CASESYLLABUSATTY.CRISOSTOMOA.

URIBE
PeachyAnneC.Apolo
I.OBLIGATIONSArts.11561304

eldemandado,comonicohijodelaprimitivadeudora,contrajoenfavordeldemandante,
nicoherederodelosprimitivosacreedores.SeadmitequelacantidaddeP1,000aquese
contraeestaobligacinesla

mismadeudadelamadredeldemandadoalospadresdeldemandante.
Aunquelaaccinpararecobrarladeudaoriginalhaprescritoyacuandoseinterpusola
A.InGeneral
demandaenestacausa,lacuestinquesesuscitaenestaapelacinesprincipalmenteladesi,
noobstantetalprescripcin,esprocedentelaaccinentablada.Sinembargo,nosefundala
1.Villaroelvs.Estrada
presenteaccinenlaobligacinoriginalcontradaporlamadredeldemandado,queyaha
prescrito,sinoenlaquecontrajoeldemandadoel9deagostode1930(ExhbitoB)alasumirel
[No.47362.Diciembre19,1940]
cumplimientodeaquellaobligacin,yaprescrita.Siendoeldemandadoelnicoherederodela
JUANF.VILLARROEL,recurrenteyapelante,contraBERNARDINOESTRADA,recurridoprimitivadeudora, con derecho a sucederla en su herencia, aquelladeudacontradaporsu
yapelado.
madrelegalmente,aunqueperdisueficaciaporprescripcin,ahoraes,sinembargo,parael
1. CONTRATOS; PROMESA NUEVA DE PAGAR UNA DEUDA PRESCRITA;una obligacin moral, que es consideracin suficiente a crear y hacer eficaz y exigible su
OBLIGACINMORALCOMOCONSIDERACINDEUNCONTRATO.Nose obligacinvoluntariamentecontradael9deagostode1930enelExhbitoB.
funda la presente accin en la obligacin original contrada por la madre del
Laregladequeunapromesanuevadepagarunadeudaprescritadebeserhechaporla
demandado,queyahaprescrito,sinoenlaquecontrajoeldemandadoel9deagosto misma personaobligada opor otralegalmente autorizadapor ella, noes aplicableal caso
de1930(ExhbitoB)alasumirelcumplimientodeaquellaobligacin,yaprescrita. presenteenquenoseexigeelcumplimientodelaobligacindelaobligadaoriginalmente,sino
Siendo el demandado el nico heredero de la primitiva deudora, con derecho a delquedespusquisovoluntariamenteasumirestaobligacin.
sucederlaensuherencia,aquelladeudacontradaporsumadrelegalmente,aunque
Seconfirmalasentenciaapelada,conlascostasalapelante.Asseordena.
perdisueficaciaporprescripcin,ahoraes,sinembargo,para lunaobligacin
Imperial,Daz,Laurel,yHorrilleno,MM.,estnconformes.
moral,queesconsideracinsuficienteacrearyhacereficazyexigiblesuobligacin
Sedeniegaelrecursoyseconfirmalasentencia.
voluntariamentecontradael9deagostode1930enelExhbitoB.
2.

ID.;ID.;ID.Laregladequeunapromesanuevadepagarunadeudaprescritadebe
serhechaporlamismapersonaobligadaoporotralegalmenteautorizadaporella,no
esaplicablealcasopresenteenquenoseexigeelcumplimientodelaobligacindela
obligadaoriginalmente,sinodelquedespusquisovoluntariamenteasumiresta
obligacin.

SOLICITUDderevisionmediantecertiorari.
LoshechosaparecenrelacionadosenladecisiondelTribunal.
D.FelipeAgoncilloenrepresentacindelrecurrenteapelante.
D.CrispnObenenrepresentacindelrecurridoapelado.
AVANCEA,Pres.:
El9demayode1912,AlejandraF.Callao,madredeldemandadoJuanF.Villarroel,obtuvode
losespososMarianoEstradaySeverinaunprstamodeP1,000pagaderoalcabodesieteaos
(ExhbitoA). Alejandra falleci, dejandocomo nicoherederoaldemandado. Los esposos
MarianoEstradaySeverinafallecierontambindejandocomonicoherederoaldemandante
BernardinoEstrada.El9deagostode1930,eldemandadosuscribiundocumento(Exhbito
B)porelcualdeclaraendeberaldemandantelacantidaddeP1,000,conunintersde12por
cientoalao.Estaaccinversasobreelcobrodeestacantidad."
ElJuzgadodePrimeraInstanciadeLaguna,enelcualseinterpusoestaaccin,conden
aldemandadoapagaraldemandantelacantidadreclamadadeP1,000consusintereseslegales
de12porcientoalaodesdeel9deagostode1930hastasucompletopago.Seapeldeesta
sentencia.
Senotarquelaspartesenlapresentecausason,respectivamente,losnicosherederosde
losacreedoresydeladeudoraoriginales.Estaaccinseejercitaenvirtuddelaobligacinque

2.Ansayvs.NDC

1.

2.

1.
2.

Article1423oftheNewCivilCodeclassifiesobligationsintocivilornatural."Civil
obligationsarearightofactiontocompeltheirperformance.Naturalobligations,notbeing
basedonpositivelawbutonequityandnaturallaw,donotgrantarightofactiontoenforce
theirperformance,butaftervoluntaryfulfillmentbytheobligor,theyauthorizetheretentionof
whathasbeendeliveredorrenderedbyreasonthereof".
[No.L13667.April29,1960]
Itisthusreadilyseenthatanelementofnaturalobligationbeforeitcanbecognizableby
PRIMITIVO ANSAY, ETC., ET AL., plaintiffs and appellants vs. THE BOARD OF
thecourtisvoluntaryfulfillmentbytheobligor.Certainlyretentioncanbeorderedbutonly
DIRECTORSOFTHENATIONALDEVELOPMENTCOMPANY,ETAL.,defendantsand
aftertherehasbeenvoluntaryperformance.Butheretherehasbeennovoluntaryperformance.
appellees.
1.NATURAL OBLIGATIONS; ELEMENT OF; VOLUNTARY FULFILLMENT; WHENInfact,thecourtcannotordertheperformance.
Atthispoint,wewouldliketoreiteratewhatwesaidinthecaseofPhilippineEducation
RETENTION CAN BE ORDERED.An element of natural obligation before it can he
Co.vs.CIRandtheUnionofPhilippineEducationCo.,Employees(NUL)(92Phil.,381;48
cognizablebythecourtisvoluntaryfulfillmentbytheobligor.Retentioncanbeorderedonly
Off.Gaz.,5278)
aftertherehasbeenvoluntaryperformance.
*******
ID.;BONUSNOTDEMANDABLEANDENFORCEABLE;EXCEPTION.Abonusisnota

demandableandenforceableobligation,exceptwhenitismadeapartofthewageorsalary
compensation.(PhilippineEducationCo. vs. CIRandtheUnionofPhilippineEducationCo. "Fromthelegalpointofviewabonusisnotademandableandenforceableobligation.Itisso
Employees (NLU), 92 Phil., 381; 48 Off. Gaz. 5278.) Hence, the grant thereof does not whenitismadeapartofthewageorsalarycompensation." Andwhileitistruethatthe
subsequentcaseofH.E.Heacockvs.NationalLaborUnion,etal.,95Phil.,553;50Off.Gaz.,
generallyconstituteanaturalobligationonthepartofthecompany.
4253,westatedthat:
APPEALfromanorderoftheCourtofFirstInstanceofManila.Gatmaitan,J.
"Evenifabonusisnotdemandablefornotformingpartofthewage,salaryorcompensationof
ThefactsarestatedintheopinionoftheCourt.
anemployee,thesamemaynevertheless,begrantedonequitableconsiderationaswhenitwas
CelsoA.Fernandezforappellants.
giveninthepast,thoughwithheldinsucceedingtwoyearsfromlowsalariedemployeesdueto
JuanC.Jimenezforappellees.
salaryincreases."
PARS,C.J.:
stillthefactsinsaidHeacockcasearenotthesameasintheinstantone,andhencetheruling
appliedinsaidcasecannotbeconsideredinthepresentaction.
OnJuly25,1956,appellantsfiledagainstappelleesintheCourtofFirstInstanceofManilaa
Premisesconsidered,theorderappealedfromisherebyaffirmed,withoutpronouncement
complaintprayingfora20%Christmasbonusfortheyears1954and1955.Thecourtaquoon
astocosts.
appellees'motiontodismiss,issuedthefollowingorder:
Bengzon,Padilla,Montemayor,BautistaAngelo,Labrador,Concepcin,Endencia,
"Consideringthemotiontodismissfiledon15August,1956,setforthismorning;considering
BarreraandGutirrezDavid,JJ.,concur.
thatatthehearingthereof,onlyrespondentsappearedthrucounselandtherewasnoappearance
Orderaffirmed.
fortheplaintiffsalthoughthecourtwaitedforsometimeforthem;considering,however,that
_____________
petitioners have submitted an opposition which the court will consider together with the
argumentspresentedbyrespondentsandtheExhibitsmarkedandpresented,namely,Exhibits1
to5,atthehearingofthemotiontodismiss;consideringthattheactioninbriefisonetocompel
respondentstodeclareaChristmasbonusforpetitionersworkersintheNationalDevelopment
Company;consideringthattheCourtdoesnotseehowpetitionersmayhaveacauseofactionto
securesuchbonusbecause:
"(a)Abonusisanactofliberalityandthecourttakesitthatitisnotwithinitsjudicialpowersto
commandrespondentstobeliberal;
"(b)Petitionersadmitthatrespondentsarenotunderlegaldutytogivesuchbonusbutthatthey
hadonlyaskthatsuchbonusbegiven.tothembecauseitisamoralobligationofrespondents
togivethatbutasthisCourtunderstands,ithasnopowertocompel apartytocomplywitha
moralobligation(Art.142,NewCivilCode).
"INVIEWWHEREOF,dismissed.Nopronouncementastocosts."
Amotionforreconsiderationoftheaforequotedorderwasdenied.Hencethisappeal.
Appellantscontendthatthereexistsacauseofactionintheircomplaintbecausetheir
claimrestsonmoralgroundsorwhatinbriefisdefinedbylawasanaturalobligation.
Sinceappellantsadmitthatappelleesarenotunderlegalobligationtogivesuchclaimed
bonus;thatthegrantarisesonlyfromamoralobligationorthenaturalobligationthatthey
discussedintheirbrief,thisCourtfeelsiturgenttoreproduceatthispoint,thedefinitionand
meaningofnaturalobligation.

3.DBPvs.Confessor

hadbeenbarredbyprescription.
On February 10,1940 spouses Patricio Confesor and Jovita Villafuerte obtained an
No.L48889.May11,1988.*
agriculturalloanfromtheAgriculturalandIndustrialBank(AIB),nowtheDevelopmentBank
DEVELOPMENTBANKOFTHEPHILIPPINES(DBP),petitioner,vs.THEHONORABLEofthePhilippines(DBP),inthesumofP2,000.00,PhilippineCurrency,asevidencedbya
MIDPANTAOL.ADIL,JudgeoftheSecondBranchoftheCourtofFirstInstanceofIloiloandpromissorynoteofsaiddatewherebytheyboundthemselvesjointlyandseverallytopaythe
SPOUSESPATRICIOCONFESORandJOVITAVILLAFUERTE,respondents.
accountinten(10)equalyearlyamortizations.Astheobligationremainedoutstandingand
CivilLaw;Prescription;Waiverofrighttoprescription;Caseatbar.Therighttounpaidevenafterthelapseoftheaforesaidtenyearperiod, Confesor, whowasbythena
prescriptionmaybewaivedorrenounced.Article1112ofCivilCodeprovides:Art.1112.member of the Congress of the Philippines, executed a second promissory note on April
Personswithcapacitytoalienatepropertymayrenounceprescriptionalreadyobtained,butnot 11,1961expresslyacknowledgingsaidloanandpromisingtopaythesameonorbeforeJune
therighttoprescribeinthefuture.Prescriptionisdeemedtohavebeentacitlyrenouncedwhen 15,1961.Thenewpromissorynotereadsasfollows
therenunciationresultsfromactswhichimplytheabandonmentoftherightacquired.Thereis IherebypromisetopaytheamountcoveredbymypromissorynoteonorbeforeJune15,
nodoubtthatprescriptionhassetinastothefirstpromissorynoteofFebruary10, 1940. 1961. Upon my failure to do so, I hereby agree to the foreclosure of my mortgage. It is
However,whenrespondentConfesorexecutedthesecondpromissorynoteonApril11,1961understoodthatifIcan secureacertificateofindebtednessfromthegovernmentofmyback
wherebyhepromisedtopaytheamountcoveredbythepreviouspromissorynoteonorbefore payIwillbeallowedtopaytheamountoutofit.
June 15, 1961, and upon failure to do so, agreed to the foreclosure of the mortgage, said Saidspousesnothavingpaidtheobligationonthespecifieddate,theDBPfiledacomplaint
respondenttherebyeffectivelyandexpresslyrenouncedandwaivedhisrighttotheprescription datedSeptember11,1970intheCityCourtofIloiloCityagainstthespousesforthepaymentof
oftheactioncoveringthefirstpromissorynote.ThisCourthadruledinasimilarcasethat"xtheloan.
xxwhenadebtisalreadybarredbyprescription,itcannotbeenforcedbythecreditor.Buta
AftertrialonthemeritsadecisionwasrenderedbytheinferiorcourtonDecember27,
newcontractrecognizingandassumingtheprescribeddebtwouldbevalidandenforceablexx 1976,thedispositivepartofwhichreadsasfollows:
x.Thus,ithasbeenheldWhere,therefore,apartyacknowledgesthecorrectnessofadebt WHEREFORE,premisesconsidered,thisCourtrendersjudgment,orderingthedefendants
andpromisestopayitafterthesamehasprescribedandwithfullknowledgeoftheprescription PatricioConfesorandJovitaVillafuerteConfesortopaytheplaintiffDevelopmentBankofthe
hetherebywaivesthebenefitofprescription.
Philippines,jointlyandseverally,(a)thesumofP5,760.96plusadditionaldailyinterestof
Same;Same;Same;Effectsofanewexpresspromisetopayadebt.ThisisnotamereP1.04fromSeptember17,1970,thedateComplaintwasfiled,untilsaidamountispaid;(b)the
caseofacknowledgmentofadebtthathasprescribedbutanewpromisetopaythedebt.The sum of P576.00 equivalent to ten (10%) of the total claim by way of attorneys fees and
consideration of the new promissory note is the preexisting obligation under the firstincidentalexpensesplusinterestatthelegalrateasofSeptember17,1970,untilfullypaid;and
promissorynote.Thestatutorylimitationbarstheremedybutdoesnotdischargethedebt.A (c)thecostsofthesuit.
newexpresspromisetopayadebtbarredxxxwilltakethecasefromtheoperationofthe DefendantsspousesappealedtherefromtotheCourtofFirstInstanceoflloilowhereinindue
statuteoflimitationsasthisproceedsuponthegroundthatasastatutorylimitationmerelybars course a decision was rendered on April 28, 1978 reversing the appealed decision and
the remedy and does not discharge the debt, there is something more than a mere moral dismissingthecomplaintandcounterclaimwithcostsagainsttheplaintiff.
obligationtosupportapromise,towitapreexistingdebtwhichisasufficientconsideration
Amotionforreconsiderationofsaiddecisionfiledbyplaintiffwasdeniedinanorderof
forthenewpromise;thenewpromiseuponthissufficientconsiderationconstitutes,infact,aAugust10,1978.
newcauseofaction.xxxxxItisthisnewpromise,eithermadeinexpresstermsordeduced
Hencethispetitionwhereinpetitionerallegesthatthedecisionofrespondentjudgeis
fromanacknowledgmentasalegalimplication,whichistoberegardedasreanimatingtheold contrarytolawandrunscountertodecisionsofthisCourtwhenrespondentjudge(a)refusedto
promise,orasimpartingvitalitytotheremedy(whichbylapseoftimehadbecomeextinct)and recognizethelawthattherighttoprescriptionmayberenouncedorwaived;and(b)thatin
thusenablingthecreditortorecoveruponhisoriginalcontract.
signing the second promissory note respondent Patricio Confesor can bind the conjugal
Same;Same;Same;ConjugalPartnership;Husbandasadministratoroftheconjugal partnership;orotherwisesaidrespondentbecameliableinhispersonalcapacity.
partnershipunderArt.165oftheCivilCode.WEdisagree.UnderArticle165oftheCivil
Thepetitionisimpressedwithmerit.
Code,thehusbandistheadministratoroftheconjugalpartnership.Assuchadministrator,all
The right to prescription may be waived or renounced. Article 1112 of Civil Code
debtsandobligationscontractedbythehusbandforthebenefitoftheconjugalpartnership,are provides:
chargeabletotheconjugalpartnership.Nodoubt,inthiscase,respondentConfesorsignedthe Art 1112. Persons with capacity to alienate property may renounce prescription already
second promissory note for the benefit of the conjugal partnership. Hence the conjugalobtained,butnottherighttoprescribeinthefuture. Prescriptionisdeemedtohavebeentacitly
partnershipisliableforthisobligation.
renouncedwhentherenunciationresultsfromactswhichimplytheabandonmentoftheright
PETITIONforcertioraritoreviewthedecisionoftheCourtofFirstInstanceofIloilo,Br.II. acquired.
Adil,J.
There is no doubt that prescription has set in as to the first promissory note of February
ThefactsarestatedintheopinionoftheCourt.
10,1940.However,whenrespondentConfesorexecutedthesecondpromissorynoteonApril
GANCAYCO,J.:
11,1961wherebyhepromisedtopaytheamountcoveredbythepreviouspromissorynoteon
orbeforeJune15,1961,anduponfailuretodoso,agreedtotheforeclosureofthemortgage,
Theissueposedinthispetitionforreviewoncertiorariisthevalidityofapromissorynote said respondent thereby effectively and expressly renounced and waived his right to the
prescriptionoftheactioncoveringthefirstpromissorynote.
whichwasexecutedinconsiderationofapreviouspromissorynotetheenforcementofwhich
ThisCourthadruledinasimilarcasethat

xxxwhenadebtisalreadybarredbyprescription,itcannotbeenforcedbythecreditor.Buta
newcontractrecognizingandassumingtheprescribeddebtwouldbevalidandenforceablexx
x."1
Thus,ithasbeenheld
Where,therefore,apartyacknowledgesthecorrectnessofadebtandpromisestopayitafter
thesamehasprescribedandwithfullknowledgeoftheprescriptionhetherebywaivesthe
benefitofprescription."2
Thisisnotamerecaseofacknowledgmentofadebtthathasprescribedbutanewpromiseto
paythedebt.Theconsiderationofthenewpromissorynoteisthepreexistingobligationunder
thefirstpromissorynote.Thestatutorylimitationbarstheremedybutdoesnotdischargethe
debt.
Anewexpresspromisetopayadebtbarredxxxwilltakethecasefromtheoperationofthe
statuteoflimitationsasthisproceedsuponthegroundthatasastatutorylimitationmerelybars
the remedy and does not discharge the debt, there is something more than a mere moral
obligationtosupportapromise,towitapreexistingdebtwhichisasufficientconsideration
forthenewpromise;thenewpromiseuponthissufficientconsiderationconstitutes,infact,a
newcauseofaction."3 xxxxxItisthisnewpromise,eithermadeinexpresstermsor
deduced from an acknowledgment as a legal implication, which is to be regarded as
reanimatingtheoldpromise,orasimpartingvitalitytotheremedy(whichbylapseoftimehad
becomeextinct)andthusenablingthecreditortorecoveruponhisoriginalcontract."4
However,thecourtaquoheldthatinsigningthepromissorynotealone,respondentConfesor
cannottherebybindhiswife,respondentJovitaVillafuerte,citingArticle166oftheNewCivil
Codewhichprovides:
Art166.Unlessthewifehasbeendeclaredanoncomposmentisoraspendthrift,orisunder
civilinterdictionorisconfinedinaleprosarium,thehusbandcannotalienateorencumberany
realpropertyoftheconjugalpartnershipwithoutthewifesconsent.Ifsherefusesunreasonably
togiveherconsent,thecourtmaycompelhertograntthesame.
Wedisagree.UnderArticle165oftheCivilCode,thehusbandistheadministratorofthe
conjugalpartnership.Assuchadministrator,alldebtsandobligationscontractedbythehusband
forthebenefitoftheconjugalpartnership,arechargeabletotheconjugalpartnership.5 No
doubt,inthiscase,respondentConfesorsignedthesecondpromissorynoteforthebenefitof
theconjugalpartnership.Hencetheconjugalpartnershipisliableforthisobligation.
WHEREFORE,thedecisionsubjectofthepetitionisreversedandsetasideandanother
decisionisherebyrenderedreinstatingthedecisionoftheCityCourtofIloiloCityofDecember
27,1976,withoutpronouncementastocostsinthisinstance.Thisdecisionisimmediately
executory and no motion for extension of time to file motion for reconsideration shall be
granted.
SOORDERED.
NarvasaandCruz,JJ.,concur.
GrioAquino,J.,nopart.TheConfesorsaremyrelatives.
Decisionreversedandsetaside.
Note.Prescriptionisrightlyregardedasastatuteofreposewhosesubjectistosuppress
fraudulentandstateclaimsfromspringingupatgreatdistancesoftimeandsurprisingthe
partiesortheirrepresentativeswhenthefactshavebecomeobscurefromthelapseoftimeor
deathorremovalofwitnesses.(Pealesvs.IntermediateAppellateCourt,145SCRA223).
o0o

