Académique Documents
Professionnel Documents
Culture Documents
151953
Ninth. The Court of First Instance of Iloilo decided the case "in
favor of the defendant without prejudice to the plaintiff's
bringing within the proper time another suit for his
proportional part of the joint debt, and that the plaintiff pay
the costs." (B. of E., 21.)
in this case, Inchausti & Company did with its debtors Manuel,
Francisco, and Carmen Yulo through the instrument of May 12,
1911, this does not lead to the conclusion that the solidarity
stipulated in the instrument of August 12, 1909 is broken, as
we already know the law provides that "solidarity may exist
even though the debtors are not bound in the same manner
and for the same periods and under the same conditions."
(Ibid, article 1140.) Whereby the second point is resolved.
With respect to the third, there can also be no doubt that the
contract of May 12, 1911, does not constitute a novation of
the former one of August 12, 1909, with respect to the other
debtors who executed this contract, or more concretely, with
respect to the defendant Gregorio Yulo: First, because "in
order that an obligation may be extinguished by another
which substitutes it, it is necessary that it should be so
expressly declared or that the old and the new be
incompatible in all points" (Civil Code, article 1204); and the
instrument of May 12, 1911, far from expressly declaring that
the obligation of the three who executed it substitutes the
former signed by Gregorio Yulo and the other debtors,
expressly and clearly stated that the said obligation of
Gregorio Yulo to pay the two hundred and fifty-three thousand
and odd pesos sued for exists, stipulating that the suit must
continue its course and, if necessary, these three parties who
executed the contract of May 12, 1911, would cooperate in
order that the action against Gregorio Yulo might prosper (7th
point in the statement of facts), with other undertakings
concerning the execution of the judgment which might be
rendered against Gregorio Yulo in this same suit. "It is always
necessary to state that it is the intention of the contracting
parties to extinguish the former obligation by the new one"
(Judgment in cassation, July 8, 1909). There exist no
incompatibility between the old and the new obligation as will
be demonstrated in the resolution of the last point, and for the
present we will merely reiterate the legal doctrine that an
obligation to pay a sum of money is not novated in a new
instrument wherein the old is ratified, by changing only the
term of payment and adding other obligations not
incompatible with the old one. (Judgments in cassation of June
28, 1904 and of July 8, 1909.)
With respect to the last point, the following must be borne in
mind:
Facts. First. Of the nine children of T. Yulo, six executed the
mortgage of August 12, 1909, namely, Gregorio, Pedro,
Francisco, Manuel, Carmen, and Concepcion, admitting a debt
of P253,445.42 at 10 per cent per annum and mortgaging sixninths of their hereditary properties. Second. Of those six
children, Francisco, Manuel and Carmen executed the
instrument of May 12, 1911, wherein was obtained a
reduction of the capital to 225,000 pesos and of the interest
to 6 per cent from the 15th of March of the same year of
1911. Third. The other children of T. Yulo named Mariano,
Teodoro, and Jose have not taken part in these instruments
and have not mortgaged their hereditary portions. Fourth. By
the first instrument the maturity of the first installment was
June 30, 1910, whereas by the second instrument, Francisco,
Manuel, and Carmen had in their favor as the maturity of the
first installment of their debt, June 30, 1912, and Fifth, on
March 27, 1911, the action against Gregorio Yulo was already
filed and judgment was pronounced on December 22, 1911,
when the whole debt was not yet due nor even the first
installment of the same respective the three aforesaid
debtors, Francisco, Manuel, and Carmen.
In jure it would follow that by sentencing Gregorio Yulo to pay
253,445 pesos and 42 centavos of August 12, 1909, this
debtor, if he should pay all this sum, could not recover from
his joint debtors Francisco, Manuel, and Carmen their
proportional parts of the P253,445.42 which he had paid,
inasmuch as the three were not obligated by virtue of the
instrument of May 12, 1911, to pay only 225,000 pesos, thus
constituting a violation of Gregorio Yulo's right under such
hypothesis, of being reimbursed for the sum paid by him, with
the interest of the amounts advanced at the rate of one-sixth
part from each of his five codebtors. (Civ. Code, article 1145,
par. 2). This result would have been a ponderous obstacle
against the prospering of the suit as it had been brought. It
would have been very just then to have absolved the solidary
debtor who having to pay the debt in its entirety would not be
able to demand contribution from his codebtors in order that
they might reimburse him pro rata for the amount advanced
obliged to pay his part of the debt before the contract of May
12, 1911, may be enforced, and "consequently he decided the
case in favor of the defendant, without prejudice to the
plaintiff proceeding in due time against him for his
proportional part of the joint debt." (B. of E., 21 and 22.)
But in the first place, taking into consideration the conformity
of the plaintiff and the provision of article 1143 of the Civil
Code, it is no longer possible to sentence the defendant to
pay the P253,445.42 of the instrument of August 12, 1909,
but, if anything, the 225,000 of the instrument of May 12,
1911.
In the second place, neither is it possible to curtail the
defendant's right of recovery from the signers of the
instrument of May 12, 1911, for he was justly exonerated from
the payment of that part of the debt corresponding to them by
reason of there having been upheld in his favor the exception
of an unmatured installment which pertains to them.
In the third place, it does not seem just, Mucius Scaevola
considers it "absurd," that, there being a debtor who is
unconditionally obligated as to when the debt has matured,
the creditor should be forced to await the realization of the
condition (or the expiration of the term.) Not only is there no
reason for this, as stated by the author, but the court would
even fail to consider the special law of the contract, neither
repealed nor novated, which cannot be omitted without
violating article 1091 of the Civil Code according to which "the
obligations arising from contracts have the force of law
between the contracting parties and must be complied with in
accordance with the tenor of the same." Certain it is that the
trial court, in holding that this action was premature but might
be brought in the time, regarded the contract of August 12,
1909, as having been expressly novated; but it is absolutely
impossible in law to sustain such supposed novation, in
accordance with the legal principles already stated, and
nevertheless the obligation of the contract of May 12, 1911,
must likewise be complied with in accordance with its tenor,
which is contrary in all respects to the supposed novation, by
obliging the parties who signed the contract to carry on the
suit brought against Gregorio Yulo. The contract of May 12,
1911, has affected the action and the suit, to the extent that
Gregorio Yulo has been able to make in his favor the defense
of remission of part of the debt, thanks to the provision of
article 1148, because it is a defense derived from the nature
of the obligation, so that although the said defendant was not
party to the contract in question, yet because of the principle
of solidarity he was benefited by it.
