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G.R. No.

L-5827

August 4, 1910

THE CHINESE CHAMBER OF COMMERCE, plaintiff-appellee,


vs.
PUA TE CHING, ET AL., defendants-appellants.
O'Brien and De Witt, for appellants.
Chicote and Miranda, for appellee.
ARELLANO, C.J.:
In the Court of First Instance of Manila, the plaintiff had prosecuted three suits against Pua Te Ching, registered under Nos. 6347, 6348 and 6349, all
for the recovery of a sum of money. The court decided them by judging that Pua Te Ching should pay the amounts claimed. Pua Te Ching, for the
purpose of staying the execution of the judgments rendered, during the pendency of his appeal, presented as sureties in the three aforesaid cases,
Pua Ti, of Calle Rosario No. 150, and Jose Temprado Yap Chatco, of Calle Sagasta, San Fernando, Pampanga, executed the proper bonds: In case
No. 6347, for P3,784; in No. 6348, for P4.00; and in No. 6349, for P1,000, "for which payments well and truly made," the bond reads, "we, the
appellant and the sureties, jointly and severally bind ourselves," it being expressly stipulated "that the appellant and the sureties are held and firmly
bound to the appellee, jointly and severally, in the sum expressed in each bond, to secure the fulfillment and payment of the judgment so appealed,
together with the costs, in case the same should be affirmed, in whole or in part, or in case the judgment should become effective on account of the
appellant's having abandoned or withdrawn the appeal, or in case it should be dismissed or declared to be improperly allowed.
The appeal having been heard by this court, which rendered a decision affirming the judgment of the lower court and, while the latter was about to
proceed with the execution of the said judgment, the sureties Jose Tempardo Yap Chatco and Pua Ti set forth: That Pua Te Ching died intestate on
September 2, 1909, and the decision of this court was rendered after his death; that the estate of the late Pua Te Ching was in the course of
administration; and that, therefore, the decision of the Supreme Court was null and of no value, it having been pronounced against a person already
dead, and that an execution thereof could not be issued against the said Pua Te Ching.
The lower court decided that, notwithstanding the death of the principal surety, the sureties who subscribed the bond were liable for the amount of
the judgment entered "that the judgment entered in these cases against the defendant Pua Te Ching and in favor of the plaintiff shall be extensive
against the sureties who subscribed the bond, named Pua Ti and Jose Temprado Yap Chatco, jointly and severally, and execution shall issue on the
said judgments.
These sureties filed notice of appeal and, having forwarded their bill of exceptions, alleged error against the judgment appealed from it that therein
the execution of a judgment was ordered notwithstanding the death of the appellant which occurred before the affirmation of the decision of the lower
court. In support of their allegation they invoke sections 119 and 448 of the Code of Civil Procedure, the provisions of which, especially those of
sections 448, may be invoked by the sureties in their favor by virtue of the provisions of articles 1148 and 1853, in relation to article 1822, of the Civil
Code.
Article 1822, invoked by the appellant, provides that "if the surety binds himself jointly with the principal debtor, the provisions of section fourth,
chapter third, title first, of this book shall be observed," that is, of book fourth of the Civil Code. Section fourth of the chapter, title, and book
mentioned provides that "a creditor may sue any of the joint debtors or all of them simultaneously." (art. 1144), In conformity having bound
themselves in solidum (jointly and severally) with the principal debtor Pua Te Ching, the creditor, that is, the Chinese Chamber of Commerce, may
sue any of them or all of them simultaneously: which is what the Chinese Chamber of Commerce did in filing suit against the joints and several
debtors.
But the basis of appellant's argument in alleging error because of the application of this provision of the law, is the benefit granted by articles 1148
and 1853.
Article 1853, which is one of the provisions made in the matter of bonds and is a reproduction of article 1148 or joint and several obligations in
general, reads as follows:
A surety may set up against the creditor all the exceptions which pertain to the principal debtor and which may be inherent to the debt; but
not those which may be purely personal to the debtor.

The whole question which this court has to decide is whether the sureties Pua Ti and Yap Chatco have set up against the creditor any exception
which pertains to the principal debtor, Pua Te Ching, and which may be inherent to the debt. If the exception which pertains to the principal debtor,
Pua Te Ching, is purely personal to him, it is evident that the sureties of Pua Te Ching can not set it up against the creditor.
Exceptions of the principal debtor which the surety may utilize and which may be inherent to the debt, are all those connected with the obligation
secured by the bond, all those which may contribute to weaken or destroy the vinculum juris existing between them creditor and the principal debtor,
all means of defense which may invalidate the original contract from which the right or the action of the creditor arises against the surety, such as the
exceptions of fraud or of violence, which annul consent, that of sine atione agis founded on a payment already made, that of res adjudicata that of
prescription, that of nullity of the loan made to a minor child, and others of the same class. (12 Manresa, Civil Code, 363.)
The exceptions which, according to the appellants, pertains to the principal debtor Pua Te Ching inasmuch as he died, is that provided by sections
119 and 448 of the Code of Civil Procedure. Section 119 relates to the continuance of the action by or against the executor, administrator or other
legal representative of the deceased, and, if the action is for the recovery of money, the payment of a debt or of damages, to its discontinuance and
prosecution in the proceeding instituted for the settlement of the estate of the deceased; and section 448 provides that, notwithstanding the death of
a party after the judgment, "execution thereon may be issued, or one already issued may be enforced as follows:(1) In case of the death of the
judgment creditor, upon the application of his executor or administrator or successor in interest; (2), in case of the death of the judgment debtor, if the
judgment be for the recovery of real or personal property, or the enforcement of a lien thereon." All these provisions concern the manner of execution
relative to the obligation against the estate of Pua Te Ching, but in nowise effect the validity and force of the obligation contracted by Pua Te Ching
toward the Chinese Chamber of Commerce in such a way as to serve the joint and several sureties of Pua Te Ching as a defense inherent to the
latter's debt to be set up against the execution, now that they are the judgment debtors made liable for payment. They are all defenses to oppose an
execution against the estate of Pua Te Ching, as the appellants say, and all of them are against the execution of the obligation, but not against the
obligation itself. They are not even personal defenses of the principal debtor against the obligation; still less are they defenses inherent to the debt
itself, which are the only ones that, as pertaining to the principal debtor, may be utilized by the sureties.
It is useless to allege the impropriety of an execution of a judgment against the estate of a person deceased when it is not a question of such an
execution against the estate of a deceased person.
It is useless to allege how the payment of money should be sued against the estate of a deceased person, when it is not a question of a suit of this
kind, nor of any other, but of the execution of a judgment against certain sureties who bound themselves jointly and severally to pay the amount of
the obligation concerned in the case at bar "in case the judgment should be affirmed in whole or in part." The judgment sentencing the principal
debtor Pua Te Ching to pay the amounts claimed, having been wholly affirmed, the case now stands for execution to issue against the sureties for
securing payment of the said amounts by them in place of Pua Te Ching or with Pua Te Ching, as they had bound themselves to do. The creditor
having chosen alone without Pua Te Ching, they alone, without Pua Te Ching and without reference whatever to the estate of Pua Te Ching, must be
compelled to pay by means of judicial compulsion through execution.
The provisions contained in articles 1148 and 1853 of the Civil Code do not apply to the sureties, the appellants; and the judgment of the trial court,
which finds the sureties liable for the payment of the debt, put into execution by virtue of final decision, is entirely in accord with the law.
The record does not show that it is a question of the execution of a judgment entered after the death of the principal debtor. No proof whatever exists
of this fact, nor even of the fact of the death of the principal debtor.
The lower court, on the truth of this hypothesis, decided that, notwithstanding the death of the principal obligor, the sureties are compelled to pay the
amount set forth in the judgment rendered.
That this court should not render a decision affirmatory or that of the lower court on account of the death of the defendant, is a point that absolutely
does not concern this incident of the execution of judgment, nor was evidence adduced to show anything specific against the rendering of such an
affirmatory decision.
The judgment appealed from is affirmed, with the costs of this instance against the appellants. So ordered.

G.R. No. 12605

September 7, 1918

UY SOO LIM, plaintiff-appellant,


vs.
BENITO TAN UNCHUAN, FRANCISCA PASTRANO and BASILIO CEFRANO UY BUNDAN, defendants-appellees.
Gibbs, McDonough & Johnson for appellant.
Williams, Ferrier & Sycip and Pantaleon E. del Rosario for appellees.
FISHER, J.:
This is an appeal by plaintiff upon the law and the facts, from a judgment of the Court of First Instance of Cebu, dismissing on the merits his action
for the annulment of a contract by the terms of which he sold to the defendant Francisca Pastrano all his interest in the estate of the late Santiago
Pastrano Uy Toco.
The material facts as found by the trial court, whose findings are fully supported by the evidence, are that at the age of about thirteen Santiago
Pastrano Uy Toco, a Chinese, came from China to reside in the Philippine Islands. He was then unmarried. On August 2, 1882, he married Candida
Vivares, a Filipina woman, at Mambajao, in the province of Cagayan de Misamis. Of this marriage there were born two daughters, Francisca and
Concepcion. Francisca is a defendant in this suit and is the wife of the co-defendant, Benito Tan Unchuan. At the time of this marriage, Santiago
Pastrano possessed very little property a tienda worth about two thousand pesos. The large estate left by him at his death was acquired by him
during his marriage with Candida Vivares.
In 1891, Santiago Pastrano, who had resided continuously in the Philippines since he came to the Islands at the age of 13, returned to China were
he remained for little less than a year. While there he entered into illicit relations with a Chinese woman, Chan Quieg, also referred to as Chan Ni Yu.
After staying a little less than a year in China, Santiago Pastrano returned to the Philippines where he remained till his death in Cebu, in March,
1901. He never saw Chan Quieg again, but received letters from her informing him that she had borne him a son, Uy Soo Lim, the present plaintiff.
He died without ever having seen Uy Soo Lim, but under the belief that he was his only son, and it was in this belief that he dictated the provisions of
his will.
On March 6, 1901, Santiago Pastrano died in Cebu, leaving a large estate. The persons who survived him, and then or afterward laid claim to an
interest in the estate, were his wife, Candida Vivares, his daughters, Francisca Pastrano and Concepcion Pastrano, Chan Quieg, and the plaintiff Uy
Soo Lim.
By the terms of his will, Santiago Pastrano attempted to dispose of the greater part of his estate in favor of the appellant, Uy Soo Lim. The will was
duly probated in the Court of First Instance of Cebu, and the defendant Benito Tan Unchuan, husband of the defendant Francisca Pastrano, who was
named in the will as executor, duly qualified as such on May 13, 1902. Basilio Uy Bundan, one of the defendants herein and brother of Santiago
Pastrano, was named by the testator as guardian of Francisca Pastrano, Concepcion Pastrano, and Uy Soo Lim, who were all three minors at the
time of the death of the testator, and duly qualified as such before the court on August 6, 1902.
On October 21, 1904 the Court of First Instance of Cebu, in the matter of the testamentary estate of Santiago Pastrano, deceased, issued an order
requiring Benito Tan Unchuan, as executor of the testamentary estate of Santiago Pastrano, to deliver to Basilio Uy Bundan, guardian of Francisca
Pastrano, Concepcion Pastrano, and Uy Soo Lim, the property to which they were entitled under the will of said Santiago Pastrano. This order was
complied with and the administration of the testamentary estate declared closed.
Basilio Uy Bundan having received, as guardian of the minors Francisca Pastrano, Concepcion Pastrano, and Uy Soo Lim, the property devised to
them under the will of said Santiago Pastrano, continued to administer the said property as guardian without incident of note till October, 1910. On
October 18, 1910, the court, in the matter of the aforesaid guardianship, issued an order on the guardian, Basilio Uy Bundan, in which it was noted
that Francisca Pastrano had reached majority, that Concepcion Pastrano would reach her majority in a few months, and that Uy Soo Lim had
married and the guardian was therefore ordered to present a plan of distribution of the estate in accordance with the dispositions of the will of
Santiago Pastrano.
The guardian did not comply with this order at once, and, before the plan of the distribution called for by this order could be presented, objections
against carrying into effect the provisions of the will were presented to this court.
On May 25, 1991, Candida Vivares presented, through her attorneys, a motion in the matter of the testamentary estate of Santiago Pastrano in
which she claimed the right as the widow of the deceased to one-half of all the estate, and asked that the administration of said estate reopened and
the rights of the persons readjudged and determined according to law. A motion of similar purport was filed by her in the matter of the guardianship of
Uy Soo Lim et al.
On June 5, 1911, Francisca Pastrano and Concepcion Pastrano filed, through their attorneys, a motion in the guardianship of Uy Soo Lim et al., in
which they opposed the distribution of the estate of Santiago Pastrano in accordance with the terms of his will, alleging that Uy Soo Lim was not
entitled under the law to the amount of the estate assigned him in the will, for the reason that the marriage alleged therein of Santiago Pastrano with