B.SourcesofCivilObligations

BARREDO,J.:
AppealfromtheorderdatedAugust13,1964oftheCourtofFirstInstanceofQuezonCityin
1.Cruzvs.Tuazon&Co.
CivilCaseNo.Q7751,FaustinoCruzvs.J.M.Tuason&Co.,Inc.,andGregorioAraneta,Inc.,
dismissingthecomplaintofappellantCruzfortherecoveryofimprovementshehasmadeon
No.L23749.April29,1977.*
appelleeslandandtocompelappelleestoconveytohim3,000squaremetersoflandonthree
FAUSTINO CRUZ, plaintiffappellant, vs. J. M. TUASON & COMPANY, INC., andgrounds:(1)failureofthecomplainttostateacauseofaction;(2)thecauseofactionof
GREGORIOARANETA,INC.,defendantsappellees.
plaintiffisunenforceableundertheStatuteofFrauds;and(3)theactionoftheplaintiffhas
Civillaw;StatuteofFrauds;Thestatuteoffraudsdoesnotapplytoanallegedcontract alreadyprescribed.
wherebyonepartyagreedtodeliveraparceloflandtoanotherinconsiderationofthelatters
Actually,aperusalofplaintiffappellantscomplaintbelowshowsthatheallegedtwo
actingasintermediarytoeffectacompromiseinacivilaction.In the instant case, whatseparatecausesofaction,namely:(1)thatuponrequestoftheDeudors(thefamilyofTelesforo
appellantistryingtoenforceisthedeliverytohimof3,000squaremetersoflandwhichhe Deudorwholaidclaimonthelandinquestiononthestrengthofaninformationposesoria)
claimsdefendantspromisedtodoinconsiderationofhisservicesasmediatororintermediaryin plaintiffmadepermanentimprovementsvaluedatP30,400.00onsaidlandhavinganareaof
effectingacompromiseofthecivilaction,CivilCaseNo.135,betweenthedefendantsandthe moreorless20quionesandforwhichhealsoincurredexpensesintheamountofP7,781.74,
Deudors.Innosensemaysuchallegedcontractbeconsideredasbeingasaleofrealproperty and since defendantsappellees are being benefited by said improvements, he is entitled to
orofanyinteresttherein.Indeed,notalldealingsinvolvinginterestinrealpropertycome reimbursement from them of said amounts; and (2) that in 1952, defendants availed of
undertheStatute.Moreover,appellantscomplaintclearlyallegesthathehasalreadyfulfilledplaintiffsservicesasanintermediarywiththeDeudorstoworkfortheamicablesettlementof
his part of the bargain to induce the Deudors to amicably settle their differences with CivilCaseNo.Q135,thenpendingalsointheCourtofFirstInstanceofQuezonCity,and
defendants as, in fact, on March 16, 1963, through his efforts, a compromise agreement involving 50 quinones of land, of which the 20 quinones aforementioned form part, and
betweenthesepartieswasapprovedbythecourt.Inotherwords,theagreementinquestionhas notwithstandinghishavingperformedhisservices,asinfact,acompromiseagreemententered
alreadybeenpartiallyconsummated,andisnolongermerelyexecutory.Anditislikewisea intoonMarch16,1963betweentheDeudorsandthedefendantswasapprovedbythecourt,the
fundamental principle governing the application of the Statute that the contract in dispute latterhaverefusedtoconveytohimthe3,000squaremetersoflandoccupiedbyhim,(apartof
shouldbepurelyexecutoryonthepartofbothpartiesthereto.
the20quinonesabove)whichsaiddefendantshadpromisedtodowithintenyearsfromand
Same;Quasicontract;Apresumedquasicontractcannotemergeasagainstoneparty afterdateofsigningofthecompromiseagreement,asconsiderationforhisservices.
whenthesubjectmatterthereofisalreadycoveredbyacontractwithanotherparty.Fromthe
Withintheperiodallowedbytherules,thedefendantsfiledseparatemotionstodismiss
verylanguageofthisprovision,itisobviousthatapresumedquasicontractcannotemergeas allegingthreeidenticalgrounds:(1)Asregardstheimprovementsmadebyplaintiff,thatthe
againstonepartywhenthesubjectmatterthereofisalreadycoveredbyanexistingcontract complaintstatesnocauseofaction,theagreementregardingthesamehavingbeenmadeby
withanotherparty.Predicatedontheprinciplethatnooneshouldbeallowedtounjustlyenrich plaintiffwiththeDeudorsandnotwiththedefendants,hencethetheoryofplaintiffbasedon
himselfattheexpenseofanother,Article2142createsthelegalfictionofaquasicontract Article2142oftheCivilCodeonunjustenrichmentis untenable;and(2)anentthealleged
precisely because of the absence of any actual agreement between the parties concerned. agreement about plaintiffs services as intermediary in consideration of which, defendants
Corollarily,iftheonewhoclaimshavingenrichedsomebodyhasdonesopursuanttoacontractpromisedtoconveytohim3,000squaremetersofland,thatthesameisunenforceableunder
withathirdparty,hiscauseofactionshouldbeagainstthelatter,whointurnmay,ifthereis theStatuteofFrauds,therebeingnothinginwritingaboutit,and,inanyevent,(3)thatthe
anygroundtherefor,seekreliefagainstthepartybenefited.Itisessentialthattheactbywhich actionofplaintifftocompelsuchconveyancehasalreadyprescribed.
thedefendantisbenefitedmusthavevoluntaryandunilateralonthepartoftheplaintiff.Asone
Plaintiffopposedthemotion,insistingthatArticle2142oftheCivilCodeisapplicableto
distinguishedcivilianputsit,Theactisvoluntary,becausetheactorinquasicontractsisnot hiscase;thattheStatuteofFraudscannotbeinvokedbydefendants,notonlybecauseArticle
boundbyanypreexistingobligationtoact.Itisunilateral,becauseitarisesfromthesolewill 1403oftheCivilCoderefersonlytosaleofrealpropertyorofaninterestthereinandnotto
oftheactorwhoisnotpreviouslyboundbyanyreciprocalorbilateralagreement.Thereason promisestoconveyrealpropertyliketheonesupposedlypromisedbydefendantstohim,but
whythelawcreatesajuridicalrelationandimposescertainobligationsistopreventasituation also because, he, the plaintiff has already performed his part of the agreement, hence the
whereapersonisabletobenefitortakeadvantageofsuchlawful,voluntaryandunilateralacts agreementhasalreadybeenpartlyexecutedandnotmerelyexecutorywithinthecontemplation
attheexpenseofsaidactor.(AmbrosioPadilla,CivilLaw,Vol.VI,p.748,1969ed.)Inthe oftheStatute;andthathisactionhasnotprescribedforthereasonthatdefendantshadtenyears
caseatbar,sinceappellanthasaclearerandmoredirectrecourseagainsttheDeudorswith tocomplyandonlyafterthesaidtenyearsdidhiscauseofactionaccrue,thatis,tenyearsafter
whomhehadenteredintoanagreementregardingtheimprovementsandexpendituresmadeby March16,1963,thedateoftheapprovalofthecompromiseagreement,andhiscomplaintwas
himonthelandofappellees,itcannotbesaid,inthesensecontemplatedinArticle2142,that filedonJanuary24,1964.
appelleeshavebeenenrichedattheexpenseofappellant.
Ruling onthe motionto dismiss, thetrial courtissued theherein impugnedorder of
Appeal;Aproformamotionforreconsiderationdoesnotsuspendrunningoftheperiod August13,1964:
forappeal.Wecannotseeanythinginsaidmotionforreconsiderationthatissubstantially In the motion, dated January 31, 1964, defendant Gregorio Araneta, Inc. prayed that the
differentfromtheaboveoppositionsandrejoinderhehadpreviouslysubmittedandwhichthe complaint againstit bedismissed onthe groundthat (1)the claimon whichthe actionis
trialcourthadalreadyconsideredwhenitrendereditsmainorderofdismissal.Consequently, foundedisunenforceableundertheprovisionoftheStatuteofFrauds;and(2)theplaintiffs
appellantsmotionforreconsiderationdidnotsuspendhisperiodforappeal.
action,ifanyhasalreadyprescribed.IntheothermotionofFebruary11,1964,defendantJ.M.
Tuason&Co.,Inc.soughtthedismissaloftheplaintiffscomplaintonthegroundthatitstates
nocauseofactionandontheidenticalgroundsstatedinthemotiontodismissofdefendant

3.

GregorioAraneta,Inc.Thesaidmotionsaredulyopposedbytheplaintiff.
REIMBURSEMENTOFHISEXPENSES,ISCONCERNED;
Fromtheallegationsofthecomplaint,itappearsthat,byvirtueofanagreementarrivedatII.THATREGARDINGPLAINTIFFSCLAIMOVERTHE3,000SQ.MS.,THESAME
in1948bytheplaintiffandtheDeudors,theformerassistedthelatterinclearing,improving, HASNOTPRESCRIBEDANDTHESTATUTEOFFRAUDSISNOTAPPLICABLE
subdividing and selling the large tract of land consisting of 50 quinones covered by the THERETO;
ARGUMENT
informationposesoriainthenameofthelateTelesforoDeudorandincurredexpenses,which
arevaluedapproximatelyatP38,400.00andP7,781.74,respectively;and,forthereasonsthat
saidimprovementsarebeingusedandenjoyedbythedefendants,theplaintiffisseekingthe
Plaintiffscomplaintcontainstwo(2)causesofactionthefirstbeinganactionforsum
reimbursementfortheservicesandexpensesstatedabovefromthedefendants.
of money in the amount of P7,781.74 representing actual expenses and P38,400.00 as
DefendantJ.M.Tuason&Co.,Inc.claimedthat,insofarastheplaintiffsclaimforthe reasonablecompensationforservicesinimprovingthe50quinonesnowinthepossessionof
reimbursementoftheamountsofP38,400.00andP7,781.74isconcerned,itisnotaprivytothedefendants.Thesecondcauseofactiondealswiththe3,000sq.ms.whichdefendantshave
plaintiffsagreementtoassisttheDeudorsinimprovingthe50quinones.Ontheotherhand,the agreedtotransferuntoplaintiffforservicesrenderedineffectingthecompromisebetweenthe
plaintiff countered that, by holding and utilizing the improvements introduced by him, the Deudorsanddefendants;
defendantsareunjustlyenrichingandbenefitingattheexpenseoftheplaintiff;andthatsaid
UnderitsorderofAugust3,1964,thisHonorableCourtdismissedtheclaimforsumof
improvementsconstitutealienorchargeonthepropertyitself
moneyonthegroundthatthecomplaintdoesnotstateacauseofactionagainstdefendants.We
Ontheissuethatthecomplaintinsofarasitclaimsthereimbursementfortheservices respectfullysubmit:
renderedandexpensesincurredbytheplaintiff,statesnocauseofaction,theCourtisofthe
1.THATTHECOMPLAINTSTATESASUFFICIENTCAUSEOFACTIONAGAINST
opinionthatthesameiswellfounded.Itisfoundthatthedefendantsarenotpartiestothe
DEFENDANTSINSOFARASPLAINTIFFSCLAIMFORPAYMENTOFSERVICES
supposedexpresscontractenteredintobyandbetweentheplaintiffandtheDeudorsforthe
ANDREIMBURSEMENTOFHISEXPENSES,ISCONCERNED.
clearing and improvement of the 50 quinones. Furthermore in order that the alleged
SaidthisHonorableCourt(atp.2,Order):
improvementmaybeconsideredalienorchargeontheproperty,thesameshouldhavebeen
ORDER
madeingoodfaithandunderthemistakeastothetitle.TheCourtcantakejudicialnoticeof
thefactthatthetractoflandsupposedlyimprovedbytheplaintiffhadbeenregisteredwayback
in1914inthenameofthepredecessorsininterestofdefendantJ.M.Tuason&Co.,Inc.This xxxxxxOntheissuethatthecomplaint,insofarasitclaimsthereimbursementforthe
factisconfirmedinthedecisionrenderedbytheSupremeCourtonJuly31,1956inCaseG.R. servicesrenderedandexpensesincurredbytheplaintiff,statesnocauseofaction,theCourtis
No.L5079entitledJ.M.Tuason&Co.Inc.vs.GeronimoSantiago,etal.Suchbeingthe oftheopinionthatthesameiswellfounded.Itisfoundthatthedefendantsarenotpartiestothe
supposedexpresscontractenteredintobyandbetweentheplaintiffandtheDeudorsforthe
case,theplaintiffcannotclaimgoodfaithandmistakeastothetitleoftheland.
clearingandimprovementofthe50quinones.Furthermore,inorderthatthealleged
Ontheissueofstatuteoffraud,theCourtbelievesthatsameisapplicabletotheinstant
improvementmaybeconsideredalienorchargeontheproperty,thesameshouldhavebeen
case.Theallegationinpar.12ofthecomplaintstatesthatthedefendantspromisedandagreed
tocede,transferandconveyuntotheplaintiffthe3,000squaremetersoflandinconsideration madeingoodfaithandunderthemistakeastotitle.TheCourtcantakejudicialnoticeofthe
ofcertainservicestoberenderedthen.Itisclearthattheallegedagreementinvolvesaninterest factthatthetractoflandsupposedlyimprovedbytheplaintiffhadbeenregisteredwaybackin
inrealproperty.UndertheprovisionsofSec.2(e)ofArticle1403oftheCivilCode,such 1914inthenameofthepredecessorsininterestofdefendantJ.M.Tuason&Co.,Inc.Thisfact
isconfirmedinthedecisionrenderedbytheSupremeCourtonJuly31,1956incaseG.R.No.
agreementisnotenforceableasitisnotinwritingandsubscribedbythepartycharged.
On the issue of statute of limitations, the Court holds that the plaintiffs action has L5079entitledJ.M.Tuason&Co.,Inc.vs.GeronimoSantiago,etal.Suchbeingthecase,
theplaintiffcannotclaimgoodfaithandmistakeastothetitleoftheland.
prescribed.Itisallegedinpar.11ofthecomplaintthat,sometimein1952,thedefendants
approachedtheplaintifftoprevailupontheDeudorstoenterintoacompromiseagreementin
ThepositionofthisHonorableCourt(supra)isthatthecomplaintdoesnotstateacause
CivilCaseNo.Q135andalliedcases.Furthermore,pars.13and14ofthecomplaintalleged
thattheplaintiffactedasemissaryofbothpartiesinconveyingtheirrespectiveproposalsand ofactioninsofarastheclaimforservicesandexpensesisconcernedbecausethecontractfor
counterproposalsuntilthefinalsettlementwaseffectedonMarch16,1953andapprovedby theimprovementofthepropertieswassolelybetweentheDeudorsandplaintiff,anddefendants
theCourtonApril11,1953.Inthepresentaction,whichwasinstitutedonJanuary24,1964, arenotpriviestoit.Now,plaintiffstheoryisthatdefendantsarenonethelessliablesincethey
theplaintiffisseekingtoenforcethesupposedagreemententeredintobetweenhimandthe areutilizingandenjoyingthebenefitsofsaidimprovements.Thus,underparagraph16ofthe
complaint,itisalleged:
defendantsin1952,whichhasalreadyprescribed.
WHEREFORE, the plaintiffs complaint is hereby ordered DISMISSED without (16)Thattheservicesandpersonalexpensesofplaintiffmentionedinparagraph7hereofwere
rendered and in fact paid by him to improve, as they in fact resulted in considerable
pronouncementastocosts.
improvementofthe50quinones,anddefendantsbeingnowinpossessionofandutilizingsaid
SOORDERED.(Pp.6569,Rec.onAppeal.)
OnAugust22,1964,plaintiffscounselfiledamotionforreconsiderationdatedAugust20, improvementsshouldreimburseandpayplaintiffforsuchservicesandexpenses.
Plaintiffscauseofactionispremisedinteralia,onthetheoryofunjustenrichmentunder
1964asfollows:
Plaintiff through undersigned counsel and to this Honorable Court, respectfully moves toArticle2142ofthecivilCode:
ART.2142.Certainlawfulvoluntaryandunilateralactsgiverisetothejuridicalrelationof
reconsideritsOrderbearingdateof13August1964,onthefollowinggrounds:
quasicontracttotheendthatnooneshallbeunjustlyenrichedorbenefitedattheexpenseof
I.THATTHECOMPLAINTSTATESASUFFICIENTCAUSEOFACTIONAGAINST
another.
DEFENDANTSINSOFARASPLAINTIFFSCLAIMPAYMENTOFSERVICESAND

3.

1.

1.
2.

3.

Inlikevein,Article19ofthesameCodeenjoinsthat:
13).Thatinordertoeffectacompromisebetweentheparties,plaintiffnotonlyaswellactedas
ART.19.Everypersonmust,intheexerciseofhisrightsandintheperformanceofhisduties, emissaryofbothpartiesinconveyingtheirrespectiveproposalsandcounterproposalsuntil
actwithjustice,giveeveryonehisdueandobservehonestyandgoodfaith.
plaintifffinallysucceededinconvincingtheDEUDORStosettlewithdefendantsamicably.
Thus,onMarch16,1953,aCompromiseAgreementwasenteredintobyandbetweenthe
WerespectfullydrawtheattentionofthisHonorableCourttothefactthatARTICLE2142 DEUDORSandthedefendantcompanies;andonApril11,1953,thisagreementwasapproved
(SUPRA) DEALS WITH QUASICONTRACTS or situations WHERE THERE IS NO bythisHonorableCourt;
CONTRACTBETWEENTHEPARTIESTOTHEACTION.Further,aswecanreadilysee 14).Thatinordertocomplywithhisotherobligationsunderhisagreementwithdefendant
from the title thereof (Title XVII), that the same bears the designation EXTRA companies,plaintiffhadtoconferwiththeoccupantsoftheproperty,exposinghimselfto
CONTRACTUALOBLIGATIONSorobligationswhichdonotarisefromcontracts.Whileitphysicalharm,convincingsaidoccupantstoleavethepremisesandtorefrainfromresortingto
istruethattherewasnoagreementbetweenplaintiffanddefendantshereinfortheimprovementphysicalviolenceinresistingdefendantsdemandstovacate;
ofthe50quinones,sincethelatterarepresentlyenjoyingandutilizingthebenefitsbrought Thatplaintifffurtherassisteddefendantsemployeesintheactualdemolitionandtransferof
aboutthroughplaintiffslaborandexpenses,defendantsshouldpayandreimbursehimtherefor allthehouseswithintheperimeterofthe20quinonesuntiltheendof1955,whensaidareawas
undertheprinciplethatnoonemayenrichhimselfattheexpenseofanother.Inthisposture, totallyclearedandthehousestransferredtoanotherareadesignatedbythedefendantsasCapt.
thecomplaintstatesacauseofactionagainstthedefendants.
CruzBlockin Masambong,QuezonCity.(Pars.12,13and14.Complaint;ItalicsOurs).
II.THATREGARDINGPLAINTIFFSCLAIMOVERTHE3,000SQ.MS.THESAMEHAS
Fromtheforegoing,itisclearthenthattheagreementbetweenthepartiesmentionedin
NOTPRESCRIBEDANDTHESTATUTEOFFRAUDSISNOTAPPLICABLETHERETO.paragraph12(supra)ofthecomplainthasalreadybeenfullyEXECUTEDONONEPART,
TheStatuteofFraudsisCLEARLYinapplicabletothiscase:
namelybytheplaintiff.Regardingtheapplicabilityofthestatuteoffrauds(Art.1403,Civil
Code), it has been uniformly held that the statute of frauds IS APPLICABLE ONLY TO
Atpage2ofthisHonorableCourtsorderdated13August1964,theCourtruledas EXECUTORYCONTRACTSBUTNOTWHERETHECONTRACTHASBEENPARTLY
EXECUTED:
follows:
SAMEACTIONTOENFORCE.Thestatuteoffraudshasbeenuniformlyinterpretedtobe
ORDER
applicable to executory and not to completed or executed contracts. Performance of the
contracttakesitoutoftheoperationofthestatute.xxxx.
xxxxxx
Thestatuteoffraudsisnotapplicabletocontractswhichareeithertotallyorpartially
performed,onthetheorythatthereisawidefieldforthecommissionoffraudsinexecutory
Ontheissueofstatuteoffraud,theCourtbelievesthatsameisapplicabletotheinstantcase. contractswhichcanonlybepreventedbyrequiringthemtobeinwriting,afactwhichis
Theallegationinpar.12ofthecomplaintstatesthatthedefendantspromisedandagreetocede, reduced to a minimum in executed contracts because the intention of the parties becomes
transferandconveyuntotheplaintiff,3,000squaremetersoflandinconsiderationofcertain apparentbytheirexecutionandexecution,inmostcases,concludestherightoftheparties.xx
servicestoberenderedthen.Itisclearthattheallegedagreementinvolvesaninterestinreal x.Thepartialperformancemaybeprovedbyeitherdocumentaryororalevidence.(Atpp.564
property.UndertheprovisionsofSec.2(e)ofArticle1403oftheCivilCode,suchagreementis 565,TolentinosCivilCodeofthePhilippines,Vol.IV,1962Ed.;ItalicsOurs).
notenforceableasitisnotinwritingandsubscribedbythepartycharged.
Authoritiesinsupportoftheforegoingrulearelegion.Thus,Mr.JusticeMoraninhis
Tobringthisissueinsharperfocus,weshallreproducenotonlyparagraph12ofthe CommentsontheRulesofCourt,Vol.III,1974Ed.,atp.167,states:
complaintbutalsotheotherpertinentparagraphsthereincontained.Paragraph12statesthus: 2. THE STATUTE OF FRAUDS IS APPLICABLE ONLY TO EXECUTORY
COMPLAINT
CONTRACTS: CONTRACTS WHICH ARE EITHER TOTALLY OR PARTIALLY
xxxxxx
PERFORMEDAREWITHOUTTHESTATUTE.Thestatuteoffraudsisapplicableonlyto
executorycontracts. Itisneitherapplicabletoexecutedcontracts nortocontractspartially
12).Thatplaintiffconferredwiththeaforesaidrepresentativesofdefendantsseveraltimesand performed.Thereasonissimple.Inexecutorycontractsthereisawidefieldforfraudbecause
ontheseoccasions,thelatterpromisedandagreedtocede,transferandconveyuntoplaintiff unless they be in writing there is no palpable evidence of the intention of the contracting
the3,000sq.ms.(nowknownasLots16B,17and18)whichplaintiffwasthenoccupyingandparties.Thestatutehasbeenenactedtopreventfraud.Ontheotherhandthecommissionof
fraudinexecutedcontractsisreducedtoaminimuminexecutedcontractsbecause(1)the
continuestooccupyasofthiswriting,forandinconsiderationofthefollowingconditions:
(a)ThatplaintiffsucceedinconvincingtheDEUDORStoenterintoacompromiseagreement intentionofthepartiesismadeapparentbytheexecutionand(2)executionconcludes,inmost
andthatsuchagreementbeactuallyenteredintobyandbetweentheDEUDORSanddefendant cases,therightsoftheparties.(ItalicsOurs)
Underparagraphs13and14ofthecomplaint(supra)onecanreadilyseethattheplaintiff
companies;
hasfulfilledALLhisobligationsunder theagreementbetweenhimanddefendantsconcerning
(b)Thatasofdateofsigningthecompromiseagreement,plaintiffshallbetheownerofthe
3,000sq.ms.butthedocumentsevidencinghistitleoverthispropertyshallbeexecutedand the3,000sq.ms.overwhichthelatterhadagreedtoexecutetheproperdocumentsoftransfer.
deliveredbydefendantstoplaintiffwithinten(10)yearsfromandafterdateofsigningofthe Thisfactisfurtherprojectedinparagraph15ofthecomplaintwhereplaintiffstates;
15).Thatinoraboutthemiddleof1963,afteralltheconditionsstatedinparagraph12hereof
compromiseagreement;
hadbeenfulfilledandfullycompliedwith, plaintiffdemandedofsaiddefendantsthatthey
(c)Thatplaintiffshall,withoutanymonetaryexpenseofhispart,assistinclearingthe20
executetheDeedofConveyanceinhisfavoranddeliverthetitlecertificateinhisname,over
quinonesofitsoccupants;
the3,000sq.ms.butdefendantsfailedandrefusedandcontinuetofailandrefusetoheedhis