The defendant Gregorio Yulo cannot be ordered to pay the
P253,445.42 claimed from him in the suit here, because he
has been benefited by the remission made by the plaintiff to
three of his codebtors, many times named above.
Consequently, the debt is reduced to 225,000 pesos.
But, as it cannot be enforced against the defendant except as
to the three-sixths part which is what he can recover from his
joint codebtors Francisco, Manuel, and Carmen, at present,
judgment can be rendered only as to the P112,500.
We therefore sentence the defendant Gregorio Yulo to pay the
plaintiff Inchausti & Company P112,500, with the interest
stipulated in the instrument of May 12, 1911, from March 15,
1911, and the legal interest on this interest due, from the time
that it was claimed judicially in accordance with article 1109
of the Civil Code, without any special finding as to costs. The
judgment appealed from is reversed. So ordered.
G.R. No. 96405 June 26, 1996
BALDOMERO INCIONG, JR., petitioner,
vs.
COURT OF APPEALS and PHILIPPINE BANK OF
COMMUNICATIONS, respondents.
ROMERO, J.:p
SO ORDERED.
Petitioner's liability resulted from the promissory note in the
amount of P50,000.00 which he signed with Rene C. Naybe
and Gregorio D. Pantanosas on February 3, 1983, holding
themselves jointly and severally liable to private respondent
Philippine Bank of Communications, Cagayan de Oro City
branch. The promissory note was due on May 5, 1983.
Said due date expired without the promissors having paid
their obligation. Consequently, on November 14, 1983 and on
June 8, 1984, private respondent sent petitioner telegrams
demanding payment thereof. 2 On December 11, 1984 private
respondent also sent by registered mail a final letter of
demand to Rene C. Naybe. Since both obligors did not
respond to the demands made, private respondent filed on
January 24, 1986 a complaint for collection of the sum of
P50,000.00 against the three obligors.
On November 25, 1986, the complaint was dismissed for
failure of the plaintiff to prosecute the case. However, on
January 9, 1987, the lower court reconsidered the dismissal
order and required the sheriff to serve the summonses. On
January 27, 1987, the lower court dismissed the case against
defendant Pantanosas as prayed for by the private respondent
herein. Meanwhile, only the summons addressed to petitioner
was served as the sheriff learned that defendant Naybe had
gone to Saudi Arabia.
In his answer, petitioner alleged that sometime in January
1983, he was approached by his friend, Rudy Campos, who
told him that he was a partner of Pio Tio, the branch manager
of private respondent in Cagayan de Oro City, in the falcata
logs operation business. Campos also intimated to him that
Rene C. Naybe was interested in the business and would
contribute a chainsaw to the venture. He added that, although
Naybe had no money to buy the equipment, Pio Tio had
assured Naybe of the approval of a loan he would make with
private respondent. Campos then persuaded petitioner to act
as a "co-maker" in the said loan. Petitioner allegedly acceded
but with the understanding that he would only be a co-maker
for the loan of P50,000.00.
Petitioner alleged further that five (5) copies of a blank
promissory note were brought to him by Campos at his office.
He affixed his signature thereto but in one copy, he indicated
that he bound himself only for the amount of P5,000.00. Thus,
it was by trickery, fraud and misrepresentation that he was
made liable for the amount of P50,000.00.
In the aforementioned decision of the lower court, it noted
that the typewritten figure "-- 50,000 --" clearly appears
directly below the admitted signature of the petitioner in the
promissory note. 3 Hence, the latter's uncorroborated
testimony on his limited liability cannot prevail over the
presumed regularity and fairness of the transaction, under
Sec. 5 (q) of Rule 131. The lower court added that it was
"rather odd" for petitioner to have indicated in a copy and not
in the original, of the promissory note, his supposed obligation
MELENCIO-HERRERA, J.:
Will a Securities and Exchange Commission (SEC) Order
suspending, during the pendency of a rehabilitation
proceeding, payment of all claims against the principal debtor
bar or preclude the creditor from recovering from the surety?
Respondents Philippine Blooming Mills (PBM) and its Surety,
Alfredo Ching, answer in the affirmative; petitioner Bank in the
negative.
The facts:
On 4 May 1979, Alfredo Ching signed a 'Comprehensive
Surety Agreement' with Rizal Commercial Banking Corporation
(RCBC), binding himself to jointly and severally guarantee the
prompt payment of all PBM obligations owing RCBC in the
aggregate sum of Forty Million (P40,000,000.00) Pesos.
Between 8 September to 30 October 1980, PBM filed several
applications for letters of credit with RCBC. Through said
applications, PBM obligated itself, among other things, to pay
on demand for all draft(s) drawn under or purporting to be
RCBC takes the position that the SEC injunctive Order pertains
and affects only PBM, the corporation under rehabilitation,
and that its right, as creditor, to proceed against respondent
Ching, as Surety, is not affected by said Order. In fine, RCBC
avers that to hold the injunctive Order applicable to both
respondents PBM and Ching is to deprive RCBC of its right to
proceed against the Surety based on the latter's separate and
independent undertaking.
PBM and Ching counter that the liabilities incurred by PBM
were corporate in character and, hence, as a corporate officer,
Alfredo Ching cannot be held liable therefor; that the
pendency of SEC Case No. 2250 and the rendition of an Order
therein on 26 April 1988 implementing respondent PBM's
rehabilitation plan must necessarily benefit the Surety,
inasmuch as payment of PBM obligations must be made
pursuant to that plan; and that the liability of the Surety can
not be more than what would remain after payment of all the
obligations of the principal. Moreover, they continue, it is
usual for majority stockholders to act as co-signors with their
respective corporations where promissory notes, collaterals or
guaranty or security agreements are involved. Respondent
Ching's action may, it is claimed, be classified as a corporate
act.
Under the attendant facts and circumstances, we answer the
question earlier posed in the negative.
Where an obligation expressly states a solidary liability, the
concurrence of two or more creditors or two or more debtors
in one and the same obligation implies that each one of the
former has a right to demand, or that each one of the latter is
bound to render, entire compliance with the prestation (Article
1207, Civil Code). The creditor may proceed against any one
of the solidary debtors or some or all of them simultaneously
(Article 1216, Civil Code).