Chan Quieg, was null and void, and, furthermore, that Uy Soo Lim was not a son, legitimate or illegitimate, of said Santiago Pastrano. They,
therefore, asked for a suspension of the distribution and a reopening of the matter of the testamentary estate of Santiago Pastrano and that the
rights of all persons in interest be readjudged and determined according to law. Chan Quieg also appeared in the matter of the estate of Santiago
Pastrano on October 7, 1911, and asked that she be declared entitled to one-half the estate on account of "having in the year 1892 in the city of
Amoy, China, held carnal relations with the deceased Santiago Pastrano, having lived maritally with him during his stay in said city that year, which
union, under the laws and customs of China, constitutes all the forms of valid marriage in said jurisdiction."
The effect of all these motions was to put in question the right of Uy Soo Lim to seven-ninths of the property as left him by Santiago Pastrano in his
will and even to put in question his right to receive anything at all. If Uy Soo Lim was merely an illegitimate son of Santiago Pastrano not legitimated
and incapable of being legitimated or of being given the status of an acknowledged natural son, and if Candida Vivares was the lawful wife of
Santiago Pastrano and Francisca and Concepcion are the lawful issue of that marriage, then the utmost that Uy Soo Lim could have taken under the
will of Santiago Pastrano, according to the contention of Pastrano's widow and daughters, would have been the third of Santiago Pastrano's one-half
interest in the community estate subject to the testator's disposition, or one-sixth of the entire estate, instead of the seven-ninths bequeathed him by
said will.
Uy Soo Lim, had married in China in 1910. He was aware of the fact that he was heir to a large fortune in the Philippine Islands under the terms of
the will of Santiago Pastrano, having already drawn from the estate for his personal use P26,800. Before Candida Vivares, Francisca Pastrano,
Concepcion Pastrano, and his own supposed mother Chan Quieg had formally impeached before the court his right to seven-ninths of the property
described in the will of Santiago Pastrano, he was fully aware of the preparations being made to reduce his interest to nothing or to a small fraction
of that conferred by the will. If was for the express purpose of frustrating these efforts that Uy Soo Lim left China and arrived in Manila on March 13,
1911, about two months more or less before the first formal protest made in court attacking the rights conferred on Uy Soo Lim under the will.
Before setting out for Manila Uy Soo Lim employed as his agent and advise one Choa Tek Hee, a resident merchant of Manila, then on a visit to
China. Plaintiff came to Manila on March 13, 1911, and resided in the house of Choa Tek Hee till his departure in November, 1911. Choa Tek Hee
was then in China, but came to Manila in time to aid plaintiff executed a power of attorney in favor of Choa Tek Hee to represent him in the pending
negotiations. He also secured the services of two attorneys, Major Bishop to represent him in Manila and Levering, of Cebu, to represent him in
Cebu.
About the end of October, 1911, or, perhaps the early part of November, an agreement was reached between Choa Tek Hee and plaintiff, of the one
part, and Tan Unchuan and Del Rosario, an attorney of Cebu, representing the interest of Candida Vivares, Francisca and Concepcion Pastrano, on
the other, to submit the entire matter in dispute to the judgment of three respectable Chinese merchants designated. The persons thus designated
were not, strictly speaking, arbitrators, but rather friendly advisers, since there was no agreement that their findings should be binding on the parties.
These advisers came to the conclusion that the sum of P82,500 should be accepted by plaintiff in full satisfaction and relinquishment of all his right,
title, and interest in and to the estate of the deceased Santiago Pastrano, and this recommendation was accepted by Choa Tek Hee and plaintiff and
by Tan Unchuan and Del Rosario. In accordance with this agreement, plaintiff, on November 18, 1911, executed a deed by which he relinguished
and sold to Francisca Pastrano all his right, title, and interest in the estate of the deceased Santiago Pastrano in consideration of P82,500, of which
sum P10,000 was received in cash and the balance was represented by six promissory notes payable to Choa Tek Hee as attorney in fact for Uy
Soo Lim, the first for P22,500 and the remaining five for P10,000 each. This is the document known as plaintiff's Exhibit B, which plaintiff is seeking
to annul in the present action. Thereafter, on December 6, 1911, Candida Vivares and Concepcion Pastrano, then of age, executed separate deeds
by where they relinquished and sold to Francisca Pastrano all their right, title, and interest in the estate left by Santiago Pastrano.
On November 29, 1911, Chan Quieg, then temporarily in the port of Cebu, executed a deed whereby she sold and relinquished to Francisca
Pastrano all her right, title, and interest in the estate of Santiago Pastrano. On December 4, 1911, Chan Quieg executed a public document in which
she gave her consent to the sale by Uy Soo Lim of his right and interest in said estate "in case the same should be necessary by virtue of any legal
requirements of the laws of the Philippine Islands."
And finally, on December 4, 1911, Basilio Uy Bundan executed a public document in which he declared that in spite of the statements in the will of
Santiago Pastrano, said testator was the owner of the entire business in Cebu known as Santiago Pastrano & Co., and that Calixto Uy Conchio, the
brother of testator and of said Basilio Uy Bundan, did not, as declared in said will, own a three-quarter interest in said business, or any interest at all
therein, for which reason the said Basilio Uy Bundan renounced any interest in said business which he might appear to have as brother and heir of
said Calixto Uy Conchio, who died without direct heirs in the ascending or descending line, said renunciation of right being made in favor of
Francisca Pastrano.
All the documents above mentioned having been duly presented to the lower court by Pantaleon del Rosario acting as attorney of Francisca
Pastrano, that court, on December 11, 1911, issued an order in the matter of the guardianship of Uy Soo Lim et al., by which Francisca Pastrano was
declared the sole owner of the property left by the deceased Santiago Pastrano, and the guardian Basilio Uy Bundan was order to deliver the same
to Francisca Pastrano. On December 14, 1911, upon proof of compliance with said order, the guardianship was closed and the guardians bond
cancelled.

On August 24, 1914, the plaintiff and appellant, Uy Soo Lim, commenced the present action in the Court of First Instance of Cebu, for the purpose of
vacating the orders of the lower court of December 11, 1911 and to rescind and annul the contract by which he had sold and transferred to Francisca
Pastrano his interest in the estate of Santiago Pastrano.
The complaint alleges as one of the reasons for setting aside plaintiffs sale of his rights to Francisca Pastrano that defendants Benito Tan Unchuan
and Basilio Uy Bundan induced the plaintiff to execute the deed of cession by conspiring together to exercise under influence upon the plaintiff, by
taking advantage of his youth, passions, and inexperience, by misrepresenting materials facts concerning the value of the property and interest in
questions, and by concealing others. The court below held that appellant had not been induced by deceit, or undue influence to enter into the
contract, but did so deliberately with full knowledge of the facts, after mature deliberation and upon the advice of capable counsel. This ruling of the
court is assigned by appellant as error. Upon this branch of the case the trial judge said:
The plaintiff testified before the court and a careful reading of the verbal and documentary evidence furnishes a fair idea of the general
characteristics of the plaintiff. That he is a spendthrift and unable to make a wise use of money is quite evident. But it is equally evident that the
plaintiff now is and at the same time of executing the bill of sale was a youth of more than ordinary intelligence, with a keen appreciation and
understanding of all the elements of strength and weakness in his case that could only have been bettered by a study of the law as a profession. As
a witness be displayed uncommon ability in avoiding a direct answer to inconvenient questions and in professing lack of memory in other points. It is
true that this testimony was given some three years, more or less, after signing the document of cession, but the court has no reason to believe that
the plaintiff's evident intelligence, not to say cunning, was appreciably less then than now. The court upon review of the evidence finds that plaintiff
when he signed the document was in possession of all the essential facts bearing upon his interest in the estate and had an intelligent
comprehension of the nature of the deed of cession, its contents and its effect upon his interests.
Some shadow of claim might be made on this issue if plaintiff, then a minor, had signed the document without careful and competent advisers to
direct him. He had however three advisers. One of them was Choa Tek Hee, characterized by Judge Del Rosario as a person of unusual ability.
Whatever discord may have arisen subsequently between plaintiff and Choa Tek Hee, there is no serious claim either in the complaint or based on
the evidence that Choa Tek Hee was a party to the supposed conspiracy against plaintiff, and the Court does not doubt but what Choa Tek Hee
exerted all his ability to procure for plaintiff the best possible terms. But plaintiff from the very beginning until the end had the benefit of the advice of
two lawyers, Major Bishop to consult with in Manila, where the document itself was signed, and Mr. Levering of Cebu, where most of the property
was situated, where the other parties in interest lived and where the litigation itself was pending. To claim that plaintiff did not know what he was
signing appears to the court to be an impeachment of the intelligence which a reading of the testimony shows the plaintiff to have possessed at the
time in question. To claim that the two attorneys named allowed their client to sign the document without being satisfied that he understood its import
and thereafter consented to the final decree issued by the court in Cebu based on said sale, constitutes in the opinion of the court an untenable
impeachment of the conduct of two lawyers well and favorably known to the Bench and Bar of these Islands as attorneys of ability and integrity.
In support of the claim that material facts were concealed and misrepresented by defendants, special stress is laid on a memorandum furnished the
"arbitrators" by Tan Unchuan. This memorandum was shown to plaintiff's agent Choa Tek Hee and was a general account of the property left by
Santiago Pastrano's estate was credited with a quarter interest in the business known as Santiago Pastrano & Co., his deceased brother Calixto Uy
Conchio being credited with only the remaining three-fourths, while as a matter of fact it would appear that Santiago Pastrano was the owner of the
entire interest in said business and subsequently to the execution of the document in question by plaintiff the entire interest in the business passed
by decree of this court to Francisca Pastrano who has purchased the interest of all the other heirs. But whatever may have been the effect of the
presentation of this memorandum, plaintiff is not shown to have relied thereon. It was for the purpose among others of being informed as to the
nature and value of his interests and as to the weight that might be attached to the claims made by persons with adverse interest that plaintiff
employed a lawyer in Cebu where most of the property (and the business known as Santiago Pastrano & Co.) was located and the facts relating
thereto accessible. Without better proof than has been presented the court will not presume that a document circulated among the arbitrators, though
seen by plaintiff, influenced plaintiff in signing the deed of cession when he had employed attorneys well able to revise and check up any statements,
made in said memorandum.
Furthermore, the bill of sale itself specifically states that among the rights sold by plaintiff is his interest in the business of Santiago Pastrano,
whatever that might be, and expressly states that the will erroneously stated that testator's interest was one quarter, whereas in reality testator
owned the entire business. The court finds under the evidence that plaintiff understood this part of the bill of sale along with its other provisions and
that its import was explained to him by his attorneys before he signed it.
Without going further into all the evidence on this question, the court finds that not only has plaintiff not sustained the burden of proving the fraud,
imposition and deceit, which the law never presumes, but that plaintiff in fact signed the deed of cession in question without relying upon the
statements and representations of the defendants as the motive for signing the same; that before signing the same he understood the nature of said
document, its contents and its effect upon his interest, and that in signing the same he was determined by the advice of his own agent Choa Tek Hee
and upon the advice of his two lawyers, who explained to him fully and to his complete understanding the nature, contents and effect of said
instrument.
Appellant vigorously assails these conclusions of the trial court, but the evidence is amply sufficient to support the findings, and we find nothing in the
record to indicate that the trial court has failed to consider all the evidence adduced, or that the findings are contrary to the weight of the testimony.

Whenever there is a conflict in the evidence and the conclusion to be reached must rest largely upon the relative credibility of the witnesses, we
rarely disturb the findings of the trial court, and we can see no reason for doing so in this case. On the contrary, we are convinced that the weight of
the evidence strongly supports the findings, and that the court did not err in rejecting appellant's contention that the contract is voidable upon the
ground that his consent was obtained by fraud or undue influence. We are particularly impressed by the fact that it is expressly stated in the contract
(Exhibit B) which plaintiff now seeks to repudiate that notwithstanding the statement to the contrary in Pastrano's will, the latter was in fact the sole
owner of the business referred to in that document. Plaintiff therefore had full information regarding the assets which composed the Pastrano's
estate, and surrounded as he was by skillful and competent advisers, we have no doubt that he was fully aware of the value of those assets.
The trial court found that plaintiff was a minor at the time of the execution of the contract in question, but that he not only failed to repudiate it
promptly upon reaching his majority but tacitly ratified it by disposing of the greater part of the proceeds after he became of age and after he had full
knowledge of the facts upon which he now seeks to disaffirm the agreement.
By the terms of the contract by which appellant transferred to the appellee Francisca Pastrano his interest in the Pastrano Estate he was paid
P10,000 in cash, the balance of the P82,500 being represented by six promissory notes dated November 18, 1911, signed as maker by the
defendant Tan Unchuan, the husband of the defendant Francisca Pastrano. The first note was for P22,500 payable twelve days after date, and the
other five for P10,000 each, payable in six, twelve, eighteen, twenty-four and thirty months, respectively. These notes were made payable to Choa
Tek Hee, or order, as attorney in fact for Uy Soo Lim.
Of these notes the first three, amounting to P42,500 were paid to Choa Tek Hee as they fell due. It appears, however, that Choa Tek Hee failed to
account to the satisfaction of Uy Soo Lim for the money so received, whereupon the latter returned to Manila on February 20, 1913, to seek an
adjustment of his affairs with his attorney in fact.
Uy Soo Lim, upon his arrival in Manila, sent the following cable to Tan Unchuan at Cebu:
I revoke power to Teck Hee. Don't pay him any more money. Please forward account payments to him Urgent, Address P. O. 1360.
(Sgd.) UY SOO LIM.
This cable, sent to forestall further payment to Choa Tek Hee, evidences a clear and convincing knowledge by plaintiff both of the conditions of the
bill of sale and his rights thereunder.
Not being able amicably to adjust with Choa Tek Hee the matter of such moneys, Uy Soo Lim filed suit against him in the Court of First Instance,
Manila, asking that the power of attorney be canceled, and for an accounting. This complaint is dated March 31, 1913, and has attached thereto a
copy of the will of Santiago Pastrano. It recites that plaintiff's interest in the estate of Santiago Pastrano was reasonably worth P200,000; that this
interest had been liquidated and "reduced to a money basis," and that in consequence money and choses in action had come into the hand of Choa
Tek Hee amounting to P83,000 more or less. There is also an allegation that the power of attorney was executed while plaintiff was still a minor.
These allegations are important as showing that on March 31, 1913, plaintiff, while claiming his interest in the estate of Santiago Pastrano was
reasonably worth P200,000 knew such interest had been sold for P83,000, more or less, and also knew he was a minor under Philippine laws at the
time of such sale.
By his answer Choa Tek Hee laid claim to a considerable portion of the P42,500 collected by him, for "services rendered," etc., his statement
showing a cash balance of only P2,867.94. This latter amount, upon petition of plaintiff, was ordered deposited with the clerk of the court.
In the meantime Chas. E. Tenney had been appointed guardian ad litem of plaintiff, and on May 12, 1913, filed a motion on behalf of plaintiff reciting
that promissory note No. 4 for P10,000 (being one of the notes executed on account of plaintiff's bill of sale) would fall due on May 18, 1913, and
asking that Choa Tek Hee be directed to indorse it over to the clerk of the court for collection. As the note was drawn in favor of Choa Tek Hee it took
some time to adjust the matter of payment, it being finally paid by Tan Unchuan to the clerk of the court on October 24, 1913. The P10,000 due on
note No. 5 was paid into court on December 18, 1913, and the final P10,000, being note No. 6, was paid on May 23, 1914.
In the meantime, on October 8, 1913, Uy Soo Lim reached his majority under Philippine laws, being then 21 years of age. On October 10, 1913,
Chas. E. Tenney, his guardian ad litem, filed a motion with the court reciting the fact of Uy Soo Lim's majority, stating that the services of a guardian
ad litem were no longer necessary.
The sum of P2,867.94 deposited by Choa Tek Hee was part of the proceeds accruing to plaintiff under his bill of sale to Francisca Pastrano, as was
also the P30,000, deposited by Tan Unchuan in payment of promissory notes Nos. 4, 5, and 6, which notes accrued subsequent to the filing of suit
against Choa Tek Hee. The whole of this P30,000 was paid into court upon demand of plaintiff, such payments being made after October 8, 1913,
when plaintiff became of age.
On March 30, 1914, Uy Soo Lim secured judgment against Choa Tek Hee in the sum of P31,511.993, with interest, which amount was in addition to
the P32,867.94 deposited with the court during the pendency of the proceedings. As heretofore noted, the final promissory note for P10,000 was
paid into court on May 23, 1914. On May 25, 1914, or within two days after the final P10,000 due upon his bill of sale had been paid into court, Uy
Soo Lim filed suit in the Court of First Instance of Manila, to annul it on the ground of minority, fraud, conspiracy, and deceit.

