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VILLARIN AND
FIRST CARGOMASTERS CORPORATION, CEBU ARRASTRE & STEVEDORING
SERVICES CORPORATION AND GUERRERO G. DAJAO, RESPONDENTS.
NATURE OF THE CASE: Quasi-delict, without stating the precise nature of the obligation involved in
the case at bar/ /corresponding degree of fairness and good faith pursuant to an existing quasi-contract or
implied contract// Specific Performance
Lorenzo Shipping Corporation (LSC) is a domestic corporation which operates interisland shipping
vessels in the Philippines. On the other hand, Cebu Arrastre and Stevedoring Services Corporation
(CASSCOR) provides arrastre and stevedoring services for LSC's ships calling at the Port of Cebu under
a Cargo Handling Contract dated March 8, 1997. On February 20, 1997, Guerrero G. Dajao (Dajao), as
President and General Manager of CASSCOR, entered into a Memorandum of Agreement (MOA) with
Serafin Cabanlit (Cabanlit) and Florencio Villarin (Villarin). Under the MOA, Villarin and Cabanlit
undertook to operate and manage the arrastre and stevedoring operations of CASSCOR with respect to
LSC's vessels. CASSCOR was entitled to 5% of the proceeds of the operation, while Dajao was entitled
to a 2% royalty. 10% was allocated for taxes, wages and other necessary expenses; and another 10% was
earmarked for the share of the Philippine Ports Authority. Villarin and Cabanlit alleged that the rest of
the proceeds, amounting to 73%, were due to them. Alleging failure on the part of CASSCOR and Dajao
to remit their shares from July 1999 onwards, Villarin, Cabanlit, and FCC (Villarin, et al.) filed a
Complaint for specific performance and accounting against CASSCOR and Dajao. Complaint was
subsequently amended on June 20, 2000 to implead LSC as a nominal defendant; to include a prayer for a
writ of preliminary attachment against CASSCOR and Dajao; and to include a prayer for mandatory
injunction against LSC. CASSCOR and Dajao filed their Answer on June 27, 2000, while LSC filed its
Answer on August 27, 2001. However, on September 22, 2003, Villarin, et al. filed a Second Amended
Complaint. The case was then re-raffled to Branch 6 of the RTC of Cebu City, On January 26, 2004,
Villarin, et al. filed a motion for issuance of a writ of preliminary attachment. On May 11, 2004, Judge
Anacleto Caminade (Judge Caminade) of RTC Branch 6 granted the motion and ordered the issuance of a
writ of preliminary attachment upon the posting by Villarin, et al. of a Php 150,000.00 bond. On May 17,
2004, LSC filed a Motion for Clarification/Reconsideration, arguing that it cannot be subjected to the
attachment writ. However, before the court can act on LSC's Motion for Clarification/Reconsideration, a
Notice of Garnishment was served on LSC on May 20, 2004, prompting it to file a motion to post a
counter-bond. On June 1, 2004, Judge Caminade issued an order granting LSC's motion to post a counter-
bond. Hence, LSC and CASSCOR both posted counter-bonds worth Php 150,000.00 each, resulting in the
discharge of the writ of attachment. Judge Caminade, ruling on LSC's Motion for
Clarification/Reconsideration, issued an Order 13clarifying that the writ of attachment issued under the
Order dated May 11, 2004 is directed at all the defendants, including LSC. Aggrieved, LSC filed a
petition for certiorari with the CA claiming that Judge Caminade committed grave abuse of discretion in
subjecting LSC to the attachment writ since it had no contract or juridical relation with Villarin and the
other plaintiffs.
On November 23, 2004, Villarin, et al. filed a Verified Motion to Require Defendant LSC to Deposit
in Court Money Held in Trust. On August 12, 2005, Judge Bienvenido R. Saniel, Jr. (Judge Saniel) of
RTC Branch 20 issued an Order (Order to Deposit) granting the November 23, 2004 motion. The Order
noted that the counsels for Villarin, et al. and CASSCOR and Dajao have subsequently agreed and jointly
manifested that the money requested to be deposited will be so deposited in court.
