other carrier prior to
the goods being delivered to and put into the physical custody of the carrier, it shall not be under any
responsibility or liability whatsoever for any loss or damage to the goods occurring prior to or until the

alleges that any provision therein is contrary to law, morals, good customs, public policy, or public order, and
indeed We found none the validity of the Bill of Lading must be sustained and the provisions therein properly
applied to resolve the conflict between the parties.

actual receipt or custody of the goods by it at the port or place of transportation to such port or place
WHEREFORE, the decision appealed from is hereby affirmed, with costs against the appellant. So ordered

where the goods are put in its physical custody, it acts solely as the agent of the shipper. (Par. 16,
emphasis supplied.)

G.R. No. L-36902 January 30, 1982

It is admitted by both parties that the crates subject matter of this action were lost while in the possession and
custody of the Manila Port Service. Since the long form of Bill of Lading (Annex "B" and Exh. "2") provides that "The
carrier shall not be liable in any capacity whatsoever for any loss or damage to the goods while the goods are not in
its actual custody," appellee cannot be held responsible for the loss of said crates. For as correctly observed by the
lower court, it is hardly fair to make appellee accountable for a loss not due to its acts or omissions or over which it
had no control.

LUIS PICHEL, petitioner,



xxx xxx xxx

This is a petition to review on certiorari the decision of the Court of First Instance of Basilan City dated January 5,

Considering the foregoing, two issues appear posed by the complaint and the answer which

1973 in Civil Case No. 820 entitled "Prudencio Alonzo, plaintiff, vs. Luis Pichel, defendant."

must needs be tested in the crucible of a trial on the merits, and they are:

This case originated in the lower Court as an action for the annulment of a "Deed of Sale" dated August 14, 1968 and

First. Whether or nor defendant actually paid to plaintiff the full sum of P4,200.00 upon

executed by Prudencio Alonzo, as vendor, in favor of Luis Pichel, as vendee, involving property awarded to the former

execution of the deed of sale.

by the Philippine Government under Republic Act No. 477. Pertinent portions of the document sued upon read as

Second. Is the deed of sale, Exhibit 'A', the prohibited encumbrance contemplated in
Section 8 of Republic Act No. 477?

That the VENDOR for and in consideration of the sum of FOUR THOUSAND TWO HUNDRED
PESOS (P4,200.00), Philippine Currency, in hand paid by the VENDEE to the entire
satisfaction of the VENDOR, the VENDOR hereby sells transfers, and conveys, by way of
absolute sale, all the coconut fruits of his coconut land, designated as Lot No. 21 Subdivision Plan No. Psd- 32465, situated at Balactasan Plantation, Lamitan, Basilan City,

That for the herein sale of the coconut fruits are for all the fruits on the aforementioned
parcel of land presently found therein as well as for future fruits to be produced on the said
parcel of land during the years period; which shag commence to run as of SEPTEMBER

Anent the first issue, counsel for plaintiff Alonzo subsequently 'stipulated and agreed that his client ... admits fun
payment thereof by defendant.

The remaining issue being one of law, the Court below considered the case submitted

for summary judgment on the basis of the pleadings of the parties, and the admission of facts and documentary
evidence presented at the pre-trial conference.

The lower court rendered its decision now under review, holding that although the agreement in question is
denominated by the parties as a deed of sale of fruits of the coconut trees found in the vendor's land, it actually is, for
all legal intents and purposes, a contract of lease of the land itself. According to the Court:

15,1968; up to JANUARY 1, 1976 (sic);

... the sale aforestated has given defendant complete control and enjoyment of the
That the delivery of the subject matter of the Deed of Sale shall be from time to time and at
the expense of the VENDEE who shall do the harvesting and gathering of the fruits;

improvements of the land. That the contract is consensual; that its purpose is to allow the
enjoyment or use of a thing; that it is onerous because rent or price certain is stipulated; and
that the enjoyment or use of the thing certain is stipulated to be for a certain and definite
period of time, are characteristics which admit of no other conclusion. ... The provisions of

That the Vendor's right, title, interest and participation herein conveyed is of his own

the contract itself and its characteristics govern its nature.

exclusive and absolute property, free from any liens and encumbrances and he warrants to
the Vendee good title thereto and to defend the same against any and all claims of all persons

After the pre-trial conference, the Court a quo issued an Order dated November 9, 1972 which in part read thus:

The Court, therefore, concluded that the deed of sale in question is an encumbrance prohibited by Republic Act No.
477 which provides thus:

Sec. 8. Except in favor of the Government or any of its branches, units, or institutions, land
acquired under the provisions of this Act or any permanent improvements thereon shall not

The following facts are admitted by the parties:

be thereon and for a term of ten years from and after the date of issuance of the certificate of
title, nor shall they become liable to the satisfaction of any debt contracted prior to the

Plaintiff Prudencio Alonzo was awarded by the Government that parcel of land designated as

expiration of such period.

Lot No. 21 of Subdivision Plan Psd 32465 of Balactasan, Lamitan, Basilan City in accordance
with Republic Act No. 477. The award was cancelled by the Board of Liquidators on January

Any occupant or applicant of lands under this Act who transfers whatever rights he has

27, 1965 on the ground that, previous thereto, plaintiff was proved to have alienated the land

acquired on said lands and/or on the improvements thereon before the date of the award or

to another, in violation of law. In 197 2, plaintiff's rights to the land were reinstated.

signature of the contract of sale, shall not be entitled to apply for another piece of
agricultural land or urban, homesite or residential lot, as the case may be, from the National

On August 14, 1968, plaintiff and his wife sold to defendant an the fruits of the coconut trees

Abaca and Other Fibers Corporation; and such transfer shall be considered null and void.

which may be harvested in the land in question for the period, September 15, 1968 to
January 1, 1976, in consideration of P4,200.00. Even as of the date of sale, however, the

The dispositive portion of the lower Court's decision states:

land was still under lease to one, Ramon Sua, and it was the agreement that part of the
consideration of the sale, in the sum of P3,650.00, was to be paid by defendant directly to
Ramon Sua so as to release the land from the clutches of the latter. Pending said payment
plaintiff refused to snow the defendant to make any harvest.

WHEREFORE, it is the judgment of this Court that the deed of sale, Exhibit 'A', should be, as
it is, hereby declared nun and void; that plaintiff be, as he is, ordered to pay back to
defendant the consideration of the sale in the sum of P4,200.00 the same to bear legal
interest from the date of the filing of the complaint until paid; that defendant shall pay to the

In July 1972, defendant for the first time since the execution of the deed of sale in his favor,
caused the harvest of the fruit of the coconut trees in the land.

plaintiff the sum of P500.00 as attorney's fees.

Costs against the defendant.

parties. The terms of the agreement are clear and unequivocal, hence the literal and plain meaning thereof should be
observed. Such is the mandate of the Civil Code of the Philippines which provides that:

Before going into the issues raised by the instant Petition, the matter of whether, under the admitted facts of this
case, the respondent had the right or authority to execute the "Deed of Sale" in 1968, his award over Lot No. 21

Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of the

having been cancelled previously by the Board of Liquidators on January 27, 1965, must be clarified. The case in

contracting parties, the literal meaning of its stipulation shall control ... .

point is Ras vs. Sua 7 wherein it was categorically stated by this Court that a cancellation of an award granted
pursuant to the provisions of Republic Act No. 477 does not automatically divest the awardee of his rights to the land.
Such cancellation does not result in the immediate reversion of the property subject of the award, to the State.
Speaking through Mr. Justice J.B.L. Reyes, this Court ruled that "until and unless an appropriate proceeding for
reversion is instituted by the State, and its reacquisition of the ownership and possession of the land decreed by a

Pursuant to the afore-quoted legal provision, the first and fundamental duty of the courts is the application of the
contract according to its express terms, interpretation being resorted to only when such literal application is

competent court, the grantee cannot be said to have been divested of whatever right that he may have over the same

Simply and directly stated, the "Deed of Sale dated August 14, 1968 is precisely what it purports to be. It is a
document evidencing the agreement of herein parties for the sale of coconut fruits of Lot No. 21, and not for

There is nothing in the record to show that at any time after the supposed cancellation of herein respondent's award
on January 27, 1965, reversion proceedings against Lot No. 21 were instituted by the State. Instead, the admitted fact
is that the award was reinstated in 1972. Applying the doctrine announced in the above-cited Ras case, therefore,
herein respondent is not deemed to have lost any of his rights as grantee of Lot No. 21 under Republic Act No. 477
during the period material to the case at bar, i.e., from the cancellation of the award in 1965 to its reinstatement in

thelease of the land itself as found by the lower Court. In clear and express terms, the document defines the object of
the contract thus: "the herein sale of the coconut fruits are for an the fruits on the aforementioned parcel of land
during the years ...(from) SEPTEMBER 15, 1968; up to JANUARY 1, 1976." Moreover, as petitioner correctly asserts,
the document in question expresses a valid contract of sale. It has the essential elements of a contract of sale as
defined under Article 1485 of the New Civil Code which provides thus:

1972. Within said period, respondent could exercise all the rights pertaining to a grantee with respect to Lot No. 21.
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer
This brings Us to the issues raised by the instant Petition. In his Brief, petitioner contends that the lower Court erred:

1. In resorting to construction and interpretation of the deed of sale in question where the
terms thereof are clear and unambiguous and leave no doubt as to the intention of the

the ownership of and to deliver a determinate thing, and the other to pay therefor a price
certain in money or its equivalent.

A contract of sale may be absolute or conditional.

The subject matter of the contract of sale in question are the fruits of the coconut trees on the land during the years
2. In declaring granting without admitting that an interpretation is necessary the deed
of sale in question to be a contract of lease over the land itself where the respondent himself
waived and abandoned his claim that said deed did not express the true agreement of the
parties, and on the contrary, respondent admitted at the pre-trial that his agreement with
petitioner was one of sale of the fruits of the coconut trees on the land;

3. In deciding a question which was not in issue when it declared the deed of sale in question
to be a contract of lease over Lot 21;

from September 15, 1968 up to January 1, 1976, which subject matter is a determinate thing. Under Article 1461 of
the New Civil Code, things having a potential existence may be the object of the contract of sale. And inSibal vs.
Valdez, 50 Phil. 512, pending crops which have potential existence may be the subject matter of the sale. Here, the
Supreme Court, citing Mechem on Sales and American cases said which have potential existence may be the subject
matter of sale. Here, the Supreme Court, citing Mechem on Sales and American cases said:

Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in
existence, is reasonably certain to come into existence as the natural increment or usual
incident of something already in existence, and then belonging to the vendor, and the title
will vest in the buyer the moment the thing comes into existence. (Emerson vs. European

4. In declaring furthermore the deed of sale in question to be a contract of lease over the land

Railway Co., 67 Me., 387; Cutting vs. Packers Exchange, 21 Am. St. Rep. 63) Things of this

itself on the basis of facts which were not proved in evidence;

nature are said to have a potential existence. A man may sell property of which he is
potentially and not actually possess. He may make a valid sale of the wine that a vineyard is

5. In not holding that the deed of sale, Exhibit "A" and "2", expresses a valid contract of sale;

expected to produce; or the grain a field may grow in a given time; or the milk a cow may
yield during the coming year; or the wool that shall thereafter grow upon sheep; or what may
be taken at the next case of a fisherman's net; or fruits to grow; or young animals not yet in

6. In not deciding squarely and to the point the issue as to whether or not the deed of sale in

existence; or the goodwill of a trade and the like. The thing sold, however, must be specific

question is an encumbrance on the land and its improvements prohibited by Section 8 of

and Identified. They must be also owned at the time by the vendor. (Hull vs. Hull 48 Conn.

Republic Act 477; and

250 (40 Am. Rep., 165) (pp. 522-523).

7. In awarding respondent attorney's fees even granting, without admitting, that the deed of

We do not agree with the trial court that the contract executed by and between the parties is "actually a contract of

sale in question is violative of Section 8 of Republic Act 477.

lease of the land and the coconut trees there." (CFI Decision, p. 62, Records). The Court's holding that the contract in
question fits the definition of a lease of things wherein one of the parties binds himself to give to another the

The first five assigned errors are interrelated, hence, We shall consider them together. To begin with, We agree with
petitioner that construction or interpretation of the document in question is not called for. A perusal of the deed fails
to disclose any ambiguity or obscurity in its provisions, nor is there doubt as to the real intention of the contracting

enjoyment or use of a thing for a price certain and for a period which may be definite or indefinite (Art. 1643, Civil
Code of the Philippines) is erroneous. The essential difference between a contract of sale and a lease of things is that
the delivery of the thing sold transfers ownership, while in lease no such transfer of ownership results as the rights of
the lessee are limited to the use and enjoyment of the thing leased.

In Rodriguez vs. Borromeo, 43 Phil. 479, 490, the Supreme Court held:

time, the Government is assured of payment on the annual installments on the land. We agree with herein petitioner
that it could not have been the intention of the legislature to prohibit the grantee from selling the natural and

Since according to article 1543 of the same Code the contract of lease is defined as the giving
or the concession of the enjoyment or use of a thing for a specified time and fixed price, and

industrial fruits of his land, for otherwise, it would lead to an absurd situation wherein the grantee would not be able
to receive and enjoy the fruits of the property in the real and complete sense.

since such contract is a form of enjoyment of the property, it is evident that it must be
regarded as one of the means of enjoyment referred to in said article 398, inasmuch as the

Respondent through counsel, in his Answer to the Petition contends that even granting arguendo that he executed a

terms enjoyment, use, and benefit involve the same and analogous meaning relative to the

deed of sale of the coconut fruits, he has the "privilege to change his mind and claim it as (an) implied lease," and he

general utility of which a given thing is capable. (104 Jurisprudencia Civil, 443)

has the "legitimate right" to file an action for annulment "which no law can stop." He claims it is his "sole
construction of the meaning of the transaction that should prevail and not petitioner. (sic).

In concluding that the possession and enjoyment of the coconut trees can therefore be said to be the possession and
enjoyment of the land itself because the defendant-lessee in order to enjoy his right under the contract, he actually
takes possession of the land, at least during harvest time, gather all of the fruits of the coconut trees in the land, and
gain exclusive use thereof without the interference or intervention of the plaintiff-lessor such that said plaintiff-lessor


Respondent's counsel

either misapplies the law or is trying too hard and going too far to defend his client's hopeless cause. Suffice it to say
that respondent-grantee, after having received the consideration for the sale of his coconut fruits, cannot be allowed
to impugn the validity of the contracts he entered into, to the prejudice of petitioner who contracted in good faith and
for a consideration.

is excluded in fact from the land during the period aforesaid, the trial court erred. The contract was clearly a "sale of
the coconut fruits." The vendor sold, transferred and conveyed "by way of absolute sale, all the coconut fruits of his

The issue raised by the seventh assignment of error as to the propriety of the award of attorney's fees made by the

land," thereby divesting himself of all ownership or dominion over the fruits during the seven-year period. The

lower Court need not be passed upon, such award having been apparently based on the erroneous finding and

possession and enjoyment of the coconut trees cannot be said to be the possession and enjoyment of the land itself

conclusion that the contract at bar is one of lease. We shall limit Ourselves to the question of whether or not in

because these rights are distinct and separate from each other, the first pertaining to the accessory or improvements

accordance with Our ruling in this case, respondent is entitled to an award of attorney's fees. The Civil Code provides

(coconut trees) while the second, to the principal (the land). A transfer of the accessory or improvement is not a


transfer of the principal. It is the other way around, the accessory follows the principal. Hence, the sale of the nuts
cannot be interpreted nor construed to be a lease of the trees, much less extended further to include the lease of the
land itself.

The real and pivotal issue of this case which is taken up in petitioner's sixth assignment of error and as already
stated above, refers to the validity of the "Deed of Sale", as such contract of sale, vis-a-vis the provisions of Sec. 8,

Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than
judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;

R.A. No. 477. The lower Court did not rule on this question, having reached the conclusion that the contract at bar
was one of lease. It was from the context of a lease contract that the Court below determined the applicability of Sec.

(2) When the defendant's act or omission has compelled the plaintiff to litigate with third

8, R.A. No. 477, to the instant case.

persons or to incur expenses to protect his interest;

Resolving now this principal issue, We find after a close and careful examination of the terms of the first paragraph of

(3) In criminal cases of malicious prosecution against the plaintiff;

Section 8 hereinabove quoted, that the grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating
or disposing of the natural and/or industrial fruits of the land awarded to him. What the law expressly disallows is
the encumbrance or alienation of the land itself or any of the permanent improvements thereon. Permanent

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

improvements on a parcel of land are things incorporated or attached to the property in a fixed manner, naturally or
artificially. They include whatever is built, planted or sown on the land which is characterized by fixity, immutability

(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the

or immovability. Houses, buildings, machinery, animal houses, trees and plants would fall under the category of

plaintiff's plainly valid, just and demandable claim;

permanent improvements, the alienation or encumbrance of which is prohibited by R.A. No. 477. While coconut trees
are permanent improvements of a land, their nuts are natural or industrial fruits which are meant to be gathered or
severed from the trees, to be used, enjoyed, sold or otherwise disposed of by the owner of the land. Herein

(6) In actions for legal support;

respondents, as the grantee of Lot No. 21 from the Government, had the right and prerogative to sell the coconut
fruits of the trees growing on the property.

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;

By virtue of R.A. No. 477, bona fide occupants, veterans, members of guerilla organizations and other qualified

(8) In actions for indemnity under workmen's compensation and employer's liability laws;

persons were given the opportunity to acquire government lands by purchase, taking into account their limited
means. It was intended for these persons to make good and productive use of the lands awarded to them, not only to
enable them to improve their standard of living, but likewise to help provide for the annual payments to the

(9) In a separate civil action to recover civil liability arising from a crime;

Government of the purchase price of the lots awarded to them. Section 8 was included, as stated by the Court a quo,
to protect the grantees from themselves and the incursions of opportunists who prey on their misery and poverty." It

(10) When at least double judicial costs are awarded;

is there to insure that the grantees themselves benefit from their respective lots, to the exclusion of other persons.
(11) In any other case where the court deems it just and equitable that attorney's fees and
The purpose of the law is not violated when a grantee sells the produce or fruits of his land. On the contrary, the aim

expenses of litigation should be recovered.

of the law is thereby achieved, for the grantee is encouraged and induced to be more industrious and productive, thus
making it possible for him and his family to be economically self-sufficient and to lead a respectable life. At the same

In all cases, the attorney's fees and expenses of litigation must be reasonable.

We find that none of the legal grounds enumerated above exists to justify or warrant the grant of attorney's fees to

Appellants contend that the exemption under section 66 (1) does not apply to appellee because the latter was trying

herein respondent.

business not only with its members but also with the general public. It may be noted that this fact is not ground for
non-exemption from taxes and license fees. What the law imposes and that under another section (Sec. 58) is a

IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby set aside and another one is entered
dismissing the Complaint. Without costs.

restriction to the effect that a cooperative shall not transact business with non-members to exceed that done with
members. There is no proof that this restriction has been violated; and in any case, the law does not provide that the
penalty for such violation is the non-exemption of the cooperative concerned. All that is required for purposes of
exemption is that the cooperative be registered under Republic Act 2023 and that its net assets be not more than
P500,000. On the question of registration, section 4 is clear that every cooperative under the jurisdiction of the


Cooperatives Administration Office existing at the time of the approval of this Act which has been registered under
G.R. No. L-17133

December 31, 1965

U.S.T. COOPERATIVE STORE, petitioner-appellee,

THE CITY OF MANILA and MARCELINO SARMIENTO, as Treasurer of the City of Manila, respondentsappellants.

existing cooperative laws (as is the case of appellee here) shall be deemed to be registered under this Act.

Appellant next argues that since the taxes and license fees in question were voluntarily paid they can no longer be
recovered, as appellee was presumed to know the law concerning its exemption and hence must be considered as
having waived the benefit thereof. That the payment was erroneously made there can be no doubt. The error
consisted in appellee's not knowing of the enactment of Republic Act No. 2023, which although passed in Julie 1957
was published only in the issue of the Official Gazette for December of the same year. The following authorities cited
by appellee appear to us to be of persuasive force:

Herras Law Office for petitioner-appellee.

City Fiscal H. Concepcion, Jr. and Assistant City Fiscal Manuel T. Reyes for respondents-appellants.

A payment of taxes under a mistake of fact has been held not to be voluntary, and is therefore recoverable. (51 Am.
Jur. 1023)


On principle, a recovery should be allowed where money is paid under a mistake of fact although such
mistake of fact may be induced by a mistake of laws, or where there is both a mistake of fact and a

This is an appeal by respondents from the decision of the Court of First Instance of Manila ordering them to refund to

mistake of law. (40 Am. Jur. 846)

appellee the sums it had paid to the City of Manila as municipal taxes and license fees for the period beginning July
1957 up to December 1958. The total amount involved is P12,345.10.

When money is paid to another under the influence of a mistake of fact that on the mistaken
supposition of the existence of a specific fact which would entitle the other to the money and it would

The material facts were stipulated by the parties. Appellee is a duly organized cooperative association registered with

not have been known that the fact making the payment was otherwise, it may be recovered. The ground

the Securities and Exchange Commission on March 18, 1947 in accordance with Commonwealth Act No. 5165 as

upon which the right of recovery rests is that money paid through misapprehension of facts belongs, in

amended. Its net assets never exceeded P500,000 during, the years 1957, 1958 and 1959. From the time of its

equity , and in good conscience, to the person who paid it. (4 Am. Jur. 514)

registration it was under the jurisdiction of the Cooperative Administration Office.

On June 22, 1957 Republic Act No. 2023, otherwise known as the Philippine Non-Agricultural Cooperative Act, was
approved by Congress, amending and consolidating existing laws on non-agricultural cooperatives in the Philippines.
The two provisions of said Act which bear on the present case are sections 4 (1) and 66 (1), which read as follows:

SEC. 4 (1) Every cooperative under the jurisdiction of the Cooperatives Administration Office existing at
the time of the approval of this Act which has been registered under existing cooperative laws
(Commonwealth Act five hundred sixty-five, Act Twenty five hundred eight and Act Thirty-four hundred
twenty-five, all as amended) shall be deemed to be registered under this Act, and its by-laws shall so far

We find no reason to attribute negligence to appellee in making the payments in question, especially considering that
the new law involved a change in its status from a taxable to a tax-exempt institution; and if it continued to pay for a
time after the exemption became effective it did so in a desire to abide by what it believed to be the law. No undue
disadvantage should be visited upon it as a consequence thereof.

The decision appealed from is affirmed, without pronouncement as to costs.

G.R. No. 72964 January 7, 1988

as they are not inconsistent with the provisions of this Act, continue in force , and be deemed to be
registered under this Act.

FILOMENO URBANO, petitioner,


SEC. 66 (1) Cooperatives with net assets of not more than five hundred thousand pesos shall be exempt


from all taxes and government fees of whatever name, and nature except those provided for under this
Act: ... .

Unaware of the exemption provided for in section 66 (1) appellee paid to respondent City of Manila municipal taxes
and license fees in the total amount and for the period already stated. In May 1959 appellee requested a refund of
said amount from the City Treasurer, but the request was denied. Hence the present suit.


This is a petition to review the decision of the then Intermediate Appellate Court which affirmed the decision of the
then Circuit Criminal Court of Dagupan City finding petitioner Filomeno Urban guilty beyond reasonable doubt of the
crime of homicide.

The records disclose the following facts of the case.

and promising to him and to this Office that this will never be repeated anymore and not to
harbour any grudge against each other. (p. 87, Original Records.)

At about 8:00 o'clock in the morning of October 23, 1980, petitioner Filomeno Urbano went to his ricefield at
Barangay Anonang, San Fabian, Pangasinan located at about 100 meters from the tobacco seedbed of Marcelo Javier.

Urbano advanced P400.00 to Javier at the police station. On November 3, 1980, the additional P300.00 was given to

He found the place where he stored his palay flooded with water coming from the irrigation canal nearby which had

Javier at Urbano's house in the presence of barangay captain Soliven.

overflowed. Urbano went to the elevated portion of the canal to see what happened and there he saw Marcelo Javier
and Emilio Erfe cutting grass. He asked them who was responsible for the opening of the irrigation canal and Javier
admitted that he was the one. Urbano then got angry and demanded that Javier pay for his soaked palay. A quarrel
between them ensued. Urbano unsheathed his bolo (about 2 feet long, including the handle, by 2 inches wide) and
hacked Javier hitting him on the right palm of his hand, which was used in parrying the bolo hack. Javier who was
then unarmed ran away from Urbano but was overtaken by Urbano who hacked him again hitting Javier on the left

At about 1:30 a.m. on November 14, 1980, Javier was rushed to the Nazareth General Hospital in a very serious
condition. When admitted to the hospital, Javier had lockjaw and was having convulsions. Dr. Edmundo Exconde
who personally attended to Javier found that the latter's serious condition was caused by tetanus toxin. He noticed
the presence of a healing wound in Javier's palm which could have been infected by tetanus.

leg with the back portion of said bolo, causing a swelling on said leg. When Urbano tried to hack and inflict further
injury, his daughter embraced and prevented him from hacking Javier.

On November 15, 1980 at exactly 4:18 p.m., Javier died in the hospital. The medical findings of Dr. Exconde are as

Immediately thereafter, Antonio Erfe, Emilio Erfe, and Felipe Erfe brought Javier to his house about 50 meters away
from where the incident happened. Emilio then went to the house of Barangay Captain Menardo Soliven but not

Date Diagnosis

finding him there, Emilio looked for barrio councilman Felipe Solis instead. Upon the advice of Solis, the Erfes
together with Javier went to the police station of San Fabian to report the incident. As suggested by Corporal Torio,
Javier was brought to a physician. The group went to Dr. Guillermo Padilla, rural health physician of San Fabian,

11-14-80 ADMITTED due to trismus

who did not attend to Javier but instead suggested that they go to Dr. Mario Meneses because Padilla had no available

adm. at DX TETANUS

After Javier was treated by Dr. Meneses, he and his companions returned to Dr. Guillermo Padilla who conducted a

1:30 AM Still having frequent muscle spasm. With diffi-

medico-legal examination. Dr. Padilla issued a medico-legal certificate (Exhibit "C" dated September 28, 1981) which

#35, 421 culty opening his mouth. Restless at times. Febrile


This is to certify that I have examined the wound of Marcelo Javier, 20 years of age, married,
residing at Barangay Anonang, San Fabian, Pangasinan on October 23, 1980 and found the

1 -Incised wound 2 inches in length at the upper portion of the lesser palmar prominence,

11-15-80 Referred. Novaldin 1 amp. inj. IM. Sudden cessa-

tion of respiration
and HR after
muscular spasm.

02 inhalation
Ambo bag

As to my observation the incapacitation is from (7-9) days period. This wound was presented


to me only for medico-legal examination, as it was already treated by the other doctor. (p. 88,
Original Records)

tion and cardiac

massage done but

Upon the intercession of Councilman Solis, Urbano and Javier agreed to settle their differences. Urbano promised to

to no avail.

pay P700.00 for the medical expenses of Javier. Hence, on October 27, 1980, the two accompanied by Solis appeared
before the San Fabian Police to formalize their amicable settlement. Patrolman Torio recorded the event in the police
blotter (Exhibit A), to wit:

Pronounced dead
by Dra. Cabugao at
4:18 P.M.

xxx xxx xxx

PMC done and
Entry Nr 599/27 Oct '80/103OH/ Re entry Nr 592 on page 257 both parties appeared before

cadaver brought

this Station accompanied by brgy. councilman Felipe Solis and settled their case amicably,

home by rela-

for they are neighbors and close relatives to each other. Marcelo Javier accepted and granted
forgiveness to Filomeno Urbano who shoulder (sic) all the expenses in his medical treatment,

tives. (p. 100,

Original Records)

In an information dated April 10, 1981, Filomeno Urbano was charged with the crime of homicide before the then

The record is clear that Marcelo Javier was hacked by the petitioner who used a bolo as a result of which Javier

Circuit Criminal Court of Dagupan City, Third Judicial District.

suffered a 2-inch incised wound on his right palm; that on November 14, 1981 which was the 22nd day after the
incident, Javier was rushed to the hospital in a very serious condition and that on the following day, November 15,

Upon arraignment, Urbano pleaded "not guilty." After trial, the trial court found Urbano guilty as charged. He was

1981, he died from tetanus.

sentenced to suffer an indeterminate prison term of from TWELVE (12) YEARS of prision mayor, as minimum to
SEVENTEEN (17) years, FOUR (4) MONTHS and ONE (1) DAY of reclusion temporal, as maximum, together with the

Under these circumstances, the lower courts ruled that Javier's death was the natural and logical consequence of

accessories of the law, to indemnify the heirs of the victim, Marcelo Javier, in the amount of P12,000.00 without

Urbano's unlawful act. Hence, he was declared responsible for Javier's death. Thus, the appellate court said:

subsidiary imprisonment in case of insolvency, and to pay the costs. He was ordered confined at the New Bilibid
Prison, in Muntinlupa, Rizal upon finality of the decision, in view of the nature of his penalty.

The claim of appellant that there was an efficient cause which supervened from the time the
deceased was wounded to the time of his death, which covers a period of 23 days does not

The then Intermediate Appellate Court affirmed the conviction of Urbano on appeal but raised the award of indemnity

deserve serious consideration. True, that the deceased did not die right away from his

to the heirs of the deceased to P30,000.00 with costs against the appellant.

wound, but the cause of his death was due to said wound which was inflicted by the
appellant. Said wound which was in the process of healing got infected with tetanus which

The appellant filed a motion for reconsideration and/or new trial. The motion for new trial was based on an affidavit

ultimately caused his death.

of Barangay Captain Menardo Soliven (Annex "A") which states:

Dr. Edmundo Exconde of the Nazareth General Hospital testified that the victim suffered
That in 1980, I was the barrio captain of Barrio Anonang, San Fabian, Pangasinan, and up
to the present having been re-elected to such position in the last barangay elections on May
17, 1982;

lockjaw because of the infection of the wound with tetanus. And there is no other way by
which he could be infected with tetanus except through the wound in his palm (tsn., p. 78,
Oct. 5, 1981). Consequently, the proximate cause of the victim's death was the wound which
got infected with tetanus. And the settled rule in this jurisdiction is that an accused is liable
for all the consequences of his unlawful act. (Article 4, par. 1, R.P.C. People v. Red, CA 43

That sometime in the first week of November, 1980, there was a typhoon that swept

O.G. 5072; People v. Cornel 78 Phil. 418).

Pangasinan and other places of Central Luzon including San Fabian, a town of said province;
Appellant's allegation that the proximate cause of the victim's death was due to his own
That during the typhoon, the sluice or control gates of the Bued irrigation dam which

negligence in going back to work without his wound being properly healed, and lately, that he

irrigates the ricefields of San Fabian were closed and/or controlled so much so that water

went to catch fish in dirty irrigation canals in the first week of November, 1980, is an

and its flow to the canals and ditches were regulated and reduced;

afterthought, and a desperate attempt by appellant to wiggle out of the predicament he found
himself in. If the wound had not yet healed, it is impossible to conceive that the deceased

That due to the locking of the sluice or control gates of the dam leading to the canals and

would be reckless enough to work with a disabled hand. (pp. 20-21, Rollo)

ditches which will bring water to the ricefields, the water in said canals and ditches became
shallow which was suitable for catching mudfishes;

The petitioner reiterates his position that the proximate cause of the death of Marcelo Javier was due to his own
negligence, that Dr. Mario Meneses found no tetanus in the injury, and that Javier got infected with tetanus when

That after the storm, I conducted a personal survey in the area affected, with my secretary
Perfecto Jaravata;

That on November 5, 1980, while I was conducting survey, I saw the late Marcelo Javier
catching fish in the shallow irrigation canals with some companions;

after two weeks he returned to his farm and tended his tobacco plants with his bare hands exposing the wound to
harmful elements like tetanus germs.

The evidence on record does not clearly show that the wound inflicted by Urbano was infected with tetanus at the
time of the infliction of the wound. The evidence merely confirms that the wound, which was already healing at the
time Javier suffered the symptoms of the fatal ailment, somehow got infected with tetanus However, as to when the
wound was infected is not clear from the record.

That few days there after,or on November l5, l980, I came to know that said Marcelo Javier
died of tetanus. (p. 33, Rollo)

The motion was denied. Hence, this petition.

In a resolution dated July 16, 1986, we gave due course to the petition.

In Vda. de Bataclan, et al. v. Medina (102 Phil. 1181), we adopted the following definition of proximate cause:

xxx xxx xxx

... A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of
American Jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows:

The case involves the application of Article 4 of the Revised Penal Code which provides that "Criminal liability shall be
incurred: (1) By any person committing a felony (delito) although the wrongful act done be different from that which
he intended ..." Pursuant to this provision "an accused is criminally responsible for acts committed by him in
violation of law and for all the natural and logical consequences resulting therefrom." (People v. Cardenas, 56 SCRA

... "that cause, which, in natural and continuous sequence, unbroken by any efficient
intervening cause, produces the injury, and without which the result would not have
occurred."And more comprehensively, "the proximate legal cause is that acting first and
producing the injury, either immediately or by setting other events in motion, all constituting

a natural and continuous chain of events, each having a close causal connection with its

In the case at bar, Javier suffered a 2-inch incised wound on his right palm when he parried the bolo which Urbano

immediate predecessor, the final event in the chain immediately effecting the injury as a

used in hacking him. This incident took place on October 23, 1980. After 22 days, or on November 14, 1980, he

natural and probable result of the cause which first acted, under such circumstances that

suffered the symptoms of tetanus, like lockjaw and muscle spasms. The following day, November 15, 1980, he died.

the person responsible for the first event should, as an ordinarily prudent and intelligent
person, have reasonable ground to expect at the moment of his act or default that an injury
to some person might probably result therefrom." (at pp. 185-186)

If, therefore, the wound of Javier inflicted by the appellant was already infected by tetanus germs at the time, it is
more medically probable that Javier should have been infected with only a mild cause of tetanus because the
symptoms of tetanus appeared on the 22nd day after the hacking incident or more than 14 days after the infliction of

The issue, therefore, hinges on whether or not there was an efficient intervening cause from the time Javier was

the wound. Therefore, the onset time should have been more than six days. Javier, however, died on the second day

wounded until his death which would exculpate Urbano from any liability for Javier's death.

from the onset time. The more credible conclusion is that at the time Javier's wound was inflicted by the appellant,
the severe form of tetanus that killed him was not yet present. Consequently, Javier's wound could have been infected

We look into the nature of tetanus-

The incubation period of tetanus, i.e., the time between injury and the appearance of
unmistakable symptoms, ranges from 2 to 56 days. However, over 80 percent of patients
become symptomatic within 14 days. A short incubation period indicates severe disease, and
when symptoms occur within 2 or 3 days of injury the mortality rate approaches 100 percent.

with tetanus after the hacking incident. Considering the circumstance surrounding Javier's death, his wound could
have been infected by tetanus 2 or 3 or a few but not 20 to 22 days before he died.