Before filing the suit to annul his contract plaintiff had already withdrawn from the P32,867.94 deposited with the court, the sum of P9,517.20, of
which amount the sum of P7,550 was withdrawn after he reached his majority.
In filing his suit to annul the contract no offer was made by appellant to return to Francisca Pastrano the consideration of such contract, or to hold,
subject to her disposition, the balance of P54,863.61 then on deposit with the court and represented by the Choa Tek Hee judgment. On the contrary,
he proceeded with the utmost celerity to secure, spend and otherwise dispose of the last cent of such consideration.
On August 24, 1914, or more than ten months after plaintiff reached his majority, the present suit was filed in the Court of First Instance of Cebu, the
action brought in Manila having been dismissed for lack of jurisdiction.
On March 29, 1915, this court affirmed on appeal the decision of the trial court awarding Uy Soo Lim P31,511.93, with interest, in his suit against
Choa Tek Hee.1 Appellant lost no time in seeking to get possession of these additional funds. Execution was secured against Choa Tek Hee on April
27, 1915, and by June 5, 1915, the whole of this judgment was collected and converted to plaintiff's use except the sum of P7,200.
By the time the present action came to trial, therefore, the whole of this P64,377.81 the then available balance on hand derived from plaintiff's bill
of sale had been collected and converted by him save and except the sum of P7,200, still due upon the judgment against Choa Tek Hee. As soon
as the trial of this case was closed appellant proceeded at once to realize this remaining remnant accruing from his bill of sale, by transferring his
interest therein to one Wee Thiam Tew, of Singapore.
As showing how and in what manner the P82,500 was realized by plaintiff, we quote as follows from the findings of the trial court (B. E., pp. 109,110):
To recapitulate, plaintiff has secured and converted to his own use the entire amount of P82,500 the consideration for which he executed the deed of
cession he is now seeking to annul.
Of this amount of P82,500, plaintiff, speaking in rough figures, has received and converted to his own use:
About P20,000 before coming of age under the laws of the Philippine Islands.
About P62,500 since coming of age under the laws of the Philippine Islands.
Of the P62,500 received and spent by plaintiff since coming of age under our laws, plaintiff has spent approximately about P7,500 before bringing
suit to set aside his deed of cession, and about P55,000 since filing his first action in Manila to set aside the deed of cession.
And of this sum of about P55,000, about P36,000 were received and spent by plaintiff after filing the present suit.
And of the sum of P36,000 more or less which plaintiff has received and spent since filing the present suit, P7,200 was received and spent after the
trial of the present case before this court had been closed; that is, after all the evidence had been presented and the case submitted to the court for
its final decision upon briefs to be filed. It was this disposal by plaintiff of the lasts remains of the consideration price which was presented to the
court as additional evidence on the reopening of the trial.
It is important to note that this final P7,200 was disposed of by plaintiff on April 13, 1916, or more than two and a half years after he reached his
majority, and an equal time after he knew all the facts now alleged by him to constitute fraud.
Uy Soo Lim became of age under Philippine laws on October 8, 1913. On March 31, 1913 (some months prior to reaching majority) he filed suit
against Choa Tek Hee for an accounting, wherein reference is had to this bill of sale and to the fact of minority. The purpose of that action was to
reduce to possession the consideration accruing to him from his bill of sale.
Knowing his legal rights, therefore, plaintiff should have been prompt to disaffirm his contract upon reaching majority. This was not done. Instead, he
deliberately permitted defendants to continue making payments thereunder, and then, on May 25, 1914, when the last cent upon such contract was
collected, sought to avail himself of this ground of rescission. This was almost eight months after he had attained his majority.
The privilege granted minors of disaffirming their contracts upon reaching majority is subject to prompt election in the matter. The court, in Hastings
vs. Dollarhide (24 Cal., 195, 212), states the principle thus:
The exemption of infants from liability on their contracts proceeds solely upon the principle that such exemption is essential to their protection; and it
is admitted that the law of infancy should be so administered that result may, in all cases, be secured. But it has not unfrequently happened that
courts, in their anxiety to protect the rights of infants in the matter of contracts made by them during non-age, have after they have become adults,
treated them to same extent as infants still, exempting them from the operation of rules of law, not only of general obligation, but founded on
essential justice. The strong tendency of the modern decisions, however, is to limit the exemptions of infancy to the principle upon which the
disability proceeds.
To the same effect Goodnow vs. Empire Lumber Company (31 Minn., 468; 47 Am. Rep., 798) where the court, in discussing the question, said:

The rule holding certain contracts of an infant voidable (among them his conveyances of real estate) and giving him the right to affirm or disaffirm
after he arrives at majority, is for the protection of minors, and so that they shall not be prejudiced by acts done or obligations incurred at a time when
they are not capable of determining what is for their interest to do. For this purpose of protection the law gives them an opportunity, after they have
become capable of judging for themselves, to determine whether such acts or obligations are beneficial or prejudicial to them, and whether they will
abide by or avoid them. If the right to affirm or disaffirm extends beyond an adequate opportunity to so determine and to act on the result, it ceases
to be a measure of protection, and becomes, in the language of the court in Wallace vs. Lewis (4 Harr., 75, 80), "a dangerous weapon of offense,
instead of a defense." For we cannot assent to the reason given in Boody vs. McKenney (23 Me., 517), (the only reason given by any of the cases
for the rule that long acquiescense is no proof of ratification), "that by his silent acquiescence he occasions no injury to other persons, and secures
no benefits or new rights to himself. There is nothing to urge him as a duty to others to act speedily." The existence of such an infirmity in one's title
as the right of another at his pleasure to defeat it, is necessarily prejudicial to it; and the longer it may continue, the more serious the injury. Such a
right is a continual menace to the title. Holding such a menace over the title is of course an injury to the owner of it; one possessing such a right is
bound in justice and fairness toward the owner of the title to determine without unnecessary delay whether he will exercise it. The right of a minor to
disaffirm on coming of age, like the right to disaffirm in any other case, should be exercised with some regard to the rights of others with as much
regard to those rights as is fairly consistent with due protection to the interests of the minor.
In every other case of a right to disaffirm, the party holding it is required, out of regard to the rights of those who may be affected by its exercise, to
act upon it within a reasonable time. There is no reason for allowing greater latitude where the right exists because of infancy at the time of making
the contract. A reasonable time after majority within which to act is all that is essential to the infant's protection. That ten, fifteen, or twenty years, or
such other time as the law may give for bringing an action, is necessary as a matter of protection to him is absurd. The only effect of giving more
than a reasonable time is to enable the mature man, not to correct what he did amiss in his infancy, but to speculate on the events of the future a
consequence entirely foreign to the purposes of the rule, which is solely protection to the infant. Reason, justice to others, public policy (which is not
subserved by cherishing defective titles), and convenience, require the right of disaffirmance to be acted upon within a reasonable time. What is a
reasonable time will depend on the circumstances of each particular case, and may be either for the court or for the jury to decide. Where, as in this
case, there is mere delay, with nothing to explain or excuse it, or show its necessity, it will be for the court.
The above decisions (which could be multiplied indefinitely) are based upon justice and sound sense, and have peculiar application to the case now
before us. Here plaintiff not only showed a personal knowledge of his rights under this contract prior to and at the time of reaching majority, but he
was surrounded by able advisers, legal and otherwise, retained to protect his interests. As a result of his failure to disaffirm promptly on reaching
majority, he received a balance of P30,000 upon the contact, which amount certainly would not have been paid if it had been known that he was
about to attempt to repudiate his agreement. This amount was not only collected by Uy Soo Lim after reaching majority, but was effectually disposed
of as rapidly as possible.
The record shows that of the P2,867.94 deposited in court by Choa Tek Hee, and the P30,000 paid into court by Tan Unchuan, only P1,967.20 was
withdrawn by plaintiff before reaching majority. Seven thousand five hundred and fifty pesos was withdrawn after he became of age and before filing
suit to rescind. There was still uncollected the P31,511.93, with interest represented by the Choa Tek Hee judgment. When plaintiff reached
majority, therefore, there was P62,412.67 of the original consideration available for refund, and there still remained P55,000 when he filed his suit to
rescind. This sum could have been returned to Francisca Pastrano or held by the court for her account.
Positive statutory law, no less than uniform court decisions, require, as a condition precedent to rescission of a contract on account of minority that
the consideration received be refunded. We cite and quote as follows:
ART. 1295 (Civil Code). Rescission obliges the return of the things which were the objects of the contract, with their fruits and the sum with interest;
therefore it can only be carried into effect when the person who may have claimed it can return that which, on his part, he is bound to do.
ART. 1304 (Civil Code). When the nullity arises from the incapacity of one of the contracting parties, the incapacitated person is not obliged to make
restitution, except to the extent he has profited by the thing or by the sum he may have received.
ART. 1308 (Civil Code). While one of the contracting parties does not return that which he is obliged to deliver by virtue of the declaration of nullity,
the other cannot be compelled to fulfill, on his part, what is incumbent on him.
Not only should plaintiff have refunded all moneys in his possession upon filing his action to rescind, but, by insisting upon receiving and spending
such consideration after reaching majority, knowing the rights conferred upon him by law, he must be held to have forfeited any right to bring such
action.
Article 1314, Civil Code, provides as follows:
The action for nullity of a contract shall also be extinguished when the thing which is the object thereof should be lost by fraud or fault of the person
having the right to bring the action.
If the cause of the action should be the incapacity of any of the contracting parties, the loss of the thing shall be no obstacle for the action to prevail,
unless it has occurred by fraud or fault on the part of the plaintiff after having acquired capacity.

Plaintiff has disposed of the whole of the P85,000 which was paid him in consideration of the execution of the contract he is now seeking to annul.
The record establishes beyond peradventure of doubt that he is utterly without funds to reimburse this consideration. In the Choa Tek Hee suit
(Exhibit 10) there appears at folio 17 a motion by plaintiff, under oath, wherein he recites as a ground for realizing certain of the moneys deposited
under this contract that he (plaintiff) has no funds with which to support himself except such as may be advanced to him out of the moneys belonging
to him which is now or may hereafter be in the hands of the clerk of this court." Being without other funds, there was the greater reason why this
deposit, derived from the very contract sought to be repudiated, should have been held intact to reimburse his vendee.
In note to Englebert vs. Pritchett reported in 26 L.R.A., 177, the various cases relating to the necessity of returning the entire consideration in order
to disaffirm infant's contracts are correlated and discussed. We quote as follows:
The rule which comes the nearest to being general is that all consideration which remains in the infant's possession upon his reaching majority or at
the time of an attempted disaffirmance in case he is still under age must be returned, but that disaffirmance will not be defeated by inability to return
what he has parted with prior to such time.
He will not be permitted to regain what he parted with or refuse payment while still possessed of what he received.
There have been many distinctions attempted such as between executory and executed contacts, and between seeking relief at law and in equity,
but with only a few exceptions the rule as stated above has governed the decisions regardless of the facts relied on as distinguishing facts. There is
no substantial ground for a distinction as to the rule to be applied, although there may be as to the manner of its application.
The rule is that the consideration must be restored. (Dickerson vs. Gordon, 24 N. Y. S. R., 448.)
Whatever difference may exist in the authorities as to the obligation of the infant to return the entire consideration received as a condition precedent
to disaffirming the contract, they are unanimous in holding that he must return such portion thereof as remains in his possession when reaching
majority.
As heretofore noted, a very considerable portion of the moneys called for by the contract under consideration was collected and used by plaintiff
after May 25, 1914, when he definitely elected to disaffirm it by bringing suit to rescind.
A leading case on the general subject is that of Manning vs. Johnson (26 Ala., 446), reported in 62 Am. Dec. 732, with an extensive footnote.
Discussing the general subject the court there lays down the following rule. (p. 733):
When we come to reason upon the proposition, however, it is surrounded with difficulty; for if the infant can raise money to the whole value of his
estate by a voidable sale or mortgage and can only avoid the conveyance after refunding, he is furnished the means of indulging habits of dissipation
and prodigality, which in many instances would doubtless result in squandering the whole of the proceeds, while the purchaser or mortgagee would
risk nothing, the land or estate of the infant so sold or mortgaged furnishing adequate security. On the other hand to allow the infant to retain the
consideration and yet to repudiate or disaffirm the conveyance, would tempt as well as enable him to practice frauds upon others. We think safe rule
should furnish a check both upon the infant and the party contracting with him. That rule we take to be this: If the infant after he arrives at age is
shown to be possessed of the consideration paid him, whether it be property, money or choses in action, and either disposes of it so that he cannot
restore it, or retains it for an unreasonable length of time after attaining his majority, this amounts to an affirmance of the contract. So likewise if it be
shown that he has the power to restore the thing that he received, he cannot be allowed to rescind without first making restitution.
Certainly the rule as above stated is far and equitable.
Appellant argues that the notes of Tan Unchuan were accepted in payment of the consideration moving from Francisca Pastrano and that therefore
the fact that some of these notes were collected after he reached his majority is of no importance. We cannot accept this view. Even had the whole
of the payment been made in cash at the time of the execution of the contract, if it had been shown that all or part of that money or its proceeds was
still in the possession of appellant when he attained his majority, it would have been incumbent upon him to make restitution, as far as was then
possible, upon coming of age. The important fact is not the time when he received the money, but the time when he disposed of it.
The contract involved herein is an executed contract. When plaintiff reached majority there was P62,412.67 in esse, and, when suit was filed, the
sum of P55,000. The "offer to account" in paragraph 20 of the complaint, "if such accounting should be necessary," is not the tender or offer to
produce or pay, which the law makes a condition precedent to demanding equitable relief. Certainly it cannot be so construed in the present case,
where it is conclusively shown that plaintiff after reaching majority and after filing his action to annul, that he had "no other funds." If plaintiff had
succeeded in having the contract set aside it would have left him in the same position as that in which he stood when it was executed that is to
say, he would have been compelled to face the contention that he was lawfully entitled to little or nothing. Had he made restitution of all the money
which came into his hands after he attained his majority, a decision in favor of the claims of the widow and legitimate daughters of Santiago Pastrano
would not have been a wholly barren victory for them. By consuming the last centavo of the proceeds of the contract plaintiff placed himself in a
position where he was bound to enjoy the most advantageous position whatever might be the outcome of the litigation. To give countenance to such
conduct would be to encourage deliberate bad faith.
On the assumption, therefore, that plaintiff might have had a right to rescind this contract on the ground of minority, his action fails.