That there exists a Comprehensive Surety Agreement
between RCBC and respondent Ching is admitted. There is no
escaping the attendant liability that binds respondent Ching,
as Surety. He is charged as an original promissor by virtue of
his primary obligation under the Suretyship Agreement. That
Agreement is bare of words imputing to respondent Ching any
liability other than that of a Surety who binds himself to insure
a debt in his personal capacity, lacking consideration therefor
notwithstanding (p. 94, Original Record). That respondent
Ching acted for and on behalf of respondent PBM as part of its
usual corporate procedure is not supported by the evidence
nor the pleadings on record, nor the Agreement itself .We can
not give any additional meaning to the plain language of the
subject agreement. It is basic that the parties are bound by
the terms of their contract, which is the law between them. As
held in Zenith Insurance Corporation vs. Court of Appeals (No.
L-57957, 29 December 1982,119 SCRA 485), the extent of a
surety's liability is determined only by the clause of the
contract of suretyship. It cannot be extended by implication,
beyond the terms of the contract. Conversely, liability therefor
may not be restricted unless expressly so stated.
Neither can respondent Ching seek refuge behind the SEC
injunctive Order. Under Section 3 of P.D. 902-A, as amended
by P.D. 1758, the Commission is given absolute jurisdiction,
supervision and control only over corporations or associations,
which are grantees of a primary franchise and/or a license or
permit issued by the government to operate in the Philippines.
The SEC injunctive Order can not effect a suspension of
payment of respondent Surety's due and demandable
obligation, it being clear therefrom that the rehabilitation
receivers were limited "to tak(ing) custody and control over all
the existing assets and property of PBM." Nothing in said
Order puts respondent Ching within its scope.
To further avoid payment of their obligation, PBM and Ching
allege a customary extension given by petitioner in PBM's
favor, which, it is averred, must necessarily benefit the Surety.
Suffice it to say that the summary judgment made by the
lower Court offers an acceptable explanation finding
respondents' obligation as matured and demandable. Thus:
The trust receipts from No. 2042 to 2100 in the schedule
(pages 2 and 3, complaint) shows that the maturity dates
thereof vary from May 12, 1981 at the latest and
February 19, 1981 at the earliest. The alleged agreement
DECISION
PANGANIBAN, J.:
May defendants in civil cases implead in their counterclaims
persons who were not parties to the original complaints? This
is the main question to be answered in this controversy.
The Case
Before us is a Petition for Review1 under Rule 45 of the Rules
of Court, seeking to nullify the May 22, 20022 and the
September 3, 2002 Orders3 of the Regional Trial Court (RTC) of
Quezon City (Branch 80) in Civil Case No. Q-00-41103. The
decretal portion of the first assailed Order reads:
"WHEREFORE, in the light of the foregoing as earlier stated,
the plaintiff's motion to dismiss claims is granted.
Accordingly, the defendants' claims against Mr. Lim and Mr.
Mariano captioned as their counterclaims are dismissed." 4
The second challenged Order denied petitioners' Motion for
Reconsideration.
The Facts
Briefly, the origins of the present controversy can be traced to
the Letter of Intent (LOI) executed by both parties on August
11, 1998, whereby Petitioner Lafarge Cement Philippines, Inc.
(Lafarge) -- on behalf of its affiliates and other qualified
entities, including Petitioner Luzon Continental Land
Corporation (LCLC) -- agreed to purchase the cement business
of Respondent Continental Cement Corporation (CCC). On
October 21, 1998, both parties entered into a Sale and
Purchase Agreement (SPA). At the time of the foregoing
transactions, petitioners were well aware that CCC had a case
pending with the Supreme Court. The case was docketed as
GR No. 119712, entitled Asset Privatization Trust (APT) v.
Court of Appeals and Continental Cement Corporation.
First Issue:
Counterclaims and Joinder of Causes of Action.
Petitioners' Counterclaims Compulsory
Counterclaims are defined in Section 6 of Rule 6 of the Rules
of Civil Procedure as "any claim which a defending party may
have against an opposing party." They are generally allowed
in order to avoid a multiplicity of suits and to facilitate the
disposition of the whole controversy in a single action, such
that the defendant's demand may be adjudged by a
counterclaim rather than by an independent suit. The only
limitations to this principle are (1) that the court should have
jurisdiction over the subject matter of the counterclaim, and
(2) that it could acquire jurisdiction over third parties whose
presence is essential for its adjudication.10
A counterclaim may either be permissive or compulsory. It is
permissive "if it does not arise out of or is not necessarily
connected with the subject matter of the opposing party's
claim."11 A permissive counterclaim is essentially an
independent claim that may be filed separately in another
case.
A counterclaim is compulsory when its object "arises out of or
is necessarily connected with the transaction or occurrence
constituting the subject matter of the opposing party's claim
and does not require for its adjudication the presence of third
parties of whom the court cannot acquire jurisdiction." 12
Unlike permissive counterclaims, compulsory counterclaims
should be set up in the same action; otherwise, they would be
barred forever. NAMARCO v. Federation of United Namarco
Distributors13 laid down the following criteria to determine
whether a counterclaim is compulsory or permissive: 1) Are
issues of fact and law raised by the claim and by the
counterclaim largely the same? 2) Would res judicata bar a
subsequent suit on defendant's claim, absent the compulsory
counterclaim rule? 3) Will substantially the same evidence
support or refute plaintiff's claim as well as defendant's
counterclaim? 4) Is there any logical relation between the
claim and the counterclaim? A positive answer to all four
questions would indicate that the counterclaim is compulsory.
Adopted in Quintanilla v. CA14 and reiterated in Alday v. FGU
Insurance Corporation,15 the "compelling test of
compulsoriness" characterizes a counterclaim as compulsory
if there should exist a "logical relationship" between the main
claim and the counterclaim. There exists such a relationship
when conducting separate trials of the respective claims of
the parties would entail substantial duplication of time and
effort by the parties and the court; when the multiple claims
involve the same factual and legal issues; or when the claims
are offshoots of the same basic controversy between the
parties.
We shall now examine the nature of petitioners' counterclaims
against respondents with the use of the foregoing parameters.
Petitioners base their counterclaim on the following
allegations:
"Gregory T. Lim and Anthony A. Mariano were the persons
responsible for making the bad faith decisions for, and
causing plaintiff to file this baseless suit and to procure an
unwarranted writ of attachment, notwithstanding their
knowledge that plaintiff has no right to bring it or to secure
the writ. In taking such bad faith actions, Gregory T. Lim
was motivated by his personal interests as one of the
owners of plaintiff while Anthony A. Mariano was motivated
by his sense of personal loyalty to Gregory T. Lim, for which
reason he disregarded the fact that plaintiff is without any
valid cause.