On September 6, 2005, Villarin, et al. moved for the issuance of a writ of execution to enforce Judge
Saniel's Order to Deposit. On the other hand, LSC moved for reconsideration of the Order to Deposit on
October 4, 2005. On March 9, 2006, Judge Saniel issued an Order granting LSC's motion for
reconsideration and denying Villarin's motion for execution. Aggrieved, Villarin, et al. filed a petition
for certiorari with the CA (the Deposit Case), asserting that Judge Saniel committed grave abuse of
discretion in granting LSC's motion for reconsideration. The CA ruled that Judge Saniel committed grave
abuse of discretion in granting LSC's motion on the ground that the counterbond was sufficient to protect
the interests of the plaintiffs. The CA, in upholding the trial court, ruled that the complaint contained
averments which allege fraud on the part of all the defendants, including LSC. As regards LSC's assertion
of the absence of privity of contract, the CA ruled that LSC is a beneficiary of the contract between
Villarin and CASSCOR; and that Section 1(d) of Rule 57 does not require the existence of a contractual
obligation.
ISSUES: (1) Whether or not THE CA SERIOUSLY ERRED IN AFFIRMING THE ORDER OF THE
COURT A QUO IN EXTENDING THE WRIT OF PRELIMINARY ATTACHMENT AS TO INCLUDE
LSC, WHICH WAS MERELY DESCRIBED AS A NOMINAL DEFENDANT,
RULING: The Court Does not agree. A writ of preliminary attachment is a provisional remedy issued
upon order of the court where an action is pending to be levied upon the property or properties of the
defendant therein, the same to be held thereafter by the Sheriff as security for the satisfaction of whatever
judgment might be secured in said action by the attaching creditor against the defendant. It is governed by
Rule 57 of the Revised Rules of Court.
It must be borne in mind that Villarin's action is for specific performance. The main thrust of his
complaint is to compel Dajao and CASSCOR to observe the provisions of the MOA. All the other
remedies sought by the complaint are merely ancillary to this primary relief. The MOA, therefore, is the
obligation upon which Villarin's action is brought; hence the obligation sought to be upheld in this case
is ex contractu. Pertinently, Article 1311 of the New Civil Code provides that "[c]ontracts take effect only
between the parties, their assigns and heirs, except in case where the rights and obligations arising from
the contract are not transmissible by their nature, or by stipulation or by provision of law." In the case at
bar, the MOA was entered into by Dajao (as CASSCOR President) on one hand, and Villarin, et al. on the
other. LSC cannot be guilty of fraud within the contemplation of Section 1(d), Rule 57 of the Rules of
Court because it did not enter into any agreement or contract with Villarin. In the absence of any
assignment of rights to LSC, the MOA can only bind the parties thereto. Not being a party to the MOA,
LSC cannot be subjected to an attachment writ on the basis of Section 1(d).The Court emphasizes that it
cannot make an authoritative characterization of the juridical relation between LSC and Villarin, so as to
not preempt any ruling of the RTC Branch 20 in Cebu City in the main controversy. Be that as it may, the
Court shall make an initial determination herein if only to resolve the issue on the propriety of the
issuance of provisional remedies by the trial court. based on jurisprudence, a deposit order is an
extraordinary provisional remedy whereby money or other property is placed in custodia legis to ensure
restitution to whichever party is declared entitled thereto after court proceedings. It is extraordinary
because its basis is not found in Rules 57 to 61 of the Rules of Court on Provisional Remedies but rather,
under Sections 5(g) and 6 of Rule 135 of the same Rules pertaining to the inherent power of every court
"[t]o amend and control its process and orders so as to make them conformable to law and justice;" as
well as to issue "all auxiliary writs, processes and other means necessary" to carry its jurisdiction into
effect.
NATURE OF ACTION: Obligation other than delict. Article 1157 of the Civil Code enumerates these
other sources of obligation, Extinguishment of Criminal and Civil Liability.
The Court adopted the Decision dated November 29,2016 of the Court of Appeals (CA) in CA-G.R.