The rule is that the death of the victim must be the direct, natural, and logical consequence of the wounds inflicted
upon him by the accused. (People v. Cardenas, supra) And since we are dealing with a criminal conviction, the proof
that the accused caused the victim's death must convince a rational mind beyond reasonable doubt. The medical
findings, however, lead us to a distinct possibility that the infection of the wound by tetanus was an efficient
intervening cause later or between the time Javier was wounded to the time of his death. The infection was, therefore,

Non-specific premonitory symptoms such as restlessness, irritability, and headache are

distinct and foreign to the crime. (People v. Rellin, 77 Phil. 1038).

encountered occasionally, but the commonest presenting complaints are pain and stiffness in
the jaw, abdomen, or back and difficulty swallowing. As the progresses, stiffness gives way to
rigidity, and patients often complain of difficulty opening their mouths. In fact, trismus in
the commonest manifestation of tetanus and is responsible for the familiar descriptive name
of lockjaw. As more muscles are involved, rigidity becomes generalized, and sustained

Doubts are present. There is a likelihood that the wound was but the remote cause and its subsequent infection, for
failure to take necessary precautions, with tetanus may have been the proximate cause of Javier's death with which
the petitioner had nothing to do. As we ruled in Manila Electric Co. v. Remoquillo, et al. (99 Phil. 118).

contractions called risus sardonicus. The intensity and sequence of muscle involvement is
quite variable. In a small proportion of patients, only local signs and symptoms develop in

"A prior and remote cause cannot be made the be of an action if such remote cause did

the region of the injury. In the vast majority, however, most muscles are involved to some

nothing more than furnish the condition or give rise to the occasion by which the injury was

degree, and the signs and symptoms encountered depend upon the major muscle groups

made possible, if there intervened between such prior or remote cause and the injury a


distinct, successive, unrelated, and efficient cause of the injury, even though such injury
would not have happened but for such condition or occasion. If no danger existed in the

Reflex spasm usually occur within 24 to 72 hours of the first symptom, an interval referred to
as the onset time. As in the case of the incubation period, a short onset time is associated
with a poor prognosis. Spasms are caused by sudden intensification of afferent stimuli
arising in the periphery, which increases rigidity and causes simultaneous and excessive

condition except because of the independent cause, such condition was not the proximate
cause. And if an independent negligent act or defective condition sets into operation the
instances which result in injury because of the prior defective condition, such subsequent
act or condition is the proximate cause." (45 C.J. pp. 931-932). (at p. 125)

contraction of muscles and their antagonists. Spasms may be both painful and dangerous.
As the disease progresses, minimal or inapparent stimuli produce more intense and longer

It strains the judicial mind to allow a clear aggressor to go scot free of criminal liability. At the very least, the records

lasting spasms with increasing frequency. Respiration may be impaired by laryngospasm or

show he is guilty of inflicting slight physical injuries. However, the petitioner's criminal liability in this respect was

tonic contraction of respiratory muscles which prevent adequate ventilation. Hypoxia may

wiped out by the victim's own act. After the hacking incident, Urbano and Javier used the facilities of barangay

then lead to irreversible central nervous system damage and death.

mediators to effect a compromise agreement where Javier forgave Urbano while Urbano defrayed the medical expenses
of Javier. This settlement of minor offenses is allowed under the express provisions of Presidential Decree G.R. No.

Mild tetanus is characterized by an incubation period of at least 14 days and an onset time of

1508, Section 2(3). (See also People v. Caruncho, 127 SCRA 16).

more than 6 days. Trismus is usually present, but dysphagia is absent and generalized
spasms are brief and mild. Moderately severe tetanus has a somewhat shorter incubation

We must stress, however, that our discussion of proximate cause and remote cause is limited to the criminal aspects

period and onset time; trismus is marked, dysphagia and generalized rigidity are present, but

of this rather unusual case. It does not necessarily follow that the petitioner is also free of civil liability. The well-

ventilation remains adequate even during spasms. The criteria for severe tetanus include a

settled doctrine is that a person, while not criminally liable, may still be civilly liable. Thus, in the recent case

short incubation time, and an onset time of 72 hrs., or less, severe trismus, dysphagia and

of People v. Rogelio Ligon y Tria, et al. (G.R. No. 74041, July 29, 1987), we said:

rigidity and frequent prolonged, generalized convulsive spasms. (Harrison's Principle of

Internal Medicine, 1983 Edition, pp. 1004-1005; Emphasis supplied)

Therefore, medically speaking, the reaction to tetanus found inside a man's body depends on the incubation period of
the disease.

xxx xxx xxx

... While the guilt of the accused in a criminal prosecution must be established beyond
reasonable doubt, only a preponderance of evidence is required in a civil action for damages.
(Article 29, Civil Code). The judgment of acquittal extinguishes the civil liability of the

accused only when it includes a declaration that the facts from which the civil liability might


arise did not exist. (Padilla v. Court of Appeals, 129 SCRA 559).
G.R. No. L-24803 May 26, 1977
The reason for the provisions of article 29 of the Civil Code, which provides that the acquittal
of the accused on the ground that his guilt has not been proved beyond reasonable doubt
does not necessarily exempt him from civil liability for the same act or omission, has been
explained by the Code Commission as follows:

The old rule that the acquittal of the accused in a criminal case also
releases him from civil liability is one of the most serious flaws in the

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano,
REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendantsappellees.

Philippine legal system. It has given use to numberless instances of

miscarriage of justice, where the acquittal was due to a reasonable

Cruz & Avecilla for appellants.

doubt in the mind of the court as to the guilt of the accused. The
reasoning followed is that inasmuch as the civil responsibility is
derived from the criminal offense, when the latter is not proved, civil

Marvin R. Hill & Associates for appellees.

liability cannot be demanded.

This is one of those causes where confused thinking leads to

unfortunate and deplorable consequences. Such reasoning fails to
draw a clear line of demarcation between criminal liability and civil
responsibility, and to determine the logical result of the distinction.
The two liabilities are separate and distinct from each other. One
affects the social order and the other, private rights. One is for the
punishment or correction of the offender while the other is for
reparation of damages suffered by the aggrieved party. The two
responsibilities are so different from each other that article 1813 of
the present (Spanish) Civil Code reads thus: "There may be a


Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q-8102,
Pedro Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of
plaintiffs for recovery of damages from defendant Reginald Hill, a minor, married at the time of the occurrence, and
his father, the defendant Marvin Hill, with whom he was living and getting subsistence, for the killing by Reginald of
the son of the plaintiffs, named Agapito Elcano, of which, when criminally prosecuted, the said accused was
acquitted on the ground that his act was not criminal, because of "lack of intent to kill, coupled with mistake."

compromise upon the civil action arising from a crime; but the
public action for the imposition of the legal penalty shall not thereby
be extinguished." It is just and proper that, for the purposes of the
imprisonment of or fine upon the accused, the offense should be
proved beyond reasonable doubt. But for the purpose of indemnity
the complaining party, why should the offense also be proved beyond

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, which is now
Rule III, of the Revised Rules of Court;

reasonable doubt? Is not the invasion or violation of every private

right to be proved only by a preponderance of evidence? Is the right
of the aggrieved person any less private because the wrongful act is
also punishable by the criminal law?

"For these reasons, the Commission recommends the adoption of the

reform under discussion. It will correct a serious defect in our law. It
will close up an inexhaustible source of injustice-a cause for

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because he was
relieved as guardian of the other defendant through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

disillusionment on the part of the innumerable persons injured or


was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial,
reiterating the above grounds that the following order was issued:

The respondent court increased the P12,000.00 indemnification imposed by the trial court to P30,000.00. However,
since the indemnification was based solely on the finding of guilt beyond reasonable doubt in the homicide case, the
civil liability of the petitioner was not thoroughly examined. This aspect of the case calls for fuller development if the
heirs of the victim are so minded.

WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the then Intermediate Appellate
Court, now Court of Appeals, is REVERSED and SET ASIDE. The petitioner is ACQUITTED of the crime of homicide.
Costs de oficio.

Considering the motion for reconsideration filed by the defendants on January 14, 1965 and
after thoroughly examining the arguments therein contained, the Court finds the same to be
meritorious and well-founded.

WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by

ordering the dismissal of the above entitled case.


Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.)

jurisdiction in Barredo vs. Garcia, 73 Phil. 607. In that case, this Court postulated, on the basis of a scholarly
dissertation by Justice Bocobo on the nature of culpa aquiliana in relation to culpa criminal or delito and mereculpa or

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following
assignment of errors:

fault, with pertinent citation of decisions of the Supreme Court of Spain, the works of recognized civilians, and earlier
jurisprudence of our own, that the same given act can result in civil liability not only under the Penal Code but also
under the Civil Code. Thus, the opinion holds:


The, above case is pertinent because it shows that the same act machinist. come under both
the Penal Code and the Civil Code. In that case, the action of the agent killeth unjustified
and fraudulent and therefore could have been the subject of a criminal action. And yet, it

was held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is
also to be noted that it was the employer and not the employee who was being sued. (pp. 615-


616, 73 Phil.).


It will be noticed that the defendant in the above case could have been prosecuted in a
criminal case because his negligence causing the death of the child was punishable by the


Penal Code. Here is therefore a clear instance of the same act of negligence being a proper
subject matter either of a criminal action with its consequent civil liability arising from a
crime or of an entirely separate and independent civil action for fault or negligence under


article 1902 of the Civil Code. Thus, in this jurisdiction, the separate individuality of a cuasi-


delito or culpa aquiliana, under the Civil Code has been fully and clearly recognized, even
with regard to a negligent act for which the wrongdoer could have been prosecuted and



convicted in a criminal case and for which, after such a conviction, he could have been sued
for this civil liability arising from his crime. (p. 617, 73 Phil.)

It is most significant that in the case just cited, this Court specifically applied article 1902 of
the Civil Code. It is thus that although J. V. House could have been criminally prosecuted for
reckless or simple negligence and not only punished but also made civilly liable because of


his criminal negligence, nevertheless this Court awarded damages in an independent civil
action for fault or negligence under article 1902 of the Civil Code. (p. 618, 73 Phil.)



The legal provisions, authors, and cases already invoked should ordinarily be sufficient to


dispose of this case. But inasmuch as we are announcing doctrines that have been little
understood, in the past, it might not he inappropriate to indicate their foundations.

It appears that for the killing of the son, Agapito, of plaintiffs-appellants, defendant- appellee Reginald Hill was
prosecuted criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was

Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also simple

acquitted on the ground that his act was not criminal because of "lack of intent to kill, coupled with mistake."

negligence. If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or

Parenthetically, none of the parties has favored Us with a copy of the decision of acquittal, presumably because

negligence not punished by law, accordingly to the literal import of article 1093 of the Civil

appellants do not dispute that such indeed was the basis stated in the court's decision. And so, when appellants filed

Code, the legal institution of culpa aquiliana would have very little scope and application in

their complaint against appellees Reginald and his father, Atty. Marvin Hill, on account of the death of their son, the

actual life. Death or injury to persons and damage to property- through any degree of

appellees filed the motion to dismiss above-referred to.

negligence - even the slightest - would have to be Idemnified only through the principle of
civil liability arising from a crime. In such a state of affairs, what sphere would remain

As We view the foregoing background of this case, the two decisive issues presented for Our resolution are:

for cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker any intention to
bring about a situation so absurd and anomalous. Nor are we, in the interpretation of the
laws, disposed to uphold the letter that killeth rather than the spirit that giveth life. We will

1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action

not use the literal meaning of the law to smother and render almost lifeless a principle of

for civil liability, was not reversed?

such ancient origin and such full-grown development as culpa aquiliana or cuasi-delito,
which is conserved and made enduring in articles 1902 to 1910 of the Spanish Civil Code.

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the
undisputed fact that at the time of the occurrence complained of. Reginald, though a minor, living with and getting

Secondary, to find the accused guilty in a criminal case, proof of guilt beyond reasonable

subsistenee from his father, was already legally married?

doubt is required, while in a civil case, preponderance of evidence is sufficient to make the
defendant pay in damages. There are numerous cases of criminal negligence which can not

The first issue presents no more problem than the need for a reiteration and further clarification of the dual
character, criminal and civil, of fault or negligence as a source of obligation which was firmly established in this

be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In

such cases, the defendant can and should be made responsible in a civil action under

articles 1902 to 1910 of the Civil Code. Otherwise. there would be many instances of

a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.", (Report of the Code) Commission, p.

unvindicated civil wrongs. "Ubi jus Idemnified remedium." (p. 620,73 Phil.)


Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice

Code on this subject, which has given rise to the overlapping or concurrence of spheres

Bacobo about construction that upholds "the spirit that giveth lift- rather than that which is literal that killeth the

already discussed, and for lack of understanding of the character and efficacy of the action

intent of the lawmaker should be observed in applying the same. And considering that the preliminary chapter on

for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of

human relations of the new Civil Code definitely establishes the separability and independence of liability in a civil

the civil responsibility arising from a crime, forgetting that there is another remedy, which is

action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising from crime fixed by

by invoking articles 1902-1910 of the Civil Code. Although this habitual method is allowed

Article 100 of the Revised Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3 (c), Rule 111,

by, our laws, it has nevertheless rendered practically useless and nugatory the more

contemplate also the same separability, it is "more congruent with the spirit of law, equity and justice, and more in

expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual. In the

harmony with modern progress"- to borrow the felicitous relevant language in Rakes vs. Atlantic. Gulf and Pacific Co.,

present case, we are asked to help perpetuate this usual course. But we believe it is high

7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or negligencia covers not only acts "not

time we pointed out to the harms done by such practice and to restore the principle of

punishable by law" but also acts criminal in character, whether intentional and voluntary or negligent. Consequently,

responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full

a separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found

rigor. It is high time we caused the stream of quasi-delict or culpa aquiliana to flow on its own

guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover

natural channel, so that its waters may no longer be diverted into that of a crime under the

damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the

Penal Code. This will, it is believed, make for the better safeguarding or private rights

awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section 3,

because it realtor, an ancient and additional remedy, and for the further reason that an

Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil

independent civil action, not depending on the issues, limitations and results of a criminal

liability for the same act considered as a quasi-delict only and not as a crime is not estinguished even by a declaration

prosecution, and entirely directed by the party wronged or his counsel, is more likely to

in the criminal case that the criminal act charged has not happened or has not been committed by the accused.

secure adequate and efficacious redress. (p. 621, 73 Phil.)

Briefly stated, We here hold, in reiteration of Garcia, thatculpa aquiliana includes voluntary and negligent acts which
may be punishable by law.4

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in
Garcia that the concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of

It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-

negligence and not intentional voluntary acts - deeper reflection would reveal that the thrust of the pronouncements

delict, hence that acquittal is not a bar to the instant action against him.

therein is not so limited, but that in fact it actually extends to fault or culpa. This can be seen in the reference made
therein to the Sentence of the Supreme Court of Spain of February 14, 1919, supra, which involved a case of fraud or
estafa, not a negligent act. Indeed, Article 1093 of the Civil Code of Spain, in force here at the time of Garcia, provided
textually that obligations "which are derived from acts or omissions in which fault or negligence, not punishable by
law, intervene shall be the subject of Chapter II, Title XV of this book (which refers to quasi-delicts.)" And it is

Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability
of Atty. Hill, his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free
from responsibility cannot be upheld.

precisely the underline qualification, "not punishable by law", that Justice Bocobo emphasized could lead to an ultimo
construction or interpretation of the letter of the law that "killeth, rather than the spirit that giveth lift- hence, the

While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and

ruling that "(W)e will not use the literal meaning of the law to smother and render almost lifeless a principle of such

under Article 397, emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that

ancient origin and such full-grown development as culpa aquiliana orquasi-delito, which is conserved and made

pursuant to Article 399, emancipation by marriage of the minor is not really full or absolute. Thus "(E)mancipation by

enduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the

marriage or by voluntary concession shall terminate parental authority over the child's person. It shall enable the

Code Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code, which was

minor to administer his property as though he were of age, but he cannot borrow money or alienate or encumber real

enacted after the Garcia doctrine, no longer uses the term, 11 not punishable by law," thereby making it clear that

property without the consent of his father or mother, or guardian. He can sue and be sued in court only with the

the concept of culpa aquiliana includes acts which are criminal in character or in violation of the penal law, whether

assistance of his father, mother or guardian."

voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code, which is Article 1162,
simply says, "Obligations derived fromquasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this
Book, (on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides:

Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's own acts or
omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or
incapacity, the mother, are responsible. The father and, in case of his death or incapacity, the mother, are responsible

ART. 2177. Responsibility for fault or negligence under the preceding article is entirely

for the damages caused by the minor children who live in their company." In the instant case, it is not controverted

separate and distinct from the civil liability arising from negligence under the Penal Code.

that Reginald, although married, was living with his father and getting subsistence from him at the time of the

But the plaintiff cannot recover damages twice for the same act or omission of the defendant.

occurrence in question. Factually, therefore, Reginald was still subservient to and dependent on his father, a situation
which is not unusual.

According to the Code Commission: "The foregoing provision (Article 2177) through at first sight startling, is not so
novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion

the criminal law, while the latter is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own

with their offending child under Article 2180 is that is the obligation of the parent to supervise their minor children

foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and

in order to prevent them from causing damage to third persons.

"culpa extracontractual" or "cuasi-delito" has been sustained by decision of the Supreme Court of Spain and

399, in providing that a minor emancipated by marriage may not, nevertheless, sue or be sued without the assistance

maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the

of the parents, is that such emancipation does not carry with it freedom to enter into transactions or do any act that

proposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not, shall

can give rise to judicial litigation. (See Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites

not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for damages due to

judicial action. Otherwise stated, the marriage of a minor child does not relieve the parents of the duty to see to it

On the other hand, the clear implication of Article

that the child, while still a minor, does not give answerable for the borrowings of money and alienation or
encumbering of real property which cannot be done by their minor married child without their consent. (Art. 399;
Manresa, supra.)

Respondents expend for the maintenance and administration of their respective parking facilities. They
provide security personnel to protect the vehicles parked in their parking facilities and maintain order within the
area. In turn, they collect the following parking fees from the persons making use of their parking facilities,
regardless of whether said persons are mall patrons or not:

Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage
of Reginald. However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty.
Hill has become milling, subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the
foregoing opinion. Costs against appellees.



Parking Fees

Ayala Land

On weekdays, P25.00 for the first four hours andP10.00 for every suc
hour; on weekends, flat rate of P25.00 per day


P20.00 for the first three hours and P10.00 for every succeeding hour


Flat rate of P30.00 per day

SM Prime

P10.00 to P20.00 (depending on whether the parking space is outd

indoors) for the first three hours and 59 minutes, and P10.00 fo
succeeding hour or fraction thereof

G.R. No. 177056


- versus -





x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

September 18, 2009



Before this Court is a Petition for Review on Certiorari,[1] under Rule 45 of the Revised Rules of Court, filed
by petitioner Office of the Solicitor General (OSG), seeking the reversal and setting aside of the Decision [2] dated 25
January 2007 of the Court of Appeals in CA-G.R. CV No. 76298, which affirmed in toto the Joint Decision [3] dated 29
May 2002 of the Regional Trial Court (RTC) of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210;
and (2) the Resolution [4] dated 14 March 2007 of the appellate court in the same case which denied the Motion for
Reconsideration of the OSG. The RTC adjudged that respondents Ayala Land Incorporated (Ayala Land), Robinsons
Land Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM Prime)
could not be obliged to provide free parking spaces in their malls to their patrons and the general public.
Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping malls in various
locations in Metro Manila. Respondent SM Prime constructs, operates, and leases out commercial buildings and
other structures, among which, are SM City, Manila; SM Centerpoint, Sta. Mesa, Manila; SM City, North
Avenue, Quezon City; and SM Southmall, Las Pias.
The shopping malls operated or leased out by respondents have parking facilities for all kinds of motor
vehicles, either by way of parking spaces inside the mall buildings or in separate buildings and/or adjacent lots that
are solely devoted for use as parking spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the
construction of their own parking facilities. Respondent Shangri-la is renting its parking facilities, consisting of land
and building specifically used as parking spaces, which were constructed for the lessors account.

The parking tickets or cards issued by respondents to vehicle owners contain the stipulation that respondents shall
not be responsible for any loss or damage to the vehicles parked in respondents parking facilities.
In 1999, the Senate Committees on Trade and Commerce and on Justice and Human Rights conducted a
joint investigation for the following purposes: (1) to inquire into the legality of the prevalent practice of shopping malls
of charging parking fees; (2) assuming arguendo that the collection of parking fees was legally authorized, to find out
the basis and reasonableness of the parking rates charged by shopping malls; and (3) to determine the legality of the
policy of shopping malls of denying liability in cases of theft, robbery, or carnapping, by invoking the waiver clause at
the back of the parking tickets. Said Senate Committees invited the top executives of respondents, who operate the
major malls in the country; the officials from the Department of Trade and Industry (DTI), Department of Public
Works and Highways (DPWH), Metro Manila Development Authority (MMDA), and other local government officials;
and the Philippine Motorists Association (PMA) as representative of the consumers group.
After three public hearings held on 30 September, 3 November, and 1 December 1999, the aforementioned Senate Committees jointly issued Senate Committee Report No. 225 [5] on 2 May 2000, in which they
In view of the foregoing, the Committees find that the collection of parking fees
by shopping malls is contrary to the National Building Code and is therefor [ sic]
illegal. While it is true that the Code merely requires malls to provide parking spaces,
without specifying whether it is free or not, both Committees believe that the reasonable and
logical interpretation of the Code is that the parking spaces are for free. This interpretation
is not only reasonable and logical but finds support in the actual practice in other countries
like the United States of America where parking spaces owned and operated by mall owners
are free of charge.
Figuratively speaking, the Code has expropriated the land for parking
something similar to the subdivision law which require developers to devote so much of the
land area for parks.
Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides
that it is the policy of the State to protect the interest of the consumers, promote the general
welfare and establish standards of conduct for business and industry. Obviously, a contrary
interpretation (i.e., justifying the collection of parking fees) would be going against the
declared policy of R.A. 7394.
Section 201 of the National Building Code gives the responsibility for the
administration and enforcement of the provisions of the Code, including the imposition of
penalties for administrative violations thereof to the Secretary of Public Works. This set up,
however, is not being carried out in reality.
In the position paper submitted by the Metropolitan Manila Development
Authority (MMDA), its chairman, Jejomar C. Binay, accurately pointed out that the Secretary
of the DPWH is responsible for the implementation/enforcement of the National Building
Code. After the enactment of the Local Government Code of 1991, the local government
units (LGUs) were tasked to discharge the regulatory powers of the DPWH. Hence, in the

local level, the Building Officials enforce all rules/ regulations formulated by the DPWH
relative to all building plans, specifications and designs including parking space
requirements. There is, however, no single national department or agency directly tasked to
supervise the enforcement of the provisions of the Code on parking, notwithstanding the
national character of the law.[6]

Senate Committee Report No. 225, thus, contained the following recommendations:
In light of the foregoing, the Committees on Trade and Commerce and Justice
and Human Rights hereby recommend the following:



The Office of the Solicitor General should institute the necessary action to enjoin the
collection of parking fees as well as to enforce the penal sanction provisions of
the National Building Code. The Office of the Solicitor General should likewise
study how refund can be exacted from mall owners who continue to collect
parking fees.
The Department of Trade and Industry pursuant to the provisions of R.A. No. 7394,
otherwise known as the Consumer Act of the Philippines should enforce the
provisions of the Code relative to parking. Towards this end, the DTI should
formulate the necessary implementing rules and regulations on parking in
shopping malls, with prior consultations with the local government units where
these are located. Furthermore, the DTI, in coordination with the DPWH, should
be empowered to regulate and supervise the construction and maintenance of
parking establishments.
Finally, Congress should amend and update the National Building Code to expressly
prohibit shopping malls from collecting parking fees by at the same time,
prohibit them from invoking the waiver of liability. [7]

Respondent SM Prime thereafter received information that, pursuant to Senate Committee Report No.
225, the DPWH Secretary and the local building officials of Manila, Quezon City, and Las Pias intended to institute,
through the OSG, an action to enjoin respondent SM Prime and similar establishments from collecting parking fees,
and to impose upon said establishments penal sanctions under Presidential Decree No. 1096, otherwise known as the
National Building Code of the Philippines (National Building Code), and its Implementing Rules and Regulations
(IRR). With the threatened action against it, respondent SM Prime filed, on 3 October 2000, a Petition for Declaratory
Relief[8] under Rule 63 of the Revised Rules of Court, against the DPWH Secretary and local building officials of
Manila, Quezon City, and Las Pias. Said Petition was docketed as Civil Case No. 00-1208 and assigned to the RTC
of Makati City, Branch 138, presided over by Judge Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM
Prime prayed for judgment:
Declaring Rule XIX of the Implementing Rules and Regulations of the
National Building Code as ultra vires, hence, unconstitutional and void;
Declaring [herein respondent SM Prime]s clear legal right to lease parking
spaces appurtenant to its department stores, malls, shopping centers and other commercial
establishments; and
Declaring the National Building Code of the Philippines Implementing
Rules and Regulations as ineffective, not having been published once a week for three (3)
consecutive weeks in a newspaper of general circulation, as prescribed by Section 211 of
Presidential Decree No. 1096.
[Respondent SM Prime] further prays for such other reliefs as may be deemed
just and equitable under the premises.[9]

The very next day, 4 October 2000, the OSG filed a Petition for Declaratory Relief and Injunction (with
Prayer for Temporary Restraining Order and Writ of Preliminary Injunction) [10]against respondents. This Petition was
docketed as Civil Case No. 00-1210 and raffled to the RTC of Makati, Branch 135, presided over by Judge Francisco
B. Ibay (Judge Ibay). Petitioner prayed that the RTC:

After summary hearing, a temporary restraining order and a writ of
preliminary injunction be issued restraining respondents from collecting parking fees from
their customers; and
After hearing, judgment be rendered declaring that the practice of
respondents in charging parking fees is violative of the National Building Code and its
Implementing Rules and Regulations and is therefore invalid, and making permanent any
injunctive writ issued in this case.
Other reliefs just and equitable under the premises are likewise prayed for.[11]

On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued an Order consolidating
Civil Case No. 00-1210 with Civil Case No. 00-1208 pending before Judge Marella of RTC of Makati, Branch 138.
As a result of the pre-trial conference held on the morning of 8 August 2001, the RTC issued a Pre-Trial
Order[12] of even date which limited the issues to be resolved in Civil Cases No. 00-1208 and No. 00-1210 to the
Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the
present proceedings and relative thereto whether the controversy in the collection of parking
fees by mall owners is a matter of public welfare.

Whether declaratory relief is proper.

Whether respondent Ayala Land, Robinsons, Shangri-La and SM
Prime are obligated to provide parking spaces in their malls for the use of their patrons or
the public in general, free of charge.

Entitlement of the parties of [sic] award of damages.[13]

On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-1208 and No. 00-1210.
The RTC resolved the first two issues affirmatively. It ruled that the OSG can initiate Civil Case No. 001210 under Presidential Decree No. 478 and the Administrative Code of 1987. [14] It also found that all the requisites
for an action for declaratory relief were present, to wit:
The requisites for an action for declaratory relief are: (a) there is a justiciable
controversy; (b) the controversy is between persons whose interests are adverse; (c) the party
seeking the relief has a legal interest in the controversy; and (d) the issue involved is ripe for
judicial determination.
SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who stands
to be affected directly by the position taken by the government officials sued namely the
Secretary of Public Highways and the Building Officials of the local government units where
it operates shopping malls. The OSG on the other hand acts on a matter of public interest
and has taken a position adverse to that of the mall owners whom it sued. The construction
of new and bigger malls has been announced, a matter which the Court can take judicial
notice and the unsettled issue of whether mall operators should provide parking facilities,
free of charge needs to be resolved.[15]

As to the third and most contentious issue, the RTC pronounced that:
The Building Code, which is the enabling law and the Implementing Rules and
Regulations do not impose that parking spaces shall be provided by the mall owners free of
charge. Absent such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are
under no obligation to provide them for free. Article 1158 of the Civil Code is clear:
Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are
demandable and shall be regulated by the precepts of the law which
establishes them; and as to what has not been foreseen, by the
provisions of this Book (1090).[]


The provision on ratios of parking slots to several variables, like shopping floor
area or customer area found in Rule XIX of the Implementing Rules and Regulations cannot
be construed as a directive to provide free parking spaces, because the enabling law, the
Building Code does not so provide. x x x.


To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide parking

spaces for free can be considered as an unlawful taking of property right without just
Parking spaces in shopping malls are privately owned and for their use, the mall
operators collect fees. The legal relationship could be either lease or deposit. In either case[,]
the mall owners have the right to collect money which translates into income. Should
parking spaces be made free, this right of mall owners shall be gone. This, without just
compensation. Further, loss of effective control over their property will ensue which is
frowned upon by law.
The presence of parking spaces can be viewed in another light. They can be
looked at as necessary facilities to entice the public to increase patronage of their malls
because without parking spaces, going to their malls will be inconvenient. These are[,]
however[,] business considerations which mall operators will have to decide for
themselves. They are not sufficient to justify a legal conclusion, as the OSG would like the
Court to adopt that it is the obligation of the mall owners to provide parking spaces for free.

The RTC then held that there was no sufficient evidence to justify any award for damages.
The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No. 00-1208 and No. 00-1210 that:
FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc., Robinsons
Land Corporation, Shangri-la Plaza Corporation and SM Prime Holdings[,] Inc. are not
obligated to provide parking spaces in their malls for the use of their patrons or public in
general, free of charge.
All counterclaims in Civil Case No. 00-1210 are dismissed.
No pronouncement as to costs.[17]

CA-G.R. CV No. 76298 involved the separate appeals of the OSG[18] and respondent SM Prime[19] filed with the
Court of Appeals. The sole assignment of error of the OSG in its Appellants Brief was:

Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the ground that the lone issue raised
therein involved a pure question of law, not reviewable by the Court of Appeals.
The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on 25 January 2007. The appellate
court agreed with respondent Robinsons that the appeal of the OSG should suffer the fate of dismissal, since the
issue on whether or not the National Building Code and its implementing rules require shopping mall operators to
provide parking facilities to the public for free was evidently a question of law. Even so, since CA-G.R. CV No. 76298
also included the appeal of respondent SM Prime, which raised issues worthy of consideration, and in order to satisfy
the demands of substantial justice, the Court of Appeals proceeded to rule on the merits of the case.
In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate Civil Case No. 00-1210 before
the RTC as the legal representative of the government, [22] and as the one deputized by the Senate of the Republic of
the Philippines through Senate Committee Report No. 225.
The Court of Appeals rejected the contention of respondent SM Prime that the OSG failed to exhaust
administrative remedies. The appellate court explained that an administrative review is not a condition precedent to
judicial relief where the question in dispute is purely a legal one, and nothing of an administrative nature is to be or
can be done.
The Court of Appeals likewise refused to rule on the validity of the IRR of the National Building Code, as
such issue was not among those the parties had agreed to be resolved by the RTC during the pre-trial conference for
Civil Cases No. 00-1208 and No. 00-1210. Issues cannot be raised for the first time on appeal. Furthermore, the
appellate court found that the controversy could be settled on other grounds, without touching on the issue of the
validity of the IRR. It referred to the settled rule that courts should refrain from passing upon the constitutionality of
a law or implementing rules, because of the principle that bars judicial inquiry into a constitutional question, unless
the resolution thereof is indispensable to the determination of the case.
Lastly, the Court of Appeals declared that Section 803 of the National Building Code and Rule XIX of the
IRR were clear and needed no further construction. Said provisions were only intended to control the occupancy or
congestion of areas and structures. In the absence of any express and clear provision of law, respondents could not
be obliged and expected to provide parking slots free of charge.
The fallo of the 25 January 2007 Decision of the Court of Appeals reads:


while the four errors assigned by respondent SM Prime in its Appellants Brief were:

are DENIED. Accordingly, appealed Decision is hereby AFFIRMED in toto.[23]


In its Resolution issued on 14 March 2007, the Court of Appeals denied the Motion for Reconsideration of the
OSG, finding that the grounds relied upon by the latter had already been carefully considered, evaluated, and passed
upon by the appellate court, and there was no strong and cogent reason to modify much less reverse the assailed
The OSG now comes before this Court, via the instant Petition for Review, with a single assignment of

The OSG argues that respondents are mandated to provide free parking by Section 803 of the National
Building Code and Rule XIX of the IRR.

According to Section 803 of the National Building Code:

SECTION 803. Percentage of Site Occupancy
(a) Maximum site occupancy shall be governed by the use, type of construction,
and height of the building and the use, area, nature, and location of the site; and subject to
the provisions of the local zoning requirements and in accordance with the rules and
regulations promulgated by the Secretary.

In connection therewith, Rule XIX of the old IRR,[25] provides:

Pursuant to Section 803 of the National Building Code (PD 1096) providing for
maximum site occupancy, the following provisions on parking and loading space
requirements shall be observed:


parking space ratings listed below are minimum off-street

requirements for specific uses/occupancies for buildings/structures:

The size of an average automobile parking slot shall be

computed as 2.4 meters by 5.00 meters for perpendicular
or diagonal parking, 2.00 meters by 6.00 meters for
parallel parking. A truck or bus parking/loading slot
shall be computed at a minimum of 3.60 meters by 12.00
meters. The parking slot shall be drawn to scale and the
total number of which shall be indicated on the plans
and specified whether or not parking accommodations,
are attendant-managed. (See Section 2 for computation of
parking requirements).