"Consequently, both Gregory T. Lim and Anthony A. Mariano
are the plaintiff's co-joint tortfeasors in the commission of
the acts complained of in this answer and in the compulsory
counterclaims pleaded below. As such they should be held
jointly and solidarily liable as plaintiff's co-defendants to
those compulsory counterclaims pursuant to the Supreme
Court's decision in Sapugay v. Mobil.
xxx
xxx
xxx
LABRADOR, J.:
Appeal from a judgment or decision of the Court of First
Instance of Manila, Hon. Gustavo Victoriano, presiding,
sentencing defendants Concepcion Mining Company and Jose
Sarte to pay jointly and severally to the plaintiff the amount of
P7,197.26 with interest up to September 29, 1959, plus a
daily interest of P1.3698 thereafter up to the time the amount
is fully paid, plus 10% of the amount as attorney's fees, and
costs of this suit.
The present action was instituted by the plaintiff to recover
from the defendants the face of a promissory note the
pertinent part of which reads as follows:
Manila, March 12, 1954
NINETY DAYS after date, for value received, I promise to pay
to the order of the Philippine National Bank . . . .
In case it is necessary to collect this note by or through an
attorney-at-law, the makers and indorsers shall pay ten
percent (10%) of the amount due on the note as attorney's
fees, which in no case shall be less than P100.00 exclusive of
all costs and fees allowed by law as stipulated in the contract
of real estate mortgage. Demand and Dishonor Waived.
Holder may accept partial payment reserving his right of
recourse again each and all indorsers.
(Purpose mining industry)
CONCEPCION MINING COMPANY, INC.,
By:
(Sgd.) VICENTE LEGARDA
President
(Sgd.) VICENTE LEGARDA
(Sgd.) JOSE S SARTE
xxx
xxx
October 5, 1918
STREET, J.:
This appeal by bill of exceptions was brought to reverse a
judgment of the Court of First Instance of the Province of
Albay whereby said court has refused to allow a claim in favor
of the plaintiff, Roman Jaucian, against the state of
Hermenegilda Rogero upon the facts hereinbelow stated.
In October, 1908, Lino Dayandante and Hermenegilda Rogero
executed a private writing in which they acknowledged
themselves to be indebted to Roman Jaucian in the sum of
P13,332.33. The terms of this obligation are fully set out at
page 38 of the bill of exceptions. Its first clause is in the
following words:
We jointly and severally acknowledge our
indebtedness in the sum of P13,332.23 Philippine
currency (a balance made October 23, 1908) bearing
interest at the rate of 10 per cent per annum to
Roman Jaucian, of age, a resident of the municipality
In this court the appellant contends that the trial judge erred
(a) in refusing to give effect to the order made by the
Honorable P.M. Moir, dated April 13, 1914; and (b) in refusing
to order the administrator of the estate of Hermenegilda
Rogero to pay the appellant the amount demanded by him.
The contention with regard to the order of April 13, 1914, is
that no appeal from it having been taken, it became final.
An examination of the order in question, however, leads us to
conclude that it was not a final order, and therefore it was not
appealable. In effect, it held that whatever rights Jaucian
might have against the estate of Rogero were subject to the
performance of a condition precedent, namely, that he should
first exhaust this remedy against Dayandante. The court
regarded Dayandante. The court regarded Dayandante as the
principal debtor, and the deceased as a surety only liable for
such deficiency as might result after the exhaustion of the
assets of the principal co-obligor. The pivotal fact upon which
the order was based was the failure of appellant to show that
he had exhausted his remedy against Dayandante, and this
failure the court regarded as a complete bar to the granting of
the petition at that time. The court made no order requiring
the appellee to make any payment whatever, and that part of
the opinion, upon which the order was based, which contained
statements of what the court intended to do when the petition
should be renewed, was not binding upon him or any other
judge by whom he might be succeeded. Regardless of what
may be our views with respect to the jurisdiction of the court
to have granted the relief demanded by appellant in any
event, it is quite clear from what we have stated that the
order of April 13, 1914, required no action by the
administrator at that time, was not final, and therefore was
not appealable. We therefore conclude that no rights were
conferred by the said order of April 13, 1914, and that it did
not preclude the administrator from making opposition to the
petition of the appellant when it was renewed.
Appellant contends that his claim against the deceased was
contingent. His theory is that the deceased was merely a
surety of Dayandante. His argument is that as section 746 of
the Code of Civil Procedure provides that contingent claims
"may be presented with the proof to the committee," it follows
that such presentation is optional. Appellant, furthermore,
contends that if a creditor holding a contingent claim does not
see fit to avail himself of the privilege thus provided, there is
nothing in the law which says that his claim is barred or
prescribed, and that such creditor, under section 748 of the
Code of Civil Procedure, at any time within two years from the
time allowed other creditors to present their claims, may, if
his claim becomes absolute within that period present it to the
court for allowance. On the other hand counsel for appellee
contends (1) that contingent claims like absolute claims are
barred for non-presentation to the committee but (2) that the
claim in question was in reality an absolute claim and
therefore indisputably barred.
The second contention takes logical precedence over the first
and our view of its conclusiveness renders any consideration
of the first point entirely unnecessary to a determination of
the case. Bearing in mind that the deceased Hermenegilda
Rogero, though surety for Lino Dayandante, was nevertheless
bound jointly and severally with him in the obligation, the
following provisions of law are here pertinent.
NARVASA, J.:
Having met with no success in the Court of First Instance of
Rizal and in the Court of Appeals, the petitioners are now in
this Court in a third and final attempt to recover from the
Philippine Airlines, Inc. (hereafter, simply PAL) the value of
jewelry, other valuables and money taken from them by four
(4) armed robbers on board one of the latter's airplanes while
on a flight from Mactan City to Manila, as well as moral and
exemplary damages, attorney's fees and expenses of
litigation.
The petitioners accept the correctness of the basic facts
adopted by the Court of Appeals from the judgment of the
Court of First Instance, to wit: 1
1. . . . Norberto Quisumbing, Sr. and Gunther Leoffler were
among the of ... (PAL's) Fokker 'Friendship' PIC-536 plane in
its flight of November 6,1968 which left Mactan City at
about 7:30 in the evening with Manila for its destination.