CR HC No. 01430 finding accused-appellants Edgar Robles (Edgar) and Wilfredo Robles (accused-
appellants) guilty beyond reasonable doubt of the crime of Murder, the Court ADOPTS the findings of
fact and conclusions of law in the November 29, 2016 Decision of the CA in CA-G.R. HC No. 01430
and AFFIRMS with MODIFICATION said Decision finding accused-appellants Edgar Robles and
Wilfredo Robles GUILTY beyond reasonable doubt of the crime of Murder, defined and penalized under
Article 248 of the Revised Penal Code. The Court received a notice of death from the accused-appellant
counsel informing the Court of Edgar’s death on Dec, 15 2018 , which there is a need to modify the
Court’s decision dismissing the criminal case insofar as Edgar is concerned.
RULING: : Yes, As provided under Article 89 of the Revised penal code, Criminal liability is totally
extinguished by:
1.) By the death of the convict, as to the personal penalties and as to pecuniary penalties, liability
therefore is extinguished only when the death of the offender occurs before final judgment.
Also as provided in the Case of People vs Culas, the Supreme Court laid down the guidelines
with respect to civil and criminal liabilities in case of death:
1.) Death of the accused pending appeal of his conviction extinguishes his criminal liability as
well as the civil liability based solely thereon. As opined by Justice Regalado, “the death of the accused
prior final judgment terminates his criminal liability and only the civil liability directly arising from and
based solely on the offense committed.
2.) The claim for civil liability survives notwithstanding the death of accused, if the same may
also be predicated on a source of obligation other than delict. Article 1156 of the Civil code provided the
sources of obligation from which civil liability may results of the same act or omission.
3.) Where the civil liability survives, as explained in number 2 above, an action for recovery
therefor may be pursued but only by way of filing a separate civil action may be enforced either against
the executor/administrator or the estate of the accused, depending on the source of obligation upon which
the same is based as explained above.
4.) Finally the private offended party need not fear a forfeiture of his right to file this separate civil
action by prescription, in cases where during the prosecution of the criminal action and prior to its
extinction, the private-offended party instituted together therewith the civil action. In such case, the
statute of limitations on the civil liability is deemed interrupted during the pendency of the criminal case,
conformably with provision of Art. 1155 of NCC that should thereby avoid any apprehension on a
possible privation of right by prescription.
Thus, upon Edgar's death prior to his final conviction, the criminal action against him is
extinguished. Consequently, the civil action instituted therein for the recovery of the civil liability ex
delicto as to him is ipso facto extinguished, grounded as it is on the criminal action. However, it is well to
clarify that Edgar's civil liability in connection with his acts against the victim may be based on sources
other than delicts; in which case, the victim's heirs may file a separate civil action against Edgar's estate,
as may be warranted by law and procedural rules
G.R. No. 227704, April 10, 2019
That on November 15, 2005, in Pasig City, and within the jurisdiction of the Honorable
Court, accused Susan Sayo, willfully and unlawfully, did then and there, recruit and transport
minors [AAA], 15 years old, [BBB] 16 years old, together with [CCC ], by taking advantage of
their vulnerability, for the purpose of prostitution and sexual exploitation; while accused Alfredo
Roxas, in conspiracy with accused Sayo, did then and there, willfully, and unlawfully, own,
manage and operate a room in his apartment in Pasig City used as a prostitution den, receive
and harbor said trafficked persons, also by taking advantage of their vulnerability and for the
purpose of prostitution and sexual exploitation.
On the substantive issue, the RTC held that the prosecution was able to prove the guilt
of accused-appellants beyond reasonable doubt. The testimonies of AAA, BBB, and. CCC were
clear, categorical, and corroborative of each other's testimony. The testimony of the arresting
officer, PO2 Anthony Ong (PO2 Ong), was also categorical and straightforward regarding the
investigation, pre-surveillance, entrapment procedure, and arrest of the accused-appellants.
THE RTC Found Sayo guilty beyond reasonable doubt, and it was affirmed by the Court of
Appeals, with modification awarding, exemplary and moral damages.
Accused-appellants filed a Notice of Appeal on July 30, 2015, which was given due course
by the CA in its Resolution dated August 20, 2015. Both plaintiff-appellee and accused-
appellants manifested before the Court that they would not be filing supplemental briefs. Sayo
had died on November 30, 2011 due to multiple organ failure, secondary to cervical cancer,
attaching thereto the Certificate of Death.
ISSUE: Whether or Not The civil and Criminal Liability of Sayo should be extinguished.