demands.(Par.15,Complaint;ItalicsOurs).
WHEREFORE,itisrespectfullyprayedthatthisHonorableCourtreconsideritsOrder
In view of the foregoing, we respectfully submit that this Honorable Court erred in datedAugust13,1964;andissueanotherorderdenyingthemotionstodismissofdefendantsG.
holdingthatthestatuteoffraudsisapplicabletoplaintiffsclaimoverthe3,000sq.ms.There Araneta,Inc.andJ.M.TuasonCo.Inc.forlackofmerit.(Pp.7085,RecordonAppeal.)
havingbeenfullperformanceofthecontractonplaintiffspart,thesametakesthiscaseoutof Defendantsfiledanoppositiononthemaingroundthattheargumentsadducedbytheplaintiff
thecontextofsaidstatute.
aremerelyreiterationsofhisargumentscontainedinhisRejoindertoReplyandOpposition,
PlaintiffsCauseofActionhasNOTPrescribed:
whichhavenotonlybeenrefutedinherein defendantsMotiontoDismissandReplybut
alreadypasseduponbythisHonorableCourt.
OnSeptember7,1964,thetrialcourtdeniedthemotionforreconsiderationsthus:
WithallduerespecttothisHonorableCourt,wealsosubmitthattheCourtcommitted
After
considering the plaintiffs Motion for Reconsideration of August 20, 1964 and it
errorinholdingthatthisactionhasprescribed:
appearingthatthegroundsrelieduponinsaidmotionaremererepetitionofthosealready
ORDER
resolvedanddiscussedbythisCourtintheorderofAugust13,1964,theinstantmotionis
herebydeniedandthefindingsandconclusionsarrivedatbytheCourtinitsorderofAugust
xxxxxx
13,1964areherebyreiteratedandaffirmed.
SOORDERED.(Page90,Rec.onAppeal.)
On the issue of the statute of limitations, the Court holds that the plaintiffs action hasUnderdateofSeptember24,1964,plaintifffiledhisrecordonappeal.
prescribed. It is alleged in par. IIofthecomplaintthat, sometime in 1952, thedefendants
Inhisbrief,appellantposesanddiscussesthefollowingassignmentsoferror:
approachedtheplaintifftoprevailupontheDeudorstoenterintoacompromiseagreementin I.THATTHELOWERCOURTERREDINDISMISSINGTHECOMPLAINTONTHE
CivilCaseNo.Q135andalliedcases.Furthermore,pars.13and14ofthecomplaintalleged GROUNDTHATAPPELLANTSCLAIMOVERTHE3,000SQ.MS.ISALLEGEDLY
that plaintiffacted asemissary ofboth partiesin conveyingtheir respectiveproposals and UNENFORCEABLEUNDERTHESTATUTEOPFRAUDS;
counterproposalsuntilthefinalsettlementwaseffectedonMarch16,1953andapprovedby II.THATTHECOURTAQUOFURTHERCOMMITTEDERRORINDISMISSING
theCourtonApril11,1953.Inthepresentaction,whichwasinstitutedonJanuary24,1964, APPELLANTSCOMPLAINTONTHEGROUNDTHATHISCLAIMOVERTHE3,000SQ.
theplaintiffisseekingtoenforcethesupposedagreemententeredintobetweenhimandthe MS.ISALLEGEDLYBARREDBYTHESTATUTEOFLIMITATIONS;and
defendantsin1952,whichhasalreadyprescribed.(atp.3,Order).
III.THATTHELOWERCOURTERREDINDISMISSINGTHECOMPLAINTFOR
Thepresentactionhasnotprescribed,especiallywhenweconsidercarefullythetermsof FAILURETOSTATEACAUSEOFACTIONINSOFARASAPPELLANTSCLAIMFOR
theagreementbetweenplaintiffand thedefendants.First,wemustdrawtheattentionofthis REIMBURSEMENTOFEXPENSESANDFORSERVICESRENDEREDINTHE
HonorableCourttothefactthatthisisanactiontocompeldefendantstoexecuteaDeedof IMPROVEMENTOFTHEFIFTY(50)QUINONES,ISCONCERNED.
Conveyance over the 3,000 sq. ms. subject of their agreement. In paragraph 12 of the WeagreewithappellantthattheStatuteofFraudswaserroneouslyappliedbythetrialcourt.It
complaint, the terms and conditions of the contract between the parties are spelled out. iselementarythattheStatutereferstospecifickindsoftransactionsandthatitcannotapplyto
Paragraph12(b)ofthecomplaintstates:
anythatisnotenumeratedtherein.Andtheonlyagreementsorcontractscoveredtherebyare
(b)Thatasofdateofsigningthecompromiseagreement, plaintiffshallbetheownerofthethefollowing:
3,000sq.ms.butthedocumentsevidencinghistitleoverthispropertyshallbeexecutedand (1)Thoseenteredintointhenameofanotherpersonbyonewhohasbeengivennoauthority
deliveredbydefendantstoplaintiffwithinten(l0)yearsfromandafterdateofsigningofthe
orlegalrepresentation,orwhohasactedbeyondhispowers;
compromiseagreement.(ItalicsOurs).
(2)ThosedonotcomplywiththeStatuteofFraudsassetforthinthisnumber.Inthefollowing
ThecompromiseagreementbetweendefendantsandtheDeudorswhichwasconcluded casesanagreementhereaftermadeshallbeunenforceablebyaction,unlessthesame,orsome
throughtheeffortsofplaintiff,wassignedon16March1953.Therefore,thedefendantshadten
noteor
(10)yearsfromsaiddatewithinwhichtoexecutethedeedofconveyanceinfavorofplaintiff memorandumthereof, beinwriting, andsubscribedbythepartycharged,orbyhisagent;
overthe3,000sq.ms.Aslongasthe10yearsperiodhasnotexpired,plaintiffhadnorightto evidence,therefore,oftheagreementcannotbereceivedwithoutthewriting,orasecondary
compeldefendantstoexecutethedocumentandthelatterwereundernoobligationtodoso. evidenceofitscontents:
Now,this10yearperiodelapsedonMarch16,1963.THENandONLYTHENdoesplaintiffs (a)Anagreementthatbyitstermsisnottobeperformedwithinayearfromthemakingthereof;
causeofactionagainstdefendantsaccrue.Therefore,theperiodofprescriptionbegantorun (b)Aspecialpromisetoanswerforthedebt,default,ormiscarriageofanother;
againstplaintiffonlyonMarch17,1963. Thus,underparagraph15ofthecomplaint(supra)(c)Anagreementmadeinconsiderationofmarriage,otherthanamutualpromisetomarry;
plaintiffmadedemandsupondefendantsfortheexecutionofthedeedinoraboutthemiddleof(d)Anagreementforthesaleofgoods,chattelsorthingsinaction,atapricenotlessthanfive
hundredpesos,unlessthebuyeracceptandreceivepartofsuchgoodsandchattels,orthe
1963.
Sincethecontractnowsoughttobeenforcedwasnotreducedtowriting,plaintiffscause evidences,orsomeofthem,ofsuchthingsinaction,orpayatthetimesomepartofthe
ofactionexpiresonMarch16,1969orsixyearsfromMarch16,1963WHENTHECAUSE purchasemoney;butwhenasaleismadebyauctionandentryismadebytheauctioneerinhis
salesbook,atthetimeofthesale,oftheamountandkindofpropertysold,termsofsale,price,
OPACTIONACCRUED(Art.1145,CivilCode).
Inthisposture,weagainrespectfullysubmitthatthisHonorableCourterredinholding namesofthepurchasersandpersononwhoseaccountthesaleismade,itisasufficient
memorandum:
thatplaintiffsactionhasprescribed.
(e)Anagreementfortheleasingforalongerperiodthanoneyear,orforthesaleofreal
PRAYER
propertyorofaninteresttherein:

6.
1.

(f)arepresentationastothecreditofathirdperson.
agreement.Thereasonwhythelawcreatedajuridicalrelationsandimposescertainobligation
(3)Thosewherebothpartiesareincapableofgivingconsenttoacontract.(Art.1403,civil
istopreventasituationwhereapersonisabletobenefitortakeadvantageofsuchlawful,
Code.)
voluntaryandunilateralactsattheexpenseofsaidactor.(AmbrosioPadilla,CivilLaw,Vol.
Intheinstantcase,whatappellantistryingtoenforceisthedeliverytohimof3,000square VI,p.748,1969ed.)Inthecaseatbar,sinceappellanthasaclearerandmoredirectrecourse
metersoflandwhichheclaimsdefendantspromisedtodoinconsiderationofhisservicesas againsttheDeudorswithwhomhehadenteredintoanagreementregardingtheimprovements
mediatororintermediaryineffectingacompromiseofthecivilaction,CivilCaseNo.135, and expenditures made by him on the land of appellees, it cannot be said, in the sense
betweenthedefendantsandtheDeudors.Innosensemaysuchallegedcontractbeconsidered contemplatedinArticle2142,thatappelleeshavebeenenrichedattheexpenseofappellant.
asbeingasaleofrealpropertyorofanyinteresttherein.Indeed,notalldealingsinvolving
Intheultimate,therefore,Ourholdingabovethatappellantsfirsttwoassignmentsof
interestinrealpropertycomeundertheStatute.
errorarewelltakencannotsavethedayforhim.Asidefromhishavingnocauseofaction
Moreover,appellantscomplaintclearlyallegesthathehasalreadyfulfilledhispartofthe againstappellees,thereisoneplainerrorofomissionWehavefoundintheorderofthetrial
bargainstoinducetheDeudorstoamicablysettletheirdifferenceswithdefendantsas,infact, court which is as good a ground as any other for Us to terminate this case favorably to
onMarch16,1963,throughhisefforts,acompromiseagreementbetweenthesepartieswas appellees.InsaidorderwhichWehavequotedinfullearlierinthisopinion,thetrialcourtruled
approvedbythecourt.Inotherwords,theagreementinquestionhasalreadybeenpartially thatthegroundsrelieduponinsaidmotionaremererepetitionsofthosealreadyresolvedand
consummated,andisnolongermerelyexecutory.Anditislikewiseafundamentalprinciple discussedbythisCourtintheorderofAugust13,1964,anobservationwhichWefullyshare.
governingtheapplicationoftheStatutethatthecontractindisputeshouldbepurelyexecutory Virtually,therefore,appellantssmotionforreconsiderationwasruledtobeproforma.Indeed,a
onthepartofbothpartiesthereto.
cursoryreadingoftherecordonappealrevealsthatappellantsmotionforreconsideration
We cannot, however, escape taking judicial notice, in relation to the compromise abovequotedcontainedexactlythesameargumentsandmannerofdiscussionashisFebruary
agreementrelieduponbyappellant,thatinseveralcasesWehavedecided,Wehavedeclared 6,1964OppositiontoMotiontoDismissofdefendantGregorioAraneta,Inc.((pp.1725,
thesamerescindedandofnoeffect.InJ.M.Tuason&Co.,Inc.vs.BienvenidoSanvictores,4 Rec. on Appeal) as well as his February 17, 1964 Opposition to Motion to Dismiss of
SCRA123,theCourtheld:
Defendant J. M. Tuason & Co. (pp. 3345, Rec. on Appeal) and his February 29, 1964
It isalso worthyof notethat thecompromise betweenDeudors andTuason, upon which RejoindertoReplyofDefendantJ.M.Tuason&Co.,(pp.5264,Rec.onAppeal)
Sanvictorespredicateshisrighttobuythelotheoccupies,hasbeenvalidlyrescindedandset
aside,asrecognizedbythisCourtinitsdecisioninG.R.No.L13768,Deudorvs.Tuason, Wecannotseeanythinginsaidmotionforreconsiderationthatissubstantiallydifferentfrom
promulgatedonMay30,1961.
theaboveoppositionsandrejoinderhehadpreviouslysubmittedandwhichthetrialcourthad
WerepeatedthisobservationinJ.M.Tuason&Co.,Inc.vs.TeodosioMacalindong,6SCRA already consideredwhen itrendered itsmain orderof dismissal. Consequently, appellants
938. Thus, viewed from what would be the ultimate conclusion of appellants case, We motionforreconsiderationdidnotsuspendhisperiodforappeal.(Estradavs.Sto.Domingo,28
entertaingravedoubtsastowhetherornothecansuccessfullymaintainhisallegedcauseof SCRA890,9056.)AndasthispointwascoveredbyappelleesOppositiontoMotionfor
actionagainstdefendants,consideringthatthecompromiseagreementthatheinvokesdidnot Reconsideration(pp.8689),hence,withintheframeoftheissuesbelow,itiswithintheambit
actuallymaterializeanddefendantshavenotbenefitedtherefrom,nottomentiontheundisputedofOurauthorityastheSupremeCourttoconsiderthesamehereevenifitisnotdiscussedin
factthat,aspointedoutbyappellees,appellantsotherattempttosecurethesame3,000squarethebriefsoftheparties.(InsularLifeAssuranceCo:,Ltd.EmployeesAssociationNATUvs.
metersviathejudicialenforcementofthecompromiseagreementinwhichtheyweresupposedInsularLifeAssuranceCo.,Ltd.[ResolutionenbancofMarch10,1977inG.R.No.L25291).
tobereservedforhimhasalreadybeenrepudiatedbythecourts.(pp.57.BriefofAppellee
Now,theimpugnedmainorderwasissuedonAugust13,1964,whiletheappealwas
GregorioAraneta,Inc.)
madeonSeptember24,1964or42dayslater.Clearly,thisisbeyondthe30dayreglementary
As regards appellants third assignment of error, We hold that the allegations in his periodforappeal.Hence,thesubjectorderofdismissalwasalreadyfinalandexecutorywhen
complaint do not sufficiently constitute a cause of action against defendantsappellees. appellantfiledhisappeal.
AppellantsrelianceonArticle2142ofCivilCodeismisplaced.Saidarticleprovides:
WHEREFORE,theappealofFaustinoCruzinthiscaseisdismissed.Nocosts.
Certainlawful,voluntaryandunilateralactsgiverisetothejuridicalrelationofquasicontract 2.GutierrezHermanosvs.Orense
totheendthatnooneshallbeunjustlyenrichedorbenefitedattheexpenseofanother.
[No.9188.December4,1914.]
Fromtheverylanguageofthisprovision,itisobviousthatapresumedquasicontractcannot
emergeasagainstonepartywhenthesubjectmatterthereofisalreadycoveredbyanexisting GUTIERREZHERMANOS,plaintiffandappellee,vs.ENGRACIOORENSE,defendantand
contract with another party. Predicated on the principle that no one should be allowed toappellant.
unjustlyenrichhimselfattheexpenseofanother,Article2142createsthelegalfictionofa 1.PRINCIPALANDAGENT;RATIFICATIONOFAGENT'SACTS;RETRACTION.
quasicontractpreciselybecauseoftheabsenceofanyactualagreementbetweentheparties Whenapersonwhosoldaparcelofrealestatefor1*1,500appearslaternottobeitsownerand
concerned.Corollarily,iftheonewhoclaimshavingenrichedsomebodyhas donesopursuantwhentherealownerthereof,uponbeingquestionedinacriminalcaseinstitutedagainstthe
toacontractwithathirdparty,hiscauseofactionshouldbeagainstthelatter,whointurnmay, vendor,statesthatheconsentedtosuchsale,sothatthevendorwasacquittedofthecharge
ifthereisanygroundtherefore,seekreliefagainstthepartybenefited.Itisessentialthattheact againsthim,itisneither'lawfulnorpermissibleforsaidownerlatertoretractanddenyhis
bywhichthedefendantisbenefitedmusthavebeenvoluntaryandunilateralonthepartofthe formerswornstatementthathehadconsentedtosaidsalebyathirdpersonwhowasarelative
plaintiff.Asonedistinguishedcivilianputsit,Theactisvoluntary,becausetheactorinquasi ofhis.(CivilCode,arts.1709,1710,1727.)
contractsisnotboundbyanypreexistingobligationtoact.Itisunilateral,becauseitarises 2.ID.;ID.;EFFECTINACTIONFORESTAFA.Theswornstatementoftheownerofthe
fromthesolewilloftheactorwhoisnotpreviouslyboundbyanyreciprocalorbilateral realestateintheactionforestafasecuredtheacquittaloftheaccusedbydestroyingthefraud

4.