2. After the plane had taken off, Florencio O. Villarin, a
Senior NBI Agent who was also a passenger of the said
plane, noticed a certain 'Zaldy,' a suspect in the killing of
Judge Valdez, seated at the front seat near the door leading
to the cockpit of the plane. A check by Villarin with the
passenger's ticket in the possession of flight Stewardess
Annie Bontigao, who was seated at the last seat right row,
revealed that 'Zaldy' had used the name 'Cardente,' one of
his aliases known to Villarin. Villarin also came to know from
the stewardess that 'Zaldy' had three companions on board
the plane."
3. Villarin then scribbled a note addressed to the pilot of the
plane requesting the latter to contact NBI duty agents in
Manila for the said agents to ask the Director of the NBI to
send about six NBI agents to meet the plane because the
suspect in the killing of Judge Valdez was on board (Exh.
'G'). The said note was handed by Villarin to the stewardess
who in tum gave the same to the pilot.
1998 of the Civil Code, denies them any recourse against PAL.
The Court also pointed out that... while it is true that the use of gems was not taken
advantage of by the robbers in gaining entrance to
defendant's ill-fated plane, the armed robbery that took
place constitutes force majeure for which defendant is not
liable because the robbers were able to gain entrance to the
plane with the guns they used already in their possession,
which fact could not have been prevented nor avoided by
the defendant since it was not authorized to search its
passengers for firearms and deadly weapons as shown in
Exhibits '6', '7', '8,' and '8-A.' As its robbery
constitutes force majeure, defendant is not liable.
The plaintiffs appealed to the Court of Appeals. 7 The Court
affirmed the trial court's judgment. 8 It rejected the argument
that "the use of arms or ... irresistible force" referred to in
Article 2001 constitutes force majeure only if resorted to gain
entry into the airplane, and not if it attends "the robbery
itself." The Court ruled that under the facts, "the highjackingrobbery was force majeure," observing that
... hijackers do not board an airplane through a blatant
display of firepower and violent fury. Firearms, handgrenades, dynamite, and explosives are introduced into the
airplane surreptitiously and with the utmost cunning and
stealth, although there is an occasional use of innocent
hostages who will be coldly murdered unless a plane is
given to the hijackers' complete disposal. The objective of
modern-day hijackers is to display the irresistible force
amounting to force majeure only when it is most effective
and that is when the jetliner is winging its way at Himalayan
altitudes and ill-advised heroics by either crew or
passengers would send the multi-million peso airplane and
the priceless lives of all its occupants into certain death and
destruction. ...
The Appellate Court also ruled that in light of the evidence
PAL could not be faulted for want of diligence, particularly for
failing "to take positive measures to implement Civil
Aeronautics Administration regulations prohibiting civilians
from carrying firearms on board aircrafts;" and that "the
absence of coded transmissions, the amateurish behaviour of
the pilot in dealing with the NBI agent, the allegedly open
cockpit door, and the failure to return to Mactan, in the light of
the circumstances of the case ..., were not negligent acts
sufficient to overcome the force majeure nature of the armed
robbery." In fact, the Court went on to says, 9
... it is illusive to assume that had these precautions been
taken, the hijacking or the robbery would not have
succeeded. The mandatory use of the most sophisticated
electronic detection devices and magnetometers, the
imposition of severe penalties, the development of
screening procedures, the compilation of hijacker
behavioural profiles, the assignment of sky marshals, and
the weight of outraged world opinion may have minimized
hijackings but all these have proved ineffective against truly
determined hijackers. World experience shows that if a
group of armed hijackers want to take over a plane in flight,
they can elude the latest combined government and airline
industry measures. And as our own experience in
Zamboanga City illustrates, the use of force to overcome
hijackers, results in the death and injury of innocent
passengers and crew members. We are not in the least bit
suggesting that the Philippine Airlines should not do
everything humanly possible to protect passengers from
hijackers' acts. We merely state that where the defendant
has faithfully complied with the requirements of
government agencies and adhered to the established
procedures and precautions of the airline industry at any
particular time, its failure to take certain steps that a
passenger in hindsight believes should have been taken is
not the negligence or misconduct which mingles with force
majeure as an active and cooperative cause.
Under the circumstance of the instant case, the acts of the
airline and its crew cannot be faulted as negligence. The
hijackers had already shown their willingness to kill. One
passenger was in fact killed and another survived gunshot
wounds. The lives of the rest of the passengers and crew
were more important than their properties. Cooperation
ROMERO, J.:p
This is a petition for review on certiorari of the decision of the
Court of Appeals affirming that of the Regional Trial Court of
Misamis Oriental, Branch 18, 1 which disposed of Civil Case
No. 10507 for collection of a sum of money and damages, as
follows:
WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is
adjudged solidarily liable and ordered to pay to the plaintiff
Philippine Bank of Communications, Cagayan de Oro City,
the amount of FIFTY THOUSAND PESOS (P50,000.00), with
interest thereon from May 5, 1983 at 16% per annum until
fully paid; and 6% per annum on the total amount due, as
liquidated damages or penalty from May 5, 1983 until fully
paid; plus 10% of the total amount due for expenses of
litigation and attorney's fees; and to pay the costs.
The counterclaim, as well as the cross claim, are dismissed
for lack of merit.
SO ORDERED.
Petitioner's liability resulted from the promissory note in the
amount of P50,000.00 which he signed with Rene C. Naybe
and Gregorio D. Pantanosas on February 3, 1983, holding
themselves jointly and severally liable to private respondent
Philippine Bank of Communications, Cagayan de Oro City
branch. The promissory note was due on May 5, 1983.
SO ORDERED.
had against him or against any of the others for the remainder
which may be already demandable but the conditional
obligation or that which has not yet matured cannot be
demanded from any one of them. Article 1148 confirms the
rule which we now enunciate inasmuch as in case the total
claim is made by one creditor, which we believe improper if
directed against the debtor affected by the condition or the
term, the latter can make use of such exceptions as are
peculiarly personal to his own obligation; and if against the
other debtors, they mightmake use of those exceptions, even
though they are personal to the other, inasmuch as they
alleged they are personal to the other, inasmuch as they
alleged them in connection with that part of the
responsibility attaching in a special manner to the other." (8
Manresa, Sp. Civil Code, 196.)
Article 1148 of the Civil Code. "The solidary debtor may
utilize against the claims of the creditor of the defenses
arising from the nature of the obligation and those which are
personal to him. Those personally pertaining to the others
may be employed by him only with regard to the share of the
debt for which the latter may be liable."