Ruling: Yes, As provided under Article 89 of the Revised penal code, Criminal liability is totally
extinguished by:
1.) By the death of the convict, as to the personal penalties and as to pecuniary
penalties, liability therefore is extinguished only when the death of the offender occurs before
final judgment.
Also as provided in the Case of People vs Bayotas, the Supreme Court laid down the
guidelines with respect to civil and criminal liabilities in case of death:
1.) Death of the accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon. As opined by Justice Regalado, “the
death of the accused prior final judgment terminates his criminal liability and only the civil liability
directly arising from and based solely on the offense committed.
2.) The claim for civil liability survives notwithstanding the death of accused, if the same
may also be predicated on a source of obligation other than delict. Article 1156 of the Civil code
provided the sources of obligation from which civil liability may results of the same act or
omission.
3.) Where the civil liability survives, as explained in number 2 above, an action for
recovery therefor may be pursued but only by way of filing a separate civil action may be
enforced either against the executor/administrator or the estate of the accused, depending on
the source of obligation upon which the same is based as explained above.
4.) Finally the private offended party need not fear a forfeiture of his right to file this separate
civil action by prescription, in cases where during the prosecution of the criminal action and prior
to its extinction, the private-offended party instituted together therewith the civil action. In such
case, the statute of limitations on the civil liability is deemed interrupted during the pendency of
the criminal case, conformably with provision of Art. 1155 of NCC that should thereby avoid any
apprehension on a possible privation of right by prescription.
However, Roxas shall be held liable for the crime that he committed as provided for by
the RTC and affirmed by the CA. it is only Sayo’s liability which is extinguish and cannot be
applied to Roxas as well.
GR NO 243245, april 1, 2019
Mary Rose Kung Vs Lilian Tan et. Al.
The Register of Deeds refused to annotate the writ of Execution because the said
property was already sold by Tan to San Diego. Petitioner elevated the cse to the LRA
which affirmed the decision of the Register of Deeds. The CA then denied the appeal.
Upon verification, the said TCT no 263145 had likewise been cancelled and TCT no.
284484 was issued in the name of Tan brothers having been sold to them by San Diegp
Sometime in 2008. Petitioner filed this case for nullification of TCT no. 284484 and
reconveyance of TCT no. 190462 alleging fraud in the transfer of the property to
frustrate her claim. Which if it will not be nullified the decision of specific performance
cannot be executed. The RTC denied the petition, first in violation of forum shopping
due to the pendency of the criminal case, second the writ of execution was not issued
since the TCT was no longer under the name of Tan, and third, the loan obtained did
not benefit other defendants, and failed to adduce evidence for the alleged conspiracy
of the defendants to defraud her. The CA also held that the petitioner failed to prove
that the sale of the property to Tan brothers was fraudulent. Aggrieved, petitioner filed
this appeal.
Ruling: No, The court held in the negative. Article 1387 provides a presumption that
“alienations by onerous title are also presumed fraudulent when made by persons
against whom some judgment has been rendered in any instance or some writ of
attachment has been issued. To creditors seeking contract rescission on the ground of
fraudulent conveyance rests the onus of proving with evidence that such fraudulent
intent on the part of the debtor. Petitioner capitalizes on such issue which in effect is
not within the province of a petition for review on certiorari. As correctly provided by
the CA, the petitioner advance the argument that the registration of the sale between
San Diego and Tan brother was fraudulent because the copy of the deed of sale was not
presented in court. However the testimony of the officer from the Register of Deeds
confirmed that it could not have been cancelled and a new one is issued. The fact that
the deed of sale could not have been presented in court does not mean it does not
exist. Having failed to substantiate the claim of fraud. The petition should be denied.
FIRST DIVISION
G.R. No. 190682, February 13, 2019
PAUL C. DAGONDON, PETITIONER, v. ISMAEL LADAGA, RESPONDENT.
BERSAMIN, C.J.:
In the early 1970's, the parcel of riceland consisting of 4,147 square meters
(subject property) owned by Jose L. Dagondon was placed under the coverage of
Operation Land Transfer (OLT) pursuant to Presidential Decree No. 27 (P.D. No. 27).