(1) Because, with a full knowledge of his rights in the premises, he failed to disaffirm his contract within a reasonable time after reaching majority;
and
(2) Because he not only failed to tender, or offer to produce and pay the consideration in esse when he reached majority, and when he filed his
action, but proceeded, after such events, to demand, collect and dispose of such consideration when according to his own statement under oath he
had no other funds with which to make reimbursement.
It is argued on behalf of appellee that it having been shown that appellant is a Chinese subject or citizen, and that under the law of China he was of
age when he executed the contract here in dispute his contractual capacity must be determined by his national law (estatuti personal). The
conclusion we have reached upon the assumption most favorable to appellant, the he was a minor at the time of the execution of the contract makes
it unnecessary for us to decide this question or to consider the effect of the marriage of appellant before attaining the age of twenty-one upon his
contractual capacity.
For the reasons stated we are of the opinion that the judgment of the trial court is without error, and it is, therefore, affirmed, with the costs of both
instances. So ordered.

G.R. No. 73471 May 8, 1990


RUFINA ORATA, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ITILIO G. ABAYA, Presiding Judge, Regional Trial Court of Pasig, M.M., Branch CLIV
(154), and GERTRUDES REYES, as Judicial Administratrix of the Estate of the Late Florencio dela Cruz, respondents.
Jeremias Zapata for petitioner.
Manuel A. Corders for private respondent.

PARAS, J.:
This is a petition for certiorari with preliminary injunction and/or restraining order praying: (a) to annul and/or to set aside the resolution of the
Intermediate Appellate Court dated May 23, 1985, dismissing the petition for review for having been filed beyond the reglementary period, in AC-G.R.
SP. 06161 entitled "Rufina Orata v. Hon. Otillo G. Abaya, et al and (b) to reverse the decision dated March 4, 1985 of the Regional Trial Court of
Pasig affirming the decision of the Municipal Trial Court of San Juan, Rizal, by ejecting the petitioner, in Civil Case No. 5083 entitled "Gertrudes
Reyes, as Judicial Administratrix of the Estate of the late Morencio dela Cruz v. Rufina Orata."
As gathered from the records, the facts of the case are as follows:
Gertrudes Reyes vda. de dela Cruz (private respondent) is a judicial administratrix of the property of her late husband Florencio dela Cruz. Since
1961 the year she was appointed by the Court as administratrix, she personally demanded payment of rental on the lot owned by her deceased
husband Florencio dela Cruz from Rufina Orata, the petitioner, but the latter refused for the reason that she has already paid her rental to the
grandson of Florencio dela Cruz, Celso Teodoro. Thus, on May 24, 1980 Gertrudes Reyes filed Civil Case No. 5083 against Rufina Orata for
ejectment before the Municipal Court of San Juan, Metro Manila, for non-payment of rental in the amount of P25.00 a month (Rollo, Annex "D", p.
48).
On the other hand, petitioner Rufina Orata argued that she paid her rental in November, 1979 to March, 1980 to Celso Teodoro because the latter
inherited the property from Florencio dela Cruz, his grandfather, who had been renting the lot to petitioner since 1946 until dela Cruz died in 1979.
She paid her rent up to the present to Celso Teodoro, without knowing that Gertrudes Reyes is the administratrix as the latter was not the one who
rented the lot to her. (Rollo, ibid).
The Municipal Court, now the Metropolitan Trial Court of San Juan, Metro Manila, Branch LVII (57) * rendered judgment on August 27, 1984, in favor
of private respondent Gertrudes Reyes, plaintiff in Civil Case No. 5083, and against petitioner, who is the defendant in the said case, the dispositive
portion of which reads as follows:
WHEREFORE, judgment is hereby rendered:
(a) Ordering the defendant and all persons claiming rights under her, to vacate and remove the house on the property administered by the plaintiff;
(b) To pay rent at the rate of P20.00 a month starting November 1979 until the defendant shall have completely vacated the leased property and
possession turned over to the plaintiff, minus whatever payments made during the pendency of this case;
(c) Attorney's fees of P500.00, and costs of the suit.
SO ORDERED. (Rollo, Annex "D", p. 49).
Petitioner Rufina Orata appealed the decision of the Metropolitan Trial Court to the Regional Trial Court of Pasig, Branch 154, as Civil Case No.
51684 ** (Rollo, Petition, p. 6).
On March 4, 1985, the respondent judge rendered a decision affirming the decision of the Metropolitan Trial Court (Rollo, Annex "E", p. 52).
Petitioner received the decision of the Regional Trial Court on March 9, 1985 and on March 18, 1985, petitioner filed a Motion for Reconsideration of
the decision, which was denied in an order dated April 23,1985 and received by petitioner on May 2, 1985 (Rollo, Petition, p. 6).
On May 8, 1985, petitioner filed with the Regional Trial Court a Notice of Appeal with notice to the adverse party (Rollo, Annex "F", p. 53).
And on the same date, petitioner filed a Motion to Fix Supersedeas Bond and respondent judge denied the motion in an order dated May 21, 1985
(Rollo, Annex "G", p. 54).
On May 17, 1985, petitioner filed a petition for review with the Intermediate Appellate Court (Rollo, Annex "H", pp. 55-69).

On May 23, 1985, the Intermediate Appellate Court rendered the questioned resolution, the dispositive portion of which reads:
WHEREFORE, the petition for review is dismissed for having been filed beyond the reglementary period.
SO ORDERED. (Rollo, Annex "A" pp. 35-35-A).
On June 13, 1985, petitioner filed a motion for Reconsideration of the resolution dated May 23,1985 (Rollo, Annex "B", pp. 36-46).
On January 6, 1986, the Court denied the Motion for Reconsideration (Rollo, Annex "C", p. 47).
Hence, this petition.
The Second Division of this Court in its resolution dated October 27, 1986 gave due course to the petition (Rollo, Petition, pp. 2-31; Resolution, p.
102).
The main issue in this case is whether or not the petition for review filed in the Court of Appeals which was obviously filed beyond the reglementary
period, may still be considered in the interest of substantial justice.
The instant petition is impressed with merit.
There is no question that the petition in the case at bar was filed out of time, the reckoning thereof being counted from the receipt of the decision on
March 9, 1985 and not from the denial of the motion for reconsideration.
Counting the fifteen (15) day period from March 9, 1985, the petition should have been filed on March 24, 1985. The running of the period was,
however, interrupted by the filing of the motion for reconsideration on March 18, 1985, thereby leaving a balance of six (6) days. Said motion for
reconsideration was denied and received by the petitioner on May 2, 1985 and the period commenced to run again. Adding the balance of six (6)
days the petition should have been filed on May 8, 1985 instead of May 17, 1985 which is nine (9) days later. In fact a motion for reconsideration is
not a prerequisite to an appeal, a petition for review or a petition for review on certiorari (Habaluyas Enterprises, Inc. v. Japson, 142 SCRA 209
[1986]).
Section 45 of the Judiciary Act as amended by Republic Act No. 6031 does not allow an appeal by record on appeal and notice of appeal from a CFI
decision in an appealed case falling within the exclusive original jurisdiction of the municipal or city courts, but the remedy is a petition for review
(Landicho v. Tensuan, 151 SCRA 410 [1987]). The petition for review of the RTC decision must be filed within the fifteen (15) day period to appeal,
which is the period for filing a petition for review of a final judgment or order of the RTC in an appeal from a final judgment or order of a municipal
circuit trial court, municipal trial court and the metropolitan trial court (Servicewide Specialist, Inc. v. Court of Appeals, G.R. No. 79778, September
21, 1988).
Be that as it may, this Court has in a number of cases, in the exercise of equity jurisdiction decided to disregard technicalities in order to resolve the
case on its merits based on the evidence (St. Peter Memorial Park, Inc. v. Cleofas, 121 SCRA 287 [1983]).
Furthermore, it is well settled that litigations should, as much as possible, be decided on their merits and not on technicalities (Galdo v. Rosete, 84
SCRA 239, 242-243 [1978]); that every party-litigant must be afforded the amplest opportunity for the proper and just determination of his case, free
from unacceptable plea of technicalities (Heirs of Ceferino Morales v. Court of Appeals, 67 SCRA 304; 310 [1975]). This Court has ruled further that
being a few days late in the filing of the petition for review does not merit automatic dismissal thereof (Serrano v. Court of Appeals, 139 SCRA 179
[1985]). And even assuming that a petition for review is filed a few days late, where strong considerations of substantial justice are manifest in the
petition, this Court may relax the stringent application of technical rules in the exercise of its equity jurisdiction. In addition to the basic merits of the
main case, such a petition usually embodies justifying circumstances which warrant Our heeding the petitioner's cry for justice, inspire of the earlier
negligence of counsel (Ibid).
Coming back to the case at bar, it is readily evident that this case has a good cause of action. Hence, it appears more appropriate to consider the
petition on its merits rather than to dismiss it on technicalities.
The records show that in the late 1979 up to the early part of 1980 when demand letters sent by Reyes to the petitioner to pay the rent to her,
Teodoro was still the registered owner of the property (TCT No. 436125 of the Rizal Registry of Deeds). His title was cancelled only on November 9,
1983, three (3) years after the filing of this case in 1980. Hence, when respondent Reyes sent a demand letter to the petitioner on October 17, 1979
to pay the rent to her, and when her ejectment complaint was filed on May 24, 1980, the title of the leased premises was still in the name of Teodoro.
Since a certificate of title is conclusive evidence of ownership in favor of the person named therein (Yumul v. Rivera, et al., 64 Phil. 13 [1937]) and
every person dealing with registered land may safely rely on its correctness (Director of Lands v. Abache, et al., 73 Phil. 606 [1942]), petitioner was
in good faith in paying the rentals to her lessor, Teodoro, who was in fact the registered owner, also up to November 9, 1983.
Payment in good faith to any person in possession of the credit shall release the debtor (Article 1242, Civil Code).

Significantly, after Teodoro's title was cancelled on November 9, 1983, the new title that replaced it was issued in the name of his grandparent, the
deceased Florencio dela Cruz. As a grandson and legal heir of the registered owner, Teodoro was a co-owner of the property. Payment of the
obligation to him discharged the debtor, but he (Teodoro) should account to the other co-owners for their share of the credit (Articles 500 and 1214,
Civil Code).
Since petitioner has not defaulted in the payment of her rental obligation as lessee of the property in question, the administratrix thereof has no
cause of action for her ejectment thereof.
But thereafter, the petitioner should pay the rentals to the private respondent as administratrix of the estate of the deceased registered owner,
Florencio dela Cruz.
PREMISES CONSIDERED, the petition is hereby GRANTED; the questioned decision and resolution are hereby ANNULLED and SET ASIDE; and
the complaint for ejectment is hereby DISMISSED.
SO ORDERED.

G.R. No. L-15645

January 31, 1964

PAZ P. ARRIETA and VITALIADO ARRIETA, plaintiffs-appellees,


vs.
NATIONAL RICE AND CORN CORPORATION, defendant-appellant,
MANILA UNDERWRITERS INSURANCE CO., INC., defendant-appellee.
Teehankee and Carreon for plaintiffs-appellees.
The Government Corporate Counsel for defendant-appellant.
Isidro A. Vera for defendant-appellee.
REGALA, J.:
This is an appeal of the defendant-appellant NARIC from the decision of the trial court dated February 20, 1958, awarding to the plaintiffs-appellees
the amount of $286,000.00 as damages for breach of contract and dismissing the counterclaim and third party complaint of the defendant-appellant
NARIC.
In accordance with Section 13 of Republic Act No. 3452, "the National Rice and Corn Administration (NARIC) is hereby abolished and all its assets,
liabilities, functions, powers which are not inconsistent with the provisions of this Act, and all personnel are transferred "to the Rice and Corn
Administration (RCA).
All references, therefore, to the NARIC in this decision must accordingly be adjusted and read as RCA pursuant to the aforementioned law.
On May 19, 1952, plaintiff-appellee participated in the public bidding called by the NARIC for the supply of 20,000 metric tons of Burmese rice. As
her bid of $203.00 per metric ton was the lowest, she was awarded the contract for the same. Accordingly, on July 1, 1952, plaintiff-appellee Paz P.
Arrieta and the appellant corporation entered into a Contract of Sale of Rice, under the terms of which the former obligated herself to deliver to the
latter 20,000 metric tons of Burmess Rice at $203.00 per metric ton, CIF Manila. In turn, the defendant corporation committed itself to pay for the
imported rice "by means of an irrevocable, confirmed and assignable letter of credit in U.S. currency in favor of the plaintiff-appellee and/or supplier
in Burma, immediately." Despite the commitment to pay immediately "by means of an irrevocable, confirmed and assignable Letter of Credit,"
however, it was only on July 30, 1952, or a full month from the execution of the contract, that the defendant corporation, thru its general manager,
took the first to open a letter of credit by forwarding to the Philippine National Bank its Application for Commercial Letter Credit. The application was
accompanied by a transmittal letter, the relevant paragraphs of which read:
In view of the fact that we do not have sufficient deposit with your institution with which to cover the amount required to be deposited as a condition
for the opening of letters of credit, we will appreciate it if this application could be considered special case.
We understand that our supplier, Mrs. Paz P. Arrieta, has a deadline to meet which is August 4, 1952, and in order to comply therewith, it is
imperative that the L/C be opened prior to that date. We would therefore request your full cooperation on this matter.
On the same day, July 30, 1952, Mrs. Paz P. Arrieta thru counsel, advised the appellant corporation of the extreme necessity for the immediate
opening of the letter credit since she had by then made a tender to her supplier in Rangoon, Burma, "equivalent to 5% of the F.O.B. price of 20,000
tons at $180.70 and in compliance with the regulations in Rangoon this 5% will be confiscated if the required letter of credit is not received by them
before August 4, 1952."
On August 4, 1952, the Philippine National Bank informed the appellant corporation that its application, "for a letter of credit for $3,614,000.00 in
favor of Thiri Setkya has been approved by the Board of Directors with the condition that marginal cash deposit be paid and that drafts are to be paid
upon presentment." (Exh. J-pl.; Exh. 10-def., p. 19, Folder of Exhibits). Furthermore, the Bank represented that it "will hold your application in
abeyance pending compliance with the above stated requirement."
As it turned out, however, the appellant corporation not in any financial position to meet the condition. As matter of fact, in a letter dated August 2,
1952, the NARIC bluntly confessed to the appellee its dilemma: "In this connection, please be advised that our application for opening of the letter of
credit has been presented to the bank since July 30th but the latter requires that we first deposit 50% of the value of the letter amounting to
aproximately $3,614,000.00 which we are not in a position to meet." (Emphasis supplied. Exh. 9-Def.; Exh. 1-Pe., p. 18, Folder of Exhibits)
Consequently, the credit instrument applied for was opened only on September 8, 1952 "in favor of Thiri Setkya, Rangoon, Burma, and/or assignee
for $3,614,000.00," (which is more than two months from the execution of the contract) the party named by the appellee as beneficiary of the letter of
credit.1wph1.t
As a result of the delay, the allocation of appellee's supplier in Rangoon was cancelled and the 5% deposit, amounting to 524,000 kyats or
approximately P200,000.00 was forfeited. In this connection, it must be made of record that although the Burmese authorities had set August 4,
1952, as the deadline for the remittance of the required letter of credit, the cancellation of the allocation and the confiscation of the 5% deposit were
not effected until August 20, 1952, or, a full half month after the expiration of the deadline. And yet, even with the 15-day grace, appellant corporation
was unable to make good its commitment to open the disputed letter of credit.