Neighborhood shopping center 1 slot/100 sq. m. of

shopping floor area

The OSG avers that the aforequoted provisions should be read together with Section 102 of the National
Building Code, which declares:
SECTION 102. Declaration of Policy
It is hereby declared to be the policy of the State to safeguard life, health,
property, and public welfare, consistent with the principles of sound environmental
management and control; and to this end, make it the purpose of this Code to provide for all
buildings and structures, a framework of minimum standards and requirements to regulate
and control their location, site, design, quality of materials, construction, use, occupancy,
and maintenance.

The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding life,
health, property, and public welfare, consistent with the principles of sound environmental management and
control. Adequate parking spaces would contribute greatly to alleviating traffic congestion when complemented by
quick and easy access thereto because of free-charge parking. Moreover, the power to regulate and control the use,
occupancy, and maintenance of buildings and structures carries with it the power to impose fees and, conversely, to
control -- partially or, as in this case, absolutely -- the imposition of such fees.
The Court finds no merit in the present Petition.
The explicit directive of the afore-quoted statutory and regulatory provisions, garnered from a plain
reading thereof, is that respondents, as operators/lessors of neighborhood shopping centers, should provide parking
and loading spaces, in accordance with the minimum ratio of one slot per 100 square meters of shopping floor
area. There is nothing therein pertaining to the collection (or non-collection) of parking fees by respondents. In fact,
the term parking fees cannot even be found at all in the entire National Building Code and its IRR.

Statutory construction has it that if a statute is clear and unequivocal, it must be given its literal
meaning and applied without any attempt at interpretation. [26] Since Section 803 of the National Building Code and
Rule XIX of its IRR do not mention parking fees, then simply, said provisions do not regulate the collection of the
same. The RTC and the Court of Appeals correctly applied Article 1158 of the New Civil Code, which states:
Art. 1158. Obligations derived from law are not presumed. Only
those expressly determined in this Code or in special laws are demandable, and shall be
regulated by the precepts of the law which establishes them; and as to what has not been
foreseen, by the provisions of this Book. (Emphasis ours.)

Hence, in order to bring the matter of parking fees within the ambit of the National Building Code and its
IRR, the OSG had to resort to specious and feeble argumentation, in which the Court cannot concur.
The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803
of the same Code and Rule XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation
to the first part of Section 102 of the National Building Code declaring the policy of the State to safeguard life,
health, property, and public welfare, consistent with the principles of sound environmental management and control;
but totally ignores the second part of said provision, which reads, and to this end, make it the purpose of this Code
to provide for all buildings and structures, a framework of minimum standards and requirements to regulate and
control their location, site, design, quality of materials, construction, use, occupancy, and maintenance. While the
first part of Section 102 of the National Building Code lays down the State policy, it is the second part thereof that
explains how said policy shall be carried out in the Code. Section 102 of the National Building Code is not an allencompassing grant of regulatory power to the DPWH Secretary and local building officials in the name of life, health,
property, and public welfare. On the contrary, it limits the regulatory power of said officials to ensuring that the
minimum standards and requirements for all buildings and structures, as set forth in the National Building Code, are
complied with.
Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking
spaces for buildings, Rule XIX of the IRR also mandates that such parking spaces be provided by building owners free
of charge. If Rule XIX is not covered by the enabling law, then it cannot be added to or included in the implementing
rules. The rule-making power of administrative agencies must be confined to details for regulating the mode or
proceedings to carry into effect the law as it has been enacted, and it cannot be extended to amend or expand the
statutory requirements or to embrace matters not covered by the statute. Administrative regulations must always be
in harmony with the provisions of the law because any resulting discrepancy between the two will always be resolved
in favor of the basic law.[27]
From the RTC all the way to this Court, the OSG repeatedly referred to Republic v. Gonzales[28] and City
of Ozamis v. Lumapas[29] to support its position that the State has the power to regulate parking spaces to promote the
health, safety, and welfare of the public; and it is by virtue of said power that respondents may be required to provide
free parking facilities. The OSG, though, failed to consider the substantial differences in the factual and legal
backgrounds of these two cases from those of the Petition at bar.
In Republic, the Municipality of Malabon sought to eject the occupants of two parcels of land of the
public domain to give way to a road-widening project. It was in this context that the Court pronounced:
Indiscriminate parking along F. Sevilla Boulevard and other main thoroughfares was
prevalent; this, of course, caused the build up of traffic in the surrounding area to the great
discomfort and inconvenience of the public who use the streets. Traffic congestion
constitutes a threat to the health, welfare, safety and convenience of the people and it can
only be substantially relieved by widening streets and providing adequate parking areas.

The Court, in City of Ozamis, declared that the City had been clothed with full power to control and
regulate its streets for the purpose of promoting public health, safety and welfare. The City can regulate the time,
place, and manner of parking in the streets and public places; and charge minimal fees for the street parking to cover
the expenses for supervision, inspection and control, to ensure the smooth flow of traffic in the environs of the public
market, and for the safety and convenience of the public.
Republic and City of Ozamis involved parking in the local streets; in contrast, the present case deals with
privately owned parking facilities available for use by the general public. In Republicand City of Ozamis, the
concerned local governments regulated parking pursuant to their power to control and regulate their streets; in the
instant case, the DPWH Secretary and local building officials regulate parking pursuant to their authority to ensure
compliance with the minimum standards and requirements under the National Building Code and its IRR. With the

difference in subject matters and the bases for the regulatory powers being invoked, Republic and City of Ozamisdo
not constitute precedents for this case.
Indeed, Republic and City of Ozamis both contain pronouncements that weaken the position of the OSG
in the case at bar. In Republic, the Court, instead of placing the burden on private persons to provide parking
facilities to the general public, mentioned the trend in other jurisdictions wherein the municipal governments
themselves took the initiative to make more parking spaces available so as to alleviate the traffic problems, thus:
Under the Land Transportation and Traffic Code, parking in designated areas
along public streets or highways is allowed which clearly indicates that provision for parking
spaces serves a useful purpose. In other jurisdictions where traffic is at least as voluminous
as here, the provision by municipal governments of parking space is not limited to parking
along public streets or highways. There has been a marked trend to build off-street parking
facilities with the view to removing parked cars from the streets. While the provision of offstreet parking facilities or carparks has been commonly undertaken by private enterprise,
municipal governments have been constrained to put up carparks in response to public
necessity where private enterprise had failed to keep up with the growing public demand.
American courts have upheld the right of municipal governments to construct off-street
parking facilities as clearly redounding to the public benefit.[30]

In City of Ozamis, the Court authorized the collection by the City of minimal fees for the parking of
vehicles along the streets: so why then should the Court now preclude respondents from collecting from the public a
fee for the use of the mall parking facilities? Undoubtedly, respondents also incur expenses in the maintenance and
operation of the mall parking facilities, such as electric consumption, compensation for parking attendants and
security, and upkeep of the physical structures.
It is not sufficient for the OSG to claim that the power to regulate and control the use, occupancy, and
maintenance of buildings and structures carries with it the power to impose fees and, conversely, to control, partially
or, as in this case, absolutely, the imposition of such fees. Firstly, the fees within the power of regulatory agencies to
impose are regulatory fees. It has been settled law in this jurisdiction that this broad and all-compassing
governmental competence to restrict rights of liberty and property carries with it the undeniable power to collect a
regulatory fee. It looks to the enactment of specific measures that govern the relations not only as between
individuals but also as between private parties and the political society. [31] True, if the regulatory agencies have the
power to impose regulatory fees, then conversely, they also have the power to remove the same. Even so, it is worthy
to note that the present case does not involve the imposition by the DPWH Secretary and local building officials of
regulatory fees upon respondents; but the collection by respondents ofparking fees from persons who use the mall
parking facilities. Secondly, assuming arguendo that the DPWH Secretary and local building officials do have
regulatory powers over the collection of parking fees for the use of privately owned parking facilities, they cannot allow
or prohibit such collection arbitrarily or whimsically. Whether allowing or prohibiting the collection of such parking
fees, the action of the DPWH Secretary and local building officials must pass the test of classic reasonableness and
propriety of the measures or means in the promotion of the ends sought to be accomplished.[32]
Keeping in mind the aforementioned test of reasonableness and propriety of measures or means, the
Court notes that Section 803 of the National Building Code falls under Chapter 8 on Light and Ventilation. Evidently,
the Code deems it necessary to regulate site occupancy to ensure that there is proper lighting and ventilation in every
building. Pursuant thereto, Rule XIX of the IRR requires that a building, depending on its specific use and/or floor
area, should provide a minimum number of parking spaces. The Court, however, fails to see the connection between
regulating site occupancy to ensure proper light and ventilation in every building vis--vis regulating the collection by
building owners of fees for the use of their parking spaces. Contrary to the averment of the OSG, the former does not
necessarily include or imply the latter. It totally escapes this Court how lighting and ventilation conditions at the
malls could be affected by the fact that parking facilities thereat are free or paid for.
The OSG attempts to provide the missing link by arguing that:
Under Section 803 of the National Building Code, complimentary parking spaces
are required to enhance light and ventilation, that is, to avoid traffic congestion in areas
surrounding the building, which certainly affects the ventilation within the building itself,
which otherwise, the annexed parking spaces would have served. Free-of-charge parking
avoids traffic congestion by ensuring quick and easy access of legitimate shoppers to offstreet parking spaces annexed to the malls, and thereby removing the vehicles of these
legitimate shoppers off the busy streets near the commercial establishments.[33]

The Court is unconvinced. The National Building Code regulates buildings, by setting the minimum
specifications and requirements for the same. It does not concern itself with traffic congestion in areas surrounding
the building. It is already a stretch to say that the National Building Code and its IRR also intend to solve the
problem of traffic congestion around the buildings so as to ensure that the said buildings shall have adequate lighting
and ventilation. Moreover, the Court cannot simply assume, as the OSG has apparently done, that the traffic
congestion in areas around the malls is due to the fact that respondents charge for their parking facilities, thus,
forcing vehicle owners to just park in the streets. The Court notes that despite the fees charged by respondents,
vehicle owners still use the mall parking facilities, which are even fully occupied on some days. Vehicle owners may be
parking in the streets only because there are not enough parking spaces in the malls, and not because they are
deterred by the parking fees charged by respondents. Free parking spaces at the malls may even have the opposite
effect from what the OSG envisioned: more people may be encouraged by the free parking to bring their own vehicles,
instead of taking public transport, to the malls; as a result, the parking facilities would become full sooner, leaving
more vehicles without parking spaces in the malls and parked in the streets instead, causing even more traffic
Without using the term outright, the OSG is actually invoking police power to justify the regulation by
the State, through the DPWH Secretary and local building officials, of privately owned parking facilities, including the
collection by the owners/operators of such facilities of parking fees from the public for the use thereof. The Court
finds, however, that in totally prohibiting respondents from collecting parking fees from the public for the use of the
mall parking facilities, the State would be acting beyond the bounds of police power.
Police power is the power of promoting the public welfare by restraining and regulating the use of liberty
and property. It is usually exerted in order to merely regulate the use and enjoyment of the property of the
owner. The power to regulate, however, does not include the power to prohibit. A fortiori, the power to regulate does
not include the power to confiscate. Police power does not involve the taking or confiscation of property, with the
exception of a few cases where there is a necessity to confiscate private property in order to destroy it for the purpose
of protecting peace and order and of promoting the general welfare; for instance, the confiscation of an illegally
possessed article, such as opium and firearms. [34]
When there is a taking or confiscation of private property for public use, the State is no longer exercising
police power, but another of its inherent powers, namely, eminent domain. Eminent domain enables the State to
forcibly acquire private lands intended for public use upon payment of just compensation to the owner.[35]
Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and
possession of, the expropriated property; but no cogent reason appears why the said power may not be availed of only
to impose a burden upon the owner of condemned property, without loss of title and possession. [36] It is a settled rule
that neither acquisition of title nor total destruction of value is essential to taking. It is usually in cases where title
remains with the private owner that inquiry should be made to determine whether the impairment of a property is
merely regulated or amounts to a compensable taking. A regulation that deprives any person of the profitable use of
his property constitutes a taking and entitles him to compensation, unless the invasion of rights is so slight as to
permit the regulation to be justified under the police power. Similarly, a police regulation that unreasonably restricts
the right to use business property for business purposes amounts to a taking of private property, and the owner may
recover therefor.[37]
Although in the present case, title to and/or possession of the parking facilities remain/s with
respondents, the prohibition against their collection of parking fees from the public, for the use of said facilities, is
already tantamount to a taking or confiscation of their properties. The State is not only requiring that respondents
devote a portion of the latters properties for use as parking spaces, but is also mandating that they give the public
access to said parking spaces for free. Such is already an excessive intrusion into the property rights of
respondents. Not only are they being deprived of the right to use a portion of their properties as they wish, they are
further prohibited from profiting from its use or even just recovering therefrom the expenses for the maintenance and
operation of the required parking facilities.
The ruling of this Court in City Government of Quezon City v. Judge Ericta [38] is edifying. Therein, the City
Government of Quezon City passed an ordinance obliging private cemeteries within its jurisdiction to set aside at
least six percent of their total area for charity, that is, for burial grounds of deceased paupers. According to the
Court, the ordinance in question was null and void, for it authorized the taking of private property without just
There is no reasonable relation between the setting aside of at least six (6) percent
of the total area of all private cemeteries for charity burial grounds of deceased paupers and
the promotion of' health, morals, good order, safety, or the general welfare of the people. The
ordinance is actually a taking without compensation of a certain area from a private
cemetery to benefit paupers who are charges of the municipal corporation. Instead of'

building or maintaining a public cemetery for this purpose, the city passes the burden to
private cemeteries.
'The expropriation without compensation of a portion of private cemeteries is not
covered by Section 12(t) of Republic Act 537, the Revised Charter of Quezon City which
empowers the city council to prohibit the burial of the dead within the center of population of
the city and to provide for their burial in a proper place subject to the provisions of general
law regulating burial grounds and cemeteries. When the Local Government Code, Batas
Pambansa Blg. 337 provides in Section 177(q) that a sangguniang panlungsod may "provide
for the burial of the dead in such place and in such manner as prescribed by law or
ordinance" it simply authorizes the city to provide its own city owned land or to buy or
expropriate private properties to construct public cemeteries. This has been the law, and
practise in the past. It continues to the present. Expropriation, however, requires payment of
just compensation. The questioned ordinance is different from laws and regulations
requiring owners of subdivisions to set aside certain areas for streets, parks, playgrounds,
and other public facilities from the land they sell to buyers of subdivision lots. The
necessities of public safety, health, and convenience are very clear from said requirements
which are intended to insure the development of communities with salubrious and
wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the
subdivision developer when individual lots are sold to homeowners.

the latter furnished the materials and the work for said walls, partitions and improvements, at a total cost of
P59,365, payable "as soon as the Bank of Manila opens for business, and is given a permit by the Central Bank." This
permit however, was never issued. The proposed Bank of Manila did not open for business, and rentals due under
said lease contract, at the rate of P5,000 a month, beginning from October, 1949, were not paid. On December 3,
1949, the lessor instituted Civil Case No. 9708 of the Municipal Court of Manila against Dikit, for unlawful detainer.
After appropriate proceedings, said court rendered judgement on March 27, 1950, sentencing Dikit.

. . . to vacate the premises described in the complaint, and to pay the plaintiff the sum of P10,000.00,
under the first cause of action, corresponding rentals due from October to November, 1949, plus the sum
of P227.80, under the second cause of action, for electric consumption up to November 30, 1949; plus
the rents that will become due from December 1, 1949, at the rate P5,000.00 per month until the date
said defendant finally vacates and surrenders possession to the plaintiff and costs of this suit. (Exhibit

Dikit appealed from this decision to the Court of First Instance of Manila, where the case was docketed as Civil Case
No. 11214 of said court. He likewise, applied, in the Supreme Court in Case G.R. No. L-3621, entitled "Domingo
Dikit vs. Hon Ramon Icasiano" for a writ of certiorari against the municipal judge who had rendered the
aforementioned decision in the ejectment case. Said cases No. 11214 and L-3621 were soon dismissed, however, upon

In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use
the mall parking facilities has no basis in the National Building Code or its IRR. The State also cannot impose the
same prohibition by generally invoking police power, since said prohibition amounts to a taking of respondents
property without payment of just compensation.

agreement of the parties, dated May 22, 1951, whereby Dikit, among other things, relinquished whatever rights have

Given the foregoing, the Court finds no more need to address the issue persistently raised by respondent SM
Prime concerning the unconstitutionality of Rule XIX of the IRR. In addition, the said issue was not among those
that the parties, during the pre-trial conference for Civil Cases No. 12-08 and No. 00-1210, agreed to submit for
resolution of the RTC. It is likewise axiomatic that the constitutionality of a law, a regulation, an ordinance or an act
will not be resolved by courts if the controversy can be, as in this case it has been, settled on other grounds.[39]

Prior to said decision, but after the commencement of the said Case No. 9708 Lao Chit had filed Civil Case No. 10178

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25
January 2007 and Resolution dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298, affirming in
toto the Joint Decision dated 29 May 2002 of the Regional Trial Court of Makati City, Branch 138, in Civil Cases No.
00-1208 and No. 00-1210 are herebyAFFIRMED. No costs.
G.R. No. L-11028
April 17, 1959

to the possession of the leased premises and disclaimed all rights to and over any and all improvements introduced
therein while he was in possession thereof.

of the Court of First Instance of Manila, against Dikit and Silva, for the recovery of what was due from them by reason
of the aforementioned improvements introduced by Lao Chit. On June 30, 1953, judgement was rendered in said
Case No. 10178 the dispositive part of which reads as follows:

WHEREFORE, judgement is hereby rendered in favor of the plaintiff and against the defendants,
sentencing the latter to pay the former, jointly and severally, the sum of P59,365.00, which is the total of
the claim under the second, third and fourth causes of action, the same to be paid within 15 days from
notice, with legal interest from the date of the filing of the complaint until its full payment; and in the
event the defendants fail to pay within the period of grace herein fixed, the fixtures herein referred to
(which by express agreement of the parties shall remain the plaintiff's property until they are fully paid
for) shall be returned to the plaintiff. The defendants shall also pay jointly and severally the plaintiff by

LAO CHIT, plaintiff-appellee,


way of damages an amount equivalent to 12% of the aforementioned sum of P59,365.00. The defendants
shall likewise pay the plaintiff, jointly and severally, another sum equivalent to 25% of the amounts
claimed in the first and sixth causes of action, besides amount claimed in the first and sixth causes of
action, besides an amount equivalent to six (6%) of the sums due and payable under the second and
third causes of action as attorney's fees, with costs against them. (Exhibit A.)

Nicetas A. Suanes for appellee.

Augusto S. Francisco for appellant Security Bank and Trust Co.

In due course, the corresponding writ of execution (Exhibits D-1 and D-3) of this judgment was subsequently issued.

Jesus S. Nava for appellant Consolidated Investments, Inc.

Later on it was returned by the sheriff unsatisfied, with the statement that neither Dikit nor Silva had any property
registered in their respective names, and that the whereabouts of Silva was unknown (Exhibits D-2 and D-4).


Meanwhile, or on September 10, 1953, Lao Chit brought the present action against the Security Bank and Trust
Company (Hereafter referred to as the Bank), to which the lessor had, since July 1, 1951, leased the premises in
question (after it had been vacated by Silva), together with the fixtures and improvements introduced therein by Lao

In May, 1949, the consolidated Investments, Inc., hereafter referred to as the lessor, leased to Domingo T. Dikit part of
the lobby, on the ground floor of the Consolidated Building, at Plaza Goiti, Manila, to be used as offices of the
proposed Bank of Manila, then being organized by said Dikit and Jose Silva. Pursuant to the lease contract between
the parties (Exhibits 2, 2-A and 2-B), the lessee undertook to construct, at the expense thereof, such walls, partitions
and other improvements as may be necessary to make the leased premises suitable for banking purposes, and such
partitions and improvements "shall become the property" of the lessor "upon the termination and/or rescission" of
said contract. It appears that, pursuant to another contract. It appears that, pursuant to another entered into June,
1949, between Dikit and Silva on the one hand, and plaintiff Lao Chit, on the other (Exhibit A-1, and A-2 and A-3),

Chit. In its complaint, Lao Chit demanded payment of P1,000 a month, by way of rental for the use of said fixtures
and improvements by the Bank, in addition to expenses of litigation, attorney's fees and costs. In its answer, the Bank
alleged that it held and used said improvements pursuant to its contract of lease with the lessor and that it had paid
the rentals due and complied with its other obligations under said contract, and set up a counterclaim for damages.
Soon thereafter, or on November 5, 1953, Lao Chit demanded payment of the aforementioned sum of P59,365, plus
P1,000 a month from June, 1951, from the lessor, which did not heed the demand, whereupon the complaint herein
was, on December 18, 1953, amended to include said lessor as one of the defendants. The latter alleged, in its
answer, that the improvements in question were introduced at the initiative and expense of Dikit and Silva, as lessees

of the premises above referred to, and that, as permanent fixtures, said improvements form an integral part of the

Building as his own. Dikit was a mere lessee and Lao Chit was his agent, as such, in the construction of the

Consolidated Investments Building, and belong to the lessor and owner thereof, not to plaintiff herein, who has no

improvements under consideration. In any event, the Spanish text of said Article 361, which is the original, reads:

contractual or juridical relation with the lessor. The lessor, likewise, sought to recover, by way of counterclaim, the
sum of P50,000, as damages for its inclusion as defendant herein, aside from attorney's fees and costs. In due course,
the Court of First Instance of Manila rendered judgment on December 28, 1955, the dispositive part of which reads:

El dueo del terreno en que se edificare, sembrare o plantare de buena fe, tendra derecho a hacer suya la
obra, siembra o plantacion, previa la indemnizacion establecida en los articulos 453 y 454, o a obligar al
que edifico o planto a pagar el precio del terreno, y al que sembro, la renta correspondiente. (Emphasis

WHEREFORE, judgment is hereby rendered, sentencing the defendant, Consolidated Investments, Inc., to


pay to the plaintiff the value of the permanent improvements in the sum of P59,365.00, and, together
with the defendant, Security Bank and Trust Company, to pay, jointly and severally, for the use of the
permanent improvements, at the rate of P1,000.00 monthly from June, 1951 to July 31, 1954, and
thereafter, until January, 1955, by the defendant, Consolidated Investments, Inc., alone, at the same
rate, and in both instances, plus legal interest until full payment thereof; in addition, the defendant,
Consolidated Investments, Inc., is further ordered to pay to the plaintiff the amount equivalent to 80% of
whatever amount is due from it, as reimbursement for plaintiff's litigation expenses, including attorney's
contingent fees, aside from moral, nominal, moderate and exemplary damages in the amount of
P2,000.00, and the costs of suit.

Defendants' counterclaim are hereby both dismissed for lack of merits and in view of the above

Clearly this provision is limited in its application to "buildings" constructed on another's land or "terreno", not to
partitions, railings, counters, shelves and other fixtures made in a building belonging to the owner of the land.
Although the verb "edificar" in Spanish is roughly synonymous with "build" in English, the latter is broader in its
connotation than the former. Literally, "edificar" is to undertake the construction of an edifice, such as a fort, castle,
house, church, market, tower, stadium, barrack, stable or other similar structure. Upon the other hand, one may
build a house, as well as a fence, partition, window, door, or even a desk or chair. It is apparent, therefore, that Lao
Chit is not entitled to the benefit of said Article 361.

The lower court, moreover, said:

conclusion of the Court.

. . . convincing evidence abounds, to wit: that the improvements were made in the presence of, and with
Their respective motions for reconsideration and new trial having been denied, the defendants have appealed from
this decision.

the knowledge and consent, and even under the personal supervision, on the part of the duly authorized
representative of the defendant, Consolidated Investments, Inc., which owns the building. Thus, it may
even be said that it was the defendant, Consolidated Investments Inc., which had acted in bad faith.
(Record on Appeal of Consolidated Investments, Inc., p. 56.)

It is apparent to us that the lower court erred in rendering judgment against the Bank. This defendant had occupied
and used the premises in question, including the partitions, fixtures and other improvements made therein by Lao
Chit, pursuant to a contract of lease entered into with lessor, the right of which to enter into said contract is not

and quoted, in support thereof, the second paragraph of Article 364 of the Spanish Civil Code, reading:

disputed. Moreover, the Bank had paid the rentals and fulfilled its other obligations under said contract. Again, it
cannot be denied that the improvements introduced by Lao Chit became property of the lessor, not only because such

Bad faith on the part of the owner is deemed to exist whenever the act has been done in his presence,

improvements are permanent in nature and cannot be removed without impairing the building to which they were

with his knowledge and tolerance, and without opposition on his part.

attached, but, also, because the contract of lease between Dikit and Silva on the hand, and the lessor, on the other
hand, provided explicitly that the latter shall own those improvements "upon the expiration and/or rescission" of said
contract, and the same has already been resolved. Although Lao Chit was not a party to said contract, this stipulation
is binding upon him, he having introduced said improvements pursuant to his contract with Dikit, from whom he
derived, therefore, his right to enter the building and make the improvements. In short, insofar as the construction

The foregoing view is, likewise, untenable. To begin with, this Article 364, involves a person who builds, plants or
sows upon a land not knowing that it belongs to another. Inasmuch as, there is no contractual relation between
them, their rights are governed by law, not by contract.

thereof, Lao Chit was, vis-a-vis the lessor, a mere agent or representative of Dikit and, as such, was privy to the
undertakings of Dikit under his contract of lease with the lessor.

Secondly, under his contract of lease with the lessor, Dikit had a legal right to make the improvements in question
and the lessor was legally bound to permit Dikit and his agent Lao Chit to enter the leased premises and construct

The lower court held the latter liable to Lao Chit upon the ground that Lao Chit was a builder in good faith, under the
provisions of the Old Civil Code, and under the theory of undue enrichment.

As regards the first ground, Article 361 of the Civil Code of Spain, on which the lower court relied, provides:

said improvements. Surely, compliance with this valid contractual obligation does not, and cannot, constitute bad
faith on the part of the lessor. Upon the other hand, the lessor could not legally object to, or obstruct, the work done
by Lao Chit, without being chargeable with bad faith in the performance of said contractual obligation with Dikit.

In order to justify the application of the principle that no one should be permitted to unjustly enrich himself at the
expense of another, His Honor the Trial Judge cited Article 356 of the Civil Code of Spain, which provides:

The owner of land on which anything has been built, sown, or planted, in good faith, shall be entitled to
appropriate the thing so built, sown, or planted, upon paying the compensation mentioned in Articles
453 and 454, or to compel the person who has built or planted to pay him the value of the land, and the
person who sowed thereon to pay the proper rent thereof.

It is well settled, however, that this provisions refers to one who builds upon a land which he believes to

He who receives fruits is obliged to pay any expenses which may have been incurred by another in the
production, gathering, and preservation thereof.

We agree with the lessor that this Article is not in point, for:

be hisproperty (Alburo vs. Villanueva, 7 Phil., 277; Cortes vs. Ramon, 46 Phil., 184; Rivera vs. Trinidad, 48 Phil., 396;
Fojas vs. Velasco, 51 Phil., 520; Montinola vs. Bantug, 71 Phil., 449-450; Lopez Inc. vs. Philippines & Eastern Trading

(a) Said provision is part of Section I, Chapter II, Title II, Book II, of the Spanish Civil Code, which section regulates

Co., Inc., 98 Phil., 348; 52 Off. Gaz., 1452). Neither Lao Chit, nor Dikit, claimed the Consolidated Investments

the "right of accession with respect to the products of property," and the work done and the improvements introduced
by Lao Chit are not "products" of the lessor's property.

(b) Said Article 356 refers to "expenses" of production, gathering and preservation" of fruits received by the owner of

Regardless of the foregoing, Lao Chit had no reason to believe and he does not claim to have acted under the belief

the property, not to improvements, whereas the claim of Lao Chit is based upon "improvements" introduced, not

that Dikit owned the leased premises. In fact, the circumstances surrounding the case are such as to leave the

"expenses" incurred by him for the "production, gathering and preservation" of fruits. In the language of Manresa:

room for doubt that Lao Chit knew that Dikit was not the owner of said property and that the same belonged to the
lessor. Besides, Lao Chit should have known that, as Dikit's agent, in the construction of the improvements, he (Lao

. . . el Codigo exige el propietario pague al tercer poseedor que fue de la cosa los gastos de produccion, y
en su caso los de recoleccion y conservacion. El propietario no puede excusarse alegando la mala fe del
tercero, porque sea de buena o de mala fe, lo cierto es que este ha hecho un gasto, no solo util para el
propietario, sino necesario, y sin el cual el propietario no hubiera obtenido frutos de su fundo, resultando
ademas que, de no mediar indemnizacion, se consagraria el injusto principio de que uno puede

Chit) was subject to the limitations imposed upon Dikit by his contract with the lessor and that the improvements in
question became property of the owner of the building, not only by operation of law, as accessions to said building,
but, also, for specific stipulation in the contract of lease between Dikit and the lessor. Inasmuch as the acquisition of
said improvements by the owner of the building and lessor is ordained by law and provided for by said contract, which
is admittedly valid, the resulting enrichment if any by said owner and lessor, is neither "undue" nor "unjustly".

enriquecerse a costa y con dao de otro. Para afirmarse por completo en esta opinion debe concordarse el
articulo que comentamos con los 452 a 456, relativos a los efectos de la posesion de buena y mala fe, y

Upon the other hand, he had been reasonably vigilant, Lao Chit could have demanded from Dikit a mortgage, or a

que no examinamos ahora porque el asunto se trata luego con mas detalles.

bond, or some other security, for the protection of his rights, yet he (Lao Chit) did not do so. Should the lessor be
required to pay Lao Chit what he is entitled to recover from Dikit, but which he (Lao Chit) cannot due to his

Los gastos de produccion y demas, para que puedan conceptuarse reembolsables por el propietario en el
caso que suponemos, deben tener dos caracteres: primero, que esten dedicados a la produccion anual; es
decir, que no se trata en este supuesto de las bonificaciones generales del fundo. Semejantes

oversight, carelessness or negligence collect from Dikit, the effect would be to relieve Lao Chit of the consequences
of his own inadvertence or negligence, and hold the lessor responsible therefor. This would be neither fair, nor just,
nor equitable.

bonificaciones entran en la categoria de las mejoras, que se regulan en otro lugar del Codigo (al tratar de la
posesion), y segundo, que no sean superfluos, excesivos o de puro lujo, sino que deben ser hechos en

Lastly, the lower court declared that the improvements in question belong to Lao Chit, because it had been so held in

aquella medida natural que la condicion del cultivo o trabajo de que se trata exige. (3 Manresa [6th ed.],

Case No. 10718 instituted by him against Dikit and Silva. Obviously, however, the proceedings in that case and the

196; Emphasis supplied.)

decision therein rendered are not binding upon the lessor, the same being neither a party in said case, nor a
successor to the interest of the defendants therein. Besides, the aforementioned finding is not borne out by Lao Chit's

(c) The right to recover under the principle of undue enrichment is justifiable under Article 1887 of the Spanish Civil
Code, reading:

contract with Dikit and Silva (Exhibits A-1, A-2, A-2-a and A-3). Indeed, even if Dikit and Silva had agreed with Lao
Chit and they had no such agreement that he would own the improvements until payment of the price thereof,
the stipulation would be, neither valid, nor binding upon the lessor, for Dikit and Silva had no authority whatsoever
to waive the statutory right of accession of the lessor to and over said improvements (Arts. 353 and 358, Civil Code of

Quasi contracts are licit and purely voluntary acts which create an obligation on the part of the actor in

Spain; Arts. 440 and 445, Civil Code of the Philippines).

favor of a third person, and, at times, a reciprocal obligation between the parties concerned.
Wherefore, the decision appealed from is hereby reversed and another one shall be entered dismissing the complaint,
Its counterpart in the Civil Code of the Philippines is Article 2142, which we quote:

Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end

with costs against plaintiff-appellee Lao Chit. It is so ordered.

G.R. No. 97995 January 21, 1993

that no one shall be unjustly enriched or benefited at the expense of another.

The former is part of Title XVI, Book IV of the Spanish Civil Code, entitled "obligations incurred without contract",
whereas the latter is included in Title XVII, Book IV of the Civil Code of the Philippines, regulating "extra-contractual
obligations" or obligations beyond, outside of, or outside the scope of, a contract. The construction of the
improvements in question was not a "purely voluntary act" or "unilateral act" of Lao Chit. He introduced them in a
compliance with a bilateral "obligation" he undertook under his contract with Dikit. The right of Dikit to enter into


Roland A. Niedo for petitioner.

such contract, in turn, sprang from his lease contract with the lessor. As a privy to Dikit's rights under this contract,
insofar as said improvements are concerned, Lao Chit's title thereto, as against the lessor, is governed, therefore, by
such contract of lease, not by any quasi-contract, or by the principles of equity, as distinguished from law, contracts

Benjamin C. Santos Law Office for respondent.

or quasi-contracts.
(d) For the principle of undue enrichment to apply, there must be "enrichment" and the same must be "undue" or

Rarely is this Court confronted with a case calling for the delineation in broad strokes of the distinctions between
such closely allied concepts as the quasi-contract called "solutio indebiti" under the venerable Spanish Civil Code and

In the case at bar, Dikit failed to pay the agreed monthly rental of P5,000 from October, 1949. Up to July 1, 1951,
when the premises in question were leased to the Bank, the rentals due from Dikit aggregated, therefore, P105,000.
Thus, despite the fact that the lessor had become the owner of the improvements in question, worth P59,365.00, is
still suffered a loss of over P45,000.00. Such "loss" negates the idea of "enrichment". Neither may the latter be
deemed to have taken place in the sense that said improvements had increased the productive capacity of the leased
premises, for, despite said improvements, the Bank agreed to pay, beginning from July 1, 1951, only P4,000 a month,
or P1,000 a month less than the rental stipulated with Dikit.

the species of implied trust denominated "constructive trusts," commonly regarded as of Anglo-American origin. Such
a case is the one presented to us now which has highlighted more of the affinity and less of the dissimilarity between
the two concepts as to lead the legal scholar into the error of interchanging the two. Presented below are the factual
circumstances that brought into juxtaposition the twin institutions of the Civil Law quasi-contract and the AngloAmerican trust.

Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and services to

Hence, the instant petition for certiorari proceeding seeking to annul the decision of the appellate court on the basis

shipping companies. Since 1966, it has acted as a manning or crewing agent for several foreign firms, one of which is

that Mata's obligation to return US$14,000 is governed, in the alternative, by either Article 1456 on constructive

Star Kist Foods, Inc., USA (Star Kist). As part of their agreement, Mata makes advances for the crew's medical

trust or Article 2154 of the Civil Code on quasi-contract. 4

expenses, National Seaman's Board fees, Seaman's Welfare fund, and standby fees and for the crew's basic personal
needs. Subsequently, Mata sends monthly billings to its foreign principal Star Kist, which in turn reimburses Mata by
sending a telegraphic transfer through banks for credit to the latter's account.

Article 1456 of the Civil Code provides:

If property is acquired through mistake or fraud, the person obtaining it is, by force of law,

Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of Los Angeles which had an

considered a trustee of an implied trust for the benefit of the person from whom the property

agency arrangement with Philippine National Bank (PNB), transmitted a cable message to the International


Department of PNB to pay the amount of US$14,000 to Mata by crediting the latter's account with the Insular Bank
of Asia and America (IBAA), per order of Star Kist. Upon receipt of this cabled message on February 24, 1975, PNB's
International Department noticed an error and sent a service message to SEPAC Bank. The latter replied with

On the other hand, Article 2154 states:

instructions that the amount of US$14,000 should only be for US$1,400.

If something is received when there is no right to demand it, and it was unduly delivered
On the basis of the cable message dated February 24, 1975 Cashier's Check No. 269522 in the amount of US$1,400

through mistake, the obligation to return it arises.

(P9,772.95) representing reimbursement from Star Kist, was issued by the Star Kist for the account of Mata on
February 25, 1975 through the Insular Bank of Asia and America (IBAA).

Petitioner naturally opts for an interpretation under constructive trust as its action filed on February 4, 1982 can still
prosper, as it is well within the prescriptive period of ten (10) years as provided by Article 1144, paragraph 2 of the

However, fourteen days after or on March 11, 1975, PNB effected another payment through Cashier's Check No.

Civil Code. 5

270271 in the amount of US$14,000 (P97,878.60) purporting to be another transmittal of reimbursement from Star
Kist, private respondent's foreign principal.

If it is to be construed as a case of payment by mistake or solutio indebiti, then the prescriptive period for quasicontracts of six years applies, as provided by Article 1145. As pointed out by the appellate court, petitioner's cause of

Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of US$14,000 (P97,878.60) after

action thereunder shall have prescribed, having been brought almost seven years after the cause of action accrued.

it discovered its error in effecting the second payment.

However, even assuming that the instant case constitutes a constructive trust and prescription has not set in, the
present action has already been barred by laches.

On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against Mata arguing that based
on a constructive trust under Article 1456 of the Civil Code, it has a right to recover the said amount it erroneously

To recall, trusts are either express or implied. While express trusts are created by the intention of the trustor or of the

credited to respondent Mata. 1

parties, implied trusts come into being by operation of law. 6 Implied trusts are those which, without being expressed,
are deducible from the nature of the transaction as matters of intent or which are superinduced on the transaction by

After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint ruling that the instant

operation of law as matters of equity, independently of the particular intention of the parties. 7

case falls squarely under Article 2154 on solutio indebiti and not under Article 1456 on constructive trust. The lower
court ruled out constructive trust, applying strictly the technical definition of a trust as "a right of property, real or

In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A resulting trust is a trust raised by

personal, held by one party for the benefit of another; that there is a fiduciary relation between a trustee and a cestui

implication of law and presumed always to have been contemplated by the parties, the intention of which is found in

que trust as regards certain property, real, personal, money or choses in action." 2

the nature of the transaction, but not expressed in the deed or instrument of conveyance. 9 Examples of resulting
trusts are found in Articles 1448 to 1455 of the Civil Code. 10 On the other hand, a constructive trust is one not

In affirming the lower court, the appellate court added in its opinion that under Article 2154 on solutio indebiti, the
person who makes the payment is the one who commits the mistake vis-a-vis the recipient who is unaware of such a

created by words either expressly or impliedly, but by construction of equity in order to satisfy the demands of justice.
An example of a constructive trust is Article 1456 quoted above. 11

mistake. Consequently, recipient is duty bound to return the amount paid by mistake. But the appellate court
concluded that petitioner's demand for the return of US$14,000 cannot prosper because its cause of action had

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense

already prescribed under Article 1145, paragraph 2 of the Civil Code which states:

is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust,


for in a typical trust, confidence

respecting property which is held by the trustee for the benefit of the cestui que trust. 13 A constructive trust, unlike an
The following actions must be commenced within six years:

express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise nor any
fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the property for

xxx xxx xxx

(2) Upon a quasi-contract.

the beneficiary. 14

In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no intent of holding the same
for a supposed beneficiary or cestui que trust, namely PNB. But under Article 1456, the law construes a trust, namely

This is because petitioner's complaint was filed only on February 4, 1982, almost seven years after March
11, 1975 when petitioner mistakenly made payment to private respondent.

a constructive trust, for the benefit of the person from whom the property comes, in this case PNB, for reasons of
justice and equity.

At this juncture, a historical note on the codal provisions on trust and quasi-contracts is in order.

Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts: negotiorum gestio andsolutio

Although we are not quite in accord with the opinion that "the trusts known to American and English equity

indebiti. But the Code Commission, mindful of the position of the eminent Spanish jurist, Manresa, that "the number

jurisprudence are derived from the fidei commissa of the Roman Law," 24 it is safe to state that their roots are firmly

of quasi contracts may be indefinite," added Section 3 entitled "Other Quasi-Contracts." 15

grounded on such Civil Law principles are expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari
potest,"25 particularly the concept of constructive trust.

Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding article provides that: "The
provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the

Returning to the instant case, while petitioner may indeed opt to avail of an action to enforce a constructive trust or

purview of the preceding article." 16

the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has effectively blocked quasicontract as an alternative, leaving only constructive trust as the feasible option.

Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts enumerated from Articles 2144 to
2175 but is open to the possibility that, absent a pre-existing relationship, there being neither crime nor quasi-delict,

Petitioner argues that the lower and appellate courts cannot indulge in semantics by holding that in Article 1456 the

a quasi-contractual relation may be forced upon the parties to avoid a case of unjust enrichment. 17 There being no

recipient commits the mistake while in Article 2154, the recipient commits no mistake.

express consent, in the sense of a meeting of minds between the parties, there is no contract to speak of. However, in

respondent, invoking the appellate court's reasoning, would impress upon us that under Article 1456, there can be

view of the peculiar circumstances or factual environment, consent is presumed to the end that a recipient of benefits

no mutual mistake. Consequently, private respondent contends that the case at bar is one of solutio indebiti and not a

or favors resulting from lawful, voluntary and unilateral acts of another may not be unjustly enriched at the expense

constructive trust.


On the other hand, private

of another.
We agree with petitioner's stand that under Article 1456, the law does not make any distinction since mutual mistake
Undoubtedly, the instant case fulfills the indispensable requisites of solutio indebiti as defined in Article 2154 that

is a possibility on either side on the side of either the grantor or the grantee. 27 Thus, it was error to conclude that

something (in this case money) has been received when there was no right to demand it and (2) the same was unduly

in a constructive trust, only the person obtaining the property commits a mistake. This is because it is also possible

delivered through mistake. There is a presumption that there was a mistake in the payment "if something which had

that a grantor, like PNB in the case at hand, may commit the mistake.

never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the
delivery was made out of liberality or for any other just cause." 18

Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it erroneously paid private
respondent under a constructive trust, we rule in the negative. Although we are aware that only seven (7) years

In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's Check No. 269522 had already

lapsed after petitioner erroneously credited private respondent with the said amount and that under Article 1144,

been made by PNB for the account of Mata on February 25, 1975. Strangely, however, fourteen days later, PNB

petitioner is well within the prescriptive period for the enforcement of a constructive or implied trust, we rule that

effected another payment through Cashier's Check No. 270271 in the amount of US$14,000, this time purporting to

petitioner's claim cannot prosper since it is already barred by laches. It is a well-settled rule now that an action to

be another transmittal of reimbursement from Star Kist, private respondent's foreign principal.

enforce an implied trust, whether resulting or constructive, may be barred not only by prescription but also by
laches. 28

While the principle of undue enrichment or solutio indebiti, is not new, having been incorporated in the subject on
quasi-contracts in Title XVI of Book IV of the Spanish Civil Code entitled "Obligations incurred without

While prescription is concerned with the fact of delay, laches deals with the effect of unreasonable delay. 29 It is

contract," 19the chapter on Trusts is fairly recent, having been introduced by the Code Commission in 1949. Although

amazing that it took petitioner almost seven years before it discovered that it had erroneously paid private

the concept of trusts is nowhere to be found in the Spanish Civil Code, the framers of our present Civil Code

respondent. Petitioner would attribute its mistake to the heavy volume of international transactions handled by the

incorporated implied trusts, which includes constructive trusts, on top of quasi-contracts, both of which embody the

Cable and Remittance Division of the International Department of PNB. Such specious reasoning is not persuasive. It

principle of equity above strict legalism. 20

is unbelievable for a bank, and a government bank at that, which regularly publishes its balanced financial
statements annually or more frequently, by the quarter, to notice its error only seven years later. As a universal bank

In analyzing the law on trusts, it would be instructive to refer to Anglo-American jurisprudence on the subject. Under
American Law, a court of equity does not consider a constructive trustee for all purposes as though he were in reality
a trustee; although it will force him to return the property, it will not impose upon him the numerous fiduciary
obligations ordinarily demanded from a trustee of an express trust.


with worldwide operations, PNB cannot afford to commit such costly mistakes. Moreover, as between parties where
negligence is imputable to one and not to the other, the former must perforce bear the consequences of its neglect.
Hence, petitioner should bear the cost of its own negligence.

It must be borne in mind that in an express

trust, the trustee has active duties of management while in a constructive trust, the duty is merely to surrender the

WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim against private respondent is



Still applying American case law, quasi-contractual obligations give rise to a personal liability ordinarily enforceable

Costs against petitioner.

by an action at law, while constructive trusts are enforceable by a proceeding in equity to compel the defendant to
surrender specific property. To be sure, the distinction is more procedural than substantive. 22

Further reflection on these concepts reveals that a constructive "trust" is as much a misnomer as a "quasi-contract,"
so far removed are they from trusts and contracts proper, respectively. In the case of a constructive trust, as in the


G.R. No. 146807

May 9, 2002

case of quasi-contract, a relationship is "forced" by operation of law upon the parties, not because of any intention on
their part but in order to prevent unjust enrichment, thus giving rise to certain obligations not within the
contemplation of the parties. 23



WHEREFORE, the appealed decision dated September 1, 1997 is REVERSED and SET ASIDE and, in lieu


thereof, a new one is entered ordering the appellee (PADCOM) to pay the appellant (the Association) the

Challenged in this case is the 30 June 2000 decision1 of the Court of Appeals in CA-G.R. CV No. 60099, reversing and
setting aside the 1 September 1997 decision2 of the Regional Trial Court of Pasig City, Branch 264, in Civil Case No.

1) P639,961.47 as and for membership dues in arrears inclusive of earned interests and penalties; and

Petitioner Padcom Condominium Corporation (hereafter PADCOM) owns and manages the Padilla Office

2) P25,000.00 as and for attorneys fees.

Condominium Building (PADCOM Building) located at Emerald Avenue, Ortigas Center, Pasig City. The land on which
the building stands was originally acquired from the Ortigas & Company, Limited Partnership (OCLP), by Tierra

Costs against the appellees.

Development Corporation (TDC) under a Deed of Sale dated 4 September 1974. Among the terms and conditions in
the deed of sale was the requirement that the transferee and its successor-in-interest must become members of an


association for realty owners and long-term lessees in the area later known as the Ortigas Center. Subsequently, the
said lot, together with improvements thereon, was conveyed by TDC in favor of PADCOM in a Deed of Transfer dated
25 February 1975.4

The Court of Appeals justified its ruling by declaring that PADCOM automatically became a member of the
Association when the land was sold to TDC. The intent to pass the obligation to prospective transferees was evident

In 1982, respondent Ortigas Center Association, Inc. (hereafter the Association) was organized to advance the

from the annotation of the same clause at the back of the Transfer Certificate of Title covering the lot. Despite

interests and promote the general welfare of the real estate owners and long-term lessees of lots in the Ortigas Center.

disavowal of membership, PADCOMs membership in the Association was evident from these facts: (1) PADCOM was

It sought the collection of membership dues in the amount of two thousand seven hundred twenty-four pesos and

included in the Associations list of bona fide members as of 30 March 1995; (2) Narciso Padilla, PADCOMs President,

forty centavos (P2,724.40) per month from PADCOM. The corporate books showed that PADCOM owed the

was one of the Associations incorporators; and (3) having received the demands for payment, PADCOM not only

Association P639,961.47, representing membership dues, interests and penalty charges from April 1983 to June

acknowledged them, but asked for and was granted repeated extensions, and even proposed a scheme for the

1993.5 The letters exchanged between the parties through the years showed repeated demands for payment, requests

settlement of its obligation. The Court of Appeals also ruled that PADCOM cannot evade payment of its obligation to

for extensions of payment, and even a settlement scheme proposed by PADCOM in September 1990.

the Association without violating equitable principles underlying quasi-contracts. Being covered by the Associations
avowed purpose to promote the interests and welfare of its members, PADCOM cannot be allowed to expediently deny

In view of PADCOMs failure and refusal to pay its arrears in monthly dues, including interests and penalties thereon,

and avoid the obligation arising from such membership.

the Association filed a complaint for collection of sum of money before the trial court below, which was docketed as
Civil Case No. 63801. The Association averred that purchasers of lands within the Ortigas Center complex from OCLP

Dissatisfied with the adverse judgment of the Court of Appeals, PADCOM filed the petition for review in this case. It

are obligated under their contracts of sale to become members of the Association. This obligation was allegedly passed

raises the sole issue of whether it can be compelled to join the association pursuant to the provision onautomatic

on to PADCOM when it bought the lot from TDC, its predecessor-in-interest. 6

membership appearing as a condition in the Deed of Sale of 04 September 1974 and the annotation thereof on
Transfer Certificate of Title No. 457308.

In its answer, PADCOM contended that it is a non-stock, non-profit association, and for it to become a special
member of the Association, it should first apply for and be accepted for membership by the latters Board of Directors.

PADCOM contends that it cannot be compelled to be a member of the Association solely by virtue of the "automatic

No automatic membership was apparently contemplated in the Associations By-laws. PADCOM added that it could

membership" clause that appears on the title of the property and the Deed of Transfer. In 1975, when it bought the

not be compelled to become a member without violating its right to freedom of association. And since it was not a

land, the Association was still inexistent. Therefore, the provision on automatic membership was anticipatory in

member of the Association, it was not liable for membership dues, interests and penalties.7

nature, subject to the actual formation of the Association and the subsequent formulation of its implementing rules.

During the trial, the Association presented its accountant as lone witness to prove that PADCOM was, indeed, one of

PADCOM likewise maintains that the Associations By-laws requires an application for membership. Since it never

its members and, as such, did not pay its membership dues.1wphi1.nt

sought membership, the Court of Appeals erred in concluding that it was a member of the Association by implication.
Aside from the lack of evidence proving such membership, the Association has no basis to collect monthly dues since

PADCOM, on the other hand, did not present its evidence; instead it filed a motion to dismiss by way of demurrer to

there is no board resolution defining and prescribing how much should be paid.

evidence. It alleged that the facts established by the Association showed no right to the relief prayed for. It claimed
that the provisions of the Associations By-laws and the Deed of Transfer did not contemplate automatic membership.

For its part, the Association claims that the Deed of Sale between OCLP and TDC clearly stipulates automatic

Rather, the owner or long-term lessee becomes a member of the Association only after applying with and being

membership for the owners of lots in the Ortigas Center, including their successors-in-interest. The filing of

accepted by its Board of Directors. Assuming further that PADCOM was a member of the Association, the latter failed

applications and acceptance thereof by the Board of Directors of the Association are, therefore, mere formalities that

to show that the collection of monthly dues was a valid corporate act duly authorized by a proper resolution of the

can be dispensed with or waived. The provisions of the Associations By-laws cannot in any manner alter or modify

Associations Board of Directors.8

the automatic membership clause imposed on a property owner by virtue of an annotation of encumbrance on his

After due consideration of the issues raised in the motion to dismiss, the trial court rendered a decision dismissing
the complaint.9

The Association likewise asserts that membership therein requires the payment of certain amounts for its operations
and activities, as may be authorized by its Board of Directors. The membership dues are for the common expenses of

The Association appealed the case to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 60099. In
its decision


of 30 June 2000, the Court of Appeals reversed and set aside the trial courts dismissal of Civil Case No.

63801, and decreed as follows:

the homeowners for necessary services.

After a careful examination of the records of this case, the Court sees no reason to disturb the assailed decision. The

Moreover, Article 1311 of the Civil Code provides that contracts take effect between the parties, their assigns and

petition should be denied.

heirs. Since PADCOM is the successor-in-interest of TDC, it follows that the stipulation on automatic membership
with the Association is also binding on the former.

Section 44 of Presidential Decree No. 152911 mandates that:

We are not persuaded by PADCOMs contention that the By-laws of the Association requires application for
SEC. 44. Statutory liens affecting title. Every registered owner receiving a certificate of title in pursuance

membership and acceptance thereof by the Board of Directors. Section 2 of the By-laws 17 reads:

of a decree of registration, and every subsequent purchaser of registered land taking a certificate of title
for value and in good faith, shall hold the same free from all encumbrances except those noted on said

Section 2. Regular Members. Upon acceptance by the Board of Directors of Ortigas Center Association,

certificate and any of the following encumbrances which may be subsisting, namely: xxx

Inc., all real estate owners, or long-term lessees of lots within the boundaries of the Association as
defined in the Articles of Incorporation become regular members, provided, however that the long-term

Under the Torrens system of registration, claims and liens of whatever character, except those mentioned by law,
existing against the land binds the holder of the title and the whole world.12

same. Likewise, regular membership in the Association automatically ceases upon the cessation of a
member to be an owner or long-term lessee of real estate in the area.

It is undisputed that when the land in question was bought by PADCOMs predecessor-in-interest, TDC, from OCLP,
the sale bound TDC to comply with paragraph (G) of the covenants, conditions and restrictions of the Deed of Sale,
which reads as follows:

lessees of a lot or lots in said area shall be considered as the regular members in lieu of the owners of the


A lessee shall be considered a long-term lessee if his lease is in writing and for a period of two (2) years or
more. Membership of a long-term lessee in the Association shall be co-terminus with his legal possession
(or his lease) of the lot/s in the area. Upon the lessees cessation of membership in the Association, the
owner shall automatically succeed the lessee as member thereat.


As lot owner, PADCOM is a regular member of the Association. No application for membership is necessary. If at all,
The owner of this lot, its successor-in-interest hereby binds himself to become a member of the

acceptance by the Board of Directors is a ministerial function considering that PADCOM is deemed to be a regular

ASSOCIATION which will be formed by and among purchasers, fully paid up Lot BUYERS, Building

member upon the acquisition of the lot pursuant to the automatic membership clause annotated in the Certificate of

Owners and the COMPANY in respect to COMPANY OWNED LOTS.

Title of the property and the Deed of Transfer.

The OWNER of this lot shall abide by such rules and regulations that shall be laid down by the

Neither are we convinced by PADCOMs contention that the automatic membership clause is a violation of its freedom

ASSOCIATION in the interest of security, maintenance, beautification and general welfare of the OFFICE

of association. PADCOM was never forced to join the association. It could have avoided such membership by not

BUILDING zone. The ASSOCIATION when organized shall also, among others, provide for and collect

buying the land from TDC. Nobody forced it to buy the land when it bought the building with the annotation of the

assessments which shall constitute a lien on the property, junior only to liens of the Government for

condition or lien on the Certificate of Title thereof and accepted the Deed. PADCOM voluntarily agreed to be bound by


and respect the condition, and thus to join the Association.

Evidently, it was agreed by the parties that dues shall be collected from an automatic member and such fees or

In addition, under the principle of estoppel, PADCOM is barred from disclaiming membership in the Association. In

assessments shall be a lien on the property.

estoppel, a person, who by his act or conduct has induced another to act in a particular manner, is barred from
adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another. 18

This stipulation was likewise annotated at the back of Transfer Certificate of Title No. 457308 issued to TDC. And
when the latter sold the lot to PADCOM on 25 February 1975, the Deed of Transfer expressly stated:15

We agree with the Court of Appeals conclusion from the facts or circumstances it enumerated in its decision and
enumerated above that PADCOM is, indeed, a regular member of the Association. These facts and circumstances are

NOW, THEREFORE, for and in consideration of the foregoing premises, the DEVELOPER, by these

sufficient grounds to apply the doctrine of estoppel against PADCOM.

presents, cedes, transfers and conveys unto the CORPORATION the above-described parcel of land
evidenced by Transfer Certificate of Title No. 457308, as well as the Common and Limited Common Areas

Having ruled that PADCOM is a member of the Association, it is obligated to pay its dues incidental thereto. Article

of the Condominium project mentioned and described in the Master Deed with Declaration of Restrictions

1159 of the Civil Code mandates:

(Annex "A" hereof), free from all liens and encumbrances, except those already annotated at the back of
said Transfer Certificate of Title No. 457308, xxx

Art. 1159. Obligations arising from contracts have the force of law between the contracting parties and
should be complied with in good faith.

This is so because any lien annotated on previous certificates of title should be incorporated in or carried over to the
new transfer certificates of title. Such lien is inseparable from the property as it is a right in rem, a burden on the
property whoever its owner may be. It subsists notwithstanding a change in ownership; in short, the personality of
the owner is disregarded.16 As emphasized earlier, the provision on automatic membership was annotated in the

Assuming in gratis argumenti that PADCOM is not a member of the Association, it cannot evade payment without
violating the equitable principles underlying quasi-contracts. Article 2142 of the Civil Code provides:

Certificate of Title and made a condition in the Deed of Transfer in favor of PADCOM. Consequently, it is bound by
and must comply with the covenant.1wphi1.nt

Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract
to the end that no one shall be unjustly enriched or benefited at the expense of another.

Generally, it may be said that a quasi-contract is based on the presumed will or intent of the obligor dictated by

private respondent. Although private respondent was able to send a telex to PNB to pay petitioner $10,000.00

equity and by the principles of absolute justice. Examples of these principles are: (1) it is presumed that a person

through the Pilipinas Bank, where petitioner had an account, the payment was not effected immediately because the

agrees to that which will benefit him; (2) nobody wants to enrich himself unjustly at the expense of another; or (3) one

payee designated in the telex was only "Wearing Apparel." Upon query by PNB, private respondent sent PNB another

must do unto others what he would want others to do unto him under the same circumstances. 19

telex dated August 27, 1980 stating that the payment was to be made to "Irene's Wearing Apparel." On August 28,
1980, petitioner received the remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.

As resident and lot owner in the Ortigas area, PADCOM was definitely benefited by the Associations acts and
activities to promote the interests and welfare of those who acquire property therein or benefit from the acts or

Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to petitioner, FACETS

activities of the Association.1wphi1.nt

informed FNSB about the situation. On September 8, 1980, unaware that petitioner had already received the
remittance, FACETS informed private respondent about the delay and at the same time amended its instruction by

Finally, PADCOMs argument that the collection of monthly dues has no basis since there was no board resolution
defining how much fees are to be imposed deserves scant consideration. Suffice it is to say that PADCOM never

asking it to effect the payment through the Philippine Commercial and Industrial Bank (hereinafter referred to as
PCIB) instead of PNB.

protested upon receipt of the earlier demands for payment of membership dues. In fact, by proposing a scheme to pay
its obligation, PADCOM cannot belatedly question the Associations authority to assess and collect the fees in

Accordingly, private respondent, which was also unaware that petitioner had already received the remittance of

accordance with the total land area owned or occupied by the members, which finds support in a resolution dated 6

$10,000.00 from PNB instructed the PCIB to pay $10,000.00 to petitioner. Hence, on September 11, 1980, petitioner

November 1982 of the Associations incorporating directors20 and Section 2 of its By-laws.21

received a second $10,000.00 remittance.

WHEREFORE, the petition is hereby DENIED for lack of merit.

Private respondent debited the account of FNSB for the second $10,000.00 remittance effected through PCIB.
However, when FNSB discovered that private respondent had made a duplication of the remittance, it asked for a

Costs against petitioner.


recredit of its account in the amount of $10,000.00. Private respondent complied with the request.

Private respondent asked petitioner for the return of the second remittance of $10,000.00 but the latter refused to
pay. On May 12, 1982 a complaint was filed with the Regional Trial Court, Branch CV, Quezon City which was
decided in favor of petitioner as defendant. The trial court ruled that Art. 2154 of the New Civil Code is not applicable

G.R. No. 82670 September 15, 1989

to the case because the second remittance was made not by mistake but by negligence and petitioner was not
unjustly enriched by virtue thereof [Record, p. 234]. On appeal, the Court of Appeals held that Art. 2154 is applicable

DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING APPAREL,"petitioner,

and reversed the RTC decision. The dispositive portion of the Court of Appeals' decision reads as follows:

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and another one
entered in favor of plaintiff-appellant and against defendant-appellee Domelita (sic) M.
Andres, doing business under the name and style "Irene's Wearing Apparel" to reimburse

Roque A. Tamayo for petitioner.

and/or return to plaintiff-appellant the amount of $10,000.00, its equivalent in Philippine

currency, with interests at the legal rate from the filing of the complaint on May 12, 1982

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent.


Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, which, applying the doctrine
of solutio indebiti, reversed the decision of the Regional Trial Court, Branch CV, Quezon City by deciding in favor of
private respondent.

Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the manufacture of ladies garments,
children's wear, men's apparel and linens for local and foreign buyers. Among its foreign buyers was Facets Funwear,
Inc. (hereinafter referred to as FACETS) of the United States.

In the course of the business transaction between the two, FACETS from time to time remitted certain amounts of
money to petitioner in payment for the items it had purchased. Sometime in August 1980, FACETS instructed the
First National State Bank of New Jersey, Newark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer

until the whole amount is fully paid, plus twenty percent (20%) of the amount due as
attomey's fees; and to pay the costs.

With costs against defendant-appellee.

SO ORDERED. [Rollo, pp. 29-30.]

Thereafter, this petition was filed. The sole issue in this case is whether or not the private respondent has the right to
recover the second $10,000.00 remittance it had delivered to petitioner. The resolution of this issue would hinge on
the applicability of Art. 2154 of the New Civil Code which provides that:

Art. 2154. If something received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises.

This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:

$10,000.00 to petitioner via Philippine National Bank, Sta. Cruz Branch, Manila (hereinafter referred to as PNB).
Art. 1895. If a thing is received when there was no right to claim it and which, through an
Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust Corporation to
effect the above- mentioned transfer through its facilities and to charge the amount to the account of FNSB with

error, has been unduly delivered, an obligation to restore it arises.

In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained the nature of this

remittance was requested by First National State Bank of New Jersey as per instruction of

article thus:

Facets Funwear (Exhibit "J", pp. 4-5).

Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable. This

That there was a mistake in the second remittance of US $10,000.00 is borne out by the fact

legal provision, which determines the quasi-contract of solution indebiti, is one of the

that both remittances have the same reference invoice number which is 263 80. (Exhibits "A-

concrete manifestations of the ancient principle that no one shall enrich himself unjustly at

1- Deposition of Mr. Stanley Panasow" and "A-2-Deposition of Mr. Stanley Panasow").

the expense of another. In the Roman Law Digest the maxim was formulated thus: "Jure
naturae acquum est, neminem cum alterius detrimento et injuria fieri locupletiorem." And the
Partidas declared: "Ninguno non deue enriquecerse tortizeramente con dano de otro." Such
axiom has grown through the centuries in legislation, in the science of law and in court

Plaintiff-appellant made the second remittance on the wrong assumption that defendantappellee did not receive the first remittance of US $10,000.00. [Rollo, pp. 26-27.]

decisions. The lawmaker has found it one of the helpful guides in framing statutes and
codes. Thus, it is unfolded in many articles scattered in the Spanish Civil Code. (See for

It is evident that the claim of petitioner is anchored on the appreciation of the attendant facts which petitioner would

example, articles, 360, 361, 464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and

have this Court review. The Court holds that the finding by the Court of Appeals that the second $10,000.00

1895, Civil Code.) This time-honored aphorism has also been adopted by jurists in their

remittance was made by mistake, being based on substantial evidence, is final and conclusive. The rule regarding

study of the conflict of rights. It has been accepted by the courts, which have not hesitated to

questions of fact being raised with this Court in a petition for certiorari under Rule 45 of the Revised Rules of Court

apply it when the exigencies of right and equity demanded its assertion. It is a part of that

has been stated in Remalante v. Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:

affluent reservoir of justice upon which judicial discretion draws whenever the statutory laws
are inadequate because they do not speak or do so with a confused voice. [at p. 632.]

The rule in this jurisdiction is that only questions of law may be raised in a petition for
certiorari under Rule 45 of the Revised Rules of Court. "The jurisdiction of the Supreme

For this article to apply the following requisites must concur: "(1) that he who paid was not under obligation to do so;

Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the

and, (2) that payment was made by reason of an essential mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563

errors of law imputed to it, its findings of fact being conclusive" [Chan v. Court of Appeals,


G.R. No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line of decisions]. This
Court has emphatically declared that "it is not the function of the Supreme Court to analyze

It is undisputed that private respondent delivered the second $10,000.00 remittance. However, petitioner contends
that the doctrine of solutio indebiti, does not apply because its requisites are absent.

or weigh such evidence all over again, its jurisdiction being limited to reviewing errors of law
that might have been committed by the lower court" [Tiongco v. De la Merced, G.R. No. L24426, July 25, 1974, 58 SCRA 89; Corona v. Court of Appeals, G.R. No. L-62482, April 28,
1983, 121 SCRA 865; Baniqued v. Court of Appeals, G. R. No. L-47531, February 20, 1984,

First, it is argued that petitioner had the right to demand and therefore to retain the second $10,000.00 remittance. It

127 SCRA 596]. "Barring, therefore, a showing that the findings complained of are totally

is alleged that even after the two $10,000.00 remittances are credited to petitioner's receivables from FACETS, the

devoid of support in the record, or that they are so glaringly erroneous as to constitute

latter allegedly still had a balance of $49,324.00. Hence, it is argued that the last $10,000.00 remittance being in

serious abuse of discretion, such findings must stand, for this Court is not expected or

payment of a pre-existing debt, petitioner was not thereby unjustly enriched.

required to examine or contrast the oral and documentary evidence submitted by the parties"
[Santa Ana, Jr. v. Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 9731. [at pp.

The contention is without merit.

The contract of petitioner, as regards the sale of garments and other textile products, was with FACETS. It was the
latter and not private respondent which was indebted to petitioner. On the other hand, the contract for the


Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the wrongful act of a
third person, the loss must be borne by the one whose negligence was the proximate cause of the loss.

transmittal of dollars from the United States to petitioner was entered into by private respondent with FNSB.
Petitioner, although named as the payee was not privy to the contract of remittance of dollars. Neither was private

The rule is that principles of equity cannot be applied if there is a provision of law specifically applicable to a case

respondent a party to the contract of sale between petitioner and FACETS. There being no contractual relation

[Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-29701, March 16, 1987,148 SCRA 433; Zabat, Jr. v. Court of

between them, petitioner has no right to apply the second $10,000.00 remittance delivered by mistake by private

Appeals, G.R. No. L36958, July 10, 1986, 142 SCRA 587; Rural Bank of Paranaque, Inc. v. Remolado, G.R. No.

respondent to the outstanding account of FACETS.

62051, March 18, 1985, 135 SCRA 409; Cruz v. Pahati, 98 Phil. 788 (1956)]. Hence, the Court in the case of De
Garcia v. Court of Appeals, G.R. No. L-20264, January 30, 1971, 37 SCRA 129, citing Aznar v. Yapdiangco, G.R. No.

Petitioner next contends that the payment by respondent bank of the second $10,000.00 remittance was not made by

L-18536, March 31, 1965, 13 SCRA 486, held:

mistake but was the result of negligence of its employees. In connection with this the Court of Appeals made the
following finding of facts:

... The common law principle that where one of two innocent persons must suffer by a fraud
perpetrated by another, the law imposes the loss upon the party who, by his misplaced

The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the written
interrogatories sent to the First National State Bank of New Jersey through the Consulate
General of the Philippines in New York, Adelaide C. Schachel, the investigation and
reconciliation clerk in the said bank testified that a request to remit a payment for Facet

confidence, has enabled the fraud to be committed, cannot be applied in a case which is
covered by an express provision of the new Civil Code, specifically Article 559. Between a
common law principle and a statutory provision, the latter must prevail in this jurisdiction.
[at p. 135.]

Funwear Inc. was made in August, 1980. The total amount which the First National State
Bank of New Jersey actually requested the plaintiff-appellant Manufacturers Hanover &

Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio indebiti, applies in the case at

Trust Corporation to remit to Irene's Wearing Apparel was US $10,000.00. Only one

bar, the Court must reject the common law principle invoked by petitioner.

Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the fact that from the time the


second $10,000.00 remittance was made, five hundred and ten days had elapsed before private respondent
demanded the return thereof. Needless to say, private respondent instituted the complaint for recovery of the second
$10,000.00 remittance well within the six years prescriptive period for actions based upon a quasi-contract [Art. 1145

the [respondent] shall transfer and surrender to [petitioner] the condominium

units abovestated in accordance with the following schedule:

80% of units upon posting and acceptance by [respondent] of the

performance bond [and]


20% or remaining balance upon completion of the project as

provided in the construction contract and simultaneous with the
posting by [petitioner] of the reglementary guarantee bond.

of the New Civil Code].

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is hereby AFFIRMED.


Significantly, the supplemental agreement adopted those provisions of the construction contract which it did
not specifically discuss or provide for.[10] Among those carried over was the designation of GEMM Construction
Corporation (GEMM) as the project's construction manager.[11]

G.R. No. 158768
PUNO, C.J., Chairperson,

-v e r s u s-



the contract period shall be fifteen (15) months reckoned from the release of the
condominium certificates of title (CCTs) covering eighty percent (80%) of the
units transferable to [petitioner] as aforesaid[.]

Petitioner started working on the project in February 1994.

On June 30, 1994, respondent executed a deed of sale [12] (covering 114 condominium units and 20 parking
slots of the MPT collectively valued by the parties at P112,416,716.88)[13] in favor of petitioner pursuant to the fullswapping payment provision of the supplemental agreement.
Shortly thereafter, petitioner sold some of its units to third persons. [14]

February 12, 2008


This petition for review on certiorari [1] seeks to set aside the decision of the Court of Appeals (CA) in CA-G.R. CV
No. 61353[2] and its resolution[3] denying reconsideration.

In September 1995, respondent engaged the services of Integratech, Inc. (ITI), an engineering consultancy firm,
to evaluate the progress of the project. [15] In its September 7, 1995 report, [16]ITI informed respondent that petitioner,
at that point, had only accomplished 31.89% of the project (or was 11 months and six days behind schedule).[17]
Meanwhile, petitioner and respondent were discussing the possibility of the latters take over of the projects
supervision. Despite ongoing negotiations, respondent did not obtain petitioners consent in hiring ITI as the projects
construction manager. Neither did it inform petitioner of ITIs September 7, 1995 report.
On October 12, 1995, petitioner sought to confirm respondent's plan to take over the project. [18] Its letter stated:
The mutual agreement arrived at sometime in the last week of August 1995
for [respondent] to take over the construction supervision of the balance of the [project]
from [petitioner's] [e]ngineering staff and complete [the] same by December 31, 1995 as
promised by [petitioner's] engineer.
The [petitioner's] accomplished works as of this date of [t]ake over is of acceptable
quality in materials and workmanship.

In 1992, respondent Primetown Property Group, Inc. awarded the contract for the structural works [4] of its 32storey Makati Prime Tower (MPT) to petitioner Titan-Ikeda Construction and Development Corporation. [5] The parties
formalized their agreement in a construction contract [6]dated February 4, 1993.[7]

This mutual agreement on the take over should not be misconstrued in any other
way except that the take over is part of the long range plan of [respondent] that [petitioner],
in the spirit of cooperation, agreed to hand over the construction supervision
to [respondent] as requested. (emphasis supplied)[19]

Upon the completion of MPT's structural works, respondent awarded the P130,000,000 contract for the tower's
architectural works[8] (project) to petitioner. Thus, on January 31, 1994, the parties executed a supplemental
agreement.[9] The salient portions thereof were:

Engineers Antonio Co, general construction manager of respondent, and Luzon Y. Tablante, project manager of
petitioner, signed the letter.



the [project] shall cover the scope of work of the detailed construction bid plans
and specifications and bid documents dated 28 September 1993, attached and
forming an integral part hereof as Annex A.
the contract price for the said works shall be P130 million.
the payment terms shall be full swapping or full payment in condominium
units. The condominium units earmarked for the [petitioner] are shown in the
attached Annex B.


In its September 7, 1995 report, ITI estimated that petitioner should have accomplished 48.71% of the
project as of the October 12, 1995 takeover date. [20] Petitioner repudiated this figure[21] but qualifiedly admitted that it
did not finish the project.[22] Records showed that respondent did not merely take over the supervision of the project
but took full control thereof.[23]
Petitioner consequently conducted an inventory. [24] On the basis thereof, petitioner demanded from respondent
the payment of its balance amounting to P1,779,744.85.[25]

On February 19, 1996, petitioner sent a second letter to respondent demanding P2,023,876.25. This new figure
included the cost of materials (P244,331.40) petitioner advanced from December 5, 1995 to January 26, 1996.[26]
On November 22, 1996, petitioner demanded from respondent the delivery of MPT's management
certificate[27] and the keys to the condominium units and the payment of its (respondent's) balance.[28]
Because respondent ignored petitioner's demand, petitioner, on December 9, 1996, filed a complaint for specific
performance[29] in the Housing and Land Use Regulatory Board (HLURB).
While the complaint for specific performance was pending in the HLURB, respondent sent a demand letter to
petitioner asking it to reimburse the actual costs incurred in finishing the project (or P69,785,923.47).[30] In view of the
pendency of the HLURB case, petitioner did not heed respondent's demands.
On April 29, 1997, the HLURB rendered a decision in favor of petitioner. [31] It ruled that the instrument
executed on June 30, 1994 was a deed of absolute sale because the conveyance of the condominium units and
parking slots was not subject to any condition.[32] Thus, it ordered respondent to issue MPTs management certificate
and to deliver the keys to the condominium units to petitioner. [33] Respondent did not appeal this decision.
Consequently, a writ of execution was issued upon its finality.[34]
Undaunted by the finality of the HLURB decision, respondent filed a complaint for collection of sum of
money[35] against petitioner in the Regional Trial Court (RTC) of Makati City, Branch 58 on July 2, 1997. It prayed for
the reimbursement of the value of the projects unfinished portion amounting to P66,677,000.[36]
During trial, the RTC found that because respondent modified the MPT's architectural design, petitioner had to
adjust the scope of work.[37] Moreover, respondent belatedly informed petitioner of those modifications. It also failed to
deliver the concrete mix and rebars according to schedule. For this reason, petitioner was not responsible for the
project's delay.[38] The trial court thus allowed petitioner to set-off respondent's other outstanding liabilities with
respondents excess payment in the project. [39] It concluded that respondent owed petitioner P2,023,876.25.[40] In
addition, because respondent refused to deliver the keys to the condominium units and the management certificate to
petitioner, the RTC found that petitioner lost rental income amounting to US$1,665,260. [41] The dispositive portion of
the RTC decision stated:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered dismissing
[respondent's] [c]omplaint for lack of merit. On the other hand, finding preponderance of
evidence to sustain [petitioner's] counterclaim, judgment is hereby rendered in favor of
[petitioner] ordering [respondent] to pay the former:

The unpaid balance of the consideration for [petitioner's] services in [the

project] in the amount of P2,023,867.25 with legal interest from the date of
demand until fully paid;


Compensatory damages in the amount of US$1,665,260 or its peso equivalent

at the current foreign exchange rate representing lost rental income due only as
of July 1997 and the accrued lost earnings from then on until the date of actual
payment, with legal interest from the date of demand until fully paid; and


Attorney's fees in the amount of P100,000 as acceptance fee, P1,000

appearance fee per hearing and 25% of the total amount awarded to [petitioner].
With costs against the [respondent].

Respondent appealed the RTC decision to the CA. [43] The appellate court found that respondent fully performed
its obligation when it executed the June 30, 1994 deed of absolute sale in favor of petitioner. [44] Moreover, ITI's report
clearly established that petitioner had completed only 48.71% of the project as of October 12, 1995, the takeover date.
Not only did it incur delay in the performance of its obligation but petitioner also failed to finish the project. The CA
ruled that respondent was entitled to recover the value of the unfinished portion of the project under the principle of
unjust enrichment.[45] Thus:
WHEREFORE, the appealed decision is REVERSED and a new one entered
dismissing [petitioner's] counterclaims of P2,023,867.25 representing unpaid balance for
[its] services in [the project]; US$1,665,260 as accrued lost earnings, and attorney's fees.
[Petitioner] is hereby ordered to return to [respondent] the amount of P66,677,000
representing the value of unfinished [portion of the project], plus legal interest thereon until
fully paid. Upon payment by [petitioner] of the aforementioned amount, [respondent] is

hereby ordered to deliver the keys and [m]anagement [c]ertificate of the [Makati Prime
Tower] paid to [petitioner] as consideration for the [project].[46]
Petitioner moved for reconsideration but it was denied. Hence, this petition.
Petitioner contends that the CA erred in giving weight to ITI's report because the project evaluation was
commissioned only by respondent,[47] in disregard of industry practice. Project evaluations are agreed upon by the
parties and conducted by a disinterested third party.[48]
We grant the petition.


As a general rule, only questions of law may be raised in a petition for review on certiorari. Factual issues are
entertained only in exceptional cases such as where the findings of fact of the CA and the trial court are conflicting.

Here, a glaring contradiction exists between the factual findings of the RTC and the CA. The trial court found
that respondent contributed to the project's delay because it belatedly communicated the modifications and failed to
deliver the necessary materials on time. The CA, however, found that petitioner incurred delay in the performance of
its obligation. It relied on ITI's report which stated that petitioner had accomplished only 48.71% of the project as of
October 12, 1995.

JANUARY 31, 1994


A contract is a meeting of the minds between two persons whereby one binds himself, with respect to the other,
to give something or to render some service. [50] This case involved two contracts entered into by the parties with
regard to the project.
The parties first entered into a contract for a piece of work [51] when they executed the supplemental agreement.
Petitioner as contractor bound itself to execute the project for respondent, the owner/developer, in consideration of a
price certain (P130,000,000). The supplemental agreement was reciprocal in nature because the obligation of
respondent to pay the entire contract price depended on the obligation of petitioner to complete the project (and vice
Thereafter, the parties entered into a second contract. They agreed to extinguish the supplemental agreement
as evidenced by the October 12, 1995 letter-agreement which was dulyacknowledged by their respective
While the October 12, 1995 letter-agreement stated that respondent was to take over merely the supervision of
the project, it actually took over the whole project itself. In fact, respondent subsequently hired two contractors in
petitioner's stead.[53] Moreover, petitioner's project engineer at site only monitored the progress of architectural works
undertaken in its condominium units.[54]Petitioner never objected to this arrangement; hence, it voluntarily
surrendered its participation in the project. Moreover, it judicially admitted in its answer that respondent took over
the entire project, not merely its supervision, pursuant to its (respondents) long-range plans.[55]
Because the parties agreed to extinguish the supplemental agreement, they were no longer required to fully
perform their respective obligations. Petitioner was relieved of its obligation to complete the project while respondent
was freed of its obligation to pay the entire contract price. However, respondent, by executing the June 30, 1994 deed
of absolute sale, was deemed to have paid P112,416,716.88. Nevertheless, because petitioner applied part of what it
received to respondents outstanding liabilities,[56] it admitted overpayment.
Because petitioner acknowledged that it had been overpaid, it was obliged to return the excess to respondent.
Embodying the principle of solutio indebiti, Article 2154 of the Civil Code provides:

Article 2154. 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.

persons, petitioner shall deliver the proceeds of the sale thereof or assign the actions for collection to respondent as
required by Article 2160.

For the extra-contractual obligation of solutio indebiti to arise, the following requisites must be proven:

the absence of a right to collect the excess sums and


the payment was made by mistake.[57]

With regard to the first requisite, because the supplemental agreement had been extinguished by the mutual
agreement of the parties, petitioner became entitled only to the cost of services it actually rendered ( i.e., that fraction
of the project cost in proportion to the percentage of its actual accomplishment in the project). It was not entitled to
the excess (or extent of overpayment).
On the second requisite, Article 2163 of the Civil Code provides:
Article 2163. It is presumed that there was a mistake in the payment if something which
had never been due or had already been paid was delivered; but, he from whom the return
is claimed may prove that the delivery was made out of liberality or for any other just
cause. (emphasis supplied)
In this instance, respondent paid part of the contract price under the assumption that petitioner would
complete the project within the stipulated period. However, after the supplemental agreement was extinguished,
petitioner ceased working on the project. Therefore, the compensation petitioner received in excess of the cost of its
actual accomplishment as of October 12, 1995 was never due. The condominium units and parking slots
corresponding to the said excess were mistakenly delivered by respondent and were therefore not due to petitioner.
Stated simply, respondent erroneously delivered excess units to petitioner and the latter, pursuant to Article
2154, was obliged to the return them to respondent.[58] Article 2160 of the Civil Code provides:
Article 2160. He who in good faith accepts an undue payment of a thing
certain and determinate shall only be responsible for the impairment or loss of the same or
its accessories and accessions insofar as he has thereby been benefited. If he has alienated
it, he shall return the price or assign the action to collect the sum.

One who receives payment by mistake in good faith is, as a general rule, only liable to return the thing
delivered.[59] If he benefited therefrom, he is also liable for the impairment or loss of the thing delivered and its
accessories and accessions.[60] If he sold the thing delivered, he should either deliver the proceeds of the sale or assign
the action to collect to the other party.[61]
The situation is, however, complicated by the following facts:
the basis of the valuation (P112,416,716.99) of the condominium units and parking slots covered by
the June 30, 1994 deed of sale is unknown;

the percentage of petitioner's actual accomplishment in the project has not been determined and


the records of this case do not show the actual number of condominium units and parking slots sold
by petitioners.

Because this Court is not a trier of facts, the determination of these matters should be remanded to the
RTC for reception of further evidence.
The RTC must first determine the percentage of the project petitioner actually completed and its proportionate
cost. This will be the amount due to petitioner. Thereafter, based on the stipulated valuation in the June 30, 1994
deed of sale, the RTC shall determine how many condominium units and parking slots correspond to the amount due
to petitioner. It will only be the management certificate and the keys to these units that petitioner will be entitled to.
The remaining units, having been mistakenly delivered by respondent, will therefore be the subject of solutio indebiti.

Mora or delay is the failure to perform the obligation in due time because of dolo (malice) orculpa (negligence).
A debtor is deemed to have violated his obligation to the creditor from the time the latter makes a demand. Once
the creditor makes a demand, the debtor incurs mora or delay.[64]

The construction contract[65] provided a procedure for protesting delay:

Article XIV
15.1. If at any time during the effectivity of this contract, [PETITIONER] shall incur
unreasonable delay or slippages of more than fifteen percent (15%) of the scheduled work
program, [RESPONDENT] should notify [PETITIONER] in writing to accelerate the work and
reduce, if not erase, slippage. If after the lapse of sixty (60) days from receipt of such
notice, [PETITIONER] fails to rectify the delay or slippage, [RESPONDENT] shall have the
right to terminate this contract except in cases where the same was caused by force
majeure. FORCE MAJEURE as contemplated herein, and in determination of delay
includes, but is not limited to, typhoon, flood, earthquake, coup d'etat, rebellion, sedition,
transport strike, stoppage of work, mass public action that prevents workers from
reporting for work, and such other causes beyond [PETITIONER'S] control. [66] (emphasis


Respondent never sent petitioner a written demand asking it to accelerate work on the project and reduce, if
not eliminate, slippage. If delay had truly been the reason why respondent took over the project, it would have sent a
written demand as required by the construction contract. Moreover, according to the October 12, 1995 letteragreement, respondent took over the project for the sole reason that such move was part of its (respondent's) longterm plan.
Respondent, on the other hand, relied on ITI's September 7, 1995 report. The construction contract named
GEMM, not ITI, as construction manager. [67] Because petitioner did not consent to the change of the designated
construction manager, ITI's September 7, 1995 report could not bind it.
In view of the foregoing, we hold that petitioner did not incur delay in the performance of its obligation.

The supplemental agreement was a contract for a stipulated price. [68] In such contracts, the recovery of
additional costs (incurred due to changes in plans or specifications) is governed by Article 1724 of the Civil Code.
Article 1724. The contractor who undertakes to build a structure or any other work
for a stipulated price, in conformity with plans and specifications agreed upon with the
landowner, can neither withdraw from the contract nor demand an increase in the price on
account of higher cost of labor or materials, save when there has been a change in plans
and specifications, provided:


What exactly must petitioner give back to respondent? Under Article 2160 in relation to Article 2154, it should
return to respondent the condominium units and parking slots in excess of the value of its actual accomplishment
(i.e., the amount due to it) as of October 12, 1995. If theseproperties include units and/or slots already sold to third



such change has been authorized by the proprietor in writing; and


the additional price to be paid to the contractor has been determined in writing by
both parties.

In Powton Conglomerate, Inc. v. Agcolicol, [69] we reiterated that a claim for the cost of additional work arising
from changes in the scope of work can only be allowed upon the:

written authority from the developer/owner ordering/allowing the changes in work;



written agreement of parties with regard to the increase in cost (or price) due to the
change in work or design modification. [70]

Republic of the Philippines



Compliance with the two requisites of Article 1724, a specific provision governing additional
works, is a condition precedent of the recovery. The absence of one or the other bars the
recovery of additional costs. Neither the authority for the changes made nor the additional
price to be paid therefor may be proved by any other evidence for purposes of recovery.
(emphasis supplied)
Petitioner submitted neither one. In addition, petitioners project coordinator Estellita Garcia testified that
respondent never approved any change order. [72] Thus, under Article 1724 and pursuant to our ruling in Powton
Conglomerate, Inc., petitioner cannot recover the cost it incurred in effecting the design modifications. A contractor
who fails to secure the owner or developer's written authority to changes in the work or written assent to the
additional cost to be incurred cannot invoke the principle of unjust enrichment.[73]
Indemnification for damages comprehends not only the loss suffered (actual damages ordamnum emergens) but
also the claimant's lost profits (compensatory damages or lucrum cessans). For compensatory damages to be awarded,
it is necessary to prove the actual amount of the alleged loss by preponderance of evidence. [74]
The RTC awarded compensatory damages based on the rental pool rates submitted by petitioner [75] and on the
premise that all those units would have been leased had respondent only finished the project by December 31, 1995.
However, other than bare assertions, petitioner submitted no proof that the rental pool was in fact able to lease out
the units. We thus hold that the losses sustained by petitioner were merely speculative and there was no basis for
the award.


G.R. No. 170498

January 9, 2013





We resolve petitioner Metropolitan Bank & Trust Company's (Metro bank's) petition for review on certiorari 1seeking
the reversal of the decision2 dated August 25, 2005 and the resolution3 dated November 17, 2005 of the Court of
Appeals (CA) in CA-G.R. SP No. 86336. The assailed decision affirmed the order4 dated May 7, 2004 of the Regional
Trial Court (RTC) of Quezon City, Branch 80. The RTC had denied the admission of Metrobank's Fourth-Party
Complaint5 against the Estate of Jose L. Chua for being a money claim that falls under Section 5, Rule 86 of the
Rules of Court; the claim should have been filed in the pending judicial settlement of Chuas estate before the RTC of



Pasay City. The CA affirmed the RTCs order based on the same ground.


Factual Antecedents

Since respondent did not repudiate petitioner's other claims stated in the inventory in the RTC and CA, it is
estopped from questioning the validity thereof. [78] However, because some of petitioner's claims have been disallowed,
we remand the records of this case to the RTC for the computation of respondent's liability. [79]
WHEREFORE, the petition is hereby GRANTED.
The March 15, 2002 decision and May 29, 2003 resolution of the Court of Appeals in CA-G.R. CV No. 61353
and the August 5, 1998 decision of the Regional Trial Court, Branch 58, Makati City in Civil Case No. 97-1501 are
hereby SET ASIDE. New judgment is entered:


ordering petitioner Titan-Ikeda Construction and Development Corporation to return to respondent

Primetown Property Group, Inc. the condominium units and parking slots corresponding to the payment
made in excess of the proportionate (project) cost of its actual accomplishment as of October 12, 1995,
subject to its (petitioners) allowable claims as stated in the inventory and
dismissing petitioner Titan-Ikeda Construction and Development Corporations claims for the cost of
additional work (or change order) and damages.

The records of this case are remanded to the Regional Trial Court of Makati City, Branch 58 for:


the reception of additional evidence to determine

the percentage of the architectural work actually completed by petitioner Titan-Ikeda
Construction and Development Corporation as of October 12, 1995 on the
Makati Prime Tower and
the number of condominium units and parking slots sold by petitioner Titan-Ikeda
Construction and Development Corporation to third persons;
the computation of petitioner Titan-Ikeda Construction and Development Corporation's
actual liability to respondent Primetown Property Group, Inc. or vice-versa, and the
determination of imposable interests and/or penalties, if any.

On October 5, 2000, Sherwood Holdings Corporation, Inc. (SHCI) filed a complaint for sum of money against Absolute
Management Corporation (AMC). The complaint was docketed as Civil Case No. Q-00-42105 and was assigned to the
RTC of Quezon City, Branch 80.6

SHCI alleged in its complaint that it made advance payments to AMC for the purchase of 27,000 pieces of plywood
and 16,500 plyboards in the sum of P12,277,500.00, covered by Metrobank Check Nos. 1407668502, 140768507,
140768530, 140768531, 140768532, 140768533 and 140768534. These checks were all crossed, and were all made
payable to AMC. They were given to Chua, AMCs General Manager, in 1998.7

Chua died in 1999,

and a special proceeding for the settlement of his estate was commenced before the RTC of

Pasay City. This proceeding was pending at the time AMC filed its answer with counterclaims and third-party

SHCI made demands on AMC, after Chuas death, for allegedly undelivered items worth P8,331,700.00. According to
AMC, these transactions could not be found in its records. Upon investigation, AMC discovered that in 1998, Chua
received from SHCI 18 Metrobank checks worth P31,807,500.00. These were all payable to AMC and were crossed or
"for payees account only."10

In its answer with counterclaims and third-party complaint,11 AMC averred that it had no knowledge of Chuas
transactions with SHCI and it did not receive any money from the latter. AMC also asked the RTC to hold Metrobank
liable for the subject checks in case it is adjudged liable to SHCI.

Metrobank filed a motion for bill of particulars,12 seeking to clarify certain ambiguous statements in AMCs answer.

ordinary action, it cannot resolve matters pertaining to special proceedings because the latter is subject to specific

The RTC granted the motion but AMC failed to submit the required bill of particulars. Hence, Metrobank filed a


motion to strike out the third-party complaint.13

Metrobank responded to the RTC ruling by filing a petition for certiorari 28 under Rule 65 before the CA.
In the meantime, Metrobank filed a motion to dismiss14 against AMC on the ground that the latter engaged in
prohibited forum shopping. According to Metrobank, AMCs claim against it is the same claim that it raised against

The CAs Ruling

Chuas estate in Special Proceedings No. 99-0023 before the RTC of Pasay City, Branch 112. The RTC subsequently
denied this motion.15

The CA affirmed the RTCs ruling that Metrobanks fourth-party complaint should have been filed in Special
The RTC of Quezon City opted to defer consideration16 of Metrobanks motion to strike out third-party complaint17 and
it instead granted AMCs motion for leave to serve written interrogatories on the third-party defendant.



Metrobank filed its answer to the written interrogatories, AMC was again directed by the RTC, in an order



Proceedings No. 99-0023.29 According to the CA, the relief that Metrobank prayed for was based on a quasi-contract
and was a money claim categorized as an implied contract that should be filed under Section 5, Rule 86 of the Rules
of Court.

August 13, 2003, to submit its bill of particulars. Instead, AMC filed a motion for reconsideration 20 which was denied
in an order21 dated October 28, 2003. AMC still did not file its bill of particulars. The RTC, on the other hand, did not

Based on the statutory construction principle of lex specialis derogat generali, the CA held that Section 5, Rule 86 of

act on Metrobanks motion to strike out AMCs third-party complaint.22

the Rules of Court is a special provision that should prevail over the general provisions of Section 11, Rule 6 of the
Rules of Court. The latter applies to money claims in ordinary actions while a money claim against a person already

In its answer


dated December 1, 2003, Metrobank admitted that it deposited the checks in question to the account

of Ayala Lumber and Hardware, a sole proprietorship Chua owned and managed. The deposit was allegedly done with

deceased falls under the settlement of his estate that is governed by the rules on special proceedings. If at all, rules
for ordinary actions only apply suppletorily to special proceedings.

the knowledge and consent of AMC. According to

The Present Petition
Metrobank, Chua then gave the assurance that the arrangement for the handling of the checks carried AMCs
consent. Chua also submitted documents showing his position and interest in AMC. These documents, as well as

In its present petition for review on certiorari,30 Metrobank asserts that it should be allowed to file a fourth-party

AMCs admission in its answer that it allowed Chua to manage AMC with a relative free hand, show that it knew of

complaint against Chuas estate in the proceedings before the RTC; its fourth-party complaint was filed merely to

Chuas arrangement with Metrobank. Further, Chuas records show that the proceeds of the checks were remitted to

enforce its right to be reimbursed by Chuas estate in case Metrobank is held liable to AMC. Hence, Section 11, Rule 6

AMC which cannot therefore now claim that it did not receive these proceeds.

of the Rules of Court should apply.

Metrobank also raised the defense of estoppel. According to Metrobank, AMC had knowledge of its arrangements with

AMC, in its comment,31 maintains the line that the CA and the RTC rulings should be followed, i.e., that Metrobanks

Chua for several years. Despite this arrangement, AMC did not object to nor did it call the attention of Metrobank

claim is a quasi-contract that should be filed as a claim under Section 5, Rule 86 of the Rules of Court.

about Chuas alleged lack of authority to deposit the checks in Ayala Lumber and Hardwares account. At this point,
AMC is already estopped from questioning Chuas authority to deposit these checks in Ayala Lumber and Hardwares

AMC also challenges the form of Metrobanks petition for failure to comply with Section 4, Rule 45 of the Rules of
Court. This provision requires petitions filed before the Supreme Court to be accompanied by "such material portions
of the record as would support the petition."

Lastly, Metrobank asserted that AMC gave Chua unbridled control in managing AMCs affairs. This measure of
control amounted to gross negligence that was the proximate cause of the loss that AMC must now bear.

According to AMC, the petitions annexes are mostly Metrobanks pleadings and court issuances. It did not append all
relevant AMC pleadings before the RTC and the CA. For this reason, the petition should have been dismissed

Subsequently, Metrobank filed a motion for leave to admit fourth-party complaint 24 against Chuas estate. It alleged


that Chuas estate should reimburse Metrobank in case it would be held liable in the third-party complaint filed
against it by AMC.

The RTCs Ruling

In an order25 dated May 7, 2004, the RTC denied Metrobanks motion. It likewise denied Metrobanks motion for
reconsideration in an order26 dated July 7, 2004.

The RTC categorized Metrobanks allegation in the fourth-party complaint as a "cobro de lo indebido" 27 a kind of
quasi-contract that mandates recovery of what has been improperly paid. Quasi-contracts fall within the concept of

The parties arguments, properly joined, present to us the following issues:

1) Whether the petition for review on certiorari filed by Metrobank before the Supreme Court complies
with Section 4, Rule 45 of the Rules of Court; and

2) Whether Metrobanks fourth-party complaint against Chuas estate should be allowed.

implied contracts that must be included in the claims required to be filed with the judicial settlement of the
deceaseds estate under Section 5, Rule 86 of the Rules of Court. As such claim, it should have been filed in Special

The Courts Ruling

Proceedings No. 99-0023, not before the RTC as a fourth-party complaint. The RTC, acting in the exercise of its
general jurisdiction, does not have the authority to adjudicate the fourth-party complaint. As a trial court hearing an

The Present Petition Complies With Section 4, Rule 45 of the Rules of Court

AMC posits that Metrobanks failure to append relevant AMC pleadings submitted to the RTC and to the CA violated

filed in the settlement of the estate of Garcias predecessor, as mandated by Section 5, Rule 87 of the Rules of Court

Section 4, Rule 45 of the Rules of Court,32 and is a sufficient ground to dismiss the petition under Section 5, Rule 45

(now Section 5, Rule 86).

of the Rules of Court.33

The Court held under these facts that a claim for necessary expenses spent as previous possessor of the land is a
We disagree with AMCs position.

kind of quasi-contract. Citing Leung Ben v. OBrien,40 it explained that the term "implied contracts," as used in our
remedial law, originated from the common law where obligations derived from quasi-contracts and from law are both

In F.A.T. Kee Computer Systems, Inc. v. Online Networks International, Inc.,34 Online Networks International, Inc.
similarly assailed F.A.T. Kee Computer Systems, Inc.s failure to attach the transcript of stenographic notes (TSN) of
the RTC proceedings, and claimed this omission to be a violation of Section 4, Rule 45 of the Rules of Court that

considered as implied contracts. Thus, the term quasi-contract is included in the concept "implied contracts" as used
in the Rules of Court. Accordingly, liabilities of the deceased arising from quasi-contracts should be filed as claims in
the settlement of his estate, as provided in Section 5, Rule 86 of the Rules of Court.41

warranted the petitions dismissal. The Court held that the defect was not fatal, as the TSN of the proceedings before
the RTC forms part of the records of the case. Thus, there was no incurable omission that warranted the outright

Metrobanks fourth-party complaint is

dismissal of the petition.

based on quasi-contract

The Court significantly pointed out in F.A.T. Kee that the requirement in Section 4, Rule 45 of the Rules of Court is

Both the RTC and the CA described Metrobanks claim against Chuas estate as one based on quasi-contract. A

not meant to be an absolute rule whose violation would automatically lead to the petitions dismissal. 35 The Rules of

quasi-contract involves a juridical relation that the law creates on the basis of certain voluntary, unilateral and lawful

Court has not been intended to be totally rigid. In fact, the Rules of Court provides that the Supreme Court "may

acts of a person, to avoid unjust enrichment.42 The Civil Code provides an enumeration of quasi-contracts,43 but the

require or allow the filing of such pleadings, briefs, memoranda or documents as it may deem necessary within such

list is not exhaustive and merely provides examples.44

periods and under such conditions as it may consider appropriate";36 and "[i]f the petition is given due course, the
Supreme Court may require the elevation of the complete record of the case or specified parts thereof within fifteen
(15) days from notice."37 These provisions are in keeping with the overriding standard that procedural rules should be
liberally construed to promote their objective and to assist the parties in obtaining a just, speedy and inexpensive
determination of every action or proceeding.38

Under this guiding principle, we do not see Metrobanks omission to be a fatal one that should warrant the petitions
outright dismissal. To be sure, the omission to submit the adverse partys pleadings in a petition before the Court is
not a commendable practice as it may lead to an unduly biased narration of facts and arguments that masks the real
issues before the Court. Such skewed presentation could lead to the waste of the Courts time in sifting through the

According to the CA, Metrobanks fourth-party complaint falls under the quasi-contracts enunciated in Article 2154
of the Civil Code.45 Article 2154 embodies the concept "solutio indebiti" which arises when something is delivered
through mistake to a person who has no right to demand it. It obligates the latter to return what has been received
through mistake.46

Solutio indebiti, as defined in Article 2154 of the Civil Code, has two indispensable requisites: first, that something
has been unduly delivered through mistake; and second, that something was received when there was no right to
demand it.47

maze of the parties narrations of facts and arguments and is a danger the Rules of Court seeks to avoid.
In its fourth-party complaint, Metrobank claims that Chuas estate should reimburse it if it becomes liable on the
Our examination of Metrobanks petition shows that it contains AMCs opposition to its motion to admit fourth-party

checks that it deposited to Ayala Lumber and Hardwares account upon Chuas instructions.

complaint among its annexes. The rest of the pleadings have been subsequently submitted as attachments in
Metrobanks Reply. A reading of these pleadings shows that their arguments are the same as those stated in the

This fulfills the requisites of solutio indebiti. First, Metrobank acted in a manner akin to a mistake when it deposited

orders of the trial court and the Court of Appeals. Thus, even if Metrobanks petition did not contain some of AMCs

the AMC checks to Ayala Lumber and Hardwares account; because of Chuas control over AMCs operations,

pleadings, the Court still had the benefit of a clear narration of facts and arguments according to both parties

Metrobank assumed that the checks payable to AMC could be deposited to Ayala Lumber and Hardwares account.

perspectives. In this broader view, the mischief that the Rules of Court seeks to avoid has not really been present. If

Second, Ayala Lumber and Hardware had no right to demand and receive the checks that were deposited to its

at all, the omission is not a grievous one that the spirit of liberality cannot address.

account; despite Chuas control over AMC and Ayala Lumber and Hardware, the two entities are distinct, and checks
exclusively and expressly payable to one cannot be deposited in the account of the other. This disjunct created an

The Merits of the Main Issue

The main issue poses to us two essential points that must be addressed. First, are quasi-contracts included in claims
that should be filed pursuant to Rule 86, Section 5 of the Rules of Court? Second, if so, is Metrobanks claim against
the Estate of Jose Chua based on a quasi-contract?

obligation on the part of Ayala Lumber and Hardware, through its sole proprietor, Chua, to return the amount of
these checks to Metrobank.

The Court notes, however, that its description of Metrobanks fourth-party complaint as a claimclosely analogous to
solutio indebiti is only to determine the validity of the lower courts orders denying it. It is not an adjudication
determining the liability of Chuas estate against Metrobank. The appropriate trial court should still determine
whether Metrobank has a lawful claim against Chuas estate based on quasi-contract.1wphi1

Quasi-contracts are included in

claims that should be filed under Rule
86, Section 5 of the Rules of Court

Metrobanks fourth-party complaint,

as a contingent claim, falls within the
claims that should be filed under

In Maclan v. Garcia,39 Gabriel Maclan filed a civil case to recover from Ruben Garcia the necessary expenses he spent

Section 5, Rule 86 of the Rules of

as possessor of a piece of land. Garcia acquired the land as an heir of its previous owner. He set up the defense that


this claim should have been filed in the special proceedings to settle the estate of his predecessor. Maclan, on the
other hand, contended that his claim arises from law and not from contract, express or implied. Thus, it need not be

A distinctive character of Metrobanks fourth-party complaint is its contingent nature the claim depends on the


possibility that Metrobank would be adjudged liable to AMC, a future event that may or may not happen. This

WILLIAM A. WILSON, ET AL., defendants-appellees.

characteristic unmistakably marks the complaint as a contingent one that must be included in the claims falling
under the terms of Section 5, Rule 86 of the Rules of Court:

Sec. 5. Claims which must be filed under the notice. If not filed, barred; exceptions. All claims for money against the

Hartigan, Marple, Rohde & Gutierrez for appellant.