4.

whichatfirstappearedtohavebeenperpetratedtotheowner'sprejudiceandbecamea
bythevendor,Duran,inconnivancewiththedefendant;thatthelatterhadbeenoccupyingthe
confirmationandratificationofthesale;therefore,theownermustfulfilltheobligations
saidpropertysinceFebruary14,1911,andrefusedtopaytherentalthereof,notwithstanding
contractedbyhisagent,whomadethesaleasthoughhehadhadpriorauthorizationand
the demand made upon him for its payment at the rate of 1*30 per month, the just and
expressinst.ructionsinwriting.(Conluvs.AranetaandGuanko,15Phil.Rep.,387.)
reasonablevaluefortheoccupancyofthesaidproperty,thepossessionofwhichthedefendant
likewiserefusedtodelivertotheplaintiffcompany,inspiteofthecontinuousdemandsmade
3.ID.;ID.;RATIFICATIONASEXPRESSAGENCY.Eventhoughtheownerofthereal
estatehadnotpreviouslyauthorizedthesaleandhisconsentwasgivensubsequenttotheact, uponhim,thedefendant,withbadfaithandtotheprejudiceofthefirmofGutierrezHermanos,
claimingtohaverightsof ownershipandpossessioninthesaidproperty.Thereforeitwas
yetwhenthefactisestablishedthatheapprovedtheactionofhisrelativeinsellingitashis
agent,thissubsequentratificationbytheowneringivinghisapprovalandconsenttothesale prayedthatjudgmentberenderedbyholdingthatthelandandimprovementsinquestionbelong
produeedtheeffectofanexpressagencyandsopurifiedthecontract oftheflawsitcontainedat legitimately and exclusively to the plaintiff, and ordering the defendant to execute in the
plaintiff'sbehalfthesaidinstrumentoftransferandconveyanceofthepropertyandofallthe
thetimeitwasexecuted.(CivilCode,arts.1259,1313.)
right,interest,titleandsharewhichthedefendanthastherein;thatthedefendantbesentenced
4.ID.;ID.;ACTIONFORNULLITY.Theactionfornullitythatcouldhaveatfirstbeen
institutedwaslegallyextinguishedatthemomentwhcnsaidcontractofsalewasvalidlyratified topayP30permonthfordamagesandrentalofthepropertyfromFebruary14,1911,tothe
dateoftherestitutionofthepropertytotheplaintiff,andthat,incasetheseremedieswerenot
andconfirmed.(CivilCode,art.1309.)
giantedtotheplaintiff,thedefendantbesentencedtopaytoitthesumof1*3,000asdamages,
APPEALfromajudgmentoftheCourtofFirstInstanceofAlbay.Moir,J.
togetherwithinterestthereonsincethedateoftheinstitutionofthissuit,andtopaythecosts
ToRRES,J.
andotherlegalexpenses.
Thedemurrerfiledtotheamendedcomplaintwasoverruled,withexceptiononthepartof
Appealthroughbillofexceptionsfiledbycounselfortheappellantfromthejudgmentrendered
the defendant, whose counsel made a general denial of the allegations contained in the
onApril14,1913,bytheHonorableP.M.Moir,judge,whereinhesentencedthedefendantto
complaint,exceptingthosethatwereadmitted,andspecificallydeniedparagraph4thereofto
makeimmediatedeliveryofthepfopertyinquestion,throughapublicinstrument,by
theeffectthatonFebruary14,1907,JoseDuranexecutedthedeedofsaleofthepropertyin
transferringandconveyingtotheplaintiffallhisrightsinthepropertydescribedinthe
favoroftheplaintiffwiththedefendant'sknowledgeandconsent.
complaintandtopayitthesumof=780,asdamages,andthecostsofthesuit.
Asthefirstspecialdefense,counselforthedefendantallegedthatthefactssetforthinthe
complaintwithrespecttotheexecutionofthedeeddidnotconstituteacauseofaction,nordid
On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards thoseallegedintheotherformofactionforthecollectionof1*3,000,thevalueoftherealty.
amended,intheCourtofFirstInstanceofAlbayagainstEngracioOrense,inwhichhesetforth
Asthesecondspecialdefense,heallegedthatthedefendantwasthelawfulownerofthe
thatonandbeforeFebruary14,1907,thedefendantOrensehadbeentheownerofaparcelof propertyclaimedinthecomplaint,ashisownershipwasrecordedinthepropertyregistry,and
land, with the buildings and improvements thereon, situated in the pueblo of Guinobatan,that,sincehistitlehadbeenregisteredundertheproceedingsinremprescribedbyActNo.496,
Albay,thelocation,areaandboundariesofwhichwerespecifiedinthecomplaint;thatthesaiditwasconclusiveagainsttheplaintiffandthepretendedrightsallegedtohavebeenacquiredby
propertyhasuptodatebeenrecordedinthenewpropertyregistryinthenameofthesaid Jose Duran prior to such registration could not now prevail; that the defendant had not
Orense,accordingtocertificateNo.5,withtheboundariesthereingiven;that,onFebruary14,executedanywrittenpowerofattorneynorgivenanyverbalauthoritytoJoseDuraninorder
1907,JoseDuran,anephewofthedefendant,withthelatter'sknowledgeandconsent,executed thatthelattermight,inhisnameandrepresentation,sellthesaidpropertytotheplaintiff
beforeanotaryapublicinstrumentwherebyhesoldandconveyedtotheplaintiffcompany,forcompany;thatthedefendant'sknowledgeofthesaidsalewasacquiredlongaftertheexecution
J*l,500, the aforementioned property, the vendor Duran reserving to himself the right to ofthecontractofsalebetweenDuranandGutierrezHermanos,andthatpriortheretothe
repurchase it for the same price within a period of four years from the date of the said defendantdidnotintentionallyanddeliberatelyperformanyactsuchasmighthaveinducedthe
instrument; that the plaintiff company had not entered into possession of the purchased plaintifftobelievethatDuranwasempoweredandauthorizedbythedefendantandwhich
property,owingtoitscontinuedoeeupancybythedefendantandhisnephew,JoseDuran,by wouldwarranthiminactingtohisowndetriment,undertheinfluenceofthatbelief.Counsel
virtueofacontractofleaseexecutedbytheplaintifftoDuran,whichcontractwasinforceup thereforeprayedthatthedefendantbeabsolvedfromthecomplaintandthattheplaintiffbe
toFebruary14>1911;thatthesaidinstrumentofsaleoftheproperty,executedbyJoseDuran, sentencedtopaythecostsandtoholdhispeaceforever.
waspubliclyandfreelyconfirmedandratifiedbythedefendantOrenseinaverbaldeclaration
Afterthehearingofthecaseandanexaminationoftheevidenceintroducedbyboth
madebyhimonMarch14,1912,intheCourtofFirstInstanceofAlbay,totheeffectthatthe parties,thecourtrenderedthejudgmentaforementioned,towhichcounselforthedefendant
said instrument of sale was executed by Duran with the knowledge and consent of the exceptedandmovedforanewtrial.Thismotionwasdenied,anexceptionwastakenbythe
defendant,Orense;that,inordertoperfectthetitletothesaidproperty,theplaintiffhadtodefendantand, upon presentation of the proper bill of exceptions, thesamewasapproved,
demandofthedefendantthatheexecuteinlegalformadeedofconveyanceoftheproperty,but certifiedandforwardedtotheclerkofthiscourt.
thatthedefendantOrenserefusedtodoso,withoutanyjustifiablecauseorreason,wherefore
Thissuitinvolvesthevalidityandefficacyofthesaleunderrightofredemptionofa
heshouldbecompelledtoexecutethesaiddeedbyanexpressorderofthecourt,forJose parceloflandandamasonryhousewithaniparooferectedthereon,effectedbyJoseDuran,a
Duranisnotoriouslyinsolventandcannotreimbursetheplaintiffcompanyforthepriceofthe nephewoftheowneroftheproperty,EngracioOrense,forthesumoff*l,500bymeansofa
salewhichhereceived,norpayanysumwhateverforthelossesanddamagesoccasionedby notarialinstrumentexecutedandratifiedonFebruary14,1907.
thesaidsale,asidefromthefactthattheplaintiffhadsuffereddamagebylosingthepresent
Afterthelapseofthefouryearsstipulatedfortheredemption,thedefendantrefusedto
valueoftheproperty,whichwasworth1*3,000;that,unlesssuchdeedoffinalconveyance deliverthepropertytothepurchaser,thefirmofGutierrezHermanos,andtopaytherental
wereexecutedinbehalf*oftheplaintiffcompany,itwouldbeinjuredbythefraudperpetrated thereofattherateoff*30permonthforitsuseandoccupationsinceFebruary14,1911,when

theperiodforitsrepurchaseterminated.Hisrefusalwasbasedontheallegationsthathehad confirmthesaidcontractofsaleandconsenttoitsexecution.
beenandwasthentheownerofthesaidproperty,whichwasregisteredinhisnameinthe
OnthetestimonygivenbyEngracioOrenseatthetrialofDuranforestafa,thelatterwas
propertyregistry;thathehadnotexecutedanywrittenpowerofattorneytoJoseDuran,norhad acquitted,anditwouldnotbejustthatthesaidtestimony,expressiveofhisconsenttothesale
hegiventhelatteranyverbalauthorizationtosellthesaid propertytotheplaintifffirminhis ofhisproperty,whichdeterminedtheacquittalofhisnephew,JoseDuran,whothenactedas
name;andthat,priortotheexecutionofthedeedofsale,thedefendantperformednoactsuch his business manager, and which testimony wiped out the deception that in the beginning
asmighthaveinducedtheplaintifftobelievethatJoseDuranwasempoweredandauthorized appearedtohavebeenpracticedbythesaidDuran,shouldnotnowserveinpassinguponthe
bythedefendanttoefrectthesaidsale,
conductofEngracioOrenseinrelationtothefirmofGutierrezHermanosinordertoprovehis
Theplaintifffirm,therefore,chargedJoseDuran,intheCourtofFirstInstanceofthesaidconsenttothesaleofhisproperty,for,haditnotbeenfortheconsentadmittedbythedefendant
province,withestafa,forhavingrepresentedhimselfinthesaiddeedofsaletobetheabsolute Orense,theplaintiffwouldhavebeenthevictimofestafa.
owneroftheaforesaidlandandimprovements,whereasinrealitytheydidnotbelongtohim,
IfthedefendantOrenseacknowledgedandadmittedunderoaththathehadconsentedto
buttothedefendantOrense.However,atthetrialofthecaseEngracioOrense,calledasa JoseDuran'ssellingthepropertyinlitigationtoGutierrezHermanos,itisnotjustnorisit
witness,beinginterrogatedbythefiscalastowhetherhehadconsentedtoDuran'ssellingthe permissibleforhimafterwardtodenythatadmission,totheprejudiceofthepurchaser,who
saidpropertyunderrightofredemptiontothefirmofGutierrezHermanos,repliedthathehad. gave1*1,500forthesaidproperty.
Inviewofthisstatementbythedefendant,thecourtacquittedJoseDuranofthechargeof
ThecontractofsaleofthesaidpropertycontainedinthenotarialinstrumentofFebruary
estafa.
14,1907,isallegedtobeinvalid,nullandvoidundertheprovisionsofparagraph5ofsection
AsaresultoftheacquittalofJoseDuran,basedontheexplicittestimonyofhisuncle,Engracio 335oftheCodeofCivilProcedure,becausetheauthoritywhichOrensemayhavegivento
Orense,theowneroftheproperty,totheeffectthathehadconsentedtohisnephewDuran'ssellingthe Durantomakethesaidcontractofsaleisnotshowntohavebeeninwritingandsignedby
propertyunderrightofrepurchasetoGutierrezHermanos,counselforthisfirmfiledacomplaintpraying, Orense,buttherecorddisclosessatisfactoryandconclusiveproofthatthedefendantOrense
amongother remedies,thatthedefendantOrensebe compelledtoexecute adeedforthetransfer and
gavehisconsenttothecontractofsaleexecutedinapublicinstrumentbyhisnephewJose
conveyancetotheplaintiffcompanyofalltheright,titleandinterestwhichOrensehadinthepropertysold,
Duran.Suchconsentwasproveninacriminalactionbythesworntestimonyoftheprincipal
andtopaytothesametherentalofthepropertyduefromFebruary14,1911.
Notwithstandingtheallegationsofthedefendant,therecordinthiscaseshowsthathedidgivehis andpresentedinthiscivilsuitbyothersworntestimcnyofthesameprincipalandbyother
consentinorderthathisnephew,JoseDuran,mightsellthepropertyinquestiontoGutierrezHermanos, evidencetowhichthedefendantmadenoobejction.Thereforetheprincipalisboundtoabide
andthathedidthereafterconfirmandratifythesalebymeansofapublicinstrumentexecutedbeforea bytheconsequencesofhisagencyasthoughithadactuallybeengiveninwriting.
notary.
TherepeatedandsuccessivestatementsmadebythedefendantOrenseintwoaetions,
Ithavingbeenprovenatthetrialthathegavehisconsenttothesaidsale,itfollowsthat wherein he affirmed that he had given his consent to the sale of his property, meet the
thedefendantconferredverbal,oratleastimplied,powerofagencyuponhisnephewDuran, requirementsofthelawandlegallyexeusethelackofwrittenauthority,and,astheyareafull
whoaccepteditinthesamewaybysellingthesaidproperty.Theprincipalmusttherefore ratificationoftheactsexecutedbyhisnephewJoseDuran, theyproducetheeffectsofan
fulfillalltheobligationscontractedbytheagent,whoactedwithinthescopeofhisauthority. expresspowerofagency.
(CivilCode,arts.1709,1710and1727.)
Thejudgmentappealedfromisinharmonywiththelawandthemeritsofthecase,andtheerrors
Evenshoulditbeheldthatthesaidconsentwasgrantedsubsequentlytothesale,itis assignedtheretohavebeendulyrefutedbytheforegoingconsiderations,soitshouldbeaffirmed.
unquestionable that the defendant, the owner of the property, approved the action of his
nephew,whointhiscaseactedasthemanagerofhisuncle'sbusiness,andOrense'sratification
producedtheeffectofanexpressauthorizationtomakethesaidsale.(CivilCode,arts.1888
and1892.)
Article1259oftheCivilCodeprescribes:"Noonecancontractinthenameofanother
withoutbeingauthorizedbyhimorwithouthavinghislegalrepresentationaccordingtolaw.
"Acontractexecutedinthenameofanotherbyonewhohasneitherhisauthorizationnorlegal
representationshallbevoid,unlessitshouldberatifiedbythepersoninwhosenameitwas
executedbeforebeingrevokedbytheothereontractingparty."
Theswornstatementmadebythedefendant,Orense,whiletestifyingasawitnessatthetrialof
Duranforestafa,virtuallyconfirmsandratifiesthesaleofhispropertyeffectedbyhisnephew,
Duran,and,pursuanttoarticle1313oftheCivilCode,remediesalldefectswhichthecontract
mayhavecontainedfromthemomentofitsexecution.
ThesaleofthesaidpropertymadebyDurantoGutierrezHermanoswasindeednulland
voidinthebeginning,butafterwardsbecameperfectlyvalidandcuredofthedefecto.fnullity
itboreatitsexecutionbytheconfirmationsolemnlymadebythesaidowneruponhisstating
underoathtothejudgethathehimselfconsentedtohisnephewJoseDuran'smakingthesaid
sale.Moreover,pursuanttoarticle1309oftheCode,therightofactionfornullificationthat
couldhavebeenbroughtbecamelegallyextinguishedfromthemomentthecontractwasvalidly
confirmedand ratified,and,inthepresent case, itisunquestionablethatthedefendantdid

Thejudgmentappealedfromisherebyaffirmed,withthecostsagainsttheappellant.Afirmed. 3.

Same;Same;Landregistration;TorrensTitlecannotcoverupfraud;Registrationnot
equivalenttonoticeofrepudiation.ItistruethatregistrationundertheTorrenssystemis
No.L44546.January29,1988.*
constructivenoticeoftitle,butithaslikewisebeenourholdingthattheTorrenstitledoesnot
RUSTICOADILLE,petitioner,vs.THEHONORABLECOURTOFAPPEALS,EMETERIA furnishashieldforfraud. It is therefore no argument to say that the act of registration is
ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA ASEJO, and SANTIAGO equivalenttonoticeofrepudiation,assumingtherewasone,notwithstandingthelongstanding
ASEJO,respondents.
rulethatregistrationoperatesasauniversalnoticeoftitle.
CivilLaw;Property;Coownership;Redemption;Redemptionofthewholepropertyby
CivilProcedure;Prescription;Whileactionstoenforceaconstructivetrustprescribe
acoownerwillnotmakehimofallofit.Therightofrepurchasemaybeexercisedbyaco intenyearsfromregistrationoftheproperty, private respondents right commenced from
ownerwithrespecttohissharealone.Whiletherecordsshowthatthepetitionerredeemedthe actualdiscoveryofpetitionersactofdefraudation.Forthesamereason,wecannotdismiss
propertyinitsentirety,shoulderingtheexpensestherefor,thatdidnotmakehimtheownerof theprivaterespondentsclaimscommencedin1974overtheestateregisteredin1955.While
allofit.Inotherwords,itdidnotputtoendtheexistingstateofcoownership.
actionstoenforceaconstructivetrustprescribesintenyears,reckonedfromthedateofthe
Same;Same;Same;Same;Same;Failureofallcoownerstoredeemtheproperty registrationoftheproperty,we,aswesaid,arenotpreparedtocounttheperiodfromsucha
entitlesthevendeearetrotoretainitandconsolidatetitletheretoinhisname;Redemptionnot dateinthiscase.Wenotethepetitionerssubrosaeffortstogetholdofthepropertyexclusively
amodeofterminatingacoownership.Theresultisthatthepropertyremainstobeina for himself beginning with his fraudulent misrepresentation in his unilateral affidavit of
conditionofcoownership.Whileavendeearetro,underArticle1613oftheCode,maynotbe extrajudicial settlement that he is the only heir and child of his mother Feliza with the
compelledtoconsenttoapartialredemption,theredemptionbyonecoheirorcoowneroftheconsequencethathewasabletosecuretitleinhisnamealso.Accordingly,weholdthatthe
propertyinitstotalitydoesnotvestinhimownershipoverit.Failureonthepartofalltheco right of the private respondents commenced from the time they actually discovered the
ownerstoredeemitentitlesthevendeearetrotoretainthepropertyandconsolidatetitlethereto petitionersactofdefraudation.AccordingtotherespondentCourtofAppeals,theycameto
inhisname.Buttheprovisiondoesnotgivetotheredeemingcoownertherighttotheentireknow[ofit]apparentlyonlyduringtheprogressofthelitigation.Hence,prescriptionisnota
property.Itdoesnotprovideforamodeofterminatingacoownership.
bar.
Same;Same;Same;Same;Same;Registrationofpropertynotameansofacquiring
Same;Same;Prescriptiveasanaffirmativedefensemustbepleadedeitherinamotion
ownership.Neitherdoesthefactthatthepetitionerhadsucceededinsecuringtitleoverthe to dismiss or in the answer otherwise it is deemed waived.Moreover, and as a rule,
parcelinhisnameterminatetheexistingcoownership.Whilehishalfbrothersandsistersare, prescriptionisanaffirmativedefensethatmustbepleadedeitherinamotiontodismissorin
aswesaid,liabletohimforreimbursementasandfortheirsharesinredemptionexpenses,he theanswerotherwiseitisdeemedwaived,andhere,thepetitionerneverraisedthatdefense.
cannotclaimexclusiverighttothepropertyownedincommon.Registrationofpropertyisnota Therearerecognizedexceptionstothisrule,butthepetitionerhasnotshownwhytheyapply.
meansofacquiringownership.Itoperatesasamerenoticeofexistingtitle,thatis,ifthereis PETITIONforcertioraritoreviewthedecisionoftheCourtofAppeals.
one.
Same;Same;Same;Same;Petitionerisatrusteeofthepropertyonbehalfofprivate
ThefactsarestatedintheopinionoftheCourt.
respondents.Thepetitionermustthenbesaidtobeatrusteeofthepropertyonbehalfofthe
SARMIENTO,J.:
privaterespondents.WeagreewiththerespondentCourtofAppealsthatfraudattendedthe
registrationoftheproperty.Thepetitionerspretensionthathewasthesoleheirtothelandin
the affidavit of extrajudicial settlement he executed preliminary to the registration thereof In issue herein are property and property rights, a familiar subject of controversy and a
betrays a clear effort on his part to defraud his brothers and sisters and to exercise sole wellspringofenormousconflictthathaslednotonlytoprotractedlegalentanglementsbutto
dominionovertheproperty.ItistheviewoftherespondentCourtthatthepetitioner,intaking evenmorebitterconsequences,likestrainedrelationshipsandeventheforfeitureoflives.Itisa
overtheproperty,didsoeitheronbehalfofhiscoheirs,inwhichevent,hehadconstituted questionthatlikewisereflectsatragiccommentaryonprevailingsocialandculturalvaluesand
himselfanegotiorumgestorunderArticle2144oftheCivilCode,orforhisexclusivebenefit, institutions,where,asoneobservernotes,wealthanditsaccumulationarethebasisofself
inwhichcase,heisguiltyoffraud,andmustactastrustee,theprivaterespondentsbeingthe fulfillment and where property is held as sacred as life itself. It is in the defense of his
beneficiaries,undertheArticle1456.Theevidence,ofcourse,pointstothesecondalternative, property,saysthismodernthinker,thatonewillmobilizehisdeepestprotectivedevices,and
thepetitionerhavingassertedclaimsofexclusiveownershipoverthepropertyandhavingacted anybodythatthreatenshispossessionswillarousehismostpassionateenmity.1
ThetaskofthisCourt,however,isnottojudgethewisdomofvalues;theburdenof
infraudofhiscoheirs.Hecannotthereforebesaidtohaveassumedthemeremanagementof
thepropertyabandonedbyhiscoheirs,thesituationArticle2144oftheCodecontemplates.In reconstructing the social order is shouldered by the political leadershipand the people
anycase,astherespondentCourtitselfaffirms,theresultwouldbethesamewhetheritisone themselves.ThepartieshavecometothisCourtforreliefandaccordingly,ourresponsibilityis
togivethemthatreliefpursuanttothedecreeoflaw.
ortheother.Thepetitionerwouldremainliabletotheprivaterespondents,hiscoheirs.
Theantecedentfactsarequotedfromthedecision2appealedfrom:
Same;Same;Same;Prescription;Prescriptionmustbeprecededbyrepudiationto
terminatecoownership;Requisites.Prescription,asamodeofterminatingarelationofco xxxxxxxxx
xxx[Th]elandinquestionLot14694ofCadastralSurveyofAlbaylocatedinLegaspi
ownership, must have been preceded by repudiation (of the coownership). The act of
repudiation, in turn, is subject to certain conditions: (1) a coowner repudiates the co Citywithanareaofsome11,325sq.m.originallybelongedtooneFelisaAlzulasherown
ownership;(2)suchanactofrepudiationisclearlymadeknowntotheothercoowners;(3)the privateproperty;shemarriedtwiceinherlifetime;thefirst,withoneBernabeAdille,with
evidencethereonisclearandconclusive;and(4)hehasbeeninpossessionthroughopen, whomshehadasanonlychild,hereindefendantRusticoAdille;inhersecondmarriagewith
continuous,exclusive,andnotoriouspossessionofthepropertyfortheperiodrequiredbylaw. oneProcopioAsejo,herchildrenwerehereinplaintiffs,now,sometimein1939,saidFelisa
Adillevs.CA