The appellee endeavored, but failed, to restore the cancelled Burmese rice allocation. When the futility of reinstating the same became apparent,
she offered to substitute Thailand rice instead to the defendant NARIC, communicating at the same time that the offer was "a solution which should
be beneficial to the NARIC and to us at the same time." (Exh. X-Pe., Exh. 25Def., p. 38, Folder of Exhibits). This offer for substitution, however,
was rejected by the appellant in a resolution dated November 15, 1952.
On the foregoing, the appellee sent a letter to the appellant, demanding compensation for the damages caused her in the sum of $286,000.00, U.S.
currency, representing unrealized profit. The demand having been rejected she instituted this case now on appeal.
At the instance of the NARIC, a counterclaim was filed and the Manila Underwriters Insurance Company was brought to the suit as a third party
defendant to hold it liable on the performance bond it executed in favor of the plaintiff-appellee.
We find for the appellee.
It is clear upon the records that the sole and principal reason for the cancellation of the allocation contracted by the appellee herein in Rangoon,
Burma, was the failure of the letter of credit to be opened with the contemplated period. This failure must, therefore, be taken as the immediate
cause for the consequent damage which resulted. As it is then, the disposition of this case depends on a determination of who was responsible for
such failure. Stated differently, the issue is whether appellant's failure to open immediately the letter of credit in dispute amounted to a breach of the
contract of July 1, 1952 for which it may be held liable in damages.
Appellant corporation disclaims responsibility for the delay in the opening of the letter of credit. On the contrary, it insists that the fault lies with the
appellee. Appellant contends that the disputed negotiable instrument was not promptly secured because the appellee , failed to seasonably furnish
data necessary and required for opening the same, namely, "(1) the amount of the letter of credit, (2) the person, company or corporation in whose
favor it is to be opened, and (3) the place and bank where it may be negotiated." Appellant would have this Court believe, therefore, that had these
informations been forthwith furnished it, there would have been no delay in securing the instrument.
Appellant's explanation has neither force nor merit. In the first place, the explanation reaches into an area of the proceedings into which We are not
at liberty to encroach. The explanation refers to a question of fact. Nothing in the record suggests any arbitrary or abusive conduct on the part of the
trial judge in the formulation of the ruling. His conclusion on the matter is sufficiently borne out by the evidence presented. We are denied, therefore,
the prerogative to disturb that finding, consonant to the time-honored tradition of this Tribunal to hold trial judges better situated to make conclusions
on questions of fact. For the record, We quote hereunder the lower court's ruling on the point:
The defense that the delay, if any in opening the letter of credit was due to the failure of plaintiff to name the supplier, the amount and the bank is not
tenable. Plaintiff stated in Court that these facts were known to defendant even before the contract was executed because these facts were
necessarily revealed to the defendant before she could qualify as a bidder. She stated too that she had given the necessary data immediately after
the execution of Exh. "A" (the contract of July 1, 1952) to Mr. GABRIEL BELMONTE, General Manager of the NARIC, both orally and in writing and
that she also pressed for the opening of the letter of credit on these occasions. These statements have not been controverted and defendant NARIC,
notwithstanding its previous intention to do so, failed to present Mr. Belmonte to testify or refute this. ...
Secondly, from the correspondence and communications which form part of the record of this case, it is clear that what singularly delayed the
opening of the stipulated letter of credit and which, in turn, caused the cancellation of the allocation in Burma, was the inability of the appellant
corporation to meet the condition importation by the Bank for granting the same. We do not think the appellant corporation can refute the fact that
had it been able to put up the 50% marginal cash deposit demanded by the bank, then the letter of credit would have been approved, opened and
released as early as August 4, 1952. The letter of the Philippine National Bank to the NARIC was plain and explicit that as of the said date,
appellant's "application for a letter of credit ... has been approved by the Board of Directors with the condition that 50% marginal cash deposit be
paid and that drafts are to be paid upon presentment." (Emphasis supplied)
The liability of the appellant, however, stems not alone from this failure or inability to satisfy the requirements of the bank. Its culpability arises from
its willful and deliberate assumption of contractual obligations even as it was well aware of its financial incapacity to undertake the prestation. We
base this judgment upon the letter which accompanied the application filed by the appellant with the bank, a part of which letter was quoted earlier in
this decision. In the said accompanying correspondence, appellant admitted and owned that it did "not have sufficient deposit with your institution
(the PNB) with which to cover the amount required to be deposited as a condition for the opening of letters of credit. ... .
A number of logical inferences may be drawn from the aforementioned admission. First, that the appellant knew the bank requirements for opening
letters of credit; second, that appellant also knew it could not meet those requirement. When, therefore, despite this awareness that was financially
incompetent to open a letter of credit immediately, appellant agreed in paragraph 8 of the contract to pay immediately "by means of an irrevocable,
confirm and assignable letter of credit," it must be similarly held to have bound itself to answer for all and every consequences that would result from
the representation. aptly observed by the trial court:
... Having called for bids for the importation of rice involving millions, $4,260,000.00 to be exact, it should have a certained its ability and capacity to
comply with the inevitably requirements in cash to pay for such importation. Having announced the bid, it must be deemed to have impliedly assured
suppliers of its capacity and facility to finance the importation within the required period, especially since it had imposed the supplier the 90-day

period within which the shipment of the rice must be brought into the Philippines. Having entered in the contract, it should have taken steps
immediately to arrange for the letter of credit for the large amount involved and inquired into the possibility of its issuance.
In relation to the aforequoted observation of the trial court, We would like to make reference also to Article 11 of the Civil Code which provides:
Those who in the performance of their obligation are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof,
are liable in damages.
Under this provision, not only debtors guilty of fraud, negligence or default in the performance of obligations a decreed liable; in general, every debtor
who fails in performance of his obligations is bound to indemnify for the losses and damages caused thereby (De la Cruz Seminary of Manila, 18
Phil. 330; Municipality of Moncada v. Cajuigan, 21 Phil. 184; De la Cavada v. Diaz, 37 Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v.
Chong, 49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v. Theaters Supply, 63 Phil. 657). The phrase "any manner contravene the tenor"
of the obligation includes any illicit act which impairs the strict and faithful fulfillment of the obligation or every kind or defective performance. (IV
Tolentino, Civil Code of the Philippines, citing authorities, p. 103.)
The NARIC would also have this Court hold that the subsequent offer to substitute Thailand rice for the originally contracted Burmese rice amounted
to a waiver by the appellee of whatever rights she might have derived from the breach of the contract. We disagree. Waivers are not presumed, but
must be clearly and convincingly shown, either by express stipulation or acts admitting no other reasonable explanation. (Ramirez v. Court of
Appeals, 52 O.G. 779.) In the case at bar, no such intent to waive has been established.
We have carefully examined and studied the oral and documentary evidence presented in this case and upon which the lower court based its award.
Under the contract, the NARIC bound itself to buy 20,000 metric tons of Burmese rice at "$203.00 U.S. Dollars per metric ton, all net shipped weight,
and all in U.S. currency, C.I.F. Manila ..." On the other hand, documentary and other evidence establish with equal certainty that the plaintiff-appellee
was able to secure the contracted commodity at the cost price of $180.70 per metric ton from her supplier in Burma. Considering freights, insurance
and charges incident to its shipment here and the forfeiture of the 5% deposit, the award granted by the lower court is fair and equitable. For a
clearer view of the equity of the damages awarded, We reproduce below the testimony of the appellee, adequately supported by the evidence and
record:
Q. Will you please tell the court, how much is the damage you suffered?
A. Because the selling price of my rice is $203.00 per metric ton, and the cost price of my rice is $180.00 We had to pay also $6.25 for shipping and
about $164 for insurance. So adding the cost of the rice, the freight, the insurance, the total would be about $187.99 that would be $15.01 gross
profit per metric ton, multiply by 20,000 equals $300,200, that is my supposed profit if I went through the contract.
The above testimony of the plaintiff was a general approximation of the actual figures involved in the transaction. A precise and more exact
demonstration of the equity of the award herein is provided by Exhibit HH of the plaintiff and Exhibit 34 of the defendant, hereunder quoted so far as
germane.
It is equally of record now that as shown in her request dated July 29, 1959, and other communications subsequent thereto for the opening by your
corporation of the required letter of credit, Mrs. Arrieta was supposed to pay her supplier in Burma at the rate of One Hundred Eighty Dollars and
Seventy Cents ($180.70) in U.S. Currency, per ton plus Eight Dollars ($8.00) in the same currency per ton for shipping and other handling expenses,
so that she is already assured of a net profit of Fourteen Dollars and Thirty Cents ($14.30), U.S., Currency, per ton or a total of Two Hundred and
Eighty Six Thousand Dollars ($286,000.00), U.S. Currency, in the aforesaid transaction. ...
Lastly, herein appellant filed a counterclaim asserting that it has suffered, likewise by way of unrealized profit damages in the total sum of
$406,000.00 from the failure of the projected contract to materialize. This counterclaim was supported by a cost study made and submitted by the
appellant itself and wherein it was illustrated how indeed had the importation pushed thru, NARIC would have realized in profit the amount asserted
in the counterclaim. And yet, the said amount of P406,000.00 was realizable by appellant despite a number of expenses which the appellee under
the contract, did not have to incur. Thus, under the cost study submitted by the appellant, banking and unloading charges were to be shouldered by
it, including an Import License Fee of 2% and superintendence fee of $0.25 per metric ton. If the NARIC stood to profit over P400 000.00 from the
disputed transaction inspite of the extra expenditures from which the herein appellee was exempt, we are convicted of the fairness of the judgment
presently under appeal.
In the premises, however, a minor modification must be effected in the dispositive portion of the decision appeal from insofar as it expresses the
amount of damages in U.S. currency and not in Philippine Peso. Republic Act 529 specifically requires the discharge of obligations only "in any coin
or currency which at the time of payment is legal tender for public and private debts." In view of that law, therefore, the award should be converted
into and expressed in Philippine Peso.
This brings us to a consideration of what rate of exchange should apply in the conversion here decreed. Should it be at the time of the breach, at the
time the obligation was incurred or at the rate of exchange prevailing on the promulgation of this decision.

In the case of Engel v. Velasco & Co., 47 Phil. 115, We ruled that in an action for recovery of damages for breach of contract, even if the obligation
assumed by the defendant was to pay the plaintiff a sum of money expressed in American currency, the indemnity to be allowed should be
expressed in Philippine currency at the rate of exchange at the time of the judgment rather than at the rate of exchange prevailing on the date of
defendant's breach. This ruling, however, can neither be applied nor extended to the case at bar for the same was laid down when there was no law
against stipulating foreign currencies in Philippine contracts. But now we have Republic Act No. 529 which expressly declares such stipulations as
contrary to public policy, void and of no effect. And, as We already pronounced in the case of Eastboard Navigation, Ltd. v. Juan Ysmael & Co., Inc.,
G.R. No. L-9090, September 10, 1957, if there is any agreement to pay an obligation in a currency other than Philippine legal tender, the same is null
and void as contrary to public policy (Republic Act 529), and the most that could be demanded is to pay said obligation in Philippine currency "to be
measured in the prevailing rate of exchange at the time the obligation was incurred (Sec. 1, idem)."
UPON ALL THE FOREGOING, the decision appealed from is hereby affirmed, with the sole modification that the award should be converted into the
Philippine peso at the rate of exchange prevailing at the time the obligation was incurred or on July 1, 1952 when the contract was executed. The
appellee insurance company, in the light of this judgment, is relieved of any liability under this suit. No pronouncement as to costs.