F.G. Waite and H.D. Terrell for appellees.

decedent, arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for
funeral expenses and expenses for the last sickness of the decedent, and judgment for money against the decedent,


must be filed within the time limited in the notice. [italics ours]
The defendant Wilson was, on the 1st of October, 1902, an employee of the Government of the Philippine Islands, as
Specific provisions of Section 5, Rule

disbursing officer of the Bureau of Coast Guard and Transportation. For the security of the Government the plaintiff

86 of the Rules of Court prevail over

company and another company. The American Surety Company of New York, became sureties on the official bond of

general provisions of Section 11, Rule

Wilson for the sum of $ 15,000, United State currency. Wilson defaulted in the sum of $ 8,931.80, United States

6 of the Rules of Court

currency, and the said two surety companies, after demand duly made upon them by the Government, were
compelled to pay and, as a matter of fact, did pay to said Government, in accordance with said bond, the sum of $

Metrobank argues that Section 11, Rule 6 of the Rules of Court should apply because it impleaded Chuas estate for

4,465.90, United States currency, each.

reimbursement in the same transaction upon which it has been sued by AMC. On this point, the Court supports the
conclusion of the CA, to wit:

Wilson, who had left the Philippine Islands, was captured in the city of Montreal, Canada, for the purpose of being
tried before the courts of the Philippine Islands for the defalcation of said sum. When apprehended Wilson had on his

Notably, a comparison of the respective provisions of Section 11, Rule 6 and Section 5, Rule 86 of the Rules of Court

person the sum of $ 785 in gold, consisting of the following:

readily shows that Section 11, Rule 6 applies to ordinary civil actions while Section 5, Rule 86 specifically applies to
money claims against the estate. The specific provisions of Section 5, Rule 86 x x x must therefore prevail over the

1 bill of $5, No. 333,448, on the Bank of Montreal.

general provisions of Section 11, Rule 6.48

1 United States bill, silver certificate, $10, series of 1891.

3 United States $10 notes, series of 1882.

We read with approval the CAs use of the statutory construction principle of lex specialis derogat generali, leading to
the conclusion that the specific provisions of Section 5, Rule 86 of the Rules of Court should prevail over the general
provisions of Section 11, Rule 6 of the Rules of Court; the settlement of the estate of deceased persons (where claims

5 United States $10 notes, series of 1891.

24 United States $10 notes, series of 1880.
45 United States $10 notes, series of 1901.

against the deceased should be filed) is primarily governed by the rules on special proceedings, while the rules
provided for ordinary claims, including Section 11, Rule 6 ofthe Rules of Court, merely apply suppletorily. 49

This sum and amount was turned over to the custody of Mr. Branagan, the Insular Treasurer.

In sum, on all counts in the considerations material to the issues posed, the resolution points to the affirmation of

The facts of this case, among others, are the following: On October 17, 1904, the plaintiff filed a complaint against

the assailed CA decision and resolution. Metrobank's claim in its fourth-party complaint against Chua's estate is

Wilson and The American Surety Company asking, first, that judgment be rendered against Wilson for the sum of

based on quasi-contract. It is also a contingent claim that depends on another event. Both belong to the category of

$4,464.90, that amount having been paid by plaintiff to the Government under plaintiff's surety bond; second, that

claims against a deceased person that should be filed under Section 5, Rule 86 of the Rules of Comi and, as such,

there be applied to the payment of said judgment the said sum of $785 found in possession of Wilson and that said

should have been so filed in Special Proceedings No. 99-0023.

plaintiff be preferred in its right to the said money and to receive the same; and third, that a depositary be named by
the court for the purpose of caring for and administering said amount during the pendency of the case.

WHEREFORE, premises considered, we hereby DENY the petition for lack of merit. The decision of the Court of
Appeals dated August 25, 2005, holding that the Regional Trial Court of Quezon City, Branch 80, did not commit

On the same date, October 17, a depositary was named, such depositary taking in charge the said $785 on that date,

grave abuse of discretion in denying Metropolitan Bank & Trust Company's motion for leave to admit fourth-party

the said sum of money being at this time in the possession of said depositary.

complaint Is
On October 26, 1904, H.D. Terrell filed a complaint as intervenor in the case, alleging that on September 3, of the
AFFIRMED. Costs against Metropolitan Bank & Trust Company.

same year, the defendant Wilson had ceded and transferred to the said Terrell all of his, the said Wilson's rights in
and to the said $785 in payment on account of a larger sum then owed by said Wilson to the said H.D. Terrell for


professional services already rendered and to be rendered as attorney for said Wilson, under agreement with the
same; that Treasurer Branagan was duly notified on the 17th day of October, 1904, of this transfer, at which time the
Treasurer had said sum in his care, and this before the notifications of the appointment of said depositary in the

March 15, 1907

principal case. Basing his claim on these facts, Terrell claims the right of ownership in and to the said sum and asks
that the same be delivered to him as the legitimate owner to the exclusion of the other parties in the case.

G.R. No. 2684


In this case of intervention The Fidelity and Deposit Company of Maryland, the plaintiff in the principal cause, and
The American Surety Company of New York together in cooperation and against the claim of the intervenor Terrell,
both of them, alleging on their part, better right that the intervenor to receive the sum in question, asked that the

said sum be delivered to them in equal shares and portions as part payment and on account of the amounts which

Archipelago, under the attachment of the court of Manila. (Here appears the description of the bank bills transferred,

they had paid respectively to the Government as sureties on the bond of Wilson. In this way the first pretension or

hereinabove described.)

claim of preference as alleged by The Fidelity and Deposit Company in its complaint was modified with respect to and
as against The American Surety Company of New York. It is asserted by these companies, as a basis of their right and
claim, that the funds in question are a portion of the money taken from the Government by Wilson and therefore the

(Signed) W.A. WILSON.

property of the said Government and that they became subrogated to rights of the Government in and to the said
sum by reason of the payment by them as sureties on the bond of Wilson.

As is seen, this transfer was made before the filing of the complaint of the appellant, and in addition thereto, it is said
that the Insular Treasurer, Mr. Branagan, was also notified before the filing of said complaint. The last does not

Judgment was rendered against Wilson by default, the latter not having answered to the complaint of Terrell were
true, in this way coming into the case in cooperation with said Terrell in his pretension.

appear to be clear in the record for the reason that the said notification served on Branagan was so served on October
17, 1904, precisely the same date upon which the complaint was filed and appointment of the depositary was made
by the court in virtue of the same, and upon which said date the depositary took possession of the said funds, the
subject matter of this suit. There is no data at hand to show in a precise manner which of the said acts took place

After due trial of the cause a judgment was rendered by the court declaring proven, among others, the facts as stated

before the other. It is true that the judgment of the lower court states that Terrell became the owner of the funds

in the first part of his decision and found as a conclusion of law that the said intervenor Terrell "became the owner

before the commencement of the action, but we consider this rather as a conclusion of law than of fact; that is to say,

and with the right to the possession of said funds before the commencement of this action and still has the right to the

that fact that the notification of the said transfer had been served on Treasurer Branagan before the filing of the

possession of the same."

complaint. However, it may be, this may be admitted as true and so taken into consideration in this decision.

In accordance with this conclusion and the facts as set out in the judgment, the following order was made by the

Terrell claims, and the court below so holds in its judgment, that in virtue of said transfer the ownership of Wilson in

court: "Let judgment be entered in favor of the party plaintiff, The Fidelity and Deposit Company of Maryland, and

and to the funds was transferred to Terrell in fact and in law. If this had been the case, the judgment would have been

against the defendant Wilson, for the sum of $4,465.90, United States currency, the equivalent of P8,931.80,

just and legal and would, therefore, be affirmed herein.

Philippine currency, together with interest on the same at the rate of 6 per cent per annum from the 22nd day of
October, 1903, and for the costs of this action, and in favor of the intervenor H.D. Terrell and against all the other
parties of this action, plaintiff and defendant, for the possession of the funds now in the hands of the depositary
appointed by this court, ... amounting in value to the sum of $785, United States currency, and in the event that the
identical money can not be delivered, then its equivalent of the total of the same that is to say, 1,570 pesos,
Philippine currency without cost. . . ."

But our opinion is contrary to that sustained by the trial court in regard to this point. We are of the opinion that the
transfer by itself, and afterwards the notification of the same of Treasurer Branagan, did not produce nor could it
produce the effect of transfer to Terrell of the ownership of the funds so transferred and which were then in the
possession of the said Treasurer. To have this effect, it would have been necessary that the delivery of the funds had
been made directly Terrell, which fact has not been proved at any time. There is no question as to this last point. The
funds were in the possession of Branagan and afterwards were transferred to the possession of the depositary

The plaintiff only in the principal suit that is to say, The Fidelity and Deposit Company filed its exception to the

appointed, by the court where such funds now are, and this without their ever having been taken possession of the

judgment. The American Surety Company of New York failing to appeal, the judgment with respect to that company

intervenor Terrell. It is not alleged, nor it is claimed by Terrell, that the delivery of the funds was ever made in any

became final, hence this court can not decide with regard to that. The same should be said with regard to that part of

manner recognized by the law. He claims the right of ownership from the mere fact of having derived the same, not

the judgment against Wilson for the payment to The Fidelity and Deposit Company of the sum $4,465.90, no appeal

from the fact of any delivery, but from the very fact of the transfer and of his subsequent notification to Treasurer

from said judgment having been made by Wilson.

Branagan, it being, in addition, very clear that such notification does not constitute, in any manner, the fact of
delivery as established by articles 1462, 1463, and 1464 of the Civil Code, all of which cover, in full this subject-

There was no new trial asked for and the parties in this instance expressly admit, as proven, the facts as set out in


the decision rendered.

Therefore, in our Civil Code it is a fundamental principle in all matters of contracts and a well-known doctrine of law
The only assignment of error alleged by the appellant in its brief, is in the following terms: "The court erred" its says,
"in rendering judgment in favor of the intervenor H.D. Terrell for the $785 in the hands of the depositary." Therefore,
that part of the judgment of the lower court that refers to this point is the only thing, in fact, submitted to us for

that "non mudis pactis, sed traditione dominia rerum transferuntur." In conformity with said doctrine as established in
paragraph 2 of article 609 of said code, that "the ownership and other property rights are acquired and transmitted
by law, by gift, by testate or intestate succession, and, in consequence of certain contracts, by tradition." And as the
logical application of this disposition article 1095 prescribes the following: "A creditor has the rights to the fruits of a
thing from the time the obligation to deliver it arises. However, he shall not acquire a real right." (and the ownership is
surely such) "until the property has been delivered to him."

According to our point of view, the only question here is to deduce and determine the true legal effects of the transfer
made by Wilson in favor of Terrell.

In accordance with such disposition and provisions the delivery of a thing constitutes a necessary and indispensable
requisite for the purpose of acquiring the ownership of the same by virtue for a contract. As Manresa states in his

This transfer is made literally in the following terms:

Commentaries on the Civil Code, volume 10, pages 339 and 340: "Our law does not admit the doctrine of the transfer
of property by mere consent but limits the effect of the agreement to the due execution of the contract. ... The

MANILA, P.I., September 3, 1904.

To whom it concerns:

ownership, the property right, is only deprived from the delivery of a thing . . . ."

Applying this doctrine concretely to the contract of transfer set up by Terrell as the basis of his complaint in
intervention, the author says, at page 341 of the volume and work above cited: "The transfer of the ownership in the
contract of such transfer, does not produce the effect by the fact of the mere consent, but is acquired by tradition and

For value received, I hereby transfer and cede to Judge H. D. Terrell all my rights, title, and interest in the following-

in the due observance of general precepts." Therefore, by reason of the non-delivery Terrell did not acquire the

described property belonging to me and now in the hands of Frank A. Branagan, Treasurer of the Philippine

ownership of the property transferred to him by Wilson. It is only the jus ad rem, and not the jus in re, that was

acquired by Terrell by virtue of the transfer, made by the consent of the transferor and the transferee but not

This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the plaintiff

consummated by the delivery which never came to pass and which delivery was the object of such transfer.

the sum of P6,641, with interest at the legal rate from the beginning of the action.

But if Terrell could not be considered as the owner of said funds in question, it is undeniable that he had rights with

It is established in this case that the plaintiff is the trustee of a charitable bequest made for the construction of a

regard to the same as a creditor by virtue of that transfer. The same right, that of a creditor, and no other is the right

leper hospital and that father Agustin de la Pea was the duly authorized representative of the plaintiff to receive the

of the appellant in that it has not been contradicted that the rights of the Government, in its judicial relation to

legacy. The defendant is the administrator of the estate of Father De la Pea.

Wilson, had not been subrogated to the appellant. The allegation of the appellant that the bank bills taken from the
person of Wilson are the property of the Government, in order to be taken into consideration, is to conclude that they
belong to the appellant as owner of the same by reason of said subrogation of right, as aforesaid. This has no
fundamental basis for the reason that such bank bills have never been duly identified. Without any proof of
identification it is not possible to know if said bank bills are really a part of the funds of the Government appropriated
by Wilson. The Government under such circumstances could not allege specifically the right of ownership of said
bank bills.

In the year 1898 the books Father De la Pea, as trustee, showed that he had on hand as such trustee the sum of
P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his personal account
P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the war of the revolution, Father
De la Pea was arrested by the military authorities as a political prisoner, and while thus detained made an order on
said bank in favor of the United States Army officer under whose charge he then was for the sum thus deposited in
said bank. The arrest of Father De la Pea and the confiscation of the funds in the bank were the result of the claim
of the military authorities that he was an insurgent and that the funds thus deposited had been collected by him for

Now, the creditors, the appellant and the appellee are both claiming at the same time the delivery of the funds in

revolutionary purposes. The money was taken from the bank by the military authorities by virtue of such order, was

question for the payment of their respective credits and it becomes a question of preference of creditors, since the

confiscated and turned over to the Government.

sum, the object of the suit, is not sufficient to satisfy the claims of both parties.
While there is considerable dispute in the case over the question whether the P6,641 of trust funds was included in
According to our view, neither of the two creditors should enjoy preference with regard to the other. Preference is

the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to the conclusion that

determined by the nature of the credit in some cases and by the priority of date in others. The first, when it deals

said trust funds were a part of the funds deposited and which were removed and confiscated by the military

with privileged credits, which different kinds of privileged credits are enumerated in articles 1922, 1923, and 1924 of

authorities of the United States.

the Civil Code; and the second, when such credits are without special privilege, but are set forth in a public
document or a final judgment. (Par. 3, article 1924.) In neither of these two classes do we find the credit of the
appellant or that of the appellee. The credit of the appellee is only shown in a private document, and the right, or
credit, of the appellant is that derived by reason of the payment made by appellant to the Government as a surety on
the bond of Wilson, and nothing more than this appears in the allegations and admissions of the parties during the

That branch of the law known in England and America as the law of trusts had no exact counterpart in the Roman
law and has none under the Spanish law. In this jurisdiction, therefore, Father De la Pea's liability is determined by
those portions of the Civil Code which relate to obligations. (Book 4, Title 1.)

trial of the case. It does not appear by the bill of exceptions in this case that any document was ever presented in
justification of such payment. Neither does the decision refer to any document as showing, as proven, said payment.

Although the Civil Code states that "a person obliged to give something is also bound to preserve it with the diligence

These two credits not coming under any of the articles herein cited, the same pertain to a general class, and therefore

pertaining to a good father of a family" (art. 1094), it also provides, following the principle of the Roman law, major

do not enjoy any preference, in accordance with provisions of article 1925 of the Civil Code. This being so, the two

casus est, cui humana infirmitas resistere non potest, that "no one shall be liable for events which could not be

creditors should be paid of pro rata from the funds in question and without consideration of the dates. (Rule 3, of

foreseen, or which having been foreseen were inevitable, with the exception of the cases expressly mentioned in the

article 1929.)

law or those in which the obligation so declares." (Art. 1105.)

The judgment appealed from is, therefore, reversed with respect to the order of the trial court ordering the delivery of

By placing the money in the bank and mixing it with his personal funds De la Pea did not thereby assume an

said funds, in their total amount, to the intervenor, H.D. Terrell, and in place of said order of said trial court we order

obligation different from that under which he would have lain if such deposit had not been made, nor did he thereby

that the payment and delivery of said funds be made to said Terrell and to the appellant, The Fidelity and Deposit

make himself liable to repay the money at all hazards. If the money had been forcibly taken from his pocket or from

Company of Maryland, pro rata, with respect to their respective credits, without special provision as to days from the

his house by the military forces of one of the combatants during a state of war, it is clear that under the provisions of

notification hereof let judgment be entered in accordance herewith, and ten days thereafter let the case be remanded

the Civil Code he would have been exempt from responsibility. The fact that he placed the trust fund in the bank in

to the court from whence it came for proper action. So ordered.

his personal account does not add to his responsibility. Such deposit did not make him a debtor who must respond at
all hazards.

November 21, 1913

We do not enter into a discussion for the purpose of determining whether he acted more or less negligently by
G.R. No. 6913
GREGORIO DE LA PEA, administrator of the estate of Father Agustin de la Pea, defendant-appellant.

depositing the money in the bank than he would if he had left it in his home; or whether he was more or less
negligent by depositing the money in his personal account than he would have been if he had deposited it in a
separate account as trustee. We regard such discussion as substantially fruitless, inasmuch as the precise question
is not one of negligence. There was no law prohibiting him from depositing it as he did and there was no law which
changed his responsibility by reason of the deposit. While it may be true that one who is under obligation to do or give
a thing is in duty bound, when he sees events approaching the results of which will be dangerous to his trust, to take

J. Lopez Vito, for appellant.

Arroyo and Horrilleno, for appellee.


all reasonable means and measures to escape or, if unavoidable, to temper the effects of those events, we do not feel
constrained to hold that, in choosing between two means equally legal, he is culpably negligent in selecting one
whereas he would not have been if he had selected the other.

The court, therefore, finds and declares that the money which is the subject matter of this action was deposited by

The other defendant, Manuel Escaler, in an amended answer to the aforementioned complaint, denied each and all of

Father De la Pea in the Hongkong and Shanghai Banking Corporation of Iloilo; that said money was forcibly taken

the allegations therein contained and each and all of its clauses, and, as a special defense, alleged that plaintiff's title

from the bank by the armed forces of the United States during the war of the insurrection; and that said Father De la

to the said land was illegal as only a simulated sale was made by and between Agapito Geronimo Cruzado, plaintiff's

Pea was not responsible for its loss.

predecessor in interest, and Bernardino Dizon; that defendants had been in possession of the said parcel of land for
more than thirty years; that the defendant Escaler in good faith purchased the land in question from Estefania

The judgment is therefore reversed, and it is decreed that the plaintiff shall take nothing by his complaint.

Bustos, widow of Dizon, without ever having had any notice of any defect in the vendor's title; that plaintiff had
knowledge of the contract of sale of the land in question yet did nothing to oppose its purchase by the defendant
Escaler, wherefore the latter, in acquiring the property, did so under the belief that the plaintiff Santiago Cruzado had

February 29, 1916

no right or interest therein. He therefore prayed that the complaint be dismissed, with the costs against plaintiff, and
that an injunction issue to restrain the latter from interfering with the defendant Escaler in the enjoyment of his

G.R. No. 10244

SANTIAGO CRUZADO, plaintiff-appellant,
ESTEFANIA BUSTOS and MANUEL ESCALER, defendants-appellees.

Felix Ferrer for appellant.

Augusto Gonzalez for appellees.

property and rights and from performing any act prejudicial to his interests.

On the case coming to trial, both parties adduced evidence, among which was included the deposition of Inocencio

Counsel for defendants, in a cross-complaint set forth: that as shown by the evidence, the defendant Escaler acquired
in good faith from Estefania Bustos the land in question at a time when there was no record whatever in the property
registry to show that this land belonged to a third person or any other than the vendor; that, on entering into
possession of the property, Escaler spent P4,000 in-improvements and in the repair of a long dike to prevent the


This appeal, by bill of exceptions, was taken from the judgment of June 17, 1914, in which the trial judge absolved
defendants from the complaint and plaintiff from the cross-complaint, without express finding as to costs. Counsel for
plaintiff appealed from this judgment and moved for a new trial. This motion was denied, exception was taken by
appellant, and, on the filing of the proper bill of exceptions, the same was approved, certified, and transmitted to the
clerk of this court, together with a transcript of the evidence introduced at the trial.

Counsel for the plaintiff Santiago Cruzado filed a written complaint on October 8, 1910, amended on September 25,
1913, in which he alleged that plaintiff was the owner of certain rural property situated in the barrio of Dolores,
formerly San Isidro, of the municipality of Bacolor, Pampanga, containing an area of 65 balitas and bounded as set
forth in the complaint; that Estafania Bustos, during her lifetime, and now the administrator of her estate, together
with the other defendant, Manuel Escaler, had, since the year 1906 up to the present, been detaining the said parcel
of land, and had refused to deliver the possession thereof to plaintiff and to recognize his ownership of the same,
notwithstanding the repeated demands made upon them; that by such detention, the plaintiff had suffered losses
and damages to the amount of P3,500. He therefore asked for judgment declaring plaintiff to be the owner of the said
parcel of land and ordering defendants to return it to plaintiff and to pay the latter P3,500 for losses and damages,
and the costs.

The demurrer filed by the defendant Bustos having been overruled, in her answer she made a general denial of each
and all of the allegations of the complaint, and of each and all of the paragraphs thereof, and, as a special defense,
alleged that the title to the said land, produced by the plaintiff, was not a lawful one, for the reason that only a
simulated sale of the land was made by the between herself and the deceased Agapito Geronimo Cruzado, plaintiff's
father, and that for more than thirty years preceding the present time she had been the sole, exclusive, and lawful
owner of the said parcel of land in question; that she had been holding it quietly, peaceably, publicly and in good
faith; that it formed an integral part of another larger parcel of land, both parcels aggregating a total area of
100 balitas, 9 loanes, and 41 square brazas; that in September, 1891, with plaintiff's knowledge, the defendant
Bustos sold and conveyed all the said property to the other defendant Manuel Escaler who then acquired the
possession and ownership of the said parcel of land, and had retained such ownership and possession up to the
present time; that at no time and on no account whatever had plaintiff or any other person except defendants

erosion of the land by the frequent overflows of the adjoining estuary; that of this sum P2,000 was paid by Escaler
and the remaining P2,000 by Estafania Bustos, in her capacity as lessee of the land; and that in case the judgment of
the court should be adverse to defendants, these latter, as owners in good faith, were entitled to be indemnified by
plaintiff for the said expenses. He therefore asked that plaintiff be ordered to reimburse half of the said P4,000 to
each of the defendants in case judgment should be rendered favorable to plaintiff.

The latter's counsel, in answer to the said cross-complaint, specifically denied each and all of the allegations thereof
and, in special defense, reproduced plaintiff's amended complaint in all its parts and alleged that the facts set forth in
the cross-complaint did not constitute a cause of action. He therefore prayed that plaintiff be absolved from the crosscomplaint and that judgment be rendered against defendants, in conformity with the prayer of his complaint.

After the evidence was all in, counsel for the defendant Escaler moved that the deposition of the witness Inocencio
Espanol Rosete be admitted into the record, and in support of his motion stated that with the authorization of the
court the said deposition had been taken on November 21, 1913, in the municipality of Arayat in the presence of
plaintiff's attorney; that the said declaration of the deponent was duly forwarded to the clerk of the court, and there
attached to the record, but through an unintentional oversight of defendant's attorney, it was not presented in
evidence at the trial; that this deposition was very important for the defendants' defense; and that the deponent was
and continued to be unable to appear before the court on account of a threatened attack of brain fever which might
develop during the journey from Arayat to San Fernando.

Plaintiff's counsel asked that the foregoing motion be overruled and that the deposition of the witness Rosete be
stricken from the record, because defendants' motion was made out of time and was contrary to the rules of
procedure, and there was no reason for altering the order of procedure, as requested by defendants, for, when the
period for the reception of the evidence of both parties is closed, an alteration in the order of procedure such as asked
by defendants would be improper and illegal, counsel citing the decision of this court in the case of Garcia vs. Reyes.

1]] He alleged, moreover, that the said deposition necessarily affected the main issue in controversy and that to allow

the motion would be in contravention of the provisions of section 364 of the Code of Civil Procedure . He therefore
asked that the said motion be overruled. The court, however, ordered that the deposition of the witness Inocencio
Rosete be admitted in evidence, and that plaintiff's exception be noted. In view of the foregoing, the judgment
aforementioned was rendered.

acquired possession of the said parcel of land or any part thereof, nor any right or title therein. She therefore prayed
to be absolved from the complaint, with the costs against plaintiff.

The questions herein submitted for the decision of this court are:

1. Is it or is it not true that the deed of sale, Exhibit A, (p. 40 of the record) of 65 balitas of land situated in the

The simulation of the said sale was effected by making a pretended contract which bore the appearance of truth,

municipality of Bacolor, Pampanga, executed by Estefania Bustos, with the assistance of her husband Bernardino

when really and truly there was no contract, because the contracting parties did not in fact intend to execute one, but

Dizon, in favor of Agapito Geronimo Cruzado, for the sum of P2,200, was simulated, not with intent to defraud any

only to formulate a sale in such a manner that, for the particular purposes sought by Bustos and Cruzado, it would

third person, but for the sole purpose of making it appear that the vendee, Cruzado, then a candidate for the position

appear to have been celebrated solely that Cruzado might hold his office of procurador on the strength of the security

of procurador on the date of the said deed, September 7,1875, possessed real estate to the value of P2,200 with which

afforded by the value of the land feignedly sold.

to guarantee the faithful discharge of the duties of the office of procurador?

The record does not show when the procurador Cruzado died, but it is unquestionable that he was still living during
2. It is or is it not true that, notwithstanding such apparent alienation of the 65 balitas of land, the supposed vendee

the last months of 1882, judging from the certificate which he himself issued to Norberto Decena (Exhibit 3). He must

continued in possession thereof, without the supposed purchaser having taken possession of the property until

have died sometime between the years 1882 and 1890, to judge from the contents of the letters plaintiff addressed to

September 10, 1891, when its owner Bustos sold to Escaler, not only the said 65 balitas of land, but also all the

Natalio Dizon, one of the children of Estefania Bustos, on July 7, 1891, and July 4, 1896, and from the fact that in

remainder of a large tract of agricultural land of which the portion appearing as sold to Agapito G. Cruzado formed

the said year 1890 Agapito G. Cruzado was no longer a practicing procurador in the Court of First Instance of

and forms a part, and that Escaler was then and, until the date of plaintiff's claim, continued to be in peaceable,


uninterrupted possession of the said whole tract of land, including the aforementioned portion of 65 balitas?
It is true that even after the death of the aforesaid procurador, any liability he might have incurred in connection with
3. Has the right of ownership prescribed which Manuel Escaler is and has been enjoying in the land which Estefania

the exercise of his office could have been, upon presentation of the proper claim, collected out of the value of the land

Bustos had sold to him and which includes the parcel of 65 balitas claimed by plaintiff, Santiago Cruzado, or has the

apparently sold by Estafania Bustos and pledged as security for the proper discharge of the duties of his office. On

right of any real or personal action he might exercise by reason of the sale to Cruzado prescribed on account of the

October 8, 1910, when his son Santiago Cruzado filed his complaint, already more than twenty years had elapsed

lapse of the respective periods fixed by law, between the 7th of September, 1875, the date of said sale, and the 8th of

since 1889, if plaintiff's father died in 1889 and not between 1883 and 1889; therefore, any right of action to foreclose

October, 1910, that of the filing of the complaint?

the mortgage, or any personal action with regard to the value of the encumbered land, as the result of any liability
incurred in the performance of his duties as procurador, has more than prescribed. (Art. 1964, Civil Code, and secs.

To judge from the evidence adduced in this case, there is ample ground for holding that the said deed of sale of a

38, 39 and 43, Act. No. 190.).

parcel of 65 balitas of land was simulated, not to defraud any creditor or other person interested in the land nor for
the purpose of eluding any lawful obligation on the part of its owner, Estafania Bustos, but for the sole purpose of

On the termination of the sovereignty of Spain over this Archipelago, the Spanish courts here established went out of

doing a favor, of rendering a special service to Agapito Geronimo Cruzado, father of the plaintiff Santiago Cruzado.

existence on January 31, 1899, the Pampanga court indeed being abolished about the middle of 1897 as a result of
the revolution against the former sovereignty. The personnel of those courts also ceased to render service as such. It

During his lifetime Agapito G. Cruzado aspired to hold the office of procurador in the Court of First Instance of
Pampanga, but notwithstanding that he possessed the required ability for the discharge of the duties of that position,
he was unable to give the required bond, an indispensable condition for his appointment, as he was possessed of no
means or real property wherewith to guarantee the proper discharge of his duties in the manner prescribed by the
laws then in force.

In the certified copy of the record of the case tried in the Secretaria de Gobierno of the abolished Real Audiencia de
Manila, issued by the Assistant Executive Secretary and chief of the division of archives, there appears on page 178 a

may therefore be affirmed that, if the said lien on the land in question has not terminated by its no longer having any
object, it is at least undeniable that prescription has already run with respect to any action that might have been
brought against the pledged land to recover for any liability which might have been incurred by
the procurador Cruzado during his lifetime in connection with his office, so that this real estate may now be
considered as free from that hypothecary encumbrance.

At the present time we have only to explain what rights Agapito G. Cruzado transmitted at his death to his son, the
herein plaintiff, by virtue of the deed of sale of the land in litigation, executed by its owner Estefania Bustos.

decree by the presidencia of this latter tribunal, issued by virtue of the resolution passed by the sala de gobierno on
November 24, 1875, whereby it was ordered that Agapito Geronimo Cruzado should be noticed that within the period

It is unquestionable that the contract of sale of the 65 balitas of land was perfect and binding upon both contracting

of 30 days he must show proof of having furnished a bond of P700 in cash or of P2,100 in real property as security for

parties, since they both appear in that instrument to have agreed upon the thing sold, to wit, the 65 balitas of land,

the position of procurador to which he had been appointed, with the understanding that should be fail to furnish such

and upon the price, P2,200; but it is also undeniable that the said contract was not consummated, inasmuch as,

bond he would not be issued the certificate entitling him to practice the profession of procurador.

notwithstanding that the deed of sale Exhibit A was accomplished and this document was kept by the pretended
purchaser, it is positively certain that the latter did not pay the purchase price of P2,200, and never took possession

After complying with the requirements of the said court and executing the mortgage deed of the land purchased by
the procurador elect Cruzado from Estefania Bustos, on March 18, 1876, the mortgage was recorded in the old
mortgage registry then kept in the office of the Ayuntamiento of Manila during the former sovereignty, and thereafter

of the land apparently sold in the said deed. All that this vendee afterwards did was to pledge the land on March
14, 1876, that is, six months and some days after the 7th of September, 1875, the date when he purchased it as
security for the faithful discharge of the duties of his office of procurador of the Court of First Instance of Pampanga.

Agapito G. Cruzado received his appointment and commenced to discharge the duties of his position.
The plaintiff, Santiago Cruzado, a son of the vendee, claiming that the said land was being detained by the vendor, or
The above-related facts conclusively prove that Estefania Bustos executed the deed of sale Exhibit A in favor of the
deceased Cruzado in order to enable the latter, by showing that he was a property owner, to hold the office
of procurador. This position he held for many years, thanks to the liberality of the pretended vendor, who,

by the administrator of the latter's estate or her death after the commencement of these proceedings, and by the
other defendant Manuel Escaler, prayed the court to declare him to be the owner thereof, to order the defendants to
return it to him and to pay him for losses and damages, and the costs.

notwithstanding the statements contained in the deed of sale, does not appear to have been paid anything as a result
of the sham sale, a sale which was affected, not in prejudice or fraud of any person, nor those who were entitled to

The action brought by the plaintiff is evidently one for recovery of possession, founded on the right transmitted to him

hold Cruzado liable for the proper discharge of the duties of his office, because, had the need arisen, any liability of

by his father at his death, a right arising from the said simulated deed of sale of the land in question. This action

his could have been covered by the value of the land, the sale of which was fictitiously set forth in that deed as

is of course improper, not only because the sale was simulated, but also because it was not consummated. The price

lawfully belonging to Cruzado, and then Estefania Bustos would have had no right either to object to or escape the

of the land was not paid nor did the vendee take possession of the property from the 7th of September, 1875, when

consequences of that alienation, although simulated.

the said sale was feigned, until the time of his death; nor did any of his successors, nor the plaintiff himself until the

simulated and executed for the sole purpose that the deceased Cruzado in default of P700 in cash might appear to

date of his claim, enter into possession of the land.

own real estate with which to insure the proper performance of his duties as procurador, an office he then desired to

It is indeed true that it is not necessary that the thing sold or its price should have been delivered in order that the
contract of purchase and sale be deemed perfect on account of its being consensual, and from it reciprocal obligations

The supreme court of Spain in a decision of cassation of June 1, 1990, established the following doctrine:

arise mutually to compel the parties to effect its fulfillment; but there is no transmission of ownership until the thing,
as in the case at bar, the land, has been delivered, and the moment such delivery is made the contract of purchase
and sale is regarded as consummated. Article 1450 of the Civil Code, relied upon in this connection by the appellant,
refers solely to the perfection of the contract and not to its consummation.

That articles 1258 and 1450 of the Civil Code and the decisions of cassation of June 30, 1854, April 13 and
December 13, 1861, June 30, 1864, and April 19 and December 15, 1865, do not warrant the conclusion that
whoever purchases personal or real property may exercise with respect thereto all rights of action inherent in its
ownership, without it having, in some way or another, been placed at his disposal. On the contrary, the distinction

The purchaser is also a creditor with respect to the products of the thing sold, and article 1095 of the Civil Code

between the perfecting and the consummation of a contract marks the diversity of relations of the contracting parties

prescribes as follows:

among themselves and of the owner with respect to what constitutes this property.

A creditor has a right to the fruits of a thing from the time the obligation to deliver it arises. However, he shall not

This principle is in harmony with those set up by the same high tribunal in its decision of January 19, 1898, and

acquire a property right thereto until it has been delivered to him.