Gregorio Yulo cannot allege as a defense to the action that it
is premature. When the suit was brought on March 27, 1911,
the first installment of the obligation had already matured of
June 30, 1910, and with the maturity of this installment, the
first not having been paid, the whole debt had become
mature, according to the express agreement of the parties,
independently of the resolutory condition which gave the
creditor the right to demand the immediate payment of the
whole debt upon the expiration of the stipulated term of one
week allowed to secure from Mariano Yulo the ratification and
confirmation of the contract of August 12, 1909.
Neither could he invoke a like exception for the shares of his
solidary codebtors Pedro and Concepcion Yulo, they being in
identical condition as he.
But as regards Francisco, Manuel, and Carmen Yulo, none of
the installments payable under their obligation, contracted
later, had as yet matured. The first payment, as already
stated, was to mature on June 30, 1912. This exception or
personal defense of Francisco, Manuel, and Carmen Yulo "as to
the part of the debt for which they were responsible" can be
sent up by Gregorio Yulo as a partial defense to the action.
The part of the debt for which these three are responsible is
three-sixths of P225,000 or P112,500, so that Gregorio Yulo
may claim that, even acknowledging that the debt for which
he is liable is P225,000, nevertheless not all of it can now be
demanded of him, for that part of it which pertained to his
codebtors is not yet due, a state of affairs which not only
prevents any action against the persons who were granted
the term which has not yet matured, but also against the
other solidary debtors who being ordered to pay could not
now sue for a contribution, and for this reason the action will
be only as to the P112,500.
Against the propriety and legality of a judgment against
Gregorio Yulo for this sum, to wit, the three-sixths part of the
debt which forms the subject matter of the suit, we do not
think that there was any reason or argument offered which
sustains an opinion that for the present it is not proper to
order him to pay all or part of the debt, the object of the
action.
It has been said in the brief of the appellee that the
prematurity of the action is one of the defenses derived from
the nature of the obligation, according to the opinion of the
commentator of the Civil Code, Mucius Scaevola, and
consequently the defendant Gregorio Yulo may make use of it
in accordance with article 1148 of the said Code. It may be so
and yet, taken in that light, the effect would not be different
from that already stated in this decision; Gregorio Yulo could
not be freed from making any payment whatever but only
from the payment of that part of the debt which corresponds
to his codebtors Francisco, Manuel, and Carmen. The same
author, considering the case of the opposing contention of
two solidary debtors as to one of whom the obligation is pure
and unconditional and as to the other it is conditional and is
not yet demandable, and comparing the disadvantages which
must flow from holding that the obligation is demandable with
xxx
xxx
DECISION
(b) Labor Cost and Rental of Crane - 26,965.78
DEL CASTILLO, J.:
"Except as provided by law or by stipulation, one is entitled to
an adequate compensation only for such pecuniary loss
suffered by him as he has duly proved. Such compensation is
referred to as actual or compensatory damages." 1
This Petition for Review on Certiorari2 under Rule 45 of the
Rules of Court assails the Decision3 dated August 25, 2005
and the Resolution4 dated February 16, 2006 of the Court of
Appeals (CA) in CA-G.R. CV No. 58551.
Factual Antecedents
Sometime in July 1990, petitioner Continental Cement
Corporation (CCC),
a corporation engaged in the business of producing
cement,5 obtained the services of respondents6 Asea Brown
Boveri, Inc. (ABB) and BBC Brown Boveri, Corp. to repair its
160 KW Kiln DC Drive Motor (Kiln Drive Motor). 7
On October 23, 1991, due to the repeated failure of
respondents to repair the Kiln Drive Motor, petitioner filed
with Branch 101 of the Regional Trial Court (RTC) of Quezon
City a Complaint8 for sum of money and damages, docketed
as Civil Case No. Q-91-10419, against respondent
corporations and respondent Tord B. Eriksson (Eriksson), VicePresident of the Service Division of the respondent
ABB.9 Petitioner alleged that:
4. On July 11, 1990, the plaintiff delivered the 160 KW Kiln
DC Drive Motor to the defendants to be repaired under PO
No. 17136-17137, x x x
The defendant, Tord B. Eriksson, was personally directing
the repair of the said Kiln Drive Motor. He has direction and
control of the business of the defendant corporations.
Apparently, the defendant Asea Brown Boveri, Inc. has no
separate personality because of the 4,000 shares of stock,
3996 shares were subscribed by Honorio Poblador, Jr. The
four other stockholders subscribed for one share of stock
each only.
5. After the first repair by the defendants, the 160 KW Kiln
Drive Motor was installed for testing on October 3, 1990. On
October 4, 1990 the test failed. The plaintiff removed the
DC Drive Motor and replaced it with its old motor. It was
only on October 9, 1990 that the plaintiff resumed
operation. The plaintiff lost 1,040 MTD per day from October
5 to October 9, 1990.
6. On November 14, 1990, after the defendants had
undertaken the second repair of the motor in question, it
was installed in the kiln. The test failed again. The plaintiff
resumed operation with its old motor on November 19,
1990. The plaintiff suffered production losses for five days
at the rate of 1,040 MTD daily.
7. The defendants were given a third chance to repair the
160 KW Kiln DC Drive Motor.1avvphi1 On March 13, 1991,
the motor was installed and tested. Again, the test failed.
The plaintiff resumed operation on March 15, 1991. The
plaintiff sustained production losses at the rate of 1,040
MTD for two days.
8. As a consequence of the failure of the defendants to
comply with their contractual obligation to repair the 160
SO ORDERED.21
Petitioner moved for reconsideration22 but the CA denied the
same in its Resolution23 dated February 16, 2006.
Issues
Our Ruling
The petition has merit.
Petitioner and respondent ABB entered into a contract for the
repair of petitioners Kiln Drive Motor, evidenced by Purchase
Order Nos. 17136-37,33 with the following terms and
conditions:
a) Total Price: P197,450.00
b) Delivery Date: August 29, 1990 or six (6) weeks from
receipt of order and down payment34
c) Penalty: One half of one percent of the total cost or Nine
Hundred Eighty Seven Pesos and Twenty five centavos
(P987.25) per day of delay.
Respondent ABB, however, not only incurred delay in
performing its obligation but likewise failed to repair the Kiln
Drive Motor; thus, prompting petitioner to sue for damages.