6.
7.
8.

soldthepropertyinpactoderetrotocertain3rdpersons,periodofrepurchasebeing3years, redemption,theredemptionbyonecoheirorcoownerofthepropertyinitstotalitydoesnot
butshediedin1942withoutbeingabletoredeemandafterherdeath,butduringtheperiodof vestinhimownershipoverit.Failureonthepartofallthecoownerstoredeemitentitlesthe
redemption,hereindefendantrepurchased,byhimselfalone,andafterthat,heexecutedadeed vendeearetrotoretainthepropertyandconsolidatetitletheretoinhisname.7Buttheprovision
ofextrajudicialpartitionrepresentinghimselftobetheonlyheirandchildofhismotherFelisa doesnotgivetotheredeemingcoownertherighttotheentireproperty.Itdoesnotprovidefor
withtheconsequencethathewasabletosecuretitleinhisnamealonealso,sothatOCT.No. amodeofterminatingacoownership.
21137inthenameofhismotherwastransferredtohisname,thatwasin1955;thatwaswhy
Neitherdoesthefactthatthepetitionerhadsucceededinsecuringtitleovertheparcelin
aftersomeeffortsofcompromisehadfailed,hishalfbrothersandsisters,hereinplaintiffs,filedhisnameterminatetheexistingcoownership.Whilehishalfbrothersandsistersare,aswe
presentcaseforpartitionwithaccountingonthepositionthathewasonlyatrusteeonan said,liabletohimforreimbursementasandfortheirsharesinredemptionexpenses,hecannot
impliedtrustwhenheredeemed,andthisistheevidence,butasitalsoturnedoutthatoneof claimexclusiverighttothepropertyownedincommon.Registrationofpropertyisnotameans
plaintiffs,EmeteriaAsejowasoccupyingaportion,defendantcounterclaimedforhertovacate ofacquiringownership.Itoperatesasamerenoticeofexistingtitle,thatis,ifthereisone.
Thepetitionermustthenbesaidtobeatrusteeofthepropertyonbehalfoftheprivate
that,
Wellthen,afterhearingtheevidence,trialJudgesustaineddefendantinhispositionthat respondents.TheCivilCodestates:
hewasandbecameabsoluteowner,hewasnotatrustee,andtherefore,dismissedcaseandalso ART.1456.Ifpropertyisacquiredthroughmistakeorfraud,thepersonobtainingitis,byforce
condemnedplaintiffoccupant,Emeteriatovacate;itisbecauseofthisthatplaintiffshavecomeoflaw,consideredatrusteeofanimpliedtrustforthebenefitofthepersonfromwhomthe
propertycomes.
hereandcontendthattrialcourterredin:
I....declaringthedefendantabsoluteowneroftheproperty;
We agreewith therespondent Courtof Appealsthat fraudattended theregistration ofthe
property.Thepetitionerspretensionthathewasthesoleheirtothelandintheaffidavitof
II....notorderingthepartitionoftheproperty;and
III....orderingoneoftheplaintiffswhoisinpossessionoftheportionofthepropertytovacate extrajudicialsettlementheexecutedpreliminarytotheregistrationthereofbetraysacleareffort
onhisparttodefraudhisbrothersandsistersandtoexercisesoledominionovertheproperty.
theland,p.1Appellantsbrief.
whichcanbereducedtosimplequestionofwhetherornotonthebasisofevidenceand Theaforequotedprovisionthereforeapplies.
ItistheviewoftherespondentCourtthatthepetitioner,intakingovertheproperty,did
law,judgmentappealedfromshouldbemaintained.3xxxxxxxxx
The respondent Court of Appeals reversed the trial court,4 and ruled for the plaintiffssoeitheronbehalfofhiscoheirs,inwhichevent,hehadconstitutedhimselfa negotiorum
appellants,theprivaterespondentsherein.Thepetitionernowappeals,bywayofcertiorari, gestorunderArticle2144oftheCivilCode,orforhisexclusivebenefit,inwhichcase,heis
fromtheAppellateCourtsdecision.
guiltyoffraud,andmustactastrustee,theprivaterespondentsbeingthebeneficiaries,under
Werequiredtheprivaterespondentstofileacommentandthereafter,havinggivendue theArticle1456.Theevidence,ofcourse,pointstothesecondalternativethepetitionerhaving
coursetothepetition,directedthepartiestofiletheirbriefs.Onlythepetitioner,however,filedassertedclaimsofexclusiveownershipoverthepropertyandhavingactedinfraudofhisco
abrief,andtheprivaterespondentshavingfailedtofileone,wedeclaredthecasesubmittedfor heirs. He cannot therefore be said to have assume the mere management of the property
decision.
abandonedbyhiscoheirs,thesituationArticle2144oftheCodecontemplates.Inanycase,as
Thepetitionraisesapurelylegalissue:Mayacoowneracquireexclusiveownershipover therespondentCourtitselfaffirms,theresultwouldbethesamewhetheritisoneortheother.
thepropertyheldincommon?
Thepetitionerwouldremainliabletotheprivaterespondents,hiscoheirs.
Essentially,itisthepetitionerscontentionthatthepropertysubjectofdisputedevolved
ThisCourtisnotunawareofthewellestablishedprinciplethatprescriptionbarsany
upon him upon the failure of his coheirs to join him in its redemption within the period demandonproperty(ownedincommon)heldbyanother(coowner)followingtherequired
requiredbylaw.HereliesontheprovisionsofArticle1515oftheoldCivilCode,Article1613 numberofyears.Inthatevent,thepartyinpossessionacquirestitletothepropertyandthestate
ofthepresentCode,givingthevendeearetrotherighttodemandredemptionoftheentireof coownershipis ended.8 Inthe caseat bar, theproperty wasregistered in1955 bythe
property.
petitioner,solelyinhisname,whiletheclaimoftheprivaterespondentswaspresentedin1974.
Thereisnomeritinthispetition.
Hasprescriptionthen,setin?
Therightofrepurchasemaybeexercisedbyacoownerwithrespecttohissharealone.5
We hold in the negative. Prescription, as a mode of terminating a relation of co
Whiletherecordsshowthatthepetitionerredeemedthepropertyinitsentirety,shoulderingthe ownership, must have been preceded by repudiation (of the coownership). The act of
expensestherefor,thatdidnotmakehimtheownerofallofit.Inotherwords,itdidnotputto repudiation,inturn,issubjecttocertainconditions:(1)acoownerrepudiatesthecoowner
endtheexistingstateofcoownership.
ship;(2)suchanactofrepudiationisclearlymadeknowntotheothercoowners;(3)the
Necessary expensesmay beincurred byone coowner, subjectto hisright tocollect evidencethereonisclearandconclusive;and(4)hehasbeeninpossessionthroughopen,
reimbursementfromtheremainingcoowners.6Thereisnodoubtthatredemptionofpropertycontinuous,exclusive,andnotoriouspossessionofthepropertyfortheperiodrequiredbylaw.9
entailsanecessaryexpense.UndertheCivilCode:
Theinstantcaseshowsthatthepetitionerhadnotcompliedwiththeserequisites.Weare
ART.488.Eachcoownershallhavearighttocompeltheothercoownerstocontributetothe notconvincedthathehadrepudiatedthecoownership;onthecontrary,hehaddeliberately
expensesofpreservationofthethingorrightownedincommonandtothetaxes.Anyoneof kepttheprivaterespondentsinthedarkbyfeigningsoleheirshipovertheestateunderdispute.
thelattermayexempthimselffromthisobligationbyrenouncingsomuchofhis undividedHe cannot therefore be said to have made known his efforts to deny the coownership.
interestasmaybeequivalenttohisshareoftheexpensesandtaxes.Nosuchwaivershallbe Moreover,oneoftheprivaterespondents,EmeteriaAsejo,isoccupyingaportionofthelandup
madeifitisprejudicialtothecoownership.
tothepresent,yet,thepetitionerhasnottakenpainstoejecthertherefrom.Asamatteroffact,
Theresultisthatthepropertyremainstobeinaconditionofcoownership.Whileavendeea hesoughttorecoverpossessionofthatportionEmeteriaisoccupyingonlyasacounterclaim,
retro, under Article 1613 of the Code, may not be compelled to consent to a partial andonlyaftertheprivaterespondentshadfirstsoughtjudicialrelief.

ItistruethatregistrationundertheTorrenssystemisconstructivenoticeoftitle,10butit
haslikewisebeenourholdingthattheTorrenstitledoesnotfurnishashieldforfraud.11Itis
thereforenoargumenttosaythattheactofregistrationisequivalenttonoticeofrepudiation,
assumingtherewasone,notwithstandingthelongstandingrulethatregistrationoperatesasa
universalnoticeoftitle.
Forthesamereason,wecannotdismisstheprivaterespondentsclaimscommencedin
1974overtheestateregisteredin1955.Whileactionstoenforceaconstructivetrustprescribes
intenyears,12reckonedfromthedateoftheregistrationoftheproperty,13we,aswesaid,are
notpreparedtocounttheperiodfromsuchadateinthiscase.Wenotethepetitionerssubrosa
efforts to get hold of the property exclusively for himself beginning with his fraudulent
misrepresentationinhisunilateralaffidavitofextrajudicialsettlementthatheistheonlyheir
andchildofhismotherFelizawiththeconsequencethathewasabletosecuretitleinhisname
also.14 Accordingly,weholdthattherightoftheprivaterespondentscommencedfromthe
time they actually discovered the petitioners act of defraudation.15 According to the
respondentCourtofAppeals,theycametoknow[ofit]apparentlyonlyduringtheprogressof
thelitigation.16Hence,prescriptionisnotabar.
Moreover,andasarule,prescriptionisanaffirmativedefensethatmustbepleadedeither
in a motion to dismiss or in the answer otherwise it is deemed waived,17 and here, the
petitionerneverraisedthatdefense.18 Therearerecognizedexceptionstothisrule,butthe
petitionerhasnotshownwhytheyapply.
WHEREFORE,therebeingnoreversibleerrorcommittedbytherespondentCourtof
Appeals,thepetitionisDENIED.TheDecisionsoughttobereviewedisherebyAFFIRMEDin
toto.Nopronouncementastocosts.
SOORDERED.
Yap(Chairman),MelencioHerrera,ParasandPadilla,JJ.,concur.
Petitiondenied.Decisionaffirmed.
Notes.Afterthelapseofredemptionperiodwithoutanyredemptionmade,awritof
possessioncanbeissuedinfavorofapurchaser.(BancoFilipinovs.IAC,142SCRA44.)
Policyofthelawistoaidratherthandefeatrightofredemption.(Tiosecovs.CA,143
SCRA705.)
o0o
________________
17RULESOFCOURT,Rule9,sec.2.Apartyneednotpleadthestatuteoflimitationsin
aresponsivepleading(ormotiontodismiss)wherethecomplaintitselfshowsthattheclaims
have prescribed [Ferrer v. Ericta, No. L41767, August 23, 1978, 84 SCRA 705 (1978)].
Likewise,ithasbeenheldthatwherethedefendanthadnowayofknowingthattheclaim
advancedbytheplaintiffhadprescribed,hisfailuretoinvokethestatute(inhisansweror
motiontodismiss)doesnotconstituteawaiverofsuchadefense[Guanzov.Ramirez,32Phil.
492(1914)].Inanothercase,wesaidthatprescriptionneednotbepleadedspecificallyinan
answerwheretheevidenceitselfshowsthatprescriptionbarstheplaintiffsclaims[Philippine
NationalBankv.Perez,No.L20412,February28,1966,16SCRA270(1966);seealsoChua
Lankov.Dioso,97[Phil.821(1955);PhilippineNationalBankv.PacificCommissionHouse,
No.L22675,March28,1969,27SCRA766(1969)].
18Rollo,id.,18.

Inthecourseofthebusinesstransactionbetweenthetwo,FACETSfromtimetotime
remittedcertainamountsofmoneytopetitionerinpaymentfortheitemsithadpurchased.
SometimeinAugust1980,FACETSinstructedtheFirstNationalStateBankofNewJersey,
G.R.No.82670.September15,1989.*
DOMETILAM.ANDRES,doingbusinessunderthenameandstyleIRENESWEARINGNewark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to
APPAREL, petitioner, vs. MANUFACTURERS HANOVER & TRUST CORPORATIONpetitionerviaPhilippineNationalBank,Sta.Cruz,Branch,Manila(hereinafterreferredtoas
PNB).
andCOURTOFAPPEALS,respondents.
Actingonsaidinstruction,FNSBinstructedprivaterespondentManufacturersHanover
CivilLaw;ObligationsandContracts;SolutioIndebiti;Fortheruleonsolutioindebiti
toapply,itisrequiredthathewhopaidwasundernoobligationtodosoandthatpaymentwas andTrustCorporationtoeffecttheabovementionedtransferthroughitsfacilitiesandtocharge
madebyreasonofanessentialmistakeoffact.ThesoleissueinthiscaseiswhetherornottheamounttotheaccountofFNSBwithprivaterespondent.Althoughprivaterespondentwas
the private respondent has the right to recover the second $10,000.00 remittance it had abletosendatelextoPNBtopaypetitioner$10,000.00throughthePilipinasBank,where
deliveredtopetitioner.TheresolutionofthisissuewouldhingeontheapplicabilityofArt. petitioner had an account, the payment was not effected immediately because the payee
2154oftheNewCivilCode. xxxForthisarticletoapplythefollowingrequisitesmust designatedinthetelexwasonlyWearingApparel.UponquerybyPNB,privaterespondent
concur:(1)thathewhopaidwasnotunderobligationtodoso;and,(2)thatpaymentwas sentPNBanothertelexdatedAugust27,1980statingthatthepaymentwastobemadeto
madebyreasonofanessentialmistakeoffact[CityofCebuv.Piccio,110Phil.558,563, Irenes Wearing Apparel. On August 28, 1980, petitioner received the remittance of
$10,000.00throughDemandDraftNo.225654ofthePNB.
(1960)].
Meanwhile,onAugust25,1980,afterlearningaboutthedelayintheremittanceofthe
Courts;Certiorari;QuestionsofFact;ThejurisdictionoftheSupremeCourtincases
broughttoitfromtheCourtofAppealsislimitedtoreviewingandrevisingerrorsoflaw moneytopetitioner, FACETS informed FNSB about the situation. OnSeptember8, 1980,
imputedtothelatter,itsfindingsoffactbeingconclusive.Theruleregardingquestionsoffactunaware that petitioner had already received the remittance, FACETS informed private
beingraisedwiththisCourtinapetitionforcertiorariunderRule45oftheRevisedRulesof respondentaboutthedelayandatthesametimeamendeditsinstructionbyaskingittoeffect
CourthasbeenstatedinRemalantev.Tibe,G.R.No.59514,February25,1988,158SCRA thepaymentthroughthePhilippineCommercialandIndustrialBank(hereinafterreferredtoas
138,thus:Theruleinthisjurisdictionisthatonlyquestionsoflawmayberaisedinapetition PCIB)insteadofPNB.
Accordingly, private respondent, which was also unaware that petitioner had already
forcertiorariunderRule45oftheRevisedRulesofCourt.ThejurisdictionoftheSupreme
CourtincasesbroughttoitfromtheCourtofAppealsislimitedtoreviewingandrevisingthe receivedtheremittanceof$10,000.00fromPNBinstructedthePCIBtopay$10,000.00to
errorsoflawimputedtoit,itsfindingsoffactbeingconclusive[Chanv.CourtofAppeals, petitioner.
Hence,onSeptember11,1980,petitionerreceivedasecond$10,000.00remittance.
G.R.No.L27488,June30,1970,33SCRA737,reiteratingalonglineofdecisions.]This
PrivaterespondentdebitedtheaccountofFNSBforthesecond$10,000.00remittance
CourthasemphaticallydeclaredthatitisnotthefunctionoftheSupremeCourttoanalyzeor
weighsuchevidencealloveragain,itsjurisdictionbeinglimitedtoreviewingerrorsoflawthat effectedthroughPCIB.However,whenFNSBdiscoveredthatprivaterespondenthadmadea
mighthavebeencommittedbythelowercourt[Tiongcov.DelaMerced,G.R.No.L24426, duplicationoftheremittance,itaskedforarecreditofitsaccountintheamountof$10,000.00.
July25,1974,58SCRA89;Coronav.CourtofAppeals,G.R.No.L62482,April28,1983, Privaterespondentcompliedwiththerequest.
Privaterespondentaskedpetitionerforthereturnofthesecondremittanceof$10,000.00
121SCRA865;Baniquedv.CourtofAppeals,G.R.No.L47531,February20,1984,127
SCRA596].Barring,therefore,ashowingthatthefindingscomplainedofaretotallydevoidof butthelatterrefusedtopay.OnMay12,1982acomplaintwasfiledwiththeRegionalTrial
supportintherecord,orthattheyaresoglaringlyerroneousastoconstituteseriousabuseof Court,BranchCV,QuezonCitywhichwasdecidedinfavorofpetitionerasdefendant.Thetrial
discretion,suchfindingsmuststand,forthisCourtisnotexpectedorrequiredtoexamineor courtruledthatArt.2154oftheNewCivilCodeisnotapplicabletothecasebecausethe
contrast the oral and documentary evidence submitted by the parties [Santa Ana, Jr. v. secondremittancewasmadenotbymistakebutbynegligenceandpetitionerwasnotunjustly
enrichedbyvirtuethereof[Record,p.234].Onappeal,theCourtofAppealsheldthatArt.2154
Hernandez,G.R.No.L16394,December17,1966,18SCRA973.][atpp.144145.]
isapplicableandreversedtheRTCdecision.ThedispositiveportionoftheCourtofAppeals
PETITIONforcertioraritoreviewthejudgmentoftheCourtofAppeals.
decisionreadsasfollows:
WHEREFORE,theappealeddecisionisherebyREVERSEDandSETASIDEandanotherone
ThefactsarestatedintheopinionoftheCourt.
enteredinfavorofplaintiffappellantandagainstdefendantappelleeDomelita(sic)M.Andres,
RoqueA.Tamayoforpetitioner.
doingbusinessunderthenameandstyleIrenesWearingAppareltoreimburseand/orreturn
Romulo,Mabanta,Buenaventura,Sayoc&DelosAngelesforprivaterespondent.
to plaintiffappellant the amount of $10,000.00, its equivalent in Philippine currency, with
CORTS,J.:
interestsatthelegalratefromthefilingofthecomplaintonMay12,1982untilthewhole
amountisfullypaid,plustwentypercent(20%)oftheamountdueasattorneysfees;andtopay
AssailedinthispetitionforreviewoncertiorariisthejudgmentoftheCourtofAppeals,which, thecosts.
applyingthedoctrineof solutioindebiti,reversedthedecisionoftheRegionalTrialCourt,
Withcostsagainstdefendantappellee.
BranchCV,QuezonCitybydecidinginfavorofprivaterespondent.
SOORDERED.[Rollo,pp.2930.]
Petitioner, using the business name Irenes Wearing Apparel, was engaged in the Thereafter,thispetitionwasfiled.
manufactureofladiesgarments,childrenswear,mensapparelandlinensforlocalandforeign
Thesoleissueinthiscaseiswhetherornottheprivaterespondenthastherighttorecover
buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as thesecond$10,000.00remittanceithaddeliveredtopetitioner.Theresolutionofthisissue
FACETS)oftheUnitedStates.
wouldhingeontheapplicabilityofArt.2154oftheNewCivilCodewhichprovidesthat:
4. Andres vs. Mantrust