G.R. No. 128669

October 4, 2002

MAMERTA VDA. DE JAYME,


and her children and/or heirs of the late GRACIANO JAYME, namely: WILFREDO, MARCIAL, MANUEL, ANTONIO, all surnamed JAYME;
the heirs of DOMINADOR JAYME, namely: SUPREMA (surviving spouse) and his children, namely: ARMANDO, NICANOR, ZENAIDA,
CATHERINE, ROSALINE, DORIS, VICKY and MARILYN, all surnamed JAYME;
and the heirs of the late NILIE JAYME SANCHEZ, namely, INOCENCIO SANCHEZ (surviving spouse) and her children: ELSA,
CONCEPCION, CLEOFE, ALEJANDRO, EFREN and MACRINA, all surnamed SANCHEZ;
and FLORA JAYME RAVANES, assisted by her husband, CESAR RAVANES, petitioners,
vs.
HON. COURT OF APPEALS, SIXTEENTH DIVISION, CEBU ASIANCARS INC.,
GEORGE NERI, CONNIE NERI, WILLIAM LEONG KOC LEE,
EDUARD JAMES LEE, ROBERTO UY KIM, AND CHARLES UY KIM; 1
METROPOLITAN BANK AND TRUST COMPANY, RENE NATIVIDAD AND/OR JOHN DOE in substitution of MAXIMO PEREZ,
sued in his capacity as City Sheriff of Mandaue City, respondents.
DECISION
QUISUMBING, J.:
This petition assails the decision2 dated September 19, 1996, of the Court of Appeals in CA-G.R. CV No. 46496 and its resolution 3 dated February
21, 1997, denying the motion for reconsideration. Said decision had affirmed that of the Regional Trial Court of Cebu City, Branch 15, in Civil Case
No. CEB-21369 for Annulment of Contract and Damages with Prayer for the Issuance of Preliminary Injunction. 4
The following facts are borne by the records:
The spouses Graciano and Mamerta Jayme are the registered owners of Lot 2700, situated in the Municipality of Mandaue (now Mandaue City),
Cebu, consisting of 2,568 sq.m. and covered by Transfer Certificate of Title No. 8290.
On January 8, 1973, they entered into a Contract of Lease 5 with George Neri, president of Airland Motors Corporation (now Cebu Asiancars Inc.),
covering one-half of Lot 2700. The lease was for twenty (20) years.
The terms and conditions of the lease contract6 stipulated that Cebu Asiancars Inc. (hereafter, Asiancars) may use the leased premises as a
collateral to secure payment of a loan which Asiancars may obtain from any bank, provided that the proceeds of the loan shall be used solely for the
construction of a building which, upon the termination of the lease or the voluntary surrender of the leased premises before the expiration of the
contract, shall automatically become the property of the Jayme spouses (the lessors).
A Special Power of Attorney7 dated January 26, 1974, was executed in favor of respondent George Neri, who used the lot to secure a loan of
P300,000 from the General Bank and Trust Company. The loan was fully paid on August 14, 1977. 8
In October 1977, Asiancars obtained a loan of P6,000,000 from the Metropolitan Bank and Trust Company (MBTC). The entire Lot 2700 was offered
as one of several properties given as collateral for the loan. As mortgagors, the spouses signed a Deed of Real Estate Mortgage 9 dated November
21, 1977 in favor of MBTC. It stated that the deed was to secure the payment of a loan obtained by Asiancars from the bank.
To assure the Jayme spouses, Neri and the other officers of Asiancars, namely Benny Liongben Lee, William Leong Koc Lee, Connie U. Neri,
Edward James Lee, Roberto Uykim and Charles P. Uykim, executed an undertaking 10 dated November 7, 1977. In it they promised, in their personal
capacities and/or in representation of Cebu Asiancars, Inc., "to compensate Mr. & Mrs. Graciano Jayme for any and all or whatever damage they
may sustain or suffer by virtue and arising out of the mortgage to MBTC of the aforestated parcel of land." 11 In addition, Neri wrote a letter dated
September 1, 198112 addressed to Mamerta Jayme acknowledging her "confidence and help" extended to him, his family and Asiancars. He
promised to pay their indebtedness to MBTC before the loan was due.
Meeting financial difficulties and incurring an outstanding balance on the loan, Asiancars conveyed ownership of the building on the leased premises
to MBTC, by way of "dacion en pago."13 The building was valued at P980,000 and the amount was applied as partial payment for the loan. There still
remained a balance of P2,942,449.66, which Asiancars failed to pay.
Eventually, MBTC extrajudicially foreclosed the mortgage. A public auction was held on February 4, 1981. MBTC was the highest bidder for
P1,067,344.35. A certificate of sale was issued and was registered with the Register of Deeds on February 23, 1981.
Meanwhile, Graciano Jayme died, survived by his widow Mamerta and their children. As a result of the foreclosure, Gracianos heirs filed a civil
complaint,14 in January of 1982, for Annulment of Contract with Damages with Prayer for Issuance of Preliminary Injunction, against respondent
Asiancars, its officers and incorporators and MBTC. Later, in 1999, Mamerta Jayme also passed away.

Petitioners claim that Neri and Asiancars did not tell them that the indebtedness secured by the mortgage was for P6,000,000 and that the security
was the whole of Lot 2700. Petitioners allege that the deed presented to the Jayme spouses was in blank, without explanation on the stipulations
contained therein, except that its conditions were identical to those of the stipulations when they mortgaged half the lots area previously with
General Bank. Petitioners also alleged that the Jayme spouses were illiterate and only knew how to sign their names. That because they did not
know how to read nor write, and had given their full trust and confidence to George Neri, the spouses were deceived into signing the Deed of Real
Estate Mortgage. Their intention as well as consent was only to be bound as guarantors.
Respondents deny that any fraud was employed, nor was there a scheme to make the spouses sign as mortgagors instead of guarantors. They aver
that the spouses were fully advised and compensated for the use of their property as collateral with MBTC; that they voluntarily signed the deed of
mortgage upon the request of George Neri, whom they previously trusted and who fulfilled his promise to pay the loan to General Bank and who
obtained the release of the same property by faithfully paying his indebtedness with General Bank.
After trial, the RTC rendered a decision, disposing as follows:
WHEREFORE, in view of the foregoing evidences, arguments and considerations, this Court hereby renders judgment as follows:
1. Declaring the Real Estate Mortgage executed by the Jaymes in favor of Metrobank as valid and binding;
2. Declaring the Undertaking executed by George Neri, Benny Leongben Lee already deceased, William Leong Koc, Connie U. Neri, Edward James
Lee, Roberto Uykim, and Charles P. Uykim on November 7, 1977 to be valid and binding as well upon the signatories thereof;
3. Allowing the Jaymes to redeem the mortgaged property, Lot 2700 covered by TCT 8290 of the Register of Deeds of Mandaue City for the amount
of P2,942,448.66 plus interest at the rate of 6% per annum within ninety (90) days from date of finality of this judgment until paid. However, if the
plaintiffs fail to redeem said property, then let a Certificate of Sale/definite Deed of Sale be issued in favor of Metropolitan Bank and Trust Co.
covering said Lot 2700;
4. Holding the defendants George Neri, William Leong Koc, Connie U. Neri, Edward James Lee, Roberto Uykim, and Charles Uykim jointly liable on
their Undertaking dated November 7, 1977 as they are hereby required to reimburse the Jaymes the amount that the Jaymes will pay to Metropolitan
Bank and Trust Co. for the redemption;
5. Requiring the defendants George Neri, William Leong Koc, Connie U. Neri, Edward James Lee, Roberto Uykim and Charles Uykim to pay jointly
attorneys fees to the Jaymes in the amount of P50,000.00;
6. Requiring the defendants George Neri, William Leong Koc, Connie U. Neri, Edwards James Lee, Roberto Uykim and Charles Uykim to pay jointly
the cost of this suit.
SO ORDERED.15
Petitioners and respondent MBTC elevated the case to the Court of Appeals, which affirmed the ruling of the RTC, with modifications stated in this
wise:
1. Declaring valid and binding the Real Estate Mortgage executed by plaintiffs in favor of defendant MBTC;
2. Declaring valid the foreclosure of the mortgage and the foreclosure sale;
3. Declaring that the period to redeem Lot 2700 had expired on February 23, 1982 without plaintiffs redeeming it;
4. Ordering the Sheriff of Mandaue City to issue a definite Deed of Sale covering Lot 2700 in favor of defendant MBTC;
5. Declaring valid and binding the dacion en pago executed by defendant Asiancars in favor of defendant MBTC;
6. Declaring defendant MBTC as owner of the building on Lot 2700;
7. Ordering defendant MBTC to pay to plaintiffs the amount of P92,083.33 for the use of the land from December 18, 1981 to February 23, 1982,
with six percent (6%) interest per annum until paid;
8. Ordering defendant Asiancars, Neris, Uykims, Lee and Koc to pay jointly and severally the plaintiffs the (a) actual value of the lot in the amount of
P3,852,000.00; (b) P400,000.00 moral damages; (c) P150,000.00 exemplary damages and P100,000.00 attorneys fee, all with six percent (6%)
interest per annum until fully paid;
9. Cost against defendants Asiancars, Neris, Uykims, Lee and Koc.
SO ORDERED.16
Petitioners filed a motion for reconsideration, which the CA denied. Hence, this petition which assigns the following errors:

I
THAT WITH GRAVE ABUSE OF DISCRETION, AMOUNTING TO EXCESS OF JURISDICTION, THE LOWER COURT GROSSLY AND SERIOUSLY
ERRED IN DECLARING VALID AND BINDING THE REAL ESTATE MORTGAGE EXECUTED BY THE PLAINTIFFS IN FAVOR OF THE MBTC,
FOR SAID DECLARATION IS ILLEGAL AND NOT WELL-FOUNDED IN LAW BECAUSE IT ULTIMATELY VIOLATED ARTS. 2058, 2076 AND 2077,
CIVIL CODE OF THE PHILIPPINES, SINCE THE REAL ESTATE MORTGAGE, EXH. "G", IS NOT LEGALLY A REAL ESTATE MORTGAGE, BUT
RATHER A DEED OF GUARANTY, CONSIDERING THAT THE PLAINTIFF MAMERTA VDA. DE JAYME AND HER HUSBAND GRACIANO JAYME,
NOW DECEASED, SIGNED INNOCENTLY THE SAID DOCUMENT AS GUARANTORS/ACCOMODATORS ONLY AND DEFINITELY NOT AS
DEBTORS/MORTGAGORS;
II
THAT WITH GRAVE ABUSE OF DISCRETION, THE LOWER COURT ERRED IN DECLARING THE PERIOD TO REDEEM LOT NO. 2700 HAD
EXPIRED ON FEBRUARY 23, 1982, WITHOUT THE PLAINTIFFS REDEEMING IT FOR SUCH DECLARATION IS NOT WELL-FOUNDED IN LAW
AND IN FACT;
III
THAT WITH GRAVE ABUSE OF DISCRETION, THE LOWER COURT ERRED IN DECLARING VALID AND BINDING THE DACION EN PAGO
EXECUTED BY DEFENDANT CEBU ASIAN- CARS IN FAVOR OF DEFENDANT MBTC, FOR SAID DECLARATION IS ILLEGAL AND IS CLEARLY
FOUNDED ON WANTON BAD FAITH COMMITTED BY BOTH PARTIES, IN VIOLATION OF ART. 1312, CIVIL CODE OF THE PHILIPPINES AND
SEC. 10, ART. III, CONSTITUTION OF THE PHILIPPINES;
IV
GRANTING ARGUENDO THAT THE DACION EN PAGO IS VALID, STILL THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION,
BY NOT DECLARING THAT THE P574,690.00 INDEBTEDNESS, INCLUDING INTEREST AND ADDITIONAL CHARGES OF CEBU ASIANCARS
WAS COMPLETELY EXTINGUISHED OR PAID OFF, BY WAY OF DACION EN PAGO PURSUANT TO ARTS. 1255, 2076 AND 2077 OF THE CIVIL
CODE OF THE PHILIPPINES.
V
THAT THE LOWER COURT COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING TO EXCESS OF JURISDICTION, IN DECLARING
VALID AND BINDING THE MORTGAGE AND THE CORRESPONDING FORECLOSURE, FOR SAID DECLARATION IS ILLEGAL, IN VIOLATION
OF ARTS. 1231 (5), 1245 AND 1255, CIVIL CODE AND BY THE INDUBITABLE EVIDENCE OF ALL THE PARTIES TESTIMONIAL AND
DOCUMENTARY, TO THE EFFECT THAT THE SIX (6) MILLION INDEBTEDNESS OF CEBU ASIANCARS WAS OVERPAID, THUS MBTC ALSO
VIOLATED ARTS. 2142, CIVIL CODE OF THE PHILIPPINES;
VI
THAT WITH GRAVE ABUSE OF DISCRETION, THE LOWER COURT ERRED BY VIOLATING EXH. "C", THE CONTRACT OF LEASE, WHICH IS
THE LAW BETWEEN THE PARTIES, AND INSTEAD, DELIBERATELY DECLARED VALID AND BINDING THE MORTGAGE EXH. "G", AND THE
FORECLOSURE OF MORTGAGE, AND IN NOT ORDERING MBTC TO VACATE THE PREMISES UPON THE TERMINATION OF THE
CONTRACT OF LEASE ON JANUARY 9, 1993 PURSUANT TO EXH. "C", AND LIKEWISE PAY RENTAL THEREAFTER, FOR ITS USE AT
P96,300.00 MONTHLY UNTIL MBTC ACTUALLY VACATES THE PREMISES.17
On March 13, 2002, the Court set a hearing on this petition, and parties were given thirty days for simultaneous submission of their respective
memoranda. Petitioners additionally submitted "reply/rejoinder" and respondent MBTC also submitted its "rejoinder sur-rejoinder."
Two main issues are for our resolution. First, whether or not the REM should be annulled on the ground of vitiated consent; and second, whether or
not the dacion en pago by Asiancars in favor of MBTC is valid and binding despite the stipulation in the lease contract that ownership of the building
will vest on the Jaymes at the termination of the lease.
The facts show that the spouses affixed their signature on the Deed of Real Estate Mortgage, in the presence of two instrumental witnesses, and
duly notarized by Atty. Rodolfo Y. Cabrera. As a notarized document, it has in its favor the presumption of regularity, and to overcome this
presumption, there must be evidence that is clear, convincing and more than merely preponderant that there was irregularity in its execution;
otherwise, the document should be upheld.18
The Deed of Real Estate Mortgage entered into by the Jayme spouses partake of a Third Party Mortgage under Art. 2085 (3) of the Civil Code which
reads:
The following requisites are essential to the contracts of pledge and mortgage: xxx (3) That the persons constituting the pledge or mortgage have the
free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose.