The respondent, who was the tenant of Jose L. Dagondon, was declared the beneficiary
of the coverage. The petitioner, one of the children of Jose L. Dagondon, filed a protest
with the Ministry of Agrarian Reform (MAR) on the basis that the subject property was
exempt from the coverage of P.D. No. 27 because the income derived therefrom had
been inadequate to support the landowner and his family. Both the Provincial and
Regional Offices of the MAR denied the protest. Consequently, the petitioner appealed
to the MAR, which also denied the protest through its order dated February 28, 1986
issued by then Minister Conrado Estrella (Estrella Order).
ISSUE: Whether or not the appellatecourt erred when it reopened the exemption of the
subject lot from PD27
Ruling: Yes because, Settled is the rule that a judgment that is final and executory
becomes immutable and unalterable, and may no longer be modified in any respect,
except to correct clerical errors, or to make nunc pro tunc entries, or when it is a void
judgment. Outside of these exceptions, the court that rendered the judgment only has
the ministerial duty to issue the writ of execution. The judgment also becomes the law
of the case regardless of any claim that it is erroneous. Any amendment or alteration
that substantially affects the final and executory judgment is null and void for lack of
jurisdiction, and the nullity extends to the entire proceedings held for that purpose.
Moreover, we cannot agree with the CA that the Estrella Order had attained
finality because of the failure of the petitioner to timely challenge it. That was
presumptuous, and had no foundation in the records. In this regard, we adopt with
approval and reiterate the following observation made by the OP in its decision dated
September 12, 2002, which entirely debunked the CA's presumptuousness
It is legally presumed that official duty has been regularly performed in the
absence of contrary evidence (Section 3[m], Rule 131 of the Rules of Court). There
being no showing that the letter for reconsideration was filed beyond the reglementary
period, this Office is inclined to believe that Secretary Garilao had not been divested of
authority and jurisdiction to take cognizance of the case and act on the same. The
presumption of regularity in the performance of official duty must prevail. Such being
the case, the action of Secretary Garilao should be accorded due respect and need not
be disturbed.
NATURE OF THE CASE: unenforceable due to lack of clear evidence, it is, however, apparent
due to the fact that he eventually agreed/
Sometime in 2001, Sanidad alleged that she and respondent, together with the latter's brother,
Julius M. Aguas (Julius), entered into a verbal agreement for the sale of the co-owned subject
property of the latter located at No. 2 Gonzales Drive, Doña Pilar Subdivision, Batasan Hills,
Quezon City. They agreed that the subject property will be sold for P1,500,000.00 and to be
paid in installments. Sanidad averred that she has been residing in the said subject property
since 1983. thus, from 2001 to 2011, Sanidad claimed that she has made several payments to
respondent and Julius by depositing in their BPI bank accounts. Sanidad also alleged that while
she has been depositing payments in their bank accounts, no acknowledgment receipt was ever
issued to her. She, however, maintained that she has deposited a total payment of One Million
One Hundred Fifty-Two Thousand Pesos (P1,152,000.00) on respondent's and Julius's BPI
bank accounts, as evidenced by the deposit slips as proof of payments. However, Sanidad
lamented that respondent took advantage of his legal knowledge as a lawyer and employed
several tactics to defraud her. She claimed that respondent, after receiving the total amount of
P1,152,000.00 from her, sent her demand letters and threatened her with eviction. She added
that after she deposited her payments in respondent's bank account, the latter also avoided
meeting her and became unreachable. Sanidad avened that she would receive telephone calls
from him pressuring her to immediately vacate the property or she will be evicted.
Feeling aggrieved, Sanidad filed the instant disbarment complaint against respondent.
respondent alleged that Sanidad's allegations are bereft of factual basis. He averred that
Sanidad has been a tenant of the subject property since 1980 whose lease had long lapsed and
is facing eviction for non-payment of rentals. He further asserted that Sanidad's occupation of
the subject property was by mere tolerance, and because her eviction from the subject property
was imminent, she allegedly fabricated lies against him.Respondent also claimed that the
instant disbarment case, along with a civil and criminal complaint against him and his brother, to
wit: (1) Action for Specific Performance and Damages, docketed as Civil Case No. Q-1271807,
entitled Paz C. Sanidad v. Atty. Joseph M. Aguas and Julius Aguas, filed on August 17, 2012
before the Regional Trial Court of Quezon City, Branch 224; and (2) Complaint for Estafa
docketed as XV-03-13B-01953 filed on February 14, 2013 before the City Prosecutor of Quezon
City, were all meant to merely harass him.