Art.2154.Ifsomethingreceivedwhenthereisnorighttodemandit,anditwasundulydeliveredof New Jersey actually requested the plaintiffappellant Manufacturers Hanover & Trust
throughmistake,theobligation toreturnitarises.
CorporationtoremittoIrenesWearingApparelwasUS$10,000.00.Onlyoneremittancewas
ThisprovisionistakenfromArt.1895oftheSpanishCivilCodewhichprovidedthat:
requestedbyFirstNationalStateBankofNewJerseyasperinstructionofFacetsFunwear
Art.1895.Ifathingisreceivedwhentherewasnorighttoclaimitandwhich,throughanerror, (ExhibitJ,pp.45).
hasbeenundulydelivered,anobligationtorestoreitarises.
ThattherewasamistakeinthesecondremittanceofUS$10,000.00isborneoutbythe
In Velezv.Balzarza,73Phil.630(1942),theCourt,speakingthroughMr.JusticeBocobo factthatbothremittanceshavethesamereferenceinvoicenumberwhichis26380.(Exhibits
A1DepositionofMr.StanleyPanasowandA2DepositionofMr.StanleyPanasow).
explainedthenatureofthisarticlethus:
Article1895[nowArticle2154]oftheCivilCodeabovequoted,isthereforeapplicable.This
Plaintiffappellantmadethesecondremittanceonthewrongassumptionthatdefendant
legalprovision,whichdeterminesthequasicontractofsolutioindebiti,isoneoftheconcrete appelleedidnotreceivethefirstremittanceofUS$10,000.00.[Rollo,pp.2627.]
manifestationsoftheancientprinciplethatnooneshallenrichhimselfunjustlyattheexpense Itisevidentthattheclaimofpetitionerisanchoredontheappreciationoftheattendantfacts
ofanother.IntheRomanLawDigestthemaximwasformulatedthus:JurenaturaeacquumwhichpetitionerwouldhavethisCourtreview.TheCourtholdsthatthefindingbytheCourtof
est,neminemcumalteriusdetrimentoetinjuriafierilocupletiorem.AndthePartidasdeclared:Appeals that the second $10,000.00 remittance was made by mistake, being based on
Ningunonondeueenriquecersetortizeramentecondanodeotro.Suchaxiomhasgrown substantialevidence,isfinalandconclusive.Theruleregardingquestionsoffactbeingraised
throughthecenturiesinlegislation,inthescienceoflawandincourtdecisions.Thelawmaker withthisCourtinapetitionforcertiorariunderRule45oftheRevisedRulesofCourthasbeen
hasfounditoneofthehelpfulguidesinframingstatutesandcodes.Thus,itisunfoldedin statedinRemalantev.Tibe,G.R.No.59514,February25,1988,158SCRA138,thus:
manyarticlesscatteredintheSpanishCivilCode.(Seeforexample,articles,360,361,464, The rule in this jurisdiction is that only questions of law may be raised in a petition for
647,648,797,1158,1163,1295,1303,1304,1893and1895,CivilCode.)Thistimehonored certiorariunderRule45oftheRevisedRulesofCourt.ThejurisdictionoftheSupremeCourt
aphorismhasalsobeenadoptedbyjuristsintheirstudyoftheconflictofrights.Ithasbeen incasesbroughttoitfromtheCourtofAppealsislimitedtoreviewingandrevisingtheerrors
acceptedbythecourts,whichhavenothesitatedtoapplyitwhentheexigenciesofrightand oflawimputedtoit,itsfindingsoffactbeingconclusive[Chanv.CourtofAppeals,G.R.No.
equity demanded its assertion. It is a part of that affluent reservoir of justice upon which L27488,June30,1970,33SCRA737,reiteratingalonglineofdecisions.]ThisCourthas
judicialdiscretiondrawswheneverthestatutorylawsareinadequatebecausetheydonotspeak emphaticallydeclaredthatitisnotthefunctionoftheSupremeCourttoanalyzeorweighsuch
ordosowithaconfusedvoice.[atp.632.]
evidencealloveragain,itsjurisdictionbeinglimitedtoreviewingerrorsoflawthatmighthave
Forthisarticletoapplythefollowingrequisitesmustconcur:(1)thathewhopaidwasnot beencommittedbythelowercourt[Tiongcov.DelaMerced,G.R.No.L24426,July25,
underobligationtodoso;and,(2)thatpaymentwasmadebyreasonofanessentialmistakeof 1974,58SCRA89;Coronav.CourtofAppeals,G.R.No.L62482,April28,1983,121SCRA
fact[CityofCebuv.Piccio,110Phil.558,563(1960).]
865;Baniquedv.CourtofAppeals,G.R.No.L47531,February20,1984,127SCRA596].
It is undisputed that private respondent delivered the second $10,000.00 remittance.Barring,therefore,ashowingthatthefindingscomplainedofaretotallydevoidofsupportin
However,petitionercontendsthatthedoctrineof solutioindebiti doesnotapplybecauseitstherecord,orthattheyaresoglaringlyerroneousastoconstituteseriousabuseofdiscretion,
suchfindingsmuststand,forthisCourtisnotexpectedorrequiredtoexamineorcontrastthe
requisitesareabsent.
First,itisarguedthatpetitionerhadtherighttodemandandthereforetoretainthesecond oralanddocumentaryevidencesubmittedbytheparties[SantaAna,Jr.v.Hernandez,G.R.
$10,000.00remittance.Itisallegedthatevenafterthetwo$10,000.00remittancesarecredited No.L16394,December17,1966,18SCRA973].[atpp.144145.]
topetitionersreceivablesfromFACETS,thelatterallegedlystillhadabalanceof$49,324.00. Petitionerinvokestheequitableprinciplethatwhenoneoftwoinnocentpersonsmustsufferby
Hence,itisarguedthatthelast$10,000.00remittancebeinginpaymentofapreexistingdebt, thewrongfulactofathirdperson,thelossmustbebornebytheonewhosenegligencewasthe
petitionerwasnottherebyunjustlyenriched.
proximatecauseoftheloss.
The rule is that principles of equity cannot be applied if there is a provision of law
Thecontentioniswithoutmerit.
Thecontractofpetitioner,asregardsthesaleofgarmentsandothertextileproducts,was specificallyapplicabletoacase[Phil.RabbitBusLines,Inc.v.Arciaga,G.R.No.L29701,
withFACETS.Itwasthelatterandnotprivaterespondentwhichwasindebtedtopetitioner.On March16, 1987,148SCRA433;Zabat,Jr.v.CourtofAppeals,G.R.No.L36958,July10,
theotherhand,thecontractforthetransmittalofdollarsfromtheUnitedStatestopetitioner 1986,142SCRA587;RuralBankofParanaque,Inc.v.Remolado,G.R.No.62051,March18,
wasenteredintobyprivaterespondentwithFNSB.Petitioner,althoughnamedasthepayeewas1985,135SCRA409;Cruzv.Pahati,98Phil.788(1956).]Hence,theCourtinthecaseof De
notprivytothecontractofremittanceofdollars.Neitherwasprivaterespondentapartytothe Garciav.CourtofAppeals,G.R.No.L20264,January30,1971,37SCRA129,citingAznar
contractofsalebetweenpetitionerandFACETS.Therebeingnocontractualrelationbetween v.Yapdiangco,G.R.No.L18536,March31,1965,13SCRA486,held:
them,petitionerhasnorighttoapplythesecond$10,000.00remittancedeliveredbymistakeby ...Thecommonlawprinciplethatwhereoneoftwoinnocentpersonsmustsufferbyafraud
privaterespondenttotheoutstandingaccountofFACETS.
perpetrated by another, the law imposes the loss upon the party who, by his misplaced
Petitionernextcontendsthatthepaymentbyrespondentbankofthesecond$10,000.00 confidence,hasenabledthefraudtobecommitted,cannotbeappliedinacasewhichiscovered
remittancewasnotmadebymistakebutwastheresultofnegligenceofitsemployees.
byanexpressprovisionofthenewCivilCode,specificallyArticle559.Betweenacommon
InconnectionwiththistheCourtofAppealsmadethefollowingfindingoffacts:
lawprincipleandastatutoryprovision,thelattermustprevailinthisjurisdiction.[atp.135.]
ThefactthatFacetssentonlyoneremittanceof$10,000.00isnotdisputed.Inthewritten HavingshownthatArt.2154oftheCivilCode,whichembodiesthedoctrineofsolutioindebiti,
interrogatories sent to the First National State Bank of New Jersey through the Consulate appliesinthecaseatbar,theCourtmustrejectthecommonlawprincipleinvokedbypetitioner.
General of the Philippines in New York, Adelaide C. Schachel, the investigation and
Finally,inherattempttodefeatprivaterespondentsclaim,petitionermakesmuchofthe
reconciliation clerk in the said bank testified that a request to remit a payment for Facet factthatfromthetimethesecond$10,000.00remittancewasmade,fivehundredandtendays
FunwearInc.wasmadeinAugust,1980.ThetotalamountwhichtheFirstNationalStateBank hadelapsedbeforeprivaterespondentdemandedthereturnthereof.Needlesstosay,private

respondent instituted the complaint for recovery of the second $10,000.00 remittance well
withinthesixyearsprescriptiveperiodforactionsbaseduponaquasicontract[Art.1145ofthe
NewCivilCode.]
WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is
herebyAFFIRMED.
SOORDERED.

5.PuyatandSonsvs.Manila

costs.
Defendantscounterclaimisherebydismissedfornothavingbeensubstantiated.
No.L17447.April30,1963.

GONZALO PUYAT & SONS, INC., plaintiffappellee, vs. ITY OF MANILA AND
OnAugust11,1958,theplaintiffGonzaloPuyat&Sons,Inc.,filedanactionforrefund
MARCELOSARMIENTO,asCityTreasurerofManila,defendantsappellants.
Taxation; Retail dealers taxes; Recovery of taxes paid by mistake; Protest not ofRetailDealersTaxespaidbyit,correspondingtothefirstQuarterof1950uptothethird
necessary.Wheretaxeswhicharenotlegallyduearepaidthruerrorormistake,theymay, Quarterof1956,amountingtoP33,785.00,againsttheCityofManilaanditsCityTreasurer.
undertheprincipleof solutioindebiti,berecovered,evenifnoprotestwasmadeupontheirThecasewassubmittedonthefollowingstipulationoffacts,towit
1.Thattheplaintiffisacorporationdulyorganizedandexistingaccordingtothelaws
payment, particularly where such payment was due to a mistake in the construction of a
of the Philippines, with offices at Manila; while defendant City Manila is a Municipal
doubtfulordifficultquestionoflaw(Article2155newCivilCode).
Same;Same;Same;Same;Section76ofcharterofManilaandapplicableincaseat Corporation duly organized in accordance with the laws of the Philippines, and defendant
bar.Section76oftheCharterofManila,whichprovidesthatNocourtshallentertainany MarcelinoSarmientoisthedulyqualifiedincumbentCityTreasurerofManila;
suitassailingthevalidityoftax underthisarticleuntil thetaxpayershallhavepaid, under
2.Thatplaintiffisengagedinthebusinessofmanufacturingandsellingallkindsof
protestthetaxesassessedagainsthim,xxx,relatestotheassessment,collectionandrecovery furnitureatitsfactoryat190RodriguezArias,SanMiguel,Manila,andhasadisplayroom
locatedat604606RizalAvenue,Manila,whereinitdisplaysthevariouskindoffurniture
ofrealestatetaxesonly,andnottotherecoveryofretaildealerstaxes.
manufacturedbyitandsells
Same; Same; Same;
some goods imported by it,
Prescription interrupted by written
Period
DatePaid
O.R.No.
Amount
such as billiard balls,
extrajudicial

demand.Even
Assessed
applyingtheprovisionsofActNo.190
bowling balls and other
andPaid.
accessories;
topaymentsbyappelleeoftheretail
FirstQuarter1950
Jan.25,1950
436271X
P1,255.00
dealers taxes made before the
3.That acting
effectivity of the new Civil Code,
pursuanttotheprovisionsof
SecondQuarter1950
Apr.25,1950
215895X
1,250.00
becauseprescriptionalreadyrunning
Sec. 1. group II, of
before the effectivity of this Code
Ordinance No. 3364,
ThirdQuarter1950
Jul.25,1950
243321X
1,250.00
shallbegovernedbylawspreviously
defendant City Treasurer of
FourthQuarter1950
Oct.25,1950
271165X
1,250.00
inforcexxx(Art.1116,NCC),still
Manila assessed from
payments made before August 30,
plaintiff retail dealers tax
(Followstheassessmentfordifferentquartersin1951,1952,
1950, are no longer recoverable in
correspondingtothequarters
1953,1954and1955,fixingthesameamountquarterly.)xxx.
view if the second paragraph of the
hereunderstatedonthesales
FirstQuarter1956
Jan.25,1956
823047X
1,250.00
saidarticle,whichprovidesthatbutif
of furniture manufactured
sincethetimethisCodetookeffectthe
andsoldbyitatitsfactory
SecondQuarter1956
Apr.25,1956
855949X
1,250.00
entire period herein required for
site,allofwhichassessments
prescriptionshouldelapse.Thepresent
plaintiffpaidwithoutprotest
ThirdQuarter1956
Jul.25,1956
880789X
1,250.00
codeshallbeapplicableeventhough
intheerroneousbeliefthatit
TOTAL.............
P33,785.00
by the former laws a longer period
was liable therefor, on the
========
might be required. The action has
dates and in the amount
thereforeprescribedonlywithrespecttothepaymentsmadebeforeOctober30,1950,whena enumeratedhereinbelow:
writtendemandwasmade,consideringthattheprescriptionofactionisinterruptedwhenthere
isawrittenextrajudicialdemand(Art.1155,NCC).

APPEALfromajudgmentoftheCourtofFirstInstanceofManila.
4.Thatplaintiff,beingamanufacturerofvariouskindsoffurniture,isexemptfromthe
ThefactsarestatedintheopinionoftheCourt.
paymentoftaxesimposedundertheprovisionsofSec.1,GroupII,ofOrdinanceNo.3364,
which took effect on September 24, 1956, on the sale of the various kinds of furniture
PAREDES,J.:
manufacturedbyitpursuanttotheprovisionsofSec.18(n)ofRepublicActNo.409(Revised
ThisisanappealfromthejudgmentoftheCFIofManila,thedispostiveportionofwhichCharterofManila),asrestatedinSection1ofOrdinanceNo.3816.
reads:
5.That,however,plaintiff,isliableforthepaymentoftaxesprescribedinSection1,
xxxOfthepaymentsmadebytheplaintiff,onlythatmadeonOctober25,1950inthe GroupIIorOrdinanceNo.3364masamendedbySec.1,GroupIIofOrdinanceNo.3816,
amountofP1,250.00hasprescribedPaymentsmadein1951andthereafterarestillrecoverablewhichtookeffectonSeptember24,1956,onthesalesofimportedbilliardballs,bowlingballs
since the extrajudicial demand made on October 30, 1956 was well within the sixyear andotheraccessoriesatitsdisplayroom.Thetaxespaidbytheplaintiffonthesalesofsaid
prescriptiveperiodoftheNewCivilCode.
articleareasfollows:
In view of the foregoing considerations, judgment is hereby rendered in favor of the
xxxxxxxxx
plaintiff, ordering the defendants to refund the amount of P29,824.00, withoutinterest. No
6.That on October 30, 1956, the plaintiff filed with defendant City Treasurer of

Manila,aformalrequestforrefundoftheretaildealerstaxesundulypaidbyitasaforestatedinThereisnogainsayingthefactthatthepaymentsmadebyappelleewasduetoamistakeinthe
paragraph3,hereof.
constructionofadoubtfulquestionoflaw.Thereasonunderlyingsimilarprovisions,asapplied
7.ThatonJuly24,1958,thedefendantCityTreasurerofManiladefinitelydeniedsaid toillegaltaxation,intheUnitedStates,isexpressedinthecaseofNewportv.Ringo,37Ky.
635,636;10S.W.2,inthefollowingmanner:.
requestforrefund.
Itistoowellsettledinthisstatetoneedthecitationofauthoritythatifmoneybepaid
8.HenceonAugust21,1958,plaintifffiledthepresentcomplaint.
9.Based on the above stipulation of facts, the legal issues to be resolved by this throughaclearmistakeoflaworfact,essentiallyaffectingtherightsoftheparties,andwhich
HonorableCourtare:(1)theperiodofprescriptionapplicableinmattersofrefundofmunicipal inlaworconsciencewasnotpayable,andshouldnotberetainedbythepartyreceivingit,it
mayberecovered.Bothlawandsoundmoralitysodictate.Especiallyshouldthisbetheruleas
taxeserroneouslypaidbyataxpayerand(2)refundoftaxesnotpaidunderprotest.xxx.
toillegaltaxation.Thetaxpayerhasnovoiceintheimpositionoftheburden.Hehastherightto
whichwasthebasisofthejudgmentheretoforerecited.
SaidjudgmentwasdirectlyappealedtothisCourtontwodominantissuestowit:(1) presumethatthetaxing powerhasbeenlawfullyexercised.Heshouldnotberequiredtoknow
Whetherornottheamountspaidbyplaintiffappellee,asretaildealerstaxesunderOrdinance morethanthoseinauthorityoverhim,norshouldhesufferlossbycomplyingwithwhathe
1925,asamendedbyOrdinanceNo.3364oftheCityofManila,withoutprotest,arerefundable; bonafidebelievestobehisdutyasagoodcitizen.Uponthecontrary,heshouldbepromotedto
(2)Assumingarguendo,thatplaintiffappelleeisentitledtotherefundoftheretailtaxesin itsreadyperformancebyrefundingtohimanylegalexactionpaidbyhiminignoranceofits
question,whetherornottheclaimforrefundfiledinOctober1956,insofarassaidclaimrefersillegality; and, certainly, in such a case, if be subject to a penalty for nonpayment, his
complianceunderbeliefofitslegality,andwithoutawaitingaresorttojudicialproceedings
totaxespaidfrom1950to1952hasalreadyprescribed.
Under the first issue, defendantsappellants contend that the taxes in question were shouldnotberegardedinlawassofarvoluntaryastoaffecthisrightofrecovery.
Every person who through an act or performance by another, or any other means,
voluntarilypaidbyappelleecompanyandsince,inthisjurisdiction,inorderthatalegalbasis
ariseforclaimofrefundoftaxeserroneouslyassessed,paymentthereofmustbemadeunder acquiresorcomesintopossessionofsomethingattheexpenseofthelatterwithoutjustorlegal
protest,andthisbeingaconditionsinequanon,andnoprotesthavingbeenmade,verballyorgrounds,shallreturnthesametohim(Art.22,CivilCode).Itwouldseemsunedifyingforthe
inwriting,therebyindicatingthatthepaymentwasvoluntary,theactionmustfail.Citedin government,(heretheCityofManila),thatknowingithasnorightatalltocollectortoreceive
supportoftheabovecontention,arethecasesofZaragozavs.Alfonso,46Phil.160161,and moneyforallegedtaxespaidbymistake,itwouldbereluctanttoreturnthesame.Noone
shouldenrichitselfunjustlyattheexpenseofanother(Art.2125,CivilCode).
Gavinov.MunicipalityofCalapan,71Phil.438.
Admittedly,plaintiffappelleepaidthetaxwithoutprotest.Equallyadmittedisthefact
Inrefutationoftheabovestandofappellants,appelleeaversthatthepaymentscouldnot
havebeenvoluntary. At most, theywerepaidmistakenlyandingoodfaithandwithout thatsection76oftheCharterofManilaprovidesthatNocourtshallentertainanysuitassailing
protestintheerroneousbeliefthatitwasliablethereof.Voluntarinessisincompatiblewith thevalidityoftaxassessedunderthisarticleuntilthetaxpayershallhavepaid,underprotest
thetaxesassessedagainsthim,xx.Itshouldbenoted,however,thatthearticlereferredtoin
protestandmistake.Itsubmitsthatthisisasimplecaseofsolutioindebiti.
Appellantsdonotdisputethefactthatappelleecompanyisexemptedfromthepayment saidsectionisArticleXXI,entitledDepartmentofAssessmentandthesectionsthereunder
ofthetaxinquestion.ThisismanifestfromthereplyofappellantCityTreasurerstatingthat manifestlyshowthatsaidarticleanditssectionsrelatetoassessment,collectionandrecoveryof
salesofmanufacturedproductsatthefactorysitearenottaxableeitherundertheWholesalers real estate taxes only.Saidsection76,therefor,isnotapplicabletothecaseatbar,which
OrdinanceorundertheRetailersOrdinance.Withthisadmission,itwouldseemclearthatthe relatestotherecoverofretaildealertaxes.
IntheopinionoftheSecretaryofJustice(Op.90,Seriesof1957,inaquestionsimilarto
taxescollectedfromappelleewerepaid,thruanerrorormistake,whichplacessaidactof
paymentwithinthepaleofthenewCivilCodeprovisiononsolutioindebiti.TheappellantCity thecaseatbar,itwasheldthattherequirementofprotestrefersonlytothepaymentoftaxes
ofManila,attheverystart,notwithstandingtheOrdinanceimposingtheRetailersTax,hadnowhicharedirectlyimposedbythecharteritself, that is, realestatetaxes, which view was
sustainedbyjudicialandadministrativeprecedents,oneofwhichisthecaseofMedina,etal.,
righttodemandpaymentthereof.
Ifsomethingisreceivedwhenthereisnorighttodemandit,anditwasundulydelivered v.CityofBaguio,G.R.No.L4269,Aug.29,1952.Inotherwords,protestisnot necessaryfor
therecoveryofretaildealerstaxes,likethepresent,becausetheyarenotdirectlyimposedby
throughmistake,theobligationtoreturnitarises(Art.2154,NCC).
Appellecategoricallystatedthatthepaymentwasnotvoluntarilymade,(afactfoundalso the charter. In the Medina case, the Charter of Baguio (Chap. 61, Revised Adm. Code),
bythelowercourt),butontheerroneousbelief,thattheyweredue.Underthiscircumstance,theprovidesthatnocourtshallentertainanysuitassailingthevalidityofataxassessedunderthis
amountpaid,evenwithoutprotestisrecoverable.Ifthepayerwasindoubtwhetherthedebt charter until the taxpayer shall have paid, under protest, the taxes assessed against him
wasdue,hemayrecoverifheprovesthatitwasnotdue(Art.2156,NCC).Appelleehadduly (sec.25474[b],Rev.Adm.Code),aprovisosimilartosection76oftheManilaCharter.The
provedthattaxeswerenotlawfullydue.Thereis,therefore,nodoubtthattheprovisionsof refundofspecifictaxespaidunderavoidordinancewasordered,althoughitdidnotappearthat
paymentthereofwasmadeunderprotest.
solutioindebiti,thenewCivilCode,applytotheadmittedfactsofthecase.
Inarecentcase,Wesaid:Theappellantsarguethatthesumtherefundofwhichis
Withall,appellantquotedManresaassaying:xxxDelamismaopinionsonelSr.
SanchezRomanyelSr.Galcon,etcualafirmaquesilapagasehizoporerrordederecho,ni soughtbytheappellee,wasnotpaidunderprotestandhenceisnotrefundable.Again,thetrial
existeelcuasicontratoniestaobligadoalarestitucionelquecobro,aunquenosedebieralocourtcorrectlyheldthatbeingunauthorized,itisnotataxassessedundertheCharterofthe
quesepago(Manresa,Tomo12,paginas611612).Thisopinion,however,hasalreadylostitsAppellantCityofDavaoandforthatreason,noprotestisnecessaryforaclaimordemandfor
persuasiveness,inviewoftheprovisionsoftheCivilCode,recognizingerrordederechoasaitsrefund(CitingtheMedinacase,supra;EastAsiaticCo.,Ltd.v.CityofDavao,G.R.No.L
16253,Aug.21,1962).Lastly,beingacaseof solutio indebiti,protestisnotrequiredasa
basisforthequasicontract,ofsolutioindebiti.
Paymentbyreasonofamistakeinthecontructionorapplicationofadoubtfulordifficultconditionsinequanonforitsapplication.
Thenextissueindiscussionisthatofprescription.Appellantsmaintainthatarticle1146
questionoflawmaycomewithinthescopeoftheprecedingarticle(Art.21555).