Third persons who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property.
In the case of Lustan vs. CA, et al.,19 this Court recognized the abovecited provision and held that "so long as valid consent was given, the fact that
the loans were solely for the benefit of (the debtor) would not invalidate the mortgage with respect to petitioners property. In consenting thereto even
granting that petitioner may not be assuming personal liability for the debt, her property shall nevertheless secure and respond for the performance
of the principal obligation."
Clearly, the law recognizes instances when persons not directly parties to a loan agreement may give as security their own properties for the
principal transaction. In this case, the spouses should not be allowed to disclaim the validity of a transaction they voluntarily and knowingly entered
into for the simple reason that such transaction turned out prejudicial to them later on.
Both the trial and appellate courts found that no fraud attended the execution of the deed of mortgage. This is a factual finding that binds this Court.
Further, the records clearly show that the spouses Jayme agreed to use their property as collateral for Neris loan because Neri had their full trust
and confidence. Mamerta herself testified that she and her husband were assured by Neris promise that he would take full responsibility for
whatever happens to the property of the spouses and that he would comply with his obligations to the bank. 20
The spouses were assisted by their own lawyer, Atty. Cirilo Sanchez, in all their transactions, including the ones with Asiancars and MBTC. Atty.
Sanchez even signed as an instrumental witness to a Special Power of Attorney executed by the spouses in favor of Neri, authorizing the latter to
mortgage the same property to MBTC. Although the said SPA was eventually not used because MBTC required that the spouses themselves
execute the REM, still, the fact remains that the spouses were already set on allowing the mortgage. In addition, we note that Nelia Sanchez, the
daughter of the spouses and one of the petitioners herein, admitted that their parents consulted her and her siblings before their parents executed
the Deed.21
With the assistance of a lawyer and consultation with their literate children, the spouses though illiterate could not feign ignorance of the stipulations
in the deed. Patently, theirs was not a vitiated consent. It could not now be justifiably asserted by petitioners that the Jayme spouses only intended to
be bound as guarantors and not as mortgagors.
In this jurisdiction, when the property of a third person which has been expressly mortgaged to guarantee an obligation to which the said person is a
stranger, said property is directly and jointly liable for the fulfillment thereof, in the same manner as the mortgaged property of the debtor himself. 22
In the case at bar, when Asiancars failed to pay its obligations with MBTC, the properties given as security (one of them being the land owned by the
Jaymes) became subject to foreclosure. When several things are given to secure the same debt in its entirety, all of them are liable for the debt, and
the creditor does not have to divide his action by distributing the debt among the various things pledged or mortgaged. Even when only a part of the
debt remains unpaid, all the things are liable for such balance. 23
At the time of the foreclosure, Asiancars had a remaining balance of P2,010,633.28. Thus, MBTC had every right to effect the extrajudicial
foreclosure of the mortgaged properties to satisfy its claim.
The appellate court found that the spouses lost their right to redeem their property. Under Section 78 of the General Banking Act then in force, 24 the
mortgagor or debtor whose real property has been foreclosed and sold at public auction, has the right to redeem the property within one year from
the sale of the real estate as a result of the foreclosure. The reckoning date in the case of a registered land is from the date of registration of the
certificate of sale.25 If no redemption is timely made, the buyer in a foreclosure sale becomes the absolute owner of the property purchased. 26 In this
case, the certificate of sale was registered on February 23, 1981, giving petitioners until February 23, 1982 to redeem the property. This they failed to
do, hence, ownership of the property already vested in the purchaser, private respondent MBTC.
Much as we sympathize with petitioners plight, we are unable to find merit in their plea for the annulment of the deed of sale covering Lot 2700 as a
result of foreclosure of mortgage. Petitioners failed to show the required quantum of evidence that they were fraudulently made to sign as
mortgagors. As early as Vales v. Villa, 35 Phil. 769 (1916), this Court has sounded a note of warning to litigants:
The law furnishes no protection to the inferior simply because he is inferior any more than it protects the strong because he is strong. The law
furnishes protection to both alike to one no more or less than the other. It makes no distinction between the wise and the foolish, the great and the
small, the strong and the weak. The foolish may lose all they have to the wise; but that does not mean that the law will give it back to them again.
Courts cannot follow one every step of his life and extricate him from bad bargains, protect him from unwise investments, relieve him from one-sided
contracts, or annul the effects of foolish acts.27
Petitioners however, are not without recourse for the loss of their property. Although they cannot go after respondent MBTC, they have in their favor
the undertaking executed by George Neri and other members of his family. The undertaking also bound respondent Asiancars, as well as its officers
who were signatories to the aforesaid Undertaking, to reimburse petitioners for the damages they suffered by reason of the mortgage.
The alienation of the building by Asiancars in favor of MBTC for the partial satisfaction of its indebtedness is, in our view, also valid. The ownership of
the building had been effectively in the name of the lessee-mortgagor (Asiancars), though with the provision that said ownership be transferred to the
Jaymes upon termination of the lease or the voluntary surrender of the premises. The lease was constituted on January 8, 1973 and was to expire

20 years thereafter, or on January 8, 1993. The alienation via dacion en pago was made by Asiancars to MBTC on December 18, 1980, during the
subsistence of the lease. At this point, the mortgagor, Asiancars, could validly exercise rights of ownership, including the right to alienate it, as it did
to MBTC.
Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of
the obligation.28 It is a special mode of payment where the debtor offers another thing to the creditor who accepts it as equivalent of payment of an
outstanding debt. The undertaking really partakes in one sense of the nature of sale, that is the creditor is really buying the thing or property of the
debtor, payment for which is to be charged against the debtors debt. As such, the essential elements of a contract of sale, namely, consent, object
certain, and cause or consideration must be present. In its modern concept, what actually takes place in dacion en pago is an objective novation of
the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of
sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the
effect of totally extinguishing the debt or obligation. 29
We also find that the Court of Appeals did not err in considering MBTC as a purchaser in good faith. MBTC had no knowledge of the stipulation in the
lease contract. Although the same lease was registered and duly annotated on the certificate of title of Lot 2700, MBTC was charged with
constructive knowledge only of the fact of lease of the land and not of the specific provision stipulating transfer of ownership of the building to the
Jaymes upon termination of the lease. There was no annotation on the title of any encumbrance. 30 While the alienation was in violation of the
stipulation in the lease contract between the Jaymes and Asiancars, MBTCs own rights could not be prejudiced by Asiancars actions unbeknownst
to MBTC. Thus, the transfer of the building in favor of MBTC was properly held valid and binding by respondent Court of Appeals.
One point, however, has to be cleared. The appellate court ordered MBTC to pay rentals to petitioners at the rate of P25.00 monthly per square
meter. For the Asiancars building stood on the lot owned by the petitioners, until the time MBTC also consolidated its ownership over the lot. Rentals
would have to be paid starting on December 18, 1980, when the buildings ownership was transferred to MBTC, until February 23, 1982, when
MBTC finally consolidated its ownership over Lot 2700. Hence, we agree that there was error in the computation of rentals by the CA. 31 From
December 18, 1980 until February 23, 1982, is a period of 1 year, 2 months and 5 days. Thus, MBTC should pay to petitioners rentals for the use of
the occupied lot,32 consisting of 1,700 sq. m. at the monthly rate of P25.00 per sq. m. for that period, in the total amount of P602,083.33, with six (6)
percent interest per annum until fully paid.
Finally, we are in agreement that bad faith attended Asiancars transfer of the building to MBTC. Asiancars was well aware of its covenant with the
Jaymes that the buildings ownership was to be transferred to the Jaymes upon termination of the lease. Indeed, petitioners suffered mental anxiety
and nervous shock upon learning that the ownership of the building standing on their property had already been transferred to MBTC. The apparent
disregard of petitioners right by Asiancars and other private respondents provides enough basis for an award of moral as well as exemplary
damages33 by the appellate court.
WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with the MODIFICATION that private respondent MBTC is ordered to pay
petitioners rentals in the total amount of P602,083.33, with six (6) percent interest per annum until fully paid. In all other respects, the assailed
decision and resolution of the Court of Appeals are AFFIRMED.
SO ORDERED.

G.R. No. L-55048 May 27, 1981


SUGA SOTTO YUVIENCO, BRITANIA SOTTO, and MARCELINO SOTTO, petitioners,
vs.
HON. AUXENCIO C. DACUYCUY, Judge of the CFI of Leyte, DELY RODRIGUEZ, FELIPE ANG CRUZ, CONSTANCIA NOGAR, MANUEL GO,
INOCENTES DIME, WILLY JULIO, JAIME YU, OSCAR DY, DY CHIU SENG, BENITO YOUNG, FERNANDO YU, SEBASTIAN YU, CARLOS UY,
HOC CHUAN and MANUEL DY, respondents.

BARREDO, J.:1wph1.t
Petition for certiorari and prohibition to declare void for being in grave abuse of discretion the orders of respondent judge dated November 2, 1978
and August 29, 1980, in Civil Case No. 5759 of the Court of First Instance of Leyte, which denied the motion filed by petitioners to dismiss the
complaint of private respondents for specific performance of an alleged agreement of sale of real property, the said motion being based on the
grounds that the respondents' complaint states no cause of action and/or that the claim alleged therein is unenforceable under the Statute of Frauds.
Finding initially prima facie merit in the petition, We required respondents to answer and We issued a temporary restraining order on October 7, 1980
enjoining the execution of the questioned orders.
In essence, the theory of petitioners is that while it is true that they did express willingness to sell to private respondents the subject property for
P6,500,000 provided the latter made known their own decision to buy it not later than July 31, 1978, the respondents' reply that they were agreeable
was not absolute, so much so that when ultimately petitioners' representative went to Cebu City with a prepared and duly signed contract for the
purpose of perfecting and consummating the transaction, respondents and said representative found variance between the terms of payment
stipulated in the prepared document and what respondents had in mind, hence the bankdraft which respondents were delivering to petit loners'
representative was returned and the document remained unsigned by respondents. Hence the action below for specific performance.
To be more specific, the parties do not dispute that on July 12, 1978, petitioners, thru a certain Pedro C. Gamboa, sent to respondents the following
letter:
Mr. Yao King Ong
Life Bakery
Tacloban City
Dear Mr. Yao: 1wph1.t
This refers to the Sotto property (land and building) situated at Tacloban City. My clients are willing to sell them at a total price of P6,500,000.00.
While there are other parties who are interested to buy the property, I am giving you and the other occupants the preference, but such priority has to
be exercised within a given number of days as I do not want to lose the opportunity if you are not interested. I am therefore gluing you and the rest of
the occupants until July 31, 1978 within it which to decide whether you want to buy the property. If I do not hear from you by July 31, I will offer or
close the deal with the other interested buyer.
Thank you so much for the hospitality extended to me during my last trip to Tacloban, and I hope to hear from you very soon. 1wph1.t
Very truly yours,
Pedro C. Gamboa 1
(Page 9, Record.)
Reacting to the foregoing letter, the following telegram was sent by "Yao King Ong & tenants" to Atty. Pedro Gamboa in Cebu City:
Atty. Pedro Gamboa
Room 314, Maria Cristina Bldg.
Osmea Boulevard, Cebu City
Reurlet dated July 12 inform Dra. Yuvienco we agree to buy property proceed Tacloban to negotiate details 1wph1.t
Yao King Ong & tenants
(Page 10, Record.)

Likewise uncontroverted is the fact that under date of July 27, 1978, Atty. Gamboa wired Yao King Ong in Tacloban City as follows:
NLT
YAO KING ONG
LIFE BAKERY
TACLOBAN CITY
PROPOSAL ACCEPTED ARRIVING TUESDAY MORNING WITH CONTRACT PREPARE PAYMENT BANK DRAFT 1wph1.t
ATTY. GAMBOA
(Page 10, Id.)
Now, Paragraph 10 of the complaint below of respondents alleges: 1wph1.t
10. That on August 1, 1978, defendant Pedro Gamboa arrived Tacloban City bringing with him the prepared contract to purchase and to sell referred
to in his telegram dated July 27, 1978 (Annex 'D' hereof) for the purpose of closing the transactions referred to in paragraphs 8 and 9 hereof,
however, to the complete surprise of plaintiffs, the defendant (except def. Tacloban City Ice Plant, Inc.) without giving notice to plaintiffs, changed the
mode of payment with respect to the balance of P4,500,000.00 by imposing upon plaintiffs to pay same amount within thirty (30) days from execution
of the contract instead of the former term of ninety (90) days as stated in paragraph 8 hereof. (Pp. 10-11, Record.)
Additionally and to reenforce their position, respondents alleged further in their complaint: 1wph1.t
8. That on July 12, 1978, defendants (except defendant Tacloban City Ice Plant, Inc.) finally sent a telegram letter to plaintiffs- tenants, through same
Mr. Yao King Ong, notifying them that defendants are willing to sell the properties (lands and building) at a total price of P6,500,000.00, which herein
plaintiffs-tenants have agreed to buy the said properties for said price; a copy of which letter is hereto attached as integral part hereof and marked as
Annex 'C', and plaintiffs accepted the offer through a telegram dated July 25, 1978, sent to defendants (through defendant Pedro C. Gamboa), a
copy of which telegram is hereto attached as integral part hereof and marked as Annex C-1 and as a consequence hereof. plaintiffs except plaintiff
Tacloban - merchants' Realty Development Corporation) and defendants (except defendant Tacloban City Ice Plant. Inc.) agreed to the following
terms and conditions respecting the payment of said purchase price, to wit: 1wph1.t
P2,000,000.00 to be paid in full on the date of the execution of the contract; and the balance of P4,500,000.00 shall be fully paid within ninety (90)
days thereafter;
9. That on July 27, 1978, defendants sent a telegram to plaintiff- tenants, through the latter's representative Mr. Yao King Ong, reiterating their
acceptance to the agreement referred to in the next preceding paragraph hereof and notifying plaintiffs-tenants to prepare payment by bank drafts;
which the latter readily complied with; a copy of which telegram is hereto attached as integral part hereof and marked as Annex "D"; (Pp 49-50,
Record.)
It was on the basis of the foregoing facts and allegations that herein petitioners filed their motion to dismiss alleging as main grounds: 1wph1.t
I. That plaintiff, TACLOBAN MERCHANTS' REALTY DEVELOPMENT CORPORATION, amended complaint, does not state a cause of action and
the claim on which the action is founded is likewise unenforceable under the provisions of the Statute of Frauds.
II. That as to the rest of the plaintiffs, their amended complaint does not state a cause of action and the claim on which the action is founded is
likewise unenforceable under the provisions of the Statute of Frauds. (Page 81, Record.)
With commendable knowledgeability and industry, respondent judge ruled negatively on the motion to dismiss, discoursing at length on the
personality as real party-in-interest of respondent corporation, while passing lightly, however, on what to Us are the more substantial and decisive
issues of whether or not the complaint sufficiently states a cause of action and whether or not the claim alleged therein is unenforceable under the
Statute of Frauds, by holding thus: 1wph1.t
The second ground of the motion to dismiss is that plaintiffs' claim is unenforceable under the Statute of Frauds. The defendants argued against this
motion and asked the court to reject the objection for the simple reason that the contract of sale sued upon in this case is supported by letters and
telegrams annexed to the complaint and other papers which will be presented during the trial. This contention of the defendants is not well taken.
The plaintiffs having alleged that the contract is backed up by letters and telegrams, and the same being a sufficient memorandum, the complaint
states a cause of action and they should be given a day in court and allowed to substantiate their allegations (Paredes vs. Espino, 22 SCRA 1000).
To take a contract for the sale of land out of the Statute of Frauds a mere note or memorandum in writing subscribed by the vendor or his agent
containing the name of the parties and a summary statement of the terms of the sale either expressly or by reference to something else is all that is
required. The statute does not require a formal contract drawn up with technical exactness for the language of Par. 2 of Art. 1403 of the Philippine