March 8, 1901.

The provisions of this article are in agreement with that of the second paragraph of article 609 of the same Code,

In this last decision, also rendered on an appeal in cassation, the doctrine enunciated in the excerpt copied here

which is of the following tenor:

below was established:

Ownership is acquired by retention.

That the contract of purchase and sale, as consensual, is perfected by consent as to the price and the thing and is
consummated by the reciprocal delivery of the one and the other, the full ownership of the thing sold being conveyed

Ownership and other property rights are required and transmitted by law, by gift, by testate or intestate succession,

to the vendee, from which moment the rights of action derived from this right may be exercised.

and, in consequence of certain contracts, by tradition.

It is, then, of the utmost importance to examine whether in the said sale the purchase price was paid and whether
They can also be acquired by prescription.

The provisions of the said article 1095 are also in accord with those of article 1462 which reads:

the vendee took possession of the land supposed to have been sold.

The record discloses that Cruzado during his lifetime was, before he became a procurador, an official escribiente or
clerk charged with the duty of coursing records and proceedings in the Court of Pampanga; that his salary was
hardly sufficient to maintain him and his family; that on account of the insufficiency of his monthly stipend, he was

A thing sold shall be considered as delivered, when it is placed in the hands and possession of the vendee.

frequently obliged to borrow money from his friends, notwithstanding that he with his family lodged in the house of
Bernardino Dizon, the husband of the vendor Bustos, situated in the municipality of Bacolor, with whom Cruzado

When the sale should be made by means of a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if in said instrument the contrary does not appear or may be
clearly inferred.

maintained intimate relations of friendship, and on this account the said couple were content to live in a country
house they owned on one of their rice fields. Such was the testimony of several witnesses who lived in that
municipality, and who knew and had considerable dealings with the plaintiff's father for many years. It was the
opinion of these witnesses that the deceased Agapito G. Cruzado was a poor man, for the reason that his monthly
salary scarcely provided for the needs of himself and his family, and they therefore believed that he could not have

It is true that the deed of sale Exhibit A remained in possession of the vendee Cruzado, but the sale is not to be

furnished the sum of P2,200 to purchase the land in question, and, furthermore, if the plaintiff's father had

considered as consummated by this because the said vendee never entered into possession of the land and neither

possessed this sum, he would have made the deposit of the sum of P700, the amount of security required by

did his son the plaintiff. The latter, moreover, was unable to prove that at any time as owner of the land he collected

the Presidencia of the former Real Audiencia de Manila for his appointment as procurador, since, having the means,

the fruits harvested thereon, or that any other person cultivated the said land in the name and representation of his

he would have preferred to deposit this smaller sum rather than to have used P2,200 in acquiring a piece of land from

deceased father or of the plaintiff himself. The fiction created by means of the execution and delivery of a public

which he would derive no benefit whatever, as in fact he never did, as he must have known that in spite of the

instrument produces no effect if the person acquiring it never takes possession of the thing sold or acquired, as

simulated sale of the property its owner would continue in its possession and would cultivate it, as she did do until

happened in the case at bar.

her death. It is, therefore, unquestionable that the price of the sale was not paid, an omission which would indicate
that it was in effect simulated.

If, as prescribed by the preinserted article 1095, the creditor, and in the present case the vendee, does not acquire a
property right in the land purchased until the property has been delivered to him or he has taken possession of it, it

Aside from the fact that the spouses Estafania Bustos and Bernardino Dizon had no need to sell the said 65 balitas of

is unquestionable that, as neither the plaintiff nor his predecessor in interest took possession of the land in litigation,

land, or of fencing or separating this parcel from the large tract of land that belonged to them and of which it formed

neither of them acquired any property right therein and, consequently, could not and cannot now bring an action for

a part, for the reason that they were rich and at that time were not in need of money to cultivate their extensive

recovery of possession which arises out of a property right in a thing which belongs to them and not a mere right

landholdings, it is also to be noted that the portion of land sold was worth very much more than the P2,200 which, in

productive of a personal obligation. The plaintiff Santiago Cruzado could only, in a proper case, exercise the personal

the said instrument, purported to be its price.

right of action flowing from the right possessed by his father to compel the vendor to fulfill the contract made in a
public instrument to deliver the land sold or to give him possession of it, in consequence of the said contract, though

In addition to the foregoing, the proceedings in the case at bar furnish ample proof that Agapito Geronimo Cruzado

Regino de los Reyes, all of whom corroborated plaintiff's testimony in this regard. However, six of the defendants'

during his lifetime stated to various persons that he succeeded in giving bond for his appointment as procurador by

witnesses positively stated that they never were aware that the said tenants had worked on the land in question

means of the said instrument of simulated sale, executed in his favor by the spouses Dizon and Bustos, as he did not

during either the said two years or in any other, for these latter were working on the adjacent lands belonging to other

have the money to make the deposit required for his appointment. So close were the relations that then existed

owners. Pablo Angeles, one of the defendants' witnesses, testified that Regino and Florentino de los Reyes were his

between the Cruzado family and that of Dizon and Bustos, that later on the plaintiff married a daughter of these

tenants on shares and were employed on his land adjoining that in question. He was positively certain that they never

latter; hence, plaintiff, in the beginning of his letters Exhibits 8 and 9 addressed to Natalio Dizon, a son of the vendor

worked on the disputed land during or about the years aforementioned, because the carabaos used by his said two

Estefania Bustos, calls his correspondent his "dear and esteemed brother-in-law." It is therefore not stranger that

tenants belonged to him and he never would have permitted them to use these animals in working land that did not

these spouses should have wished to help plaintiff's predecessor in interest by assisting him to obtain the office

belong to him. He added that Regino's children, Macario and Basilio, were at that time so young, being about eight

of procurador, even to the extent of making a feigned sale.

years of age, that they were not yet able to work in the fields.

However, years afterwards, prompted by an intuition of possible future difficulties, Dizon and his wife Bustos went to

The plaintiff must have been well convinced that he had no right whatever in the land supposedly purchased by his

the office of Agapito G. Cruzado and required him to cancel the said deed of sale, in order to avoid any lawsuit after

father. The latter never demanded its possession from its owner Estefania Bustos and never thought of declaring the

their death. Cruzado promised to look for money wherewith to substitute the mortgage bond. This demand had to be

property as belonging to him, for the purposes of the land tax, from the time this tax was established in this country,

repeated several times, because Cruzado did not cancel the deed as he promised.

notwithstanding that the plaintiff, knowing his obligation, filed a sworn declaration relative to a lot he owned in the
municipality of Bacolor. This procedure of plaintiff's proves that he did not believe himself to be the owner of the land

Furthermore, it is shown that the instrument Exhibit A is merely a second copy obtained by the plaintiff from the

he claims and which its present owner Manuel Escaler has constantly declared for the purpose of assessment.

chief of division of archives, without prior summons or notification of the vendor Estefania Bustos, who was still
living, in conformity with the provisions contained in article 18 of the Notarial Law of February 15, 1889, and without

Moreover, about the middle of the year 1891, the plaintiff Santiago Cruzado begged his brother-in-law Natalio Dizon

the plaintiff's having explained what became of the first copy. Besides, the clerk and notary who certified that

to tell the latter's mother, plaintiff's mother-in-law, that Cruzado desired the lease four balitas of the land in question,

instrument did not attest therein that in his presence the vendee Cruzado paid over the sum of P2,200, the price of

and some days afterwards, possibly because he received no reply from his said brother-in-law, he addressed a letter to

the land sold, and as the vendor denied having received this sum, the obligation devolved upon plaintiff to prove that

Dizon (Exhibit 9, page 152 of the record, translated on page 154) in which he repeated his request and asked for a

his deceased father had paid the price stated in that instrument. By this not having done so, his omission constitutes

reply; but notwithstanding that his brother-in-law Dizon told him that he could not dispose of any part of the said

additional proof that the sale of the land, the recovery of possession of which plaintiff now seeks, was really

land for the reason that his mother Estefania Bustos was negotiating for the sale of all the land she possessed in


the sitio of Sicat to Manuel Escaler, plaintiff went to Dizon's house on an occasion when Paulino de la Cruz was there.
Cruz was a representative of Escaler and had been charged to inform himself of the situation, condition and quality of

The supreme court of Spain, in a decision dated February 20, 1899, rendered on an appeal in cassation, laid down
the doctrine that, in accordance with the provisions of article 40 of the Mortgage Law, in the alienation of real
property it is understood that no price has been paid if the notary does not attest its delivery or the contracting
parties do not prove that it was previously paid.

The courts are allowed full latitude to accept the presumption that the purchase price has not been paid when the
notary before whom the instrument was executed does not attest the delivery of the money, and when, such delivery
being denied by one of the contracting parties, the other does not adduce proof of its payment, especially when such
presumption is corroborated by other circumstantial evidence which, all together, undoubtedly prove that the sale
was feigned and simulated for certain purposes sought to be attained by the parties, though, as in the case at bar,
the simulation was not effected in fraud of creditors.

the land which Bustos was about to sell to his principal and was at the said house for the purpose of being shown the
land offered for sale. On this occasion plaintiff learned that negotiations were being made for the sale of all the land
owned by Estefania Bustos of which the 65 balitas in litigation formed a part. Plaintiff did not then or afterwards
make any statement or objection whatever in defense of his rights and interest, if he really believed that he was
entitled to the land shown in the instrument Exhibit A to have been purchased by his father.

Plaintiff made no protest whatsoever, because he well knew that the said sale was simulated and that his father had
acquired no right whatever in the property; he was therefore anxious to lease fourbalitas of the same land, a purpose
in which he was unsuccessful because a deal was then already going forward for the sale of the said land to its
present owner, Manuel Escaler, who in fact did but it on September 10, 1891. If plaintiff were convinced that he was
the owner of the land, as he rashly asserted that he was in his complaint for recovery of possession, it is not
understood why about the middle of the year 1891 he wished to lease, not all the 65 balitas, but only four of them, as
stated in his said letter, Exhibit 9.

Besides the failure to pay the purchase price, the record discloses another very important fact, to wit, that neither the
vendee nor his heirs, among these latter, the plaintiff, had at any time taken possession of the land which in the said
instrument Exhibit A appeared to have been sold, for, by the testimony of seven competent witnesses examined at the
trial it is decisively and conclusively proven that the alleged vendor, Estefania Bustos, and her husband while he was
living, notwithstanding the said alienation, continued to possess the said land supposedly sold to plaintiff's father,
and cultivated it, as she had done long before the sale of September, 1875, and continued to do so up to the date of
the complaint filed by Santiago Cruzado; in the first period, until September 10, 1891, as the owner of the land, and
from this date, when the whole of the large tract of land of which the said portion apparently sold forms a part was
sold to the other defendant Manuel Escaler, the original owner Estefania Bustos continued in the material possession
of the land, but now as the lessee of the new owner, until 1908, when she was substituted by Marcelo Rodriguez as

From that time the new owner Manuel Escaler took possession of all the land sold by Estefania Bustos, including the
65 balitas in litigation, and continued in its possession as the owner thereof until October 8, 1910, when plaintiff
filed his claim. Thus, more than the ten years required by law for ordinary prescription had already elapsed, as
Escaler purchased the land and was holding it in good faith under a lawful title and was not disturbed in his
continuous and peaceable possession, one that was adverse to the whole world. It is therefore unquestionable that he
has absolutely acquired by prescription the ownership of the disputed land, and the action brought by plaintiff,
founded solely on a simulated sale executed by the original owner of the land, not to the prejudice, but to the benefit,
of the pretended vendee, cannot prevail against Escaler's rights.

the new lessee of the property. The plaintiff at no time after his father's death occupied the land in litigation,
notwithstanding his allegation that he has been collecting rentals from Estefania Bustos, his mother-in-law, by reason

The registration obtained by the plaintiff in the property registry of the second copy of the said instrument Exhibit A,

of his having leased the land to her.

about two months before filing his action for recovery, to wit, on August 23, 1910, has not improved the deed of sale
nor made it more effective, nor could it affect the rights held by the original owner and the present proprietor of the

The plaintiff endeavored to prove that during the years 1882 and 1883 he personally took charge of and tilled the
disputed land on shares through his tenants named Florentino de los Reyes, Lino Cortes, Macario de los Reyes and

land in question, inasmuch as their predecessor in interest, by default of payment of the price of the sale and on
account of his never having taken possession of the land sold, was not the owner thereof, nor did he acquire any
property right whatever therein. Consequently at his death he could not have transmitted to the plaintiff as his

successor any greater right than a personal right to exact the fulfillment of a contract, and as plaintiff was not the


owner of the land, he could not validly register it.

This is a petition for review on certiorari seeking the reversal of the January 28, 1987 decision of the Court of Appeals
Article 1473 of the Civil Code prescribes:

in CA-G.R. SP No. 10990 entitled "Rita Caleon V. Hon. Samilo Barlongay, et al." dismissing the petition for review of
the decision of the Regional Trial Court of Manila, Branch 34, which affirmed the decision of the Metropolitan Trial

If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who

Court of Manila, Branch XII, ejecting the petitioner.

may have first taken possession thereof in good faith, if it should be personal property.
The undisputed facts of the case are as follows:
Should it be real property, it shall belong to the person acquiring it who first recorded it in the registry.
Private respondent Agus Development Corporation is the owner of a parcel of land denominated as Lot 39, Block 28,
Should there be no entry, the property shall belong to the person who first took possession of it in good faith, and, in
the absence thereof, to the person who presents the oldest title, provided there is good faith.

On the sale of the land to the defendant Escaler, neither he nor the plaintiff had had it entered in the property
registry, but the said new owner, Escaler, took possession of the land on the date of its acquisition, September
10,1891, and has retained possession thereof up to the present time. So that when plaintiff registered the land he
was not in possession thereof and no longer had any right whatever therein, because it already belonged to the

situated at 1611-1619 Lealtad, Sampaloc, Manila, which it leased to petitioner Rita Caleon for a monthly rental of
P180.00. Petitioner constructed on the lot leased a 4-door apartment building.

Without the consent of the private respondent, the petitioner sub-leased two of the four doors of the apartment to
Rolando Guevarra and Felicisima Estrada for a monthly rental of P350.00 each. Upon learning of the sub-lease,
private respondent through counsel demanded in writing that the petitioner vacate the leased premises (Rollo, Annex
"A", p. 20).

defendant Escaler, its lawful owner.

For failure of petitioner to comply with the demand, private respondent filed a complaint for ejectment (Civil Case No.
However, even though it were proper for plaintiff to bring the real action for recovery derived, though we do not admit
that it could be, from the simulated sale before mentioned, both this action as well as the personal action the only
one available in a proper case, as before demonstrated, pursuant to the provisions of article 1095 of the Civil Code
have both certainly prescribed, for the reason that the periods fixed by law for filing such actions have much more

048908) with the Metropolitan Trial Court of Manila, Branch XII against the petitioner citing as ground therefor the
provisions of Batas Pambansa Blg. 25, Section 5, which is the unauthorized sub-leasing of part of the leased
premises to third persons without securing the consent of the lessor within the required sixty (60)-day period from
the promulgation of the new law (B.P. 25). (Rollo, Petition, p. 8).

than elapsed.
After trial, the court a quo rendered its decision ordering petitioner and all persons claiming possession under her (a)
Article 1939 of the Civil Code says:

to vacate the premises alluded to in the complaint; (b) to remove whatever improvement she introduced on the
property; (c) to pay private respondent the amount of P2,000.00 as attorney's fees; and (d) to pay the costs (Rollo,
Annex "A", p. 19).

Prescription, which began to run before the publication of this code, shall be governed by the prior laws; but if, after
this code became operative, all the time required in the same for prescription has elapsed, it shall be effectual, even if
according to said prior laws a longer period of time may be required.

Personal actions prescribe after ten years; and the same with the writ of execution therein issued, after twenty years;
while real actions prescribe after thirty years: according to Law 5, Title 8, Book 1 of the Novisima Recopilacion, and
Law 21, Title 29, Partida 3, which were those in force on the date of the execution of the deed of sale, Exhibit A.

From September 7, 1875, to October 8, 1910, when the complaint was filed, thirty-five years have elapsed. Therefore,
not only in accordance with the laws aforecited, but also pursuant to the provisions of articles 1963 and 1964 of the

Petitioner appealed the decision to the Regional Trial Court and on November 24, 1980, presiding judge of the RTC,
the Hon. Samilo Barlongay, affirmed in toto the decision of the Metropolitan Trial Court (Rollo, Annex "A", p. 19).

The decision of the Regional Trial Court was appealed to the Court of Appeals for review. The respondent Court of
Appeals rendered its decision dated January 28, 1987, the dispositive portion of which reads as follows:

PREMISES CONSIDERED, the petition not being prima facie meritorious, the same is
outright dismissed.

Civil Code, the periods fixed for the prescription of the personal action which could, in a proper case, have been
exercised, as well as for the real action for recovery of possession brought by the plaintiff without right so to do, have
more than prescribed.

For all the foregoing reasons, whereby the errors assigned to the judgment appealed from have been duly refuted, the
said judgment should be, as it is hereby, affirmed, with the costs against the appellant. So ordered.

G.R. No. 77365 April 7, 1992

SO ORDERED. (Rollo, Annex "A", p. 21)

Hence, the petition for review on certiorari.

The principal issue in this case is whether or not the lease of an apartment includes a sublease of the lot on which it
is constructed, as would constitute a ground for ejectment under Batas Pambansa BLg. 25.

Petitioner is of the view that Batas Pambansa Blg. 25 is not applicable because what she leased was her own
RITA CALEON, petitioner,

apartment house which does not include a sublease of the lot she leased from private respondent on which the


apartment is constructed.


Petitioner's contention is untenable.

or units thereof used solely as dwelling places, except motels, motel rooms, hotels, hotel
rooms, boarding houses, dormitories, rooms and bedspaces for rent, but also those used for
home industries, retail stores, or other business purposes if the owner thereof and his family

This issue has already been laid to rest in the case of Duellome v. Gotico (7 SCRA 841 [1963]) where this Court ruled

actually live therein and use it principally for dwelling purposes: . . .

that the lease of a building naturally includes the lease of the lot, and the rentals of the building includes those of the
lot. Thus:

Petitioner argued further that Batas Pambansa Blg. 25 cannot be applied in this case because there is a perfected
. . . the lease of a building would naturally include the lease of the lot and that the rentals of
the building include the rentals of the lot.

xxx xxx xxx

contract of lease without any express prohibition on subleasing which had been in effect between petitioner and
private respondent long before the enactment of Batas Pambansa Blg. 25. Therefore, the application of said law to the
case at bar is unconstitutional as an impairment of the obligation of contracts.

It is well settled that all presumptions are indulged in favor of constitutionality; one who attacks a statute, alleging
unconstitutionality must prove its invalidity beyond a reasonable doubt (Victoriano v. Elizalde Rope Workers' Union,

Furthermore, under our Civil Code, the occupancy of a building or house not only suggests

59 SCRA 54 [1974]). In fact, this Court does not decide questions of a constitutional nature unless that question is

but implies the tenancy or possession in fact of the land on which they are constructed. This

properly raised and presented in appropriate cases and is necessary to a determination of the case,i.e., the issue of

is not a new pronouncement. An extensive elaboration of this rule was discussed by this

constitutionality must be the very lis mota presented (Tropical Homes, Inc. v. National Housing Authority, 152 SCRA

Court in the case ofBaquiran, et al., v. Baquiran, et al., 53 O.G. p. 1130.

540 [1987]).

. . . the Court of Appeals should have found the herein appellees

In any event, it is now beyond question that the constitutional guaranty of non-impairment of obligations of contract

lessees of the house, and for all legal purposes, of the lot on which it

is limited by and subject to the exercise of police power of the state in the interest of public health, safety, morals and

was built as well.

general welfare (Kabiling, et al. v. National Housing Authority, 156 SCRA 623 [1987]). In spite of the constitutional
prohibition, the State continues to possess authority to safeguard the vital interests of its people. Legislation

But petitioner insists that the ruling in the aforecited case is not applicable to the case at bar because the former is a
damage suit while the latter is an ejectment case.

appropriate to safeguarding said interest may modify or abrogate contracts already in effect (Victoriano v. Elizalde
Rope Workers' Union, et al., supra). In fact, every contract affecting public interest suffers a congenital infirmity in
that it contains an implied reservation of the police power as a postulate of the existing legal order. This power can be
activated at anytime to change the provisions of the contract, or even abrogate it entirely, for the promotion or

Be that as it may, this Court has categorically answered in the affirmative, the principal question, common to both

protection of the general welfare. Such an act will not militate against the impairment clause, which is subject to and

cases and on which rests the resolution of the issues involved therein. Under the above ruling it is beyond dispute

limited by the paramount police power (Villanueva v. Castaeda, 154 SCRA 142 [1987]).

that petitioner in leasing her apartment has also subleased the lot on which it is constructed which lot belongs to
private respondent. Consequently, she has violated the provisions of Section 5, Batas Pambansa Blg. 25 which is a
ground for Ejectment.

Batas Pambansa Blg. 25, "An Act Regulating Rentals of Dwelling Units or of Land On Which Another's Dwelling is
Located and For Other Purposes" shows that the subject matter of the law is the regulation of rentals and is intended
only for dwelling units with specified monthly rentals constructed before the law became effective (Baens v. Court of

Section 5 of Batas Pambansa Blg. 25 enumerates the grounds for judicial ejectment, among which is the subleasing

Appeals, 125 SCRA 634 [1983]).

of residential units without the written consent of the owner/lessor, to wit:

Batas Pambansa Blg. 25 is derived from P.D. No. 20 which has been declared by this Court as a police power
Se. 5 Grounds for judicial ejectment. Ejectment shall be allowed on the following grounds:

legislation, applicable to leases entered into prior to July 14, 1971 (effectivity date of RA 6539), so that the
applicability thereof to existing contracts cannot be denied (Gutierrez v. Cantada, 90 SCRA 1 [1979]).

a) Subleasing or assignment of lease of residential units in whole or in part, with the written
consent of the owner/lessor: Provided that in the case of subleases or assignments executed

Finally, petitioner invokes, among others, the promotion of social justice policy of the New Constitution. Like P.D. No.

prior to the approval of this Act, the sublessor/assignor shall have sixty days from the

20, the objective of Batas Pambansa Blg. 25 is to remedy the plight of lessees, but such objective is not subject to

effectivity of this Act within which to obtain the written approval of the owner/lessor or

exploitation by the lessees for whose benefit the law was enacted. Thus, the prohibition provided for in the law against

terminate the sublease or assignment.

the sublease of the premises without the consent of the owner. As enunciated by this Court, it must be remembered
that social justice cannot be invoked to trample on the rights of property owners, who under our Constitution and

Section 2(b) of Batas Pambansa Blg. 25 defines the term residential unit as follows:

Sec. 2. Definition of Terms Unless otherwise indicated wherever in this Act, the following
shall have the following meaning:

xxx xxx xxx

b. A residential unit refers to an apartment, house and/or land on which another's

dwelling is located used for residential purposes and shall include not only buildings, parts

laws are also entitled to protection. The social justice consecrated in our Constitution was not intended to take away
rights from a person and give them to another who is not entitled thereto (Salonga v. Farrales, 105 SCRA 360 [1981]).

WHEREFORE, the Petition is Denied for lack of merit and the assailed decision of the Court of Appeals is Affirmed.


Republic of the Philippines



was the pipe? - A. It was broken. Q. How was it broken? - A. There were porous holes in the pipe and the water came
out. Q. Will you explain what you mean by porous? - A. The pipe was made of cast iron and I believe the pipe, on

October 26, 1907 G.R. No. 3676 PONS Y COMPANIA, plaintiff-appellee, vs. LA COMPANIA MARITIMA, defendantappellant. Rosado, Sanz and Opisso, for appellant. W. A. Kincaid, for appellee. JOHNSON, J.: On or about 19th day of
February, 1906, the plaintiff turned over to the defendant certain goods, wares, and merchandise to be transported
from the city of Manila to the pueblo of Tobaco. These goods were put on board the steamship Venus, which ship

account of being old, had rusted through. Q. Do you mean on account of the age of the pipe it had rusted and eaten
through? - A. Yes, sir. Q. So the damage caused was on account of the pipe having been old? - A. I am unable to tell you.
Q. So owing to the rust you have seen, you believe that the holes that you found in that pipe were on account of the pipe
being old? - A. I suppose so. Q. What was the thickness of that pipe? - A. One-half inch.

belonged to and was under the control of the defendant. The said ship left Manila with the goods, wares, and
merchandise on board on or about the said 19th day of February and arrived at the pueblo of Tobaco some days later.


Upon the arrival of the ship at the pueblo of Tobaco, and in fact some days before, the captain in charge of the vessel
discovered that a portion of the said goods, wares, and merchandise were submerged in water in the hold of the ship
and were practically destroyed. The plaintiff claims that the damages done to his goods amounted to the sum of
P738.45, and no question is raised as to the amount of damage done. On the 26th day of April, 1906, the plaintiff
commenced an action in the Court of First Instance of the city of Manila against the defendant, for the purpose of
recovering the sum of P738.45, the amount of damage alleged to have been done to said goods, wares, and
merchandise. To the complaint of the plaintiff the defendant filed a general and special answer, alleging for his special

Q. Was that pipe unfit for use? - A. Yes, sir. Carlos Pombo, ship inspector, testified relating to the cause of the injury as
follows: Q. To what do you attribute the breaking of that pipe? - A. It could be attributed to many causes; it was probably
more or less to the amount of water in the bilge keel; it might be through some accident; it might have been caused by
the filling up of the tank; very likely the loading of some heavy stuff on board and it falling on the board covering of the
pipe might have caused the breaking of it.

defense that the damages occasioned to said merchandise were not caused by his negligence, but by circumstances
over which he had no control. The issue thus formed was finally brought on for trial on the 11th day of October,

We are satisfied from an examination of the record brought to this court that the damages occasioned were not of

1906. The judge of the Court of First Instance of the city of Manila, after hearing the evidence adduced during the

such a character as to be characterized as force majeure. Where the officers of a vessel fail to make such frequent

trial of the cause, made the following finding of facts:

inspection of their ship as to discover the existence of rusted parts, from which injuries to cargo result, we are of the
opinion that such injuries can not be attributed to force majeure, but rather to the negligence of the officials of such

1. That the plaintiff is a regular company registered and doing business in the city of Manila. 2. That the defendant is a
corporation authorized and registered in the city of Manila. 3. That the defendant is the owner and does business in
vessel for the transportation of passengers and merchandise between the city of Manila and other points in the

ship. An examination of the Spanish and American authorities concerning the meaning of force majeure shows that
the jurisprudence of these two countries practically agree upon the meaning of this phrase. Blackstone, in his
Commentaries on English Law, defines it as -

Philippine Islands. 4. That on or about the 20th or 22d of February, 1906, the plaintiff delivered certain merchandise to
the defendant, under an agreement to transport the same from the city of Manila to the pueblo of Tobaco in the

Inevitable accident or casualty; an accident produced by any physical cause which is irresistible; such as lightning,

steamshipVenus of the property of the defendant. 5. That among the merchandise so delivered there was a box of shoes;

tempest, perils of the sea, inundation, or earthquake; the sudden illness or death of a person. (2 Blackstone's

that when the said box of shoes had arrived at the pueblo of Tobaco it was found to have been immersed in water

Commentaries, 122; Story on Bailments, sec. 25.)

during the voyage, while it was deposited in the bodega (hold) of the ship, and that the contents of said box were
entirely destroyed; that the value of the shoes contained in said box was P738.45.

Upon these facts the judge of the lower court concluded that there was nothing in the proof adduced during the trial
of the cause which was sufficient to relieve the defendant of the responsibility occasioned by the damage done to said
merchandise, and therefore rendered a judgment against the defendant and in favor of the plaintiff for the sum of
P738.45, with interest at the rate of 6 per cent from the 26th day of April, 1906, and costs. From this judgment the

Escriche, in his Diccionario de Legislacion y Jurisprudencia, defines fuerza mayor as follows:

The event which we could neither foresee nor resist; as, for example, the lightning stroke, hail, inundation, hurricane,
public enemy, attack by robbers; Vis mayor est, says Cayo, ea qu consilio humano neque provideri neque vitari
potest. - Accident and mitigating circumstances.

defendant appealed to this court and made the following assignment of errors:
Bouvier defines the same as 1. In making the defendant-appellant responsible for damages caused by force majeure. 2. In declaring that the third
person, to whom the damaged merchandise appears to have been sold by the plaintiff, refused to pay the said plaintiff

Any accident due to natural causes, directly, exclusively without human intervention, such as could not have been

for the value thereof. 3. In not declaring the plaintiff's lack of right to bring this action.

prevented by any kind of oversight, pains, and care reasonably to have been expected. (Law Reports, 1 Common Pleas
Division, 432; Law Reports, 10 Exchequer, 255.)

In the lower court practically the only defense that was offered by the defendant was to the effect that a pipe or tube
running from one of the tanks in the stern of the vessel, for the purpose of allowing air to escape, had become rusted

Cockburn, chief justice, in a well-considered English case (1 Common Pleas Division, 34, 432), said that where a

and punctured full of holes, so that when the tank was filled with water on that side of the vessel, owing to the list of

captain -

the ship, the water ran up into this tube or pipe and escape through the holes into the bodega of the vessel and thus
some of the merchandise in transportation became wet and was damaged. This was the defense relied upon by the
defendant and the one relied upon in the above first assignment of error. The defendant and appellant claims that the
injuries occasioned to the merchandise in question were caused by fuerza mayor. If it is true that the injuries were
the result of fuerza mayor, then the defendant is entirely relieved from responsibility and liability. (Art. 620,

Uses all the known means to which prudent and experienced captains ordinarily have recourse, he does all that can be
reasonably require of him; and if, under such circumstances, he is overpowered by storm or other natural agency, he is
within the rule which gives immunity from the effects of such vis major.

Commercial Code.) Upon the question of the cause of the injury the chief engineer, in charge during the voyage when
the said damage was done, testified as follows:

The term generally applies, broadly speaking, to natural accidents, such as those caused by lightning, earthquake,
tempests, public enemy, etc. Article 618 of the Commercial Code provides, among other things, that -

Q. After the damage did you see the pipe? - A. After the damage took place the inspector was informed when we arrived
in Manila. Q. Did you see the pipe at that time? - A. Yes, sir; after the wooden covering was opened. Q. In what condition

The captain shall be civilly liable to the agent and the latter to the third persons, who may have made contracts with the

a notary public; that afterwards the defendant expressly authorized the plaintiff to sell he damaged goods at any

former, for all the damages suffered by the vessel and its cargo by reason of want of skill or negligence on his part.

price, promising to pay the difference between the selling price and the regular price of the articles in good condition;
that by virtue of said authorization and promise, plaintiff accordingly disposed of all the damaged goods that could be

In the present case the captain admits that the injury was occasioned by reason of a rusted pipe. The rust, of course,
was occasioned by natural causes, but the failure to discover the unsafe condition of the pipe was due to the
negligence of the persons in charge of the vessel and for this negligence the owner of the boat is liable to the persons

sold, at a loss of P1,169; and that notwithstanding the repeated demands made upon him to pay this amount,
according to promise, said defendant had refused and refuses to pay. Therefore, judgment is prayed against the
defendant, sentencing him to pay to the plaintiff the sum of P1,169 with legal interest, and the costs.

injured. Upon the second assignment of error above noted, the plaintiff contends that the merchandise in question
was by him to be delivered to the purchaser of the same at Tabaco, and that he was under obligation to deliver the

On September 3, 1913, defendant filed his answer in writing, admitting certain paragraphs of the foregoing complaint

same in good condition. If this be true, then whatever damages were done to the said merchandise prior to delivery

but specifically denying the rest, and alleging as a special defense that the building the plaintiff occupies had been

were damages done to the plaintiff. This contention of the plaintiff is supported by the fact that the purchaser of the

recently finished, the construction thereof having been under the direction and inspection of an engineer, after

merchandise, immediately upon discovering the damaged condition of the same, presented a claim against the

approval of the plans and specifications by the engineering and sanitation departments of the city of Manila; that it

plaintiff concerning the said damages. Upon the question the lower court, in its decision, said: The evidence is rather

was opened for use after acceptation of the work by the city engineer and approval by the said departments of

meager upon this question, but I find that the person to whom the merchandise was sold immediately reclaimed from

engineering and sanitation; that about 5 o'clock in the afternoon of April 14, 1913, there fell over the city of Manila a

the plaintiff the loss thereof, and refused to pay for the merchandise, and that the plaintiff suffered the loss of the

torrential rain the heaviest from the month of January of that year; that because of the large amount of water and the

merchandise and the damages arising therefrom. We are of the opinion, therefore, and so hold, that the plaintiff

extraordinary violence of the downpour many buildings in the Escolta and adjacent business sections, not only many

herein was the proper party to bring said action. This conclusion, in our opinion, also disposes of the third

buildings of wood merely, but even those of reinforced concrete, were flooded by the overflowing of the drains, gutters,

assignment of error above noted. For all of the foregoing reasons, we are of the opinion, and so hold, that the

and by filtrations, because the gutters of the eaves and roofs were inadequate for holding the extraordinarily excessive

judgment of the lower court should be affirmed, with costs. After the expiration of twenty days let judgment be

rainfall on that occasion; that the wetting the plaintiff's merchandise sustained from that rainfall was not caused

entered against the defendant and in favor of the plaintiff for the sum of P738.45, with interest at the rate of 6 per

wholly by the leaks and drips but was in large part due to the improper situation or location of said merchandise

cent from the 26th day of April, 1906, with costs. So ordered. Arellano, C.J., Torres, Willard and Tracey, JJ., concur.

inside the building; that in neither case was there fault of negligence on defendant's part, said occurrence having
been unforeseen, or, even being foreseen, unavoidable; that it is true an inventory of the plaintiff's damaged goods

Republic of the Philippines


was made in the presence of the interested parties before a notary public; that said plaintiff presented to the
defendant his claim for the damages sustained, asking the latter to pay them; that the truth is that the defendant
never authorized plaintiff to sell the said merchandise inventoried, as set forth in the complaint; that it is not the
truth the defendant promised, either expressly or tacitly, to make good to the plaintiff any loss sustained through the
difference between the price of the articles in good condition and the price thereof after being damaged, for, as


recorded in the document drawn up on April 15, 1913, signed by the plaintiff, the defendant's intervention therein
did not signify a tacit acceptance of any liability for the alleged loss sustained by the plaintiff, but was merely to
determine the cause thereof and the manner in which the water got into the building. As another special defense he

September 18, 1915

alleged that on August 2, 1913, defendant transferred all his own rights, claims, and obligations in the lease, as well
as the absolute ownership of the building occupied by plaintiff's store, to Seoras Romana, Cecilia, Luisa, and Maria,

G.R. No. 10006

YAP KIM CHUAN, plaintiff-appellee,
ALFONSO M. TIAOQUI, defendant-appellant.