(NCC),whichprovidesforaperiodoffour(4)years(uponinjurytotherightsoftheplaintiff),
applytothecase.Ontheotherhand,appelleecontendsthatprovisionsofAct190(CodeofCiv.
Procedure)shouldapply,insofaraspaymentsmadebeforetheeffectivityoftheNewCivil
CodeonAugust30,1950,theperiodofwhichisten(10)years,(Sec.40,ActNo.190;Osoriov.
TanJongko,51O.G.6211)andarticle1145(NCC),forpaymentsmadeaftersaideffectivity,
providingforaperiodofsix(6)years(uponquasicontractslikesolutioindebiti).Evenifthe
provisionsofActNo.190shouldapplytothosepaymentsmadebeforetheeffectivityofthe
newCivilCode,becauseprescriptionalreadyrunningbeforetheeffectivityofthisCodeshall
begovernedbylawspreviouslyinforcexxx(art.1116,NCC),forpaymentsmadeaftersaid
effectivity,providingforaperiodofsix(6)years(uponquasicontractslikesolutioindebiti).
Even if the provisions of Act No. 190should apply to those payments made before the
effectivityofthenewCivilCode,becauseprescriptionalreadyrunningbeforetheeffectivity
of this Code shall be govern by laws previously in force xxx (Art. 1116, NCC), Still
payments made before August 30, 1950 are no longer recoverable in view of the second
paragraphofsaidarticle(1116),whichprovides:butifsincethetimethisCodetookeffectthe
entireperiodhereinrequiredforprescriptionshouldelapsethepresentCodeshallbeapplicable
eventhoughbytheformerlawsalongerperiodmightberequired.Anentthepaymentsmade
afterAugust30,1950,itisobviousthattheactionhasprescribedwithrespecttothosemade
beforeOctober30,1950only,consideringthefactthattheprescriptionofactionisinterrupted
xxxwhenisawrittenextrajudicialdemandxxx(Art.1155,NCC),andthewrittendemand
inthecaseatbarwasmadeonOctober30,1956(StipulationofFacts).MODIFIEDinthesense
that only payments made on or after October 30, 1950 should be refunded, the decision
appealedfromisaffirmed,inallotherrespects.Nocosts..

Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Dizon, Regala and

Makalintal,JJ.,concur.
Padilla,Reyes,J.B.L.,andBarrera,JJ.,tooknopart.
Decisionaffirmed.
Note.SeeCoTuanv.CityofManilaL12481,Aug.31,1961,2SCRA1070andSantos
Lumber,etal,v.CityofCebu,etal.,L14618,May30,1961,2SCRA173.
_______________

6.Saludagavs.FEU

essentialintheawardofdamagesthattheclaimantmusthavesatisfactorilyprovenduringthe
trialtheexistenceofthefactualbasisofthedamagesanditscausalconnectiontodefendants
G.R.No.179337.April30,2008.*
acts. In the instant case, it was established that petitioner spent P35,298.25 for his
JOSEPHSALUDAGA,petitioner, vs. FAREASTERNUNIVERSITYandEDILBERTOC.hospitalizationandothermedicalexpenses.Whilethetrialcourtcorrectlyimposedintereston
DEJESUSinhiscapacityasPresidentofFEU,respondents.
saidamount,however,thecaseatbarinvolvesanobligationarisingfromacontractandnota
CollegesandUniversities;ObligationsandContracts;Whereastudentisenrolledin loanorforbearanceofmoney.Assuch,theproperrateoflegalinterestissixpercent(6%)per
aneducationalinstitution,thereiscreatedacontractualobligationbetweenthetwoparties annum oftheamountdemanded.Suchinterestshallcontinuetorunfromthefilingofthe
thestudentisobligedtocomplywiththerulesandregulationsoftheschoolwhilethelatter,as complaintuntilthefinalityofthisDecision.AfterthisDecisionbecomesfinalandexecutory,
a learning institution, is mandated to impart knowledge and equip its students with the theapplicablerateshallbetwelvepercent(12%)perannumuntilitssatisfaction.
necessaryskillstopursuehighereducationoraprofession,aswellastoensureandtake Same; Same; Same; Damages; Trial courts must guard against the award of exorbitant
adequatestepstomaintainpeaceandorderwithinthecampus.Itisundisputedthatpetitionerdamages; they should exercise balanced, restrained and measured objectivity to avoid
wasenrolledasasophomorelawstudentinrespondentFEU.Assuch,therewascreateda suspicionthatitwasduetopassion,prejudice,orcorruptiononthepartofthetrialcourt.As
contractualobligationbetweenthetwoparties.Onpetitionerspart,hewasobligedtocomply regardstheawardofmoraldamages,thereisnohardandfastruleinthedeterminationofwhat
withtherulesandregulationsoftheschool.Ontheotherhand,respondentFEU,asalearningwouldbeafairamountofmoraldamagessinceeachcasemustbegovernedbyitsownpeculiar
institutionismandatedtoimpartknowledgeandequipitsstudentswiththenecessaryskillsto circumstances.Thetestimonyofpetitionerabouthisphysicalsuffering,mentalanguish,fright,
pursuehighereducationoraprofession.Atthesametime,itisobligedtoensureandtake seriousanxiety,andmoralshockresultingfromtheshootingincidentjustifytheawardofmoral
adequate steps to maintain peace and order within the campus. It is settled that in culpa damages.However,moraldamagesareinthecategoryofanawarddesignedtocompensatethe
contractual,themereproofoftheexistenceofthecontractandthefailureofitscompliance claimantforactualinjurysufferedandnottoimposeapenaltyonthewrongdoer.Theawardis
justify,primafacie,acorrespondingrightofrelief.Intheinstantcase,wefindthat,when notmeanttoenrichthecomplainantattheexpenseofthedefendant,buttoenabletheinjured
petitionerwasshotinsidethecampusbynolessthesecurityguardwhowashiredtomaintain partytoobtainmeans,diversion,oramusementsthatwillservetoobviatethemoralsuffering
peaceandsecurethepremises,thereisaprimafacieshowingthatrespondentsfailedtocomplyhehasundergone.Itisaimedattherestoration,withinthelimitsofthepossible,ofthespiritual
withitsobligationtoprovideasafeandsecureenvironmenttoitsstudents.
statusquoante,andshouldbeproportionatetothesufferinginflicted.Trialcourtsmustthen
Same; Same; Security Guards; A learning institution should not be allowed to guardagainsttheawardofexorbitantdamages;theyshouldexercisebalanced,restrainedand
completelyrelinquishorabdicatesecuritymattersinitspremisestothesecurityagencyithired measuredobjectivitytoavoidsuspicionthatitwasduetopassion,prejudice,orcorruptionon
todosowouldresulttocontractingawayitsinherentobligationtoensureasafelearning thepartofthetrialcourt.Wedeemitjustandreasonableunderthecircumstancestoaward
environmentforitsstudents.Respondentsalsofailedtoshowthattheyundertookstepsto petitionermoraldamagesintheamountofP100,000.00.
ascertain and confirm that the security guards assigned to them actually possess the
Same;Same;Same;Same;CorporationLaw;Acorporationisinvestedbylawwitha
qualificationsrequiredintheSecurityServiceAgreement.Itwasnotproventhattheyexamined personalityseparateanddistinctfromthoseofthepersonscomposingit,suchthat,savefor
theclearances,psychiatrictestresults,201files,andothervitaldocumentsenumeratedinits certainexceptions,corporateofficerswhoenteredintocontractsinbehalfofthecorporation
contractwithGalaxy.Totalrelianceonthesecurityagencyaboutthesemattersorfailureto cannotbeheldpersonallyliablefortheliabilitiesofthelatter.Wenotethatthetrialcourt
check the papers stating the qualifications of the guards is negligence on the part of heldrespondentDeJesussolidarilyliablewithrespondentFEU.InPowtonConglomerate,Inc.
respondents.Alearninginstitutionshouldnotbeallowedtocompletelyrelinquishorabdicate v.Agcolicol,400SCRA523(2003),weheldthat:[A]corporationisinvestedbylawwitha
security matters in its premises to the security agency it hired. To do so would result to personalityseparateanddistinctfromthoseofthepersonscomposingit,suchthat,savefor
contractingawayitsinherentobligationtoensureasafelearningenvironmentforitsstudents. certainexceptions,corporateofficerswhoenteredintocontractsinbehalfofthecorporation
Same;Same;ForceMajeure;AnactofGodcannotbeinvokedtoprotectapersonwho cannotbeheldpersonallyliablefortheliabilitiesofthelatter.Personalliabilityofacorporate
has failed to take steps to forestall the possible adverse consequences of such a loss.director,trusteeorofficeralong(althoughnotnecessarily)withthecorporationmaysovalidly
Respondentsdefenseofforcemajeuremustfail.Inorderforforcemajeuretobeconsidered, attach,asarule,onlywhen(1)heassentstoapatentlyunlawfulactofthecorporation,or
respondents must show that no negligence or misconduct was committed that may have whenheisguiltyofbadfaithorgrossnegligenceindirectingitsaffairs,orwhenthereisa
occasionedtheloss.AnactofGodcannotbeinvokedtoprotectapersonwhohasfailedtotakeconflictofinterestresultingindamagestothecorporation,itsstockholdersorotherpersons;(2)
stepstoforestallthepossibleadverseconsequencesofsuchaloss.Onesnegligencemayhave heconsentstotheissuanceofwatereddownstocksorwho,havingknowledgethereof,doesnot
concurredwithanactofGodinproducingdamageandinjurytoanother;nonetheless,showing forthwithfilewiththecorporatesecretaryhiswrittenobjectionthereto;(3)heagreestohold
thattheimmediateorproximatecauseofthedamageorinjurywasafortuitouseventwouldnot himselfpersonallyandsolidarilyliablewiththecorporation;or(4)heismadebyaspecific
exempt one from liability. When the effect is found to be partly the result of a persons provision of law personally answerable for his corporate action. None of the foregoing
participationwhetherbyactiveintervention,neglectorfailuretoactthewholeoccurrenceisexceptionswasestablishedintheinstantcase;hence,respondentDeJesusshouldnotbeheld
humanizedandremovedfromtherulesapplicabletoactsofGod.
solidarilyliablewithrespondentFEU.
Same; Same; Negligence; For breach of contract due to negligence in providing a safe Same;LaborLaw;SecurityGuards;Wherethesecurityagencyrecruits,hiresandassignsthe
learningenvironment,aneducationalinstitutionisliabletopetitionerfordamages.Articleworksofitswatchmenorsecurityguardstoaclient,theemployerofsuchguardsorwatchmen
1170 of the Civil Code provides that those who are negligent in the performance of their issuchagency,andnottheclient,sincethelatterhasnohandinselectingthesecurityguards
obligationsareliablefordamages.Accordingly,forbreachofcontractduetonegligencein thedutytoobservethediligenceofagoodfatherofafamilycannotbedemandedfromthe
providingasafelearningenvironment,respondentFEUisliabletopetitionerfordamages.Itis saidclient.WeagreewiththefindingsoftheCourtofAppealsthatrespondentscannotbe

heldliablefordamagesunderArt.2180oftheCivilCodebecauserespondentsarenotthe
ThisPetitionforReviewonCertiorari1underRule45oftheRulesofCourtassailsthe
employers of Rosete. The latter was employed by Galaxy. The instructions issued by June29,2007Decision2 oftheCourtofAppealsinCAG.R.CVNo.87050,nullifyingand
respondentsSecurityConsultanttoGalaxyanditssecurityguardsareordinarilynomorethan settingasidetheNovember10,2004Decision3oftheRegionalTrialCourtofManila,Branch
requestscommonlyenvisagedinthecontractforservicesenteredintobyaprincipalanda 2,inCivilCaseNo.9889483anddismissingthecomplaintfiledbypetitioner;aswellasits
securityagency.Theycannotbeconstruedastheelementofcontrolastotreatrespondentsas August23,2007Resolution4denyingtheMotionforReconsideration.5
theemployersofRosete.Asheldin MercuryDrugCorporationv.Libunao,434SCRA404
Theantecedentfactsareasfollows:
(2004):InSoliman,Jr.v.Tuazon,209SCRA47(1992),weheldthatwherethesecurityagency
Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern
recruits,hiresandassignstheworksofitswatchmenorsecurityguardstoaclient,theemployer University(FEU)whenhewasshotbyAlejandroRosete(Rosete),oneofthesecurityguards
ofsuchguardsorwatchmenissuchagency,andnottheclient,sincethelatterhasnohandin ondutyattheschoolpremisesonAugust18,1996.PetitionerwasrushedtoFEUDr.Nicanor
selectingthesecurityguards.Thus,thedutytoobservethediligenceofagoodfatherofa ReyesMedicalFoundation(FEUNRMF)duetothewoundhesustained.6Meanwhile,Rosete
familycannotbedemandedfromthesaidclient.
wasbroughttothepolicestationwhereheexplainedthattheshootingwasaccidental.Hewas
Actions;PleadingsandPractice;ThirdPartyComplaints;Thethirdpartycomplaintis eventuallyreleasedconsideringthatnoformalcomplaintwasfiledagainsthim.
aproceduraldevicewherebyathirdpartywhoisneitherapartynorprivytotheactordeed
Petitionerthereafterfiledacomplaintfordamagesagainstrespondentsonthegroundthat
complained of by the plaintiff, may be brought into the case with leave of court, by the theybreachedtheirobligationtoprovidestudentswithasafeandsecureenvironmentandan
defendant,whoactsasthirdpartyplaintifftoenforceagainstsuchthirdpartydefendanta atmosphereconducivetolearning.Respondents,inturn,filedaThirdPartyComplaint7against
rightforcontribution,indemnity,subrogationoranyotherrelief,inrespectoftheplaintiffs Galaxy Development and Management Corporation (Galaxy), the agency contracted by
claim.WenowcometorespondentsThirdPartyClaimagainstGalaxy.In FirestoneTire respondent FEU to provide security services within its premises and Mariano D. Imperial
andRubberCompanyofthePhilippinesv.Tempongko,27SCRA418(1969),weheldthat:The(Imperial),GalaxysPresident,toindemnifythemforwhateverwouldbeadjudgedinfavorof
thirdpartycomplaintis,therefore,aproceduraldevicewherebyathirdpartywhoisneithera petitioner,ifany;andtopayattorneysfeesandcostofthesuit.Ontheotherhand,Galaxyand
partynorprivytotheactordeedcomplainedofbytheplaintiff,maybebroughtintothecase ImperialfiledaFourthPartyComplaintagainstAFPGeneralInsurance.8
withleaveofcourt,bythedefendant,whoactsasthirdpartyplaintifftoenforceagainstsuch
OnNovember10,2004,thetrialcourtrenderedadecisioninfavorofpetitioner,the
thirdpartydefendantarightforcontribution,indemnity,subrogationoranyotherrelief,in dispositiveportionofwhichreads:
respect of the plaintiffs claim. The thirdparty complaint is actually independent of and
WHEREFORE,fromtheforegoing,judgmentisherebyrenderedordering:
separateanddistinctfromtheplaintiffscomplaint.WereitnotforthisprovisionoftheRules
1.FEUandEdilbertodeJesus,inhiscapacityaspresidentofFEUtopay
ofCourt,itwouldhavetobefiledindependentlyandseparatelyfromtheoriginalcomplaintby
jointlyandseverallyJosephSaludagatheamountofP35,298.25foractualdamages
thedefendantagainstthethirdparty.ButtheRulespermitdefendanttobringinathirdparty
with12%interestperannumfromthefilingofthecomplaintuntilfullypaid;moral
defendantorsotospeak,tolitigatehisseparatecauseofactioninrespectofplaintiffsclaim
damages of P300,000.00, exemplary damages of P500,000.00, attorneys fees of
againstathirdpartyintheoriginalandprincipalcasewiththeobjectofavoidingcircuitryof
P100,000.00andcostofthesuit;
actionandunnecessaryproliferationoflawsuitsandofdisposingexpeditiouslyinonelitigation
2.Galaxy Management and Development Corp. and its president, Col.
theentiresubjectmatterarisingfromoneparticularsetoffacts.
MarianoImperialtoindemnifyjointlyandseverally3rdpartyplaintiffs(FEUand
Same; Same; Same; Security Guards; For acts of negligence and for having supplied an
EdilbertodeJesusinhiscapacityasPresidentofFEU)fortheabovementioned
educationalinstitutionwithanunqualifiedsecurityguard,whichresultedinthelattersbreach
amounts;
ofobligationtoitsstudent,itispropertoholdthesecurityagencyliabletotheclientforsuch
3.Andthe4thpartycomplaintisdismissedforlackofcauseofaction.No
damagesequivalenttotheamountsawardedtothestudent.RespondentsandGalaxywere
pronouncementastocosts.
abletolitigatetheirrespectiveclaimsanddefensesinthecourseofthetrialofpetitioners
SOORDERED.9
complaint.EvidencedulysupportsthefindingsofthetrialcourtthatGalaxyisnegligentnot
RespondentsappealedtotheCourtofAppealswhichrenderedtheassailedDecision,the
onlyintheselectionofitsemployeesbutalsointheirsupervision.Indeed,noadministrativedecretalportionofwhichprovides,viz.:
sanctionwasimposedagainstRosetedespitetheshootingincident;moreover,hewaseven
WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10,
allowedtogoonleaveofabsencewhichledeventuallytohisdisappearance.Galaxyalsofailed 2004isherebyREVERSEDandSETASIDE.ThecomplaintfiledbyJosephSaludagaagainst
tomonitorpetitionersconditionorextendthenecessaryassistance,otherthantheP5,000.00 appellantFarEasternUniversityanditsPresidentinCivilCaseNo.9889483isDISMISSED.
initiallygiventopetitioner.GalaxyandImperialfailedtomakegoodtheirpledgetoreimburse
SOORDERED.10
petitionersmedicalexpenses.Fortheseactsofnegligenceandforhavingsuppliedrespondent
Petitioner filed a Motion for Reconsideration which was denied; hence, the instant
FEUwithanunqualifiedsecurityguard,whichresultedtothelattersbreachofobligationto petitionbasedonthefollowinggrounds:
petitioner,itispropertoholdGalaxyliabletorespondentFEUforsuchdamagesequivalentto
THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO
theabovementionedamountsawardedtopetitioner.
LAWANDJURISPRUDENCEINRULINGTHAT:
PETITIONforreviewoncertiorariofthedecisionandresolutionoftheCourtofAppeals.
5.1.THESHOOTINGINCIDENTISAFORTUITOUSEVENT;
ThefactsarestatedintheopinionoftheCourt.
5.2.RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY
Cacho&ChuaLawOfficesforpetitioner.
RESULTINGFROMAGUNSHOTWOUNDSUFFEREDBYTHEPETITIONERFROM
AntonioH.Abad&Associatesforrespondents.
THEHANDSOFNOLESSTHANTHEIROWNSECURITYGUARDINVIOLATIONOF
YNARESSANTIAGO,J.:
THEIR BUILTIN CONTRACTUAL OBLIGATION TO PETITIONER, BEING THEIR