Civil Code is' ... an agreement ... or some note or memorandum thereof,' thus recognizing a difference between the contract itself and the written
evidence which the statute requires (Berg vs. Magdalena Estate, Inc., 92 Phil. 110; Ill Moran, Comments on the Rules of Court, 1952 ed. p. 187).
See also Bautista's Monograph on the Statute of Frauds in 21 SCRA p. 250. (Pp. 110-111, Record)
Our first task then is to dwell on the issue of whether or not in the light of the foregoing circumstances, the complaint in controversy states sufficiently
a cause of action. This issue necessarily entails the determination of whether or not the plaintiffs have alleged facts adequately showing the
existence of a perfected contract of sale between herein petitioners and the occupant represented by respondent Yao King Ong.
In this respect, the governing legal provision is, of course, Article 1319 of the Civil Code which provides:1wph1.t
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are constitute the contract.
The offer must be certain the acceptance absolute. A qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind offerer except from the time it came to his knowledge. The contract, in a case, is presumed to
have been entered into in the place where the offer was made.
In the instant case, We can lay aside, for the moment, petitioners' contention that the letter of July 12, 1978 of Atty. Pedro C. Gamboa to respondents
Yao King Ong and his companions constitute an offer that is "certain", although the petitioners claim that it was a mere expression of willingness to
sell the subject property and not a direct offer of sale to said respondents. What We consider as more important and truly decisive is what is the
correct juridical significance of the telegram of respondents instructing Atty. Gamboa to "proceed to Tacloban to negotiate details." We underline the
word "negotiate" advisedly because to Our mind it is the key word that negates and makes it legally impossible for Us to hold that respondents'
acceptance of petitioners' offer, assuming that it was a "certain" offer indeed, was the "absolute" one that Article 1319 above-quoted requires.
Dictionally, the implication of "to negotiate" is practically the opposite of the Idea that an agreement has been reached. Webster's Third International
Dictionary, Vol. II (G. & C. Merriam Co., 1971 Philippine copyright) gives the meaning of negotiate as "to communicate or confer with another so as to
arrive at the settlement of some matter; meet with another so as to arrive through discussion at some kind of agreement or compromise about
something; to arrange for or bring about through conference or discussion; work at or arrive at or settle upon by meetings and agreements or
compromises ". Importantly, it must be borne in mind that Yao King Ong's telegram simply says "we agree to buy property". It does not necessarily
connote acceptance of the price but instead suggests that the details were to be subject of negotiation.
Respondents now maintain that what the telegram refers to as "details" to be "negotiated" are mere "accidental elements", not the essential elements
of the contract. They even invite attention to the fact that they have alleged in their complaint (Par. 6) that it was as early as "in the month of October,
1977 (that) negotiations between plaintiffs and defendants for the purchase and sale (in question) were made, thus resulting to offers of same
defendants and counter-offer of plaintiffs". But to Our mind such alleged facts precisely indicate the failure of any meeting of the minds of the parties,
and it is only from the letter and telegrams above-quoted that one can determine whether or not such meeting of the minds did materialize. As We
see it, what such allegations bring out in bold relief is that it was precisely because of their past failure to arrive at an agreement that petitioners had
to put an end to the uncertainty by writing the letter of July 12, 1978. On the other hand, that respondents were all the time agreeable to buy the
property may be conceded, but what impresses Us is that instead of "absolutely" accepting the "certain" offer if there was one of the
petitioners, they still insisted on further negotiation of details. For anyone to read in the telegram of Yao that they accepted the price of
P6,500,000.00 would be an inference not necessarily warranted by the words "we agree to buy" and "proceed Tacloban to negotiate details". If
indeed the details being left by them for further negotiations were merely accidental or formal ones, what need was there to say in the telegram that
they had still "to negotiate (such) details", when, being unessential per their contention, they could have been just easily clarified and agreed upon
when Atty. Gamboa would reach Tacloban?
Anent the telegram of Atty. Gamboa of July 27, 1978, also quoted earlier above, We gather that it was in answer to the telegram of Yao. Considering
that Yao was in Tacloban then while Atty. Gamboa was in Cebu, it is difficult to surmise that there was any communication of any kind between them
during the intervening period, and none such is alleged anyway by respondents. Accordingly, the claim of respondents in paragraph 8 of their
complaint below that there was an agreement of a down payment of P2 M, with the balance of P4.5M to be paid within 90 days afterwards is rather
improbable to imagine to have actually happened.
Respondents maintain that under existing jurisprudence relative to a motion to dismiss on the ground of failure of the complaint to state a cause of
action, the movant-defendant is deemed to admit the factual allegations of the complaint, hence, petitioners cannot deny, for purposes of their
motion, that such terms of payment had indeed been agreed upon.
While such is the rule, those allegations do not detract from the fact that under Article 1319 of the Civil Code above-quoted, and judged in the light of
the telegram-reply of Yao to Atty. Gamboa's letter of July 12, 1978, there was not an absolute acceptance, hence from that point of view, petitioners'
contention that the complaint of respondents state no cause of action is correct.
Nonetheless, the alleged subsequent agreement about the P2 M down and P4.5 M in 90 days may at best be deemed as a distinct cause of action.
And placed against the insistence of petitioners, as demonstrated in the two deeds of sale taken by Atty. Gamboa to Tacloban, Annexes 9 and 10 of
the answer of herein respondents, that there was no agreement about 90 days, an issue of fact arose, which could warrant a trial in order for the trial
court to determine whether or not there was such an agreement about the balance being payable in 90 days instead of the 30 days stipulated in

Annexes 9 and 10 above-referred to. Our conclusion, therefore, is that although there was no perfected contract of sale in the light of the letter of
Atty. Gamboa of July 12, 1978 and the letter-reply thereto of Yao; it being doubtful whether or not, under Article 1319 of the Civil Code, the said letter
may be deemed as an offer to sell that is "certain", and more, the Yao telegram is far from being an "absolute" acceptance under said article, still
there appears to be a cause of action alleged in Paragraphs 8 to 12 of the respondents' complaint, considering it is alleged therein that subsequent
to the telegram of Yao, it was agreed that the petitioners would sell the property to respondents for P6.5 M, by paving P2 M down and the balance in
90 days and which agreement was allegedly violated when in the deeds prepared by Atty. Gamboa and taken to Tacloban, only 30 days were given
to respondents.
But the foregoing conclusion is not enough to carry the day for respondents. It only brings Us to the question of whether or not the claim for specific
performance of respondents is enforceable under the Statute of Frauds. In this respect, We man, view the situation at hand from two angles, namely,
(1) that the allegations contained in paragraphs 8 to 12 of respondents' complaint should be taken together with the documents already
aforementioned and (2) that the said allegations constitute a separate and distinct cause of action. We hold that either way We view the situation, the
conclusion is inescapable e that the claim of respondents that petitioners have unjustifiably refused to proceed with the sale to them of the property v
in question is unenforceable under the Statute of Frauds.
It is nowhere alleged in said paragraphs 8 to 12 of the complaint that there is any writing or memorandum, much less a duly signed agreement to the
effect that the price of P6,500,000 fixed by petitioners for the real property herein involved was agreed to be paid not in cash but in installments as
alleged by respondents. The only documented indication of the non-wholly-cash payment extant in the record is that stipulated in Annexes 9 and 10
above-referred to, the deeds already signed by the petitioners and taken to Tacloban by Atty. Gamboa for the signatures of the respondents. In other
words, the 90-day term for the balance of P4.5 M insisted upon by respondents choices not appear in any note, writing or memorandum signed by
either the petitioners or any of them, not even by Atty. Gamboa. Hence, looking at the pose of respondents that there was a perfected agreement of
purchase and sale between them and petitioners under which they would pay in installments of P2 M down and P4.5 M within ninety 90) days
afterwards it is evident that such oral contract involving the "sale of real property" comes squarely under the Statute of Frauds (Article 1403, No. 2(e),
Civil Code.)
On the other score of considering the supposed agreement of paying installments as partly supported by the letter and t telegram earlier quoted
herein, His Honor declared with well studied ratiocination, albeit legally inaccurate, that: 1wph1.t
The next issue relate to the State of Frauds. It is contended that plaintiffs' action for specific performance to compel the defendants to execute a
good and sufficient conveyance of the property in question (Sotto land and building) is unenforceable because there is no other note memorandum
or writing except annexes "C", "C-l" and "D", which by themselves did not give birth to a contract to sell. The argument is not well founded. The rules
of pleading limit the statement of the cause of action only to such operative facts as give rise to the right of action of the plaintiff to obtain relief
against the wrongdoer. The details of probative matter or particulars of evidence, statements of law, inferences and arguments need not be stated.
Thus, Sec. 1 of Rule 8 provides that 'every pleading shall contain in a methodical and logical form, a plain concise and direct statement of the
ultimate facts on which the party pleading relies for his claim or defense, as the case may be, omitting the statement of mere evidentiary facts.'
Exhibits need not be attached. The contract of sale sued upon in this case is supported by letters and telegrams annexed to the complaint and
plaintiffs have announced that they will present additional evidences during the trial to prove their cause of action. The plaintiffs having alleged that
the contract is backed up by letters and telegrams, and the same being sufficient memorandum, the complaint states a cause of action and they
should be given their day in court and allowed to substantiate their allegations (Parades vs. Espino, 22 SCRA 1000). (Pp 165-166, Record.)
The foregoing disquisition of respondent judge misses at least two (2) juridical substantive aspects of the Statute of Frauds insofar as sale of real
property is concerned. First, His Honor assumed that the requirement of perfection of such kind of contract under Article 1475 of the Civil Code which
provides that "(t)he contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and
upon the price", the Statute would no longer apply as long as the total price or consideration is mentioned in some note or memorandum and there is
no need of any indication of the manner in which such total price is to be paid.
We cannot agree. In the reality of the economic world and the exacting demands of business interests monetary in character, payment on
installments or staggered payment of the total price is entirely a different matter from cash payment, considering the unpredictable trends in the
sudden fluctuation of the rate of interest. In other words, it is indisputable that the value of money - varies from day to day, hence the indispensability
of providing in any sale of the terms of payment when not expressly or impliedly intended to be in cash.
Thus, We hold that in any sale of real property on installments, the Statute of Frauds read together with the perfection requirements of Article 1475 of
the Civil Code must be understood and applied in the sense that the idea of payment on installments must be in the requisite of a note or
memorandum therein contemplated. Stated otherwise, the inessential elements" mentioned in the case of Parades vs. Espino, 22 SCRA 1000, relied
upon by respondent judge must be deemed to include the requirement just discussed when it comes to installment sales. There is nothing in the
monograph re the Statute of Frauds appearing in 21 SCRA 250 also cited by His Honor indicative of any contrary view to this ruling of Ours, for
the essence and thrust of the said monograph refers only to the form of the note or memorandum which would comply with the Statute, and no
doubt, while such note or memorandum need not be in one single document or writing and it can be in just sufficiently implicit tenor, imperatively the
separate notes must, when put together', contain all the requisites of a perfected contract of sale. To put it the other way, under the Statute of Frauds,

the contents of the note or memorandum, whether in one writing or in separate ones merely indicative for an adequate understanding of all the
essential elements of the entire agreement, may be said to be the contract itself, except as to the form.
Secondly, We are of the considered opinion that under the rules on proper pleading, the ruling of the trial court that, even if the allegation of the
existence of a sale of real property in a complaint is challenged as barred from enforceability by the Statute of Frauds, the plaintiff may simply say
there are documents, notes or memoranda without either quoting them in or annexing them to the complaint, as if holding an ace in the sleeves is
not correct. To go directly to the point, for Us to sanction such a procedure is to tolerate and even encourage undue delay in litigation, for the simple
reason that to await the stage of trial for the showing or presentation of the requisite documentary proof when it already exists and is asked to be
produced by the adverse party would amount to unnecessarily postponing, with the concomitant waste of time and the prolongation of the
proceedings, something that can immediately be evidenced and thereby determinable with decisiveness and precision by the court without further
delay.
In this connection, Moran observes that unlike when the ground of dismissal alleged is failure of the complaint to state a cause of action, a motion to
dismiss invoking the Statute of Frauds may be filed even if the absence of compliance does not appear an the face of the complaint. Such absence
may be the subject of proof in the motion stage of the proceedings. (Moran, Comment on the Rules of Court, Vol. 1, p. 494, 1979 ed.) It follows then
that when such a motion is filed and all the documents available to movant are before the court, and they are insufficient to comply with the Statute, it
becomes incumbent upon the plaintiff, for the reasons of policy We have just' indicated regarding speedy administration of justice, to bring out what
note or memorandum still exists in his possession in order to enable the court to expeditiously determine then and there the need for further
proceedings. In other words, it would be inimical to the public interests in speedy justice for plaintiff to play hide and seek at his own convenience,
particularly, when, as is quite apparent as in the instant case that chances are that there are no more writings, notes or memoranda of the installment
agreement alleged by respondents. We cannot divine any reason why any such document would be withheld if they existed, except the
unpermissible desire of the respondents to force the petitioners to undergo the ordeals, time, effort and expenses of a futile trial.
In the foregoing premises, We find no alternative than to render judgment in favor of petitioners in this certiorari and prohibition case. If at all, appeal
could be available if the petitioners subjected themselves to the trial ruled to be held by the trial court. We foresee even at this point, on the basis of
what is both extant and implicit in the records, that no different result can be probable. We consider it as sufficiently a grave abuse of discretion
warranting the special civil actions herein the failure of respondent judge to properly apply the laws on perfection of contracts in relation to the
Statute of Frauds and the pertinent rules of pleading and practice, as We have discussed above.
ACCORDINGLY, the impugned orders of respondent judge of November 2, 1978 and August 29, 1980 are hereby set aside and private respondents'
amended complaint, Annex A of the petition, is hereby ordered dismissed and the restraining order heretofore issued by this Court on October 7,
1980 is declared permanent. Costs against respondents.