Petitioner avers that every time the Kiln Drive Motor is tested,
petitioner had to rent a crane and pay for labor to install the
motor.42 But except for the Summary of Claims for
Damages,43 no other evidence was presented by petitioner to
show that it had indeed rented a crane or that it incurred labor
cost to install the motor.
xxx
xxx
xxx
xxx
P2,838,454.68
P 576,167.89
P4,581,692.10
P7,996,314.67
xxx
xxx
xxx
xxx
MEDIALDEA, J.:p
Petitioners seek a review on certiorari of the decision of the
Court of Appeals in CA-G.R. CV No. 09504 "Enrique Sy and
Country Bankers Insurance Corporation v. Oscar Ventanilla
Enterprises Corporation" affirming in toto the decision of the
Regional Trial Court, Cabanatuan City, Branch XXV, to wit:
WHEREFORE, the complaint of the plaintiff Enrique F. Sy is
dismissed, and on the counterclaim of the defendant O.
Ventanilla Enterprises Corporation, judgment is hereby
rendered:
1. Declaring as lawful, the cancellation and termination of
the Lease Agreement (Exh. A) and the defendant's re-entry
and repossession of the Avenue, Broadway and Capitol
theaters under lease on February 11, 1980;
2. Declaring as lawful, the forfeiture clause under paragraph
12 of the Id Lease Agreement, and confirming the forfeiture
of the plaintiffs remaining cash deposit of P290,000.00 in
favor of the defendant thereunder, as of February 11, 1980;
3. Ordering the plaintiff to pay the defendant the sum of
P289,534.78, representing arrears in rentals, unremitted
amounts for amusement tax delinquency and accrued
interest thereon, with further interest on said amounts at
the rate of 12% per annum (per lease agreement) from
December 1, 1980 until the same is fully paid;
4. Ordering the plaintiff to pay the defendant the amount of
P100,000.00, representing the P10,000.00 portion of the
monthly lease rental which were not deducted from the
cash deposit of the plaintiff from February to November,
1980, after the forfeiture of the said cash deposit on
February 11, 1980, with interest thereon at the rate of 12%
per annum on each of the said monthly amounts of
P10,000.00 from the time the same became due until it is
paid;
5. Ordering the plaintiff to pay the defendant through the
injunction bond, the sum of P100,000.00, representing the
P10,000.00 monthly increase in rentals which the defendant
failed to realize from February to November 1980 result
from the injunction, with legal interest thereon from the
finality of this decision until fully paid;
Previous Balance
Purchases (Payments)
10/27/2002
94,843.70
11/27/2002
98,465.41
(15,000)
12/31/2002
86,351.02
30,308.80
1/27/2003
119,752.28
2/27/2003
124,234.58
3/27/2003
129,263.13
4/27/2003
115,177.90
5/27/2003
119,565.44
(10,000.00)
6/29/2003
113,540.10
8,362.50 (7,000.00)
7/27/2003
118,833.49
8/27/2003
123,375.65
9/28/2003
128,435.56
(18,000.00)
10/28/2003
11/28/2003
12/28/2003
1/27/2004
141,518.34
No pronouncement as to costs.
SO ORDERED.12
Unconvinced, petitioner Macalinao filed a petition for review
with the CA, which was docketed as CA-G.R. SP No. 92031.
The CA affirmed with modification the Decision of the RTC:
WHEREFORE, the appealed decision is AFFIRMED but
MODIFIED with respect to the total amount due and interest
rate. Accordingly, petitioners are jointly and severally ordered
to pay respondent Bank of the Philippine Islands the following:
1. The amount of One Hundred Twenty Six Thousand
Seven Hundred Six Pesos and Seventy Centavos plus
interest and penalty charges of 3% per month from
January 5, 2004 until fully paid;
2. P10,000.00 as and by way of attorneys fees; and
3. Cost of Suit.
SO ORDERED.13
Although sued jointly with her husband, petitioner Macalinao
was the only one who filed the petition before the CA since
her husband already passed away on October 18, 2005.14
In its assailed decision, the CA held that the amount of PhP
141,518.34 (the amount sought to be satisfied in the demand
letter of respondent BPI) is clearly not the result of the recomputation at the reduced interest rate as previous higher
interest rates were already incorporated in the said amount.
Thus, the said amount should not be made as basis in
computing the total obligation of petitioner Macalinao.
Further, the CA also emphasized that respondent BPI should
not compound the interest in the instant case absent a
stipulation to that effect. The CA also held, however, that the
MeTC erred in modifying the amount of interest rate from 3%
monthly to only 2% considering that petitioner Macalinao
freely availed herself of the credit card facility offered by
respondent BPI to the general public. It explained that
contracts of adhesion are not invalid per se and are not
entirely prohibited.
Petitioner Macalinaos motion for reconsideration was denied
by the CA in its Resolution dated November 21, 2006. Hence,
petitioner Macalinao is now before this Court with the
following assigned errors:
I.
THE REDUCTION OF INTEREST RATE, FROM 9.25% TO 2%,
SHOULD BE UPHELD SINCE THE STIPULATED RATE OF
INTEREST WAS UNCONSCIONABLE AND INIQUITOUS, AND
THUS ILLEGAL.
II.
THE COURT OF APPEALS ARBITRARILY MODIFIED THE
REDUCED RATE OF INTEREST FROM 2% TO 3%, CONTRARY TO
THE TENOR OF ITS OWN DECISION.
III.
THE COURT A QUO, INSTEAD OF PROCEEDING WITH A
RECOMPUTATION, SHOULD HAVE DISMISSED THE CASE FOR
FAILURE OF RESPONDENT BPI TO PROVE THE CORRECT
AMOUNT OF PETITIONERS OBLIGATION, OR IN THE
ALTERNATIVE, REMANDED THE CASE TO THE LOWER COURT
FOR RESPONDENT BPI TO PRESENT PROOF OF THE CORRECT
AMOUNT THEREOF.
Our Ruling
The petition is partly meritorious.
The Interest Rate and Penalty Charge of 3% Per Month
or 36% Per Annum Should Be Reduced to 2% Per Month
or 24% Per Annum
In its Complaint, respondent BPI originally imposed the
interest and penalty charges at the rate of 9.25% per month
or 111% per annum. This was declared as unconscionable by
the lower courts for being clearly excessive, and was thus
reduced to 2% per month or 24% per annum. On appeal, the
CA modified the rate of interest and penalty charge and
increased them to 3% per month or 36% per annum based on
the Terms and Conditions Governing the Issuance and Use of
the BPI Credit Card, which governs the transaction between
petitioner Macalinao and respondent BPI.