Respondent further explained that from 2001 until October 2010, Sanidad merely paid
P5,468.75 as rentals. He claimed that it was only in 2010 that they agreed on the sale of the
subject property for an amount of One Million. Five Hundred Thousand Pesos (P1,500,000.00)
but Sanidad failed to pay the said amount, thus, she was given an eviction notice. Respondent
maintained that all of Sanidad's payments made between 2001 to 2010 were just payment for
the rental of the subject property.
respondent, however, manifested that he and Sanidad mutually agreed to amicably settle
which resulted to the dismissal of the civil case which the latter filed against him. He added that
he had already turned over the title of the subject property to Sanidad even without receiving a
single centavo as payment. He submitted a photocopy of the acknowledgment receipt signed by
Sanidad's counsel which showed that the latter already received the (1) absolute deed of sale of
the subject real property; (2) motion to withdraw IBP case (Aguas v. Camacho); (3)
Compromise Agreement with Joint Motion to Dismiss (Br. 224, RTC QC) and (4) the Owner's
Duplicate Certificate of Transfer Certificate of Title No. 48029. However, respondent lamented
that while he agreed to amicably settle because he was of the understanding that all the cases
filed against him would be dismissed, only the civil case was dismissed. Finally, respondent
maintained that he did not abuse or took advantage of his position as a lawyer in his dealings
with complainant. the IBP-CBD found respondent to have indeed used his legal knowledge to
defraud and mislead Sanidad by sending her demand letters to vacate the subject property
despite the sale of the same and payments made to him.
ISSUE: WHETHER OR NOT there is a contract between Sanidad and the petitioner
First, we find substantial evidence that Sanidad indeed entered into a contract of
sale, albeit verbal, with respondent by showing proof of payments made to the latter. She
presented copies of bank deposit slips as evidence that she has been depositing her payments
for the sale of the subject property under the BPI bank accounts of respondent and Julius;
Second, as observed by the IBP, respondent's allegations that the payments were for rentals
and his denial of the existence of the contract of sale between him and Sanidad fail to convince
considering that the amounts of deposits made by Sanidad in respondent's and Julius's bank
account were too substantial to be regarded as payments of rentals. Third, respondent's
allegation that it was only on August 17, 2010 when he entered into a contract of sale of the
subject real property with Sanidad which allegedly the latter was not able to pay for, is hard to
believe considering that the deposit of substantial amounts in his account and Julius's began as
early as 2001; Fourth, despite the receipt of payments from Sanidad, respondent apparently
used his legal knowledge when he sent a demand letter dated April 10, 2012 to vacate the
subject property; Finally, but equally important, we note that while respondent denied that he
entered into a contract of sale with Sanidad, records show that he eventually decided to turn
over the title of the subject property to Sanidad based on a settlement agreement that the cases
filed against him will be withdrawn. Clearly, this act of respondent is inconsistent with his claim
that Sanidad's payments were for rentals, and that no payment was actually made for the sale
of the property. espondent never denied that he received the deposits made by Sanidad, but he
never issued her any acknowledgment receipts. He claimed that Sanidad has been their tenant
since 1983 yet no contract of lease was ever presented to support his claim. It, thus, appears
that while respondent profited from receiving substantial amounts of moneys from Sanidad, the
latter, however, holds no concrete proof that he has been actually receiving her payments. The
interest of Sanidad, as buyer or lessee, as the case may be, was left fully unprotected. The lack
of transparency due to respondent's failure to give acknowledgment receipts and the lack of
written contracts is highly suspicious of deceit and fraud because it inevitably placed Sanidad in
a rather disadvantageous position. Worse, respondent has utilized the lack of written contracts
and acknowledgment receipts in threateni
On, December 23, 2008, petitioner DPRC filed a complaint for Collection of Sums of Money
against respondent MIAA before the RTC averring that on June 4, 1998, the parties entered into a
contract of lease whereby the former leased from the latter a 1,631.12- square meter parcel of land and a
630.88 square meter building both located at Pasay City. Petitioner was obliged to pay monthly rentals of
P75, 357.74 for the land and P33, 310.46 for the building, Petitioner DPRC faithfully complied with its
obligation to pay the monthly rentals since the start of the lease contract. Respondent suddenly changed
the rent of lease in pursuance to an Resolution Issued.