Alfredo Chicote and Agustin Alvarez Salazar for appellant.

of the surname Tantungco y Guepangco who, by agreement set down in the instrument of transfer, took over all the
premises covered by the lease made by the defendant to the plaintiff from the date thereof, to wit, March 15, 1913,
and subsequently they were parties directly interested in the present suit.

After trial and introduction of the evidence by both parties, the court rendered the judgment that has been set forth,
whereupon defendant saved his exception and filed a written motion for reopening of the case and a new trial. This
motion was denied, with exception on appellant's part and presentation of the corresponding bill of exceptions, which

D.R. Williams and Albino Z. Sycip for appellee.

was approved and forwarded to the clerk of this court.


The question raised in this case No. 10006, and in two others of the same nature, Nos. 10007 and 10008, is whether

This is an appeal filed through a bill of exceptions by counsel for the defendant from the judgment of March 20, 1914,
whereby the Honorable A.S. Crossfield, judge, sentenced him to pay to the plaintiff the sum of P1,019 with legal
interest at the rate of 6 per cent a year, from August 4, 1903, and the costs.

Under the rate of August 4, 1913, counsel for the plaintiff filed a written complaint in the Court of First Instance of
Manila, alleging as his first cause of action that on March 15, 1913, plaintiff leased the building at No. 218 Calle
Rosario, owned by the defendant, up to December 31 of the same year, undertaking to pay therefor the sum of P310
from said March 15 to June 30, 1913, and P315 from the subsequent first of July until the termination of the lease;
and that on April 14, 1913, because of the leaks in the roof of the storeroom of said building, without fault or
negligence on the plaintiff's part, some of his merchandise stored in said storeroom was so wet and damaged as to
cause him a loss amounting to P1,169. He set forth as his second cause of action that subsequent to this occurrence,
to wit, on April 15, 1913, a list of the damaged goods was made out in the presence of the plaintiff, the defendant and

the owner of a tenement occupied by each of the defendants in the three cases cited, each in his respective rooms or
apartment, is responsible for the deterioration through the wetting of the cloth and other goods that said plaintiffs as
tenants had in same and its storerooms, as a result of the torrential and extraordinary rain which fell upon the city
for nearly an hour in the afternoon of April 14, 1913.

Defendant's building, composed of four apartments, had just been finished and a few months ago was inspected by
the city engineer and approved for the use for which it was intended. There is no record that said building presented
any indication or sign of having defects in its roof such as might cause leaks and damage to the merchandise placed
therein, to enable the Chinese contractor Machuca to hand over the same, as finished, the work was previously
approved by the architect who superintended the construction and finally by the city engineer, who authorized the
use and occupancy of the building for leasing, therefore it is to be presumed, in the absence of proof to the contrary,
that the owner who invested many thousands of pesos in the construction would not have approved or accepted the
work on his building unless he had been convinced that the building, finished by the contractor, and approved by his

architect who superintended the work and by the city engineer, had been properly construed, and therefore that in

Article 1105 of the same Code prescribes: "No one shall be liable for events which could not be foreseen, or which

leasing it to the plaintiff-tenants he acted in the greatest good faith; that they on their part, in taking over and

having been foreseen were inevitable, with the exception of the cases expressly mentioned in the law or those in which

occupying the leased premises, did so satisfied and persuaded that the building was adequate and would serve for

the obligation so declares."

the use they had for it and that it had no defect which would cause any injury or loss to their interests.
The wetting sustained by the goods and merchandise of the plaintiffs as a consequence of the heavy torrential rainfall
The principal rights and obligations of lessor and lessee are comprised in the two following articles of the Civil

on the afternoon mentioned, which caused leaks in the building and flooded the yard, is not a case expressly

Code ."ART. 1554. The lessee is obliged: 1. To deliver to the lessee the thing which is the object of the contract. 2. To

mentioned by the law for which the owner of the premises is responsible, and further it does not appear to have been

make thereon, during the lease, all the necessary repairs in order to preserve it in condition to serve for the purpose

provided against in the lease to be seen in folio 15, letter A, by virtue whereof the lessor would be liable to an

to which it was destined. 3. To maintain the lessee in the peaceful enjoyment of the lease during all the time of the

indemnity for the damages and losses cause his tenants by that rainfall; and so, in accordance with the provisions of

contract. ART. 1555. The lessee is obliged: 1. To pay the price of the lease in the manner agreed upon. 2. To use the

the article quoted above, the defendant is not responsible for the results of the torrential rainfall that has been

thing leased as a diligent father of a family would, applying the same to the use agreed upon; and, in the absence of


an agreement, to the use which may be inferred from the nature of the thing leased according to the custom of the
land. 3. To pay the expenses arising from the instrument constituting the contract. ART. 1556. If the lessor or lessee
should not comply with the obligations mentioned in the preceding articles, they may request the rescission of the
contract and indemnity for losses and damages, or only the latter, leaving the contract in force."

A fortuitous event is an accident independent of the obligor's will to carry out some stipulation and it is plain that for
him to escape the imputation of not performing his obligation he must be placed in a situation arising from an
unforeseen event, or in one where, even if he had foreseen it, still he could not have avoided it, by reason of the fact
that its unexpectedness and inevitability places it beyond human control.

Did the defendant owner of the building in question fail to carry out any obligation imposed by the law in the
foregoing articles, or at least some obligation imposed in the lease? There is no evidence in the case that he failed in
the performance of the obligations he assumed in executing the lease, nor does there appear to have been stipulated
therein the liability now imputed to him.

It was not stipulated in the lease executed between the defendant and the plaintiffs that, if the goods and
merchandise the defendant-tenants might have on the premises should get wet, the defendant would as lessor thereof
be liable to indemnity , nor have the plaintiffs been able to allege such liability in their claim; and we do not know of
any article of the Civil Code included in the chapter which deals with leasing of urban property that makes any

Article 1562 of the same code reads: "If, at the time of the lease of the estate, the condition of the same was not

provision for such liability on the part of the owner of the property.

mentioned, the law presumes that the lessee received it in good condition, unless there be proof to the contrary."
If, on the said afternoon of April 14, it rained so heavily and so abundantly that the proof of the building occupied by
Have the plaintiffs proven that when they accepted defendant's building it was uninhabitable and inadequate for the

the plaintiffs, even though in good condition, according to the municipal architect's certificate, leaked, and if as a

use for which they leased it? There is no evidence in the case to prove such a circumstance.

consequence of that torrential rainfall said merchandise of the plaintiffs got wet, the occurrence is not imputable to
the lessor owner of the building, nor according to any evidence in the case to the lessor's fault. Being evidently a

Nor have the plaintiffs themselves even in the least way proven that the three of them, or any one of them, notified the
defendant after they had occupied the premises that repairs were necessary thereon for keeping the same in
condition suitable for the use intended, and never did they notify the defendant that the roof was defective or had
holes or cracks that might cause leakage and the wetting of the merchandise within the building. The fact is that
neither the lessor no the lessees knew that the roof was defective and was going to leak when it rained, for they only

fortuitous event, unforeseeable by any of the litigating parties, inevitable on account of force majeure, the case
discloses no proof of any kind that the defendant Tiaoqui knew that the roof of the building leased to the plaintiffs
had cracks or defects in it that would cause leakages, just as the plaintiff-tenants did not know that fact themselves,
for otherwise they would have notified the defendant-lessor in due season and demanded repair thereof so as to avoid
injury to their interests.

became aware of the leaks during the rainstorm on the afternoon of the day mentioned, April 14; and therefore only
on the hypothesis that the lessor had known of such defect and had concealed it from the plaintiffs could he be held

Nobody, neither the defendant nor the plaintiffs, could have been foreseen that on the said afternoon of April 14 it

responsible for the consequences thereof on account of the leakages that occurred, especially when it has not been

was going to rain in torrents and in an extraordinary manner, wherefore it is neither right nor proper to ascribe the

duly proven that the defendant lessor failed to perform any of the obligations imposed by the law in the article quoted,

wetting of the merchandise of the plaintiff-tenants to negligence, carelessness, or fault on the defendant's part. It was

1554, by which he might be held responsible to the plaintiffs for damages and losses for which indemnity is

a case of accident and force majeure which could not have been foreseen and which nobody could have prevented, and

unwarrantedly sought.

the fact that the defendant repaired and fixed the leaks in the roof the next day cannot be taken as proof of his
liability, for he did not know and could not have foreseen that it was going to rain in torrents the said afternoon and

Besides the articles quoted therein is nothing in the Civil Code by virtue whereof the lessor may be declared

that the roof of the building would leak and show defects.

responsible for the damages and losses the lessees may have sustained as a consequence of the leaks in the roof of
the building leased and for the other troubles they have encountered.

It would be an absurdity which the law cannot authorize for said tenant to be entitled to claim damages from the
owner because the roof a building leaked and some of the tenant's good got wet, for no provision of the law relating to

If a a consequence of the torrential rainfall mentioned, which in scarcely an hour filled the squares, streets and lots of
the city of Manila, and if as a result of the large quantity of water that fell the yard of the premises in question was

leases of urban property places any such obligation on the owner to pay indemnity for damages, when he himself did
not know that there was any defect to accuse such damages.

flooded and the roof leaked, there being no outlet for the water through the drain-pipes, by reason whereof the
plaintiffs had to break open four bell traps in the yard so that the water would quickly and swiftly flow away thus

Article 1553 of the Civil Code declares that the provisions relating to warranty contained in the title of purchase and

preventing a greater inundation of the yard of the premises, the occurrence was undoubtedly due to force majeure,

sale are applicable to leases.

being a fortuitous event which could not have been foreseen by the owner or the plaintiffs-tenants, or many other
proprietors of stores whose interiors were flooded as a result of that heavy rainfall, and consequently the damages
and losses the water inflicted upon the plaintiffs could not be ascribed to the owner of the premises so as to hold him
liable for the indemnity.

In connection with a lease warranty is the obligation to repair or correct the error whereunder the lessee took over the
property leased, but when the law declares that the lessor must warrant the thing leased, but when the law declares
that the lessor must warrant the thing leased, it is not to be understood that he must also indemnify the lessee.

Liability for the warranty is not equivalent to liability in damages, as the latter is an obligation distinct from the

established jurisprudence, indemnity for losses and damages cannot be claimed when they are caused by a fortuitous



For proper understanding of the provisions of articles 1484 and 1485 of the Civil Code dealing with warranty it is

As for the other facts alleged by the parties, which have been the subject of the evidence adduced by them, the record

necessary to remember that under their provisions the lessor is liable for the warranty of the thing leased against any

contains a certificate from the Observatory in this city to the effect that the rain which fell over the city of April 14,

hidden defects this liability for warranty of the thing leased does not amount to an obligation to indemnify the tenant

1913, was the heaviest from January to the said month of April of that year, for 48.3 mm. of water were registered in

for damages, which is only to be allowed when there is proof that the lessor acted with fraud and in bad faith by

the rain-gauge, an amount of rainfall notably excessive and the greatest during that period of four months.

concealing to the lessee.

Counsel for the plaintiffs has strongly insisted in his briefs that the defendant-lessor agreed and stipulated to pay the
Article 1486 of the Code reads:

amount of the deterioration or depreciation of the goods and merchandise that were wet.

In the cases of the two preceding articles (1484 and 1485) the vendee (sc. lessee) may choose between withdrawing

It has not been duly proven in the case that the lessor Tiaoqui admitted, or agreed to pay, the amount of the losses

from the contract, the expenses which he may have incurred being returned to him, or demanding a proportional

and damages sustained by the plaintiffs because they sold the merchandise, wet by the rainfall that afternoon, for a

reduction of the price, according to the judgment of experts.

lower price than it was really worth. The declarations of the three plaintiffs do not constitute sufficient proof to offset
the positive denial of the defendant Tiaoqui; and the witnesses called by said plaintiffs, far from confirming their

If the vendor (sc. lessor) knew of the faults or hidden defects in the thing sold (sc. leased) and did not give notice
thereof to the vendee (sc. lessee), the latter shall have the same option, and furthermore, be imdemnified for the
lossess and damages should be choose the rescission.

It must be kept in mind that the foregoing article and the two previously quoted appear in the title on contracts of
purchase and sale and are in every way applicable, according to article 1553 of the same code, to leases.

allegations, made affirmations contradictory among themselves and at variance with the assertion of the plaintiffs
interested, for the latter aver that two of them demanded of Tiaoqui and were promised by him that he would pay a
half of the difference caused by the lower price at the sale of the goods, while the witnesses cited stated under oath
that Tiaoqui agreed to pay the whole amount resulting from the depreciation in the value of the merchandise.

In fact, the record reveals that the defendant Tiaoqui denied in a sworn statement (folios 25 and 28) that he had
agreed to pay damages to the plaintiffs and alleged that, not only did he make plain that his intervention in the
notarial instrument drawn up the day after the disaster did not signify that he tacitly accepted any responsibility

Hence, while the lessor is obligated by the general rule to warranty of the thing leased, whether or not he may know

arising from the alleged losses in the merchandise, but furthermore, when demand was made by two of them that he

of the existence therein of defects that render it inadequate for the use the tenant intends, he is only liable for an

pay the amount averred as the extent of said respective losses, he replied that he could not pay it; and he added that,

indemnity for damages in addition to the warranty when he knew of the defects in the thing leased and had not

when for the second time the plaintiffs saw him for the purpose he would investigate whether there were defects in

revealed them to the lessee, a procedure which induces the presumption that he acted with fraud and in bad faith;

the roof of the building to cause leaks, in which case he would collect from the contractor Machuca and that the sum

but in order to hold him responsible for the damages and losses caused by such defects there must be the express

the latter might pay he would deliver to the plaintiffs to cover said losses and damages, but that if said contractor did

condition that the lessee should choose rescission of the contract, according to the prescription of the second

not pay up or if the leaks had resulted from the torrential rain which fell over Manila he would not pay them a cent.

paragraph of the article quoted above, whence it is inferred that, should the lessee insist upon continuing the

The promise contained in the first part of the defendant's answer plainly has a condition attached to it, and there is

contract by occupying the property, he must be understood to have waived the indemnity.

no record that the plaintiffs accepted it or that they agreed to the condition mentioned, and therefore it cannot serve
as ground for an adverse finding.

The plaintiffs, without choosing warranty of the property leased, supposing that they were entitled to require it, set
up a direct claim for indemnity for losses and damages from the lessor, without having proven that the latter had

The contractor Rafael Machuca Gotauco testified that he constructed the defendant's building, located in Calle

knowledge of the defects in the roof of the building leased and in spite of such knowledge did not reveal it to the

Rosario, according to plans and specifications which were kept before him, and that after the work had been finished

plaintiff- tenants, thus acting with malice and bad faith; and yet they continued to occupy the property without

the architect certified that said building was well constructed; and he added that he did not know why the water

having sought or demanded rescission of the contract; wherefore, even supposing that the lessor were liable under

penetrated at the junction of the roof of the building with the firewall, for that junction had been carefully made, but

the law for losses and damages, the plaintiffs were not and are not entitled to claim such, because they in fact waived

thought it must have been due to that torrential rainfall.

the indemnity. Read the above-quoted article of the code carefully.

The attorney, Vicente Miranda, testified in his sworn statement that on the afternoon in question he was in Clarke's
As for the rest, article 1101 of the Civil Code reads:

situated in the Escolta and that as a consequence of the rainfall the persons there had to put their feet on the tables
because the water rose so high that it overflowed the sidewalk. This the witness Aurelio Acua corroborates in his

Those who in fulfilling their obligations are guilty of fraud, negligence, or delay, and those who in any manner
whatsoever act in contravention of the stipulations of the same, shall be subject to indemnity for the losses and
damages caused thereby.

testimony by saying that his store at No. 21 Calle Rosario was filled with water flowing from the yard and the street,
so that he sustained damages, and that he saw his neighbors had to bail the water out of the interior of their stores
or shops with pails and washbasins. Attorney Miranda added that over a week after a occurrence he had interviews
with Attorney O'Brien, counsel for the plaintiff Tan Tiap, and they two talked about the liability of the defendant for
the losses and damages sustained by the plaintiff Tan Tiap, and he did not then hear that the defendant Tiaoqui had

It has not been demonstrated in the that the defendant lessor failed to fulfill the conditions of the lease or that he

promised to pay the plaintiffs a part or all of the amount of the losses and damages they may have sustained through

acted with fraud, negligence or delay in the fulfillment of said conditions. (Arts. 1102-1104, Civil Code.).

the wetting of their goods and merchandise.

In a judgment on appeal of October 29, 1887, the supreme court of Spain, in applying said article 1101 of the civil

Summing up, the record fully demonstrates that the defendant Alfonso M. Tiaoqui is not liable under the law to pay

code of that country, identical with the one in force in these Islands, laid down the principle that, according to

indemnity for losses and damages because of the wetting of the goods and merchandise of Yap Kim Chuan, plaintiff in
case No. 10006; of Marciano Ong Qui Sing plaintiff in case No. 10007; and Tan Tiap, plaintiff in case No. 10008; and

that on the other hand these cases do not reveal satisfactory and conclusive evidence that the defendant lessor

following the channel. When they passed the shallow water they were met with high seas and strong winds. The

Tiaoqui to make up all or part of the loss or depreciation on the sale of the goods and merchandise that was wet.

bamboo poles were unavailing, and , finding themselves in danger of being washed ashore and destroyed, they claim
they called to the Matulin , which was in plain sight, for help. The patron of the Matulin, they allege, made no effect to

It is be observed that as the three said cases are based on analogous facts, having the same origin, they were tried
together and the parol and documentary evidence adduced by the parties in each of said cases all taken in No.
10006; and as the questions of fact and of law raised in all three cases are the same, the legal grounds for the final

assist them and, by reason of the high seas and strong winds, they were driven ashore or on the shoals and their
cargoes lost. The patron of the Matulin e testified that he was unable to render assistance to cascos by reason of the
shallow water in which they were at the time they were caught by the winds and waves and washed ashore.

decision in all three cases are set forth only in the decision of the first of them, in order to avoid useless and
unnecessary repetition.

We are of the opinion that the judgment must be reversed on defendant's own statement of facts. Defendant, in its
brief, states the facts substantially as above, except that it denies that the crews of the cascos, in their distress, called

Roman Tantungco and three others, represented by the same counsel for the defendant, as owners of the building
leased to the plaintiffs after August 2, 1913, through the transfer made by her defendant, prayed that they be allowed
to intervene in these three cases, that the said cases be finally dismissed and that they be absolved from the
complaints filed. These contentions were opposed by the plaintiffs, but the record does not show that any action was
taken on the motions presented by the parties.

to the patron of the Matulin for assistance, or that the cascos were in deep water at the time the wind and waves
began to drive them toward the shore. We have no doubt, however, from the facts and circumstances related that the
crews of the cascos did call for help when they saw the dangerous position in which they had been placed by the
orders of the captain of the launch. It would be a natural thing for them to do under the circumstances, and we have
no doubt that they did. But whether they really did or not we regard as of very little importance; and the same may be
said with respect to the position of the cascos when they first received the winds and waves. It was evident to the
captain of the Matulin that the cascos were in distress, in the open bay with winds and waves driving them ashore;

For the foregoing reasons the judgment appealed from, as rendered in this case No. 10006, must be reversed, and the

and if he had had anything like a proper conception of his duty he would have gone to their assistance. Nor does the

defendant Alfonso M. Tiaoqui absolved, as we do absolve him, from the complaint filed by Yap Kim Chuan, without

argument avail that he could not do so because his launch was of such draft that it would have been impossible to

special finding as to costs in both instances. So ordered.

navigate the shallow water in which the cascos were at the time the elements began to drive them toward the shoals.
That fact does not furnish a legal excuse. He came for the purpose of towing the cascos to Manila; he knew that it was

July 25, 1916

the reason when the southwest monsoon or other winds could be expected to blow at any moment; he knew that two
heavily loaded cascos with nothing to propel them but bamboo poles in the hands of their crews and nothing to
maintain their position in the water except anchors so small as to be of little avail even in a moderate sea, would be at

G.R. No. 10283

LIMPANGCO SONS, plaintiff-appellant,
YANGCO STEAMSHIP CO., defendant-appellee.

the mercy of wind and wave, if there should be any, the moment they emerged from the mouth of the river. He must
have known, if he had any reasonable conception of his duty, that the cascos. propelled simply by bamboo poles,
could make no headway against wind and sea, and that it would be well night impossible, in view of the weather
which at any moment might prevail, to traverse a distance of 1,500 meters in an open sea. Fifteen hundred meters is
almost a mile; and that the captain of theMatulin should have expected that the two cascos could successfully face
the weather which would naturally be expected at that time while the crews "poled" their heavily laden craft in the

Lawrence, Ross, and Block for appellant.

open bay for almost a mile demonstrates that he had no proper conception of his obligation. It must be remembered

Haussermann, Cohn, and Fisher for appellee.

that the Malabon River opens into Manila Bay toward the southwest, almost directly in the teeth of the winds


prevailing at the time. Every wind across Manila Bay from the southwest blows almost squarely into the mouth of the
Malabon River; and every craft passing from the river in the bay in the monsoon season must be prepared to meet
that the obstacle to its progress. In view of this and the further fact that strong southwest winds were the rule rather
than the exception at that reason of the year, was the captain of the Matulin exercising reasonable care when he

The following grounds moved the court to a reversal in this case:

On the 3d day of August, 1913, plaintiff employed defendant to tow from Guagua to Manila two cascos loaded with
2,041.80 piculs of sugar, property of the plaintiff, of the value of P11,229.90. On that date the cascos left Guagua
towed by the launches Tahimic and Matulin , belonging to the defendant. When the launches, together with their tows,
arrived off the Malabon River, the patron of the launch Matulin , whether of his own motion, as contended by the
casco men, or whether at the instance of the patrones of the cascos, as he testified, decided to leave the cascos in the
Malabon River. The launch Tahimic towed the cascos into the Malabon River and the launch Matulin continued the
trip to Manila. The reason why this was done, according to the testimony of the patron of the Matulin , was that, at
that time, the weather was threatening, and the cascos, heavily loaded as they were, to continue the voyage to Manila.

On Friday following, August 8, 1913, the launch Matulin was in the Malabon River and the patron talked to the men
in charge of the two cascos, which were at that time tied up at Tansa, and told them that on the following day, the 9th
of August, at daybreak, he would await them off the mouth of the Malabon River, outside the bar, and that, if the
weather was then favorable, he would tow them to Manila. It was agreed between the patron of the Matulin and
the patrones of the cascos that the later should move out of the river by means of their tikines or bamboo poles and,
thus propelled, proceed to the place where the launch Matulin was to be waiting for them. On the following day, 9th of
August, 1913, at 6 a. m., the patron of the Matulin arrived with his launch off the mouth of the Malabon River and
anchored outside of the shallows, something like 1,500 meters from the mouth of the river. In accordance with the
agreement with the patron of the Matulin and under his instructions, the crews poled their cascos out of the river

asked the crews of two heavily loaded cascos carrying more than 2,000 piculs of sugar of the value of more than
P11,000 to attempt to cross a stretch of open water, nearly a mile in width, with nothing to propel them but bamboo
poles? And under the circumstances described, did the captain of theMatulin perform his full duty when he ordered
or even permitted the cascos to attempt such a journey when he himself was without power or means to help them in
case of need?

A vessel which undertakes a towage service is liable for reasonable care of the tow, and that reasonable care is
measured by the dangers and hazards to which the tow is or may be exposed, which it is the duty of the master of the
tug to know and to guard against not only by giving proper instructions for the management of the tow, but by
watching her when in a dangerous locality, to see that his directions are obeyed. The duty of the tug to a tow is a
continuous one from the time service commences until it is completed. Its responsibility includes not only the proper
and safe navigation of the tug on the journey, but to furnish safe, sound and reasonable appliances and
instrumentalities for the service to be performed, as well as the giving of proper instructions as to the management of
the tow; and if the locality in which the two finds itself at any given time is more than ordinarily dangerous, the tug is
held to a proportionately higher degree of care and skill. It is well recognized that in towing a boat built only for the
shallow water of an inland stream, as the cascos mentioned in this case are, greater care must necessarily be used
when venturing upon an ocean voyage than with a vessel fitted for deep water; and this applies not only in the choice
of routes, to select the one having the smoothest water and affording shelter is stormy weather, but in the handling of
the tow. (The Jane McCrea, 121 Fed., 932; The Printer, 164 Fed., 314; The Somers N. Smith, 120 Fed., 569; Ross vs.
Erie R. Co., 120 Fed., 703; 38 Cyc., 564.)

In the case at bar the defendant failed to meet any of these requirements; it neglected to furnish suitable appliances

The decision of this honorable court is based upon the theory of the case which was not advanced by plaintiff at the

and instrumentalities; for the tug itself, as is demonstrated by the facts in this case, was unsuitable for the purpose

trial and is wholly at variance with the issues of law tendered at the trial. The case was tried on the assumption that

in hand. As we have said, it is negligence to leave two heavily loaded cascos in Manila Bay at the mercy of weather

if it was in fact impossible for the launch to go to the aid of the cascos, no liability for the loss would rest upon the

likely to exist in the month of August for a distance of 1,500 meters with no other motive power than bamboo poles.

defendant. It was never once contended in the course of the trial that it was negligence per se for the defendant to

Also the captain of the Matulin failed to give proper instructions to the tow. If it was negligence not to provide himself

permit the cascos to make their way from the mouth of the river to the bar.

with appliances by which the cascos could be protected while passing from the mouth of the river to the launch, it
was negligence for him to ask the cascos to move out into the open sea under such circumstances. It is clear,
therefore, that the defendant directly or through the captain failed in every duty laid upon it by the law, even though
the law applicable under the facts and circumstances of this case require the use of only ordinary diligence and care;
but, as a matter of fact, the law required the exercise of more than ordinary care under the circumstances existing at
the time the cascos were lost. The fact of time and season and of the probability that in coming out of the river they
would be met with wind and wave and, in their helpless condition, would in all probability, if so met, be driven on the
shoals, made the situation of the cascos one of more than ordinary danger; and the tug should be held to a
proportionately higher degree of care and skill.

We are of the opinion that the defendant limits too severely the theory on which the case was tried below. The
complaint alleges facts sufficient to state a cause of action against the defendant from several points of view. As
shown by the statement of facts in the decision in the main case, which was but a restatement of the facts alleged in
the complaint, the defendant was charged with negligence for everything done by him subsequent to the time when
he placed the cascos in the Malabon River instead of continuing with them to Manila. Indeed, the complaint even
alleges that the placing of the cascos in the mouth of the Malabon River was in itself an act of negligence. To say the
least, the theory of the plaintiff was that the negligence of the defendant began from the placing of the cascos in the
river. While the fact that the defendant's launch did not go to the assistance of the cascos when they found
themselves unable to navigate the waters of the bay was, perhaps, dwelt upon with more emphasis than the other

While the captain of the Matulin would not have been responsible for an act of God by which the cascos were lost, it

features of the case, there does not appear any intention on the part of the plaintiff of relying solely on that theory

was his duty to foresee what the weather was likely to be, and to take such precautions as were necessary to protect

and to renounce his rights against the defendant arising from other acts of negligence and to stand alone upon the

his tow. It was not an act of God by which the cascos were lost; it was the direct result of the failure of the captain of

act on which particular emphasis was placed.

the Matulin to meet the responsibilities which the occasion placed on him. To be exempt from liability because of an
act of God the tug must be free from any previous negligence or misconduct by which that loss or danger may have
been occasioned. For, although the immediate or proximate cause of the loss in any given instance may have been
what is termed an act of God, yet, if the tug unnecessarily exposed the two to such accident by any culpable act or
omission of its own, it is not excluded. (Manresa, vol. 8, pages 91 et seq.; art. 1105, Civil Code.)

Moreover, the act of the patron of defendant's launch of calling the cascos out of the shelter of the Malabon River into
the dangers of the bay, while an act of negligence on the part of the defendant'spatron under the circumstances, is so
closely connected both in point of time and in nature with the inability of the patron to go to their assistance after
they were called out as to make the two inseparable to the extent that logically they cannot be divided for the purpose
of claiming that one of the acts or omissions was accepted as the theory of the case to the exclusion of the other. We

These are the grounds upon which the decision in this case was rested. So ordered.

held in the main case that it was not only negligence for the patron of the defendant's launch to order the cascos out
of the shelter of the river into the dangers of the bay; but we also held that the failure of the defendant to provide

Torres, Moreland, and Araullo, JJ., concur.

Johnson, J., concurs in the result.
Trent, J., dissents.


suitable means by which it could extend assistance to the cascos after they had reached the waters of the bay was
also negligence under all the circumstances. Indeed, one of the principal grounds of our decision was that the
defendant, after putting the property of the plaintiff in a dangerous position, found itself without means of averting
the catastrophe which its own acts invited.

For these reasons we are of the opinion that the theory on which the case was tried below was not so narrow as the
defendant assumes. Nor was the decision of this court so circumscribes as counsel maintains. All of the facts upon

November 2, 1916

which our decision was based were proved in the trial and were discussed by the trial court. While he may not have
drawn conclusions from some of the facts, that was due more to the circumstance that he found for the defendant


This is a motion for a rehearing in a case decided by this court in which we held that the plaintiff was entitled to a

than that he was simply following a particular theory in the trial of the cause.

Finally, the brief filed in the trial court by the plaintiff puts these questions:

judgment against the defendant. The action was one for negligence in towing two cascos from Guagua to Manila
whereby they and their cargoes were lost. Reference is made to the decision in the main case for a statement of the

First, Was there reasonable ground for the defendant leaving the cascos in the Malabon River? Second, Was not the


loss of the cascos and their cargoes due to the negligence of the patron of the launch 'Matulin '?

On this motion the defendant contends that "the decision of this honorable court in the above entitled cause is based

In arguing these questions counsel said: "The contract of towage is by its nature indivisible." Continuing the

upon the ground that it was negligence for the patron of the defendant's launch to permit the patrones of the cascos

argument he called attention to the fact that the patron of the Matulin summoned the cascos from the Malabon River

to attempt to move their vessels from their mooring place in the Malabon River to the place where the launch was

into the bay in the early morning and then left them to the mercy of the wind and waves. Counsel then argued the

waiting for them outside the bar."

legal responsibility of the defendant. He asserted that thepatron of the defendant's launch should have known the
hours of the ebb and flow of the tide and the condition of the bay and that he should not have called the cascos from

While, says the defendant, "the case was tried below solely upon the theory that the negligence imputed to defendant
consisted in the failure of the launch to go to the assistance of the cascos when the roughness of the sea made them

the mouth of the river until the conditions were such that they could navigate without assistance or until, if they
needed assistance, he was able to offer it.

It is undoubtedly the law that, where a cause has been tried upon the theory that the pleadings are at issue, or that
With this allegation as a basis the defendant says in its motion:

a particular issue is made by the pleadings, or where an issue is tacitly accepted by all parties as properly presented
for trial and as the only issue, the appellate court will proceed upon the same theory. (Lizarraga Hermanos vs. Yap

Tico, 24 Phil. Rep., 504; Molina vs. Somes, 24 Phil. Rep., 49.) It would be unjust and oppressive for the appellate
court to adopt a theory at variance with that on which the case was presented to and tried by the lower court. It
would surprise the parties, take them unaware and off their guard, and would, in effect, deprive them of their day in
court. There is a difference, however, between a change in the theory of the case and a shifting of the incidence of the
emphasis placed during the trial or in the briefs. The theory of the case is primarily determined by the pleadings. But
the parties may, by express or implied agreement during the trial, adopt and follow some other theory, in which case
the theory so adopted will control the case. Where, however, the theory of the case as set out in the pleadings remains
the theory throughout the progress of the cause, the change of emphasis from one phase of the case as presented by
one set of facts to another phase made prominent by another set of facts, all of which facts were received in evidence
without objection as clearly pertinent to the issues framed by the parties in their pleadings, does not result in a
change of theory, and particularly not where the two sets of facts are so closely related both as to time and nature
that they are to all intents and purposes inseparable. In the case under discussion the action was based on the
negligence of defendant which resulted in the loss of plaintiff's cascos and their cargoes of sugar. The complaint
contains a complete history of the case and a statement of all of the defendant's acts from the time it received the
cascos in tow until they were lost. Those acts were proved in the trial. Plaintiff emphasized in particular those facts
which showed that defendant's patron refused or neglected to go to the assistance of the cascos after he had
summoned them from the safety of the river into the hazards to the bay and when he saw them drifting helplessly on
the shoals. But there was in the case the fact that the patron did call the cascos out of the river into the
bay knowing that he could not assist them should they need assistance before they reached the deeper water where
the launch could navigate, and knowing the state of the tide and that bad weather might supervene at any moment at
the season of the year. The court on appeal emphasized, perhaps, but not intentionally, as it was unnecessary, the
latter facts, holding that it was negligence, under all the conditions, for the defendant to summon the cascos from the
river into the bay while the defendant had so circumstanced itself as to be unable to render assistance to the cascos if
they should need it. These two sets of facts are so closely related and inseparably connected in the theory of plaintiff's
case as stated in the pleadings and as tried that we do not believe it can reasonably be urged that there was a change
of theory in the appellate court. This court simply developed plaintiff's theory and its facts; it did not change them.
The motion is denied. So ordered.