In the instant petition, Macalinao claims that the interest rate
and penalty charge of 3% per month imposed by the CA is
iniquitous as the same translates to 36% per annum or thrice
the legal rate of interest.15 On the other hand, respondent BPI
asserts that said interest rate and penalty charge are
Stat
eme
nt
Date
Prev
ious
Bala
nce
10/2
7/20
02
94,8
43.7
0
11/2
7/20
02
94,8
43.7
0
12/3
1/20
02
79,8
43.7
0
1/27
/200
3
Purc
hase
s
(Pay
men
ts)
Bala
nce
Inte
rest
(1%
)
Pen
alty
Cha
rge
(1%
)
Total
Amo
unt
Due
for
the
Mon
th
94,8
43.7
0
948
.44
948
.44
96,7
40.5
8
(15,
000)
79,8
43.7
0
798
.44
798
.44
81,4
40.5
8
30,3
08.8
0
110,
152.
50
1,1
01.
53
1,1
01.
53
112,
355.
56
110,
152.
50
110,
152.
50
1,1
01.
53
1,1
01.
53
112,
355.
56
2/27
/200
3
110,
152.
50
110,
152.
50
1,1
01.
53
1,1
01.
53
112,
355.
56
3/27
/200
3
110,
152.
50
4/27
/200
3
92,1
52.5
0
5/27
/200
3
92,1
52.5
0
6/29
/200
3
82,1
52.5
0
7/27
/200
3
8/27
(18,
000.
00)
92,1
52.5
0
921
.53
921
.53
93,9
95.5
6
92,1
52.5
0
921
.53
921
.53
93,9
95.5
6
(10,
000.
00)
82,1
52.5
0
821
.53
821
.53
83,7
95.5
6
8,36
2.50
(7,0
00.0
0)
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
83,5
83,5
835
835
85,1
/200
3
15.0
0
15.0
0
.15
.15
85.3
0
9/28
/200
3
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
10/2
8/20
03
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
11/2
8/20
03
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
12/2
8/20
03
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
1/27
/200
4
83,5
15.0
0
83,5
15.0
0
835
.15
835
.15
85,1
85.3
0
83,5
15.0
0
14,
397
.26
14,
397
.26
112,
309.
52
TOT
AL
The Facts
On February 28, 1986, a "Contract of Lease" was executed by
Jose S. Menchavez, Juan S. Menchavez Sr., Juan S. Menchavez
Jr., Rodolfo Menchavez, Simeon Menchavez, Reynaldo
Menchavez, Cesar Menchavez, Charito M. Maga, Fe M. Potot,
Thelma R. Reroma, Myrna Ybaez, Sonia S. Menchavez, Sarah
Villaver, Alma S. Menchavez, and Elma S. Menchavez, as
lessors; and Florentino Teves Jr. as lessee.l^vvphi1.net The
pertinent portions of the Contract are herein reproduced as
follows:
"WHEREAS, the LESSORS are the absolute and lawful coowners of that area covered by FISHPOND APPLICATION No.
VI-1076 of Juan Menchavez, Sr., filed on September 20, 1972,
at Fisheries Regional Office No. VII, Cebu City covering an area
of 10.0 hectares more or less located at Tabuelan, Cebu;
xxxxxxxxx
"NOW, THEREFORE, for and in consideration of the mutual
covenant and stipulations hereinafter set forth, the LESSORS
and the LESSEE have agreed and hereby agree as follows:
"1. The TERM of this LEASE is FIVE (5) YEARS, from and after
the execution of this Contract of Lease, renewable at the
OPTION of the LESSORS;
"2. The LESSEE agrees to pay the LESSORS at the residence
of JUAN MENCHAVEZ SR., one of the LESSORS herein, the
sum of FORTY THOUSAND PESOS (P40,000.00) Philippine
Currency, annually x x x;
"3. The LESSORS hereby warrant that the above-described
parcel of land is fit and good for the intended use as
FISHPOND;
"4. The LESSORS hereby warrant and assure to maintain the
LESSEE in the peaceful and adequate enjoyment of the
lease for the entire duration of the contract;
x x x x x x x x x.5
The Contract itself stated that the area was still covered by a
fishpond application.38 Nonetheless, although petitioners
declared in the Contract that they co-owned the property,
their erroneous declaration should not be used against them.
A cursory examination of the Contract suggests that it was
drafted to favor the lessee. It can readily be presumed that it
was he or his counsel who prepared it -- a matter supported
by petitioners evidence.39 The ambiguity should therefore be
resolved against him, being the one who primarily caused it.40
The CA erred in finding that petitioners had failed to prove
actual knowledge of respondent of the ownership status of the
property that had been leased to him. On the contrary, as the
party alleging the fact, it was he who had the burden of
proving through a preponderance of evidence 41 -- that they
misled him regarding the ownership of the fishpond. His
evidence fails to support this contention. Instead, it reveals
his fault in entering into a void Contract. As both parties are
equally at fault, neither may recover against the other. 42
Liquidated Damages Not Proper
The CA erred in awarding liquidated damages,
notwithstanding its finding that the Contract of Lease was
void. Even if it was assumed that respondent was entitled to
reimbursement as provided under paragraph 1 of Article 1412
of the Civil Code, the award of liquidated damages was
contrary to established legal principles.1a\^/phi1.net
Liquidated damages are those agreed upon by the parties to a
contract, to be paid in case of a breach thereof. 43Liquidated
damages are identical to penalty insofar as legal results are
concerned.44 Intended to ensure the performance of the
principal obligation, such damages are accessory and
subsidiary obligations.45 In the present case, it was stipulated
that the party responsible for the violation of the terms,
conditions and warranties of the Contract would pay not less
than P50,000 as liquidated damages. Since the principal
obligation was void, there was no contract that could have
been breached by petitioners; thus, the stipulation on
liquidated damages was inexistent. The nullity of the principal
obligation carried with it the nullity of the accessory obligation
of liquidated damages.46
As explained earlier, the applicable law in the present factual
milieu is Article 1412 of the Civil Code. This law merely allows
innocent parties to recover what they have given without any
obligation to comply with their prestation. No damages may
be recovered on the basis of a void contract; being
nonexistent, the agreement produces no juridical tie between
the parties involved. Since there is no contract, the injured
party may only recover through other sources of obligations
such as a law or a quasi-contract.47 A party recovering through
these other sources of obligations may not claim liquidated
damages, which is an obligation arising from a contract.
WHEREFORE, the Petition is GRANTED and the assailed
Decision and Resolution SET ASIDE. The Decision of the trial
court is hereby REINSTATED.
No pronouncement as to costs.
SO ORDERED.