Petitioner initially refused to pay the increased rentals which was decreed without prior notice
and hearing. MIAA demanded its payment of P655,031.13 as rental arrears which was based on the
increase prescribed in resolution no. 98-30 with 2% interest compounded monthly, and also demanded the
amount of P655, 031.13.Petitioner refused to honor the change in tenor of the terms of contract and
insisted on paying the rental fee prescribed in their contractual arrangement, and paid it under protest. .
On June 22, 2006, MIAA required the payment of P645, 216.21 allegedly the balance of the
rentals from January to June 2006. Petitioner sent its reply to MIAA denying the unpaid obligation
reiterating that the rental could no longer be computed on the said resolution and demanded the refund on
its overpayment. MIAA ignored its demand, which forced DPRC to send a final written demand letter and
was constrained to file a complaint for Collection for Sums of money.
The CA found that the liability of respondent MIAA to petitioner DPRC for overpaid monthly
rentals was in the nature of a quasi-contract of solutio indebiti. And because petitioner DPRC's claim
against respondent MIAA is purportedly in the nature of solutio indebiti, the CA held that "the claim of
refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the
Civil Code." the CA found that, despite the records showing that petitioner DPRC made overpayment in
monthly rentals from December 11, 1998 up to December 5, 2005, such claim could not be fully awarded
to petitioner DPRC due to prescription. Unsatisfied, petitioner DPRC filed a Motion for Partial
Reconsideration , which was denied by the CA in the assailed Resolution.
ISSUE: WHETHER OR NOT THE CA ERRED IN MODIFYING THE AWARD RENDERED BY THE
RTC.
RULING: YES the Court held in the affirmative.
The elements of solution indebitie are the following, to wit;
(1) a payment is made when there exists no binding relation between the payor who has no duty to pay,
and the person who received the payment, and
(2) the payment is made through mistake, and not through liberality or some other cause. In the instant
case, the Court finds that the essential requisites of solutio indebiti are not present.
In Fact, DPRC paid in protest the said rentals due to the inadvertent increase in the monthly
lease rental which was not included in the lease agreement. Just because the Contract of Lease in itself
may be silent as to petitioner DPRC's entitlement to a refund does not mean that such claim for refund is
not provided for in the contract and cannot be asserted by petitioner DPRC. Specifically on lease
contracts, Article 1659 of the Civil Code, in relation to Article 1657, states that the aggrieved party in a
contract of lease may ask for indemnification when the other party fails to comply with his/her
obligations, one of which is to ask from the lessee the price of the lease only according to the terms
stipulated.
In the instant case, petitioner DPRC made the overpayments in monthly rentals from December
11, 1998 to December 5, 2005 not due to any mistake, error, or omission as to any factual matter
surrounding the payment of rentals. Nor did petitioner DPRC make the overpayments due to any
mistaken construction or application of a doubtful question of law. Considering that petitioner DPRC's
cause of action is not based on a quasi-contract and is instead founded on the enforcement of a contract,
the CA erred in applying Article 1145(2) of the Civil Code in the instant case.
Instead of the prescriptive period of six years for quasi-contracts, it is Article 1144 of the Civil
Code that finds application in the instant case. This Article provides that an action based on a written
contract must be brought within 10 years from the time the right of action accrues.
According to Article 1155 of the Civil Code, the prescription of actions is interrupted when a
written extrajudicial demand is made. And so, when written extrajudicial demand for refund of
overpayments was made by petitioner DPRC on July 27, 2006, not only was the prescriptive period to file
an action suspended; jurisprudence holds that "[t]he interruption of the prescriptive period by written
extrajudicial demand means that the said period would commence anew from the receipt of the demand
[,] x x x written extrajudicial demand wipes out the period that has already elapsed and starts anew the
prescriptive period. Hence CA erred in issuing the assailed Decision and Resolution insofar as it modified
the amount of respondent MIAA's liability.
Hence the petitioner is entitled for the full amount of the obligation.