LAW STUDENT AT THAT TIME, TO PROVIDE HIM WITH A SAFE AND SECURE equipitsstudentswiththenecessaryskillstopursuehighereducationoraprofession.Atthe
EDUCATIONALENVIRONMENT;
sametime,itisobligedtoensureandtakeadequatestepstomaintainpeaceandorderwithinthe
5.3.SECURITY GUARD, ALEJANDRO ROSETE, WHO SHOT PETITIONERcampus.
Itissettledthatinculpacontractual,themereproofoftheexistenceofthecontractand
WHILEHEWASWALKINGONHISWAYTOTHELAWLIBRARYOFRESPONDENT
FEUISNOTTHEIREMPLOYEEBYVIRTUEOFTHECONTRACTFORSECURITYthefailureofitscompliancejustify,primafacie,acorrespondingrightofrelief.15Intheinstant
SERVICES BETWEEN GALAXY AND FEU NOTWITHSTANDING THE FACT THATcase,wefindthat,whenpetitionerwasshotinsidethecampusbynolessthesecurityguard
PETITIONER,NOTBEINGAPARTYTOIT,ISNOTBOUNDBYTHESAMEUNDER whowashiredtomaintainpeaceandsecurethepremises,thereisaprimafacieshowingthat
respondentsfailedtocomplywithitsobligationtoprovideasafeandsecureenvironmenttoits
THEPRINCIPLEOFRELATIVITYOFCONTRACTS;and
5.4.RESPONDENTEXERCISEDDUEDILIGENCEINSELECTINGGALAXYASstudents.
Inordertoavoidliability,however,respondentsaverthattheshootingincidentwasa
THE AGENCY WHICH WOULD PROVIDE SECURITY SERVICES WITHIN THE
fortuitouseventbecausetheycouldnothavereasonablyforeseennoravoidedtheaccident
PREMISESOFRESPONDENTFEU.11
Petitionerissuingrespondentsfordamagesbasedontheallegedbreachofstudentschool causedbyRoseteashewasnottheiremployee;16andthattheycompliedwiththeirobligation
contractforasafelearningenvironment.ThepertinentportionsofpetitionersComplaintread: toensureasafelearningenvironmentfortheirstudentsbyhavingexercisedduediligencein
6.0.Atthetimeofplaintiffsconfinement,thedefendantsoranyoftheirrepresentative selectingthesecurityservicesofGalaxy.
Afterathoroughreviewoftherecords,wefindthatrespondentsfailedtodischargethe
didnotbothertovisitandinquireabouthiscondition.Thisabjectindifferenceonthepartofthe
defendantscontinuedevenafterplaintiffwasdischargedfromthehospitalwhennotevena burdenofprovingthattheyexercisedduediligenceinprovidingasafelearningenvironment
wordofconsolationwasheardfromthem.Plaintiffwaitedformorethanone(1)yearforthefortheirstudents.Theyfailedtoprovethattheyensuredthattheguardsassignedinthecampus
defendantstoperformtheirmoralobligationbutthewaitwasfruitless.Thisindifferenceand mettherequirementsstipulatedintheSecurityServiceAgreement.Indeed,certaindocuments
aboutGalaxywerepresentedduringtrial;however,noevidenceastothequalificationsof
totallackofconcernofdefendantsservedtoexacerbateplaintiffsmiserablecondition.
Roseteasasecurityguardfortheuniversitywasoffered.
xxxx
Respondentsalsofailedtoshowthattheyundertookstepstoascertainandconfirmthat
11.0.Defendantsareresponsibleforensuringthesafetyofitsstudentswhilethelatter
arewithintheUniversitypremises.Andthatshouldanythinguntowardhappenstoanyofits thesecurityguardsassignedtothemactuallypossessthequalificationsrequiredintheSecurity
students while they are within the Universitys premises shall be the responsibility of the Service Agreement. It was not proven that they examined the clearances, psychiatric test
defendants.Inthiscase,defendants,despitebeinglegallyandmorallybound,miserablyfailed results, 201 files, and other vital documents enumerated in its contract with Galaxy. Total
toprotectplaintifffrominjuryandthereafter,tomitigateandcompensateplaintiffforsaid relianceonthesecurityagencyaboutthesemattersorfailuretocheckthepapersstatingthe
qualificationsoftheguardsisnegligenceonthepartofrespondents.Alearninginstitution
injury;
12.0.WhenplaintiffenrolledwithdefendantFEU,acontractwasenteredintobetween shouldnotbeallowedtocompletelyrelinquishorabdicatesecuritymattersinitspremisesto
them.Underthiscontract,defendantsaresupposedtoensurethatadequatestepsaretakento thesecurityagencyithired.Todosowouldresulttocontractingawayitsinherentobligationto
provideanatmosphereconducivetostudyandensurethesafetyoftheplaintiffwhileinside ensureasafelearningenvironmentforitsstudents.
Consequently,respondentsdefenseofforcemajeuremustfail.Inorderforforcemajeure
defendantFEUspremises.Intheinstantcase,thelatterbreachedthiscontractwhendefendant
allowedharmtobefallupontheplaintiffwhenhewasshotatby,ofallpeople,theirsecurity tobeconsidered,respondentsmustshowthatnonegligenceormisconductwascommittedthat
mayhaveoccasionedtheloss.AnactofGodcannotbeinvokedtoprotectapersonwhohas
guardwhowastaskedtomaintainpeaceinsidethecampus.12
failed to take steps to forestall the possible adverse consequences of such a loss. Ones
InPhilippineSchoolofBusinessAdministrationv.CourtofAppeals,13weheldthat:
When an academic institution accepts students for enrollment, there is established a negligencemayhaveconcurredwithanactofGodinproducingdamageandinjurytoanother;
contractbetweenthem,resultinginbilateralobligationswhichbothpartiesareboundtocomply nonetheless,showingthattheimmediateorproximatecauseofthedamageorinjurywasa
with.Foritspart,theschoolundertakestoprovidethestudentwithaneducationthatwould fortuitouseventwouldnotexemptonefromliability.Whentheeffectisfoundtobepartlythe
presumablysufficetoequiphimwiththenecessarytoolsandskillstopursuehighereducationresultofapersonsparticipationwhetherbyactiveintervention,neglectorfailuretoactthe
oraprofession.Ontheotherhand,thestudentcovenantstoabidebytheschoolsacademic wholeoccurrenceishumanizedandremovedfromtherulesapplicabletoactsofGod.17Article
1170 of the Civil Code provides that those who are negligent in the performance of their
requirementsandobserveitsrulesandregulations.
Institutionsoflearningmustalsomeettheimplicitorbuiltinobligationofprovidingobligationsareliablefordamages.Accordingly,forbreachofcontractduetonegligencein
theirstudentswithanatmospherethatpromotesorassistsinattainingitsprimaryundertaking providingasafelearningenvironment,respondentFEUisliabletopetitionerfordamages.Itis
ofimpartingknowledge.Certainly,nostudentcanabsorbtheintricaciesofphysicsorhigher essentialintheawardofdamagesthattheclaimantmusthavesatisfactorilyprovenduringthe
mathematicsorexploretherealmoftheartsandotherscienceswhenbulletsareflyingor trialtheexistenceofthefactualbasisofthedamagesanditscausalconnectiontodefendants
grenadesexplodingintheairorwherethereloomsaroundtheschoolpremisesaconstantthreat acts.18
In the instant case, it was established that petitioner spent P35,298.25 for his
tolifeandlimb.Necessarily,theschoolmustensurethatadequatestepsaretakentomaintain
hospitalizationandothermedicalexpenses.19 Whilethetrialcourtcorrectlyimposedinterest
peaceandorderwithinthecampuspremisesandtopreventthebreakdownthereof.14
Itisundisputedthatpetitionerwasenrolledasasophomorelawstudentinrespondent onsaidamount,however,thecaseatbarinvolvesanobligationarisingfromacontractandnot
FEU. As such, there was created a contractual obligation between the two parties. On aloanorforbearanceofmoney.Assuch,theproperrateoflegalinterestissixpercent(6%)per
petitionerspart,hewasobligedtocomplywiththerulesandregulationsoftheschool.Onthe annum oftheamountdemanded.Suchinterestshallcontinuetorunfromthefilingofthe
otherhand,respondentFEU,asalearninginstitutionismandatedtoimpartknowledgeand complaintuntilthefinalityofthisDecision.20AfterthisDecisionbecomesfinalandexecutory,

Theresponsibilitytreatedofinthisarticleshallceasewhenthepersonshereinmentioned
theapplicablerateshallbetwelvepercent(12%)perannumuntilitssatisfaction.
Theotherexpensesbeingclaimedbypetitioner,suchastransportationexpensesandthose provethattheyobservedallthediligenceofagoodfatherofafamilytopreventdamage.
WeagreewiththefindingsoftheCourtofAppealsthatrespondentscannotbeheldliable
incurredinhiringapersonalassistantwhilerecuperatingwerehowevernotdulysupportedby
receipts.21Intheabsencethereof,noactualdamagesmaybeawarded.Nonetheless,temperate fordamagesunderArt.2180oftheCivilCodebecauserespondentsarenottheemployersof
damagesunderArt.2224oftheCivilCodemayberecoveredwhereithasbeenshownthatthe Rosete.ThelatterwasemployedbyGalaxy.TheinstructionsissuedbyrespondentsSecurity
claimantsufferedsomepecuniarylossbuttheamountthereofcannotbeprovedwithcertainty. ConsultanttoGalaxyanditssecurityguardsareordinarilynomorethanrequestscommonly
envisagedinthecontractforservicesenteredintobyaprincipalandasecurityagency.They
Hence,theamountofP20,000.00astemperatedamagesisawardedtopetitioner.
Asregardstheawardofmoraldamages,thereisnohardandfastruleinthedeterminationcannot be construed as the element of control as to treat respondents as the employers of
ofwhatwouldbeafairamountofmoraldamagessinceeachcasemustbegovernedbyitsown Rosete.28
peculiar circumstances.22 The testimony of petitioner about his physical suffering, mental
AsheldinMercuryDrugCorporationv.Libunao:29
anguish,fright,seriousanxiety,andmoralshockresultingfromtheshootingincident23justify
InSoliman,Jr.v.Tuazon,30 weheldthatwherethesecurityagencyrecruits,hiresand
the award of moral damages. However, moral damages are in the category of an award assignstheworksofitswatchmenorsecurityguardstoaclient,theemployerofsuchguardsor
designedtocompensatetheclaimantforactualinjurysufferedandnottoimposeapenaltyon watchmen issuch agency, andnot theclient, since thelatter hasno handin selectingthe
the wrongdoer. The award is not meant to enrich the complainant at the expense of the securityguards.Thus,thedutytoobservethediligenceofagoodfatherofafamilycannotbe
defendant,buttoenabletheinjuredpartytoobtainmeans,diversion,oramusementsthatwill demandedfromthesaidclient:
servetoobviatethemoralsufferinghehasundergone.Itisaimedattherestoration,withinthe
[I]tissettledinourjurisdictionthatwherethesecurityagency,ashere,
limits of the possible, of the spiritual status quo ante, and should be proportionate to the
recruits,hiresandassignstheworkofitswatchmenorsecurityguards,theagencyis
sufferinginflicted.Trialcourtsmustthenguardagainsttheawardofexorbitantdamages;they
the employer of such guards or watchmen. Liability for illegal or harmful acts
shouldexercisebalanced,restrainedandmeasuredobjectivitytoavoidsuspicionthatitwasdue
committedbythesecurityguardsattachestotheemployeragency,andnottothe
to passion, prejudice, or corruption on the part of the trial court.24 We deem it just and
clientsorcustomersofsuchagency.Asageneralrule,aclientorcustomerofa
reasonable under the circumstances to award petitioner moral damages in the amount of
securityagencyhasnohandinselectingwhoamongthepoolofsecurityguardsor
P100,000.00.
watchmenemployedbytheagencyshallbeassignedtoit;thedutytoobservethe
Likewise,attorneysfeesandlitigationexpensesintheamountofP50,000.00aspartof
diligenceofagoodfatherofafamilyintheselectionoftheguardscannot,inthe
damagesisreasonableinviewofArticle2208oftheCivilCode.25However,theawardof
ordinarycourseofevents,bedemandedfromtheclientwhosepremisesorproperty
WenotethatthetrialcourtheldrespondentDeJesussolidarilyliablewithrespondent
areprotectedbythesecurityguards.
FEU.InPowtonConglomerate,Inc.v.Agcolicol,26weheldthat:
xxxx
[A]corporationisinvestedbylawwithapersonalityseparateanddistinctfromthoseofthe
Thefactthataclientcompanymaygiveinstructionsordirectionstothesecurityguards
personscomposingit,suchthat,saveforcertainexceptions,corporateofficerswhoenteredinto assignedtoit,doesnot,byitself,rendertheclientresponsibleasanemployerofthesecurity
contractsinbehalfofthecorporationcannotbeheldpersonallyliablefortheliabilitiesofthe guardsconcernedandliablefortheirwrongfulactsoromissions.31
latter. Personal liability of a corporate director, trustee or officer along (although not
WenowcometorespondentsThirdPartyClaimagainstGalaxy.InFirestoneTireand
necessarily)withthecorporationmaysovalidlyattach,asarule,onlywhen(1)heassentstoRubberCompanyofthePhilippinesv.Tempongko,32weheldthat:
apatentlyunlawfulactofthecorporation,orwhenheisguiltyofbadfaithorgrossnegligence
Thethirdpartycomplaintis,therefore,aproceduraldevicewherebyathirdpartywho
in directing its affairs, or when there is a conflict of interest resulting in damages to the isneitherapartynorprivytotheactordeedcomplainedofbytheplaintiff,maybebrought
corporation,itsstockholdersorotherpersons;(2)heconsentstotheissuanceofwatereddown intothecasewithleaveofcourt,bythedefendant,whoactsasthirdpartyplaintifftoenforce
stocksorwho,havingknowledgethereof,doesnotforthwithfilewiththecorporatesecretary againstsuchthirdpartydefendantarightforcontribution,indemnity,subrogationoranyother
hiswrittenobjectionthereto;(3)heagreestoholdhimselfpersonallyandsolidarilyliablewith relief,inrespectoftheplaintiffsclaim.Thethirdpartycomplaintisactuallyindependentof
thecorporation;or(4)heismadebyaspecificprovisionoflawpersonallyanswerableforhis andseparateanddistinctfromtheplaintiffscomplaint.Wereitnotforthisprovisionofthe
corporateaction.27
Rules of Court, it would have to be filed independently and separately from the original
Noneoftheforegoingexceptionswasestablishedintheinstantcase;hence,respondent complaintbythedefendantagainstthethirdparty.ButtheRulespermitdefendanttobringina
DeJesusshouldnotbeheldsolidarilyliablewithrespondentFEU.
thirdparty defendant or so to speak, to litigate his separate cause of action in respect of
Incidentally,althoughthemaincauseofactionintheinstantcaseisthebreachofthe plaintiffs claim against a thirdparty in the original and principal case with the object of
schoolstudentcontract,petitioner,inthealternative,alsoholdsrespondentsvicariouslyliable avoiding circuitry of action and unnecessary proliferation of law suits and of disposing
underArticle2180oftheCivilCode,whichprovides:
expeditiously in one litigation the entire subject matter arising from one particular set of
Art.2180.TheobligationimposedbyArticle2176isdemandablenotonlyforonesfacts.33
RespondentsandGalaxywereabletolitigatetheirrespectiveclaimsanddefensesinthe
ownactsoromissions,butalsoforthoseofpersonsforwhomoneisresponsible.
xxxx
courseofthetrialofpetitionerscomplaint.Evidencedulysupportsthefindingsofthetrial
Employers shall be liable for the damages caused by their employees and household court that Galaxy is negligent not only in the selection of its employees but also in their
helpersactingwithinthescopeoftheirassignedtasks,eventhoughtheformerarenotengaged supervision. Indeed, no administrative sanction was imposed against Rosete despite the
shooting incident; moreover, he was even allowed to go on leave of absence which led
inanybusinessorindustry.
xxxx
eventually to his disappearance.34 Galaxy also failed to monitor petitioners condition or

extendthenecessaryassistance,otherthantheP5,000.00initiallygiventopetitioner.Galaxy
andImperialfailedtomakegoodtheirpledgetoreimbursepetitionersmedicalexpenses.
FortheseactsofnegligenceandforhavingsuppliedrespondentFEUwithanunqualified
securityguard,whichresultedtothelattersbreachofobligationtopetitioner,itisproperto
holdGalaxyliabletorespondentFEUforsuchdamagesequivalenttotheabovementioned
amountsawardedtopetitioner.
UnlikerespondentDeJesus,wedeemImperialtobesolidarilyliablewithGalaxyfor
beinggrosslynegligentindirectingtheaffairsofthesecurityagency.ItwasImperialwho
assured petitioner that his medical expenses will be shouldered by Galaxy but said
representationswerenotfulfilledbecausetheypresumedthatpetitionerandhisfamilywereno
longerinterestedinfilingaformalcomplaintagainstthem.35
WHEREFORE,thepetitionisGRANTED.TheJune29,2007DecisionoftheCourtof
AppealsinCAG.R.CVNo.87050nullifyingtheDecisionofthetrialcourtanddismissingthe
complaintaswellastheAugust23,2007ResolutiondenyingtheMotionforReconsideration
areREVERSEDandSET
ASIDE.TheDecisionoftheRegionalTrialCourtofManila,Branch2,inCivilCaseNo.98
89483 finding respondent FEU liable for damages for breach of its obligation to provide
students with a safe and secure learning atmosphere, is AFFIRMED with the following
MODIFICATIONS:
a.respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual
damages in the amount of P35,298.25, plus 6% interest per annum from the filing of the
complaintuntilthefinalityofthisDecision.Afterthisdecisionbecomesfinalandexecutory,
theapplicablerateshallbetwelvepercent(12%)perannumuntilitssatisfaction;
b.respondent FEU is also ORDERED to pay petitioner temperate damages in the
amountofP20,000.00;moraldamagesintheamountofP100,000.00;andattorneysfeesand
litigationexpensesintheamountofP50,000.00;
c.theawardofexemplarydamagesisDELETED.
The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The
counterclaimsofrespondentsarelikewiseDISMISSED.
GalaxyDevelopmentandManagementCorporation(Galaxy)anditspresident,Mariano
D.ImperialareORDEREDtojointlyandseverallypayrespondentFEUdamagesequivalentto
theabovementionedamountsawardedtopetitioner.
SOORDERED.
AustriaMartinez,ChicoNazario,NachuraandReyes,JJ.,concur.
Petitiongranted,judgmentandresolutionreversedandsetaside.
Notes.Aschoolprincipalistaskedtoseetothemaintenanceoftheschoolgroundsand
safetyofthechildrenwithintheschoolanditspremises.(Capilivs.Cardaa,506SCRA569
[2006])
The term chartered institution includes the state universities and colleges and the
monetaryauthorityoftheState.(Gumaruvs.QuirinoStateCollege,525SCRA412[2007])
o0o

7.SagradaOrdenvs.NACOCO

9.

5.

2.

the property it was occupied by the defendant herein. The Philippine Government made
representationswiththeOfficeoftheUnitedStatesAlienPropertyCustodianfortheuseofthe
property by the Government (see Exhibits 2, 2A, 2B, and 1), On March 31, 1947, the
defendantwasauthorizedtorepairthewarehouseontheland,andactuallyspentthereonfor
[No.L3756.June30,1952]
repairsthesumofP26,898.27.In1948defendantleasedonethirdofthewarehousetoone
SAGRADAORDENDEPREDICADORESDELSANTISIMOROSARIODEFILIPINAS,DioscoroSarileatamonthlyrentalofP500,whichwaslaterraisedtoP1,000amonth.Sarile
plaintiffandappellee,vs.NATIONALCOCONUTCORPORATION,defendantandappellant didnotpaytherents,soactionwasbroughtagainsthim. Itisnotshown,however,ifthe
1,UNITEDSTATESALIENPROPERTYCUSTODIAN;RIGHTSANDPOWERSOVER judgmentwaseverexecuted.
ENEMYPROPERTY.TheAlienPropertyCustodianoftheUnitedStateshadthecontroland
PlaintiffmadeclaimtothepropertybeforetheAlienPropertyCustodianoftheUnited
administrationofenemyproperty,notasasuccessortotheinterestsoftheenemyalienowner, States,butasthiswasdenied,itbroughtanactionincourt(CourtofFirstInstanceofManila,
butbyexpressprovisionoflaw(TradingWithTheEnemyAct,40Stat.,44;50U.S.C.A.,
civilcaseNo.5007,entitled"LaSagradaOrdendePredicadoresdelaProvinciadelSantisimo
189).Neitherwasheatrusteeoftheprewarowneroftheproperty,butatrusteeoftheUnited RosariodeFilipinas,"plaintiffvs.PhilippineAlienPropertyAdministrator,defendant,Republic
StatesGovernment(50U..S.C.A.,282283),initsownright,totheexclusionofandagainst ofthePhilippines,intervenor)toannulthesaleofthepropertytotheTaiwanTekkosho,and
theclaimortitleoftheenemyowner,withpowertodisposeofthepropertybysaleor
recoveritspossession.TheRepublicofthePhilippineswasallowedtointerveneintheaction.
otherwise,asthoughheweretheabsoluteowner.
Thecasedidnotcomefortrialbecausethepartiespresentedajointpetitioninwhichitis
2.ID.;ID.;RENTALSFORUSEANDOCCUPATIONOFENEMYPROPERTY.Aparty claimedbyplaintiffthatthesaleinfavoroftheTaiwanTekkoshowasnullandvoidbecauseit
allowedbytheUnitedStatesAlienPropertyCustodiantooccupyandusetheenemypropertyis wasexecutedunderthreats,duress,andintimidation,anditwasagreedthatthetitleissuedin
notliabletopayrentalstherefortotheprewarownerpriortotheannulmentoftheenemy'stitle thenameoftheTaiwanTekkoshobecancelledandtheoriginaltitleofplaintiffreissued;that
tothepropertyevenwhentheenemyacquireditbyduress,becausetherewasnoprivity(of
theclaims,rights,title,andinterestoftheAlienPropertyCustodianbecancelledandheldfor
contractorobligation)betweentheAlienPropertyCustodianandtheenemyowner,theformer's naught;thattheoccupantNationalCoconutCorporationhasuntilFebruary28,1949,torecover
titlebeingbased,bylegalprovision,ontherighttoseizeenemyproperty.Theoccupant's
itsequipmentfromthepropertyandvacatethepremises;thatplaintiff,uponentryofjudgment,
obligationtopayrentals,likeanyotherobligation,mustarisefromlaw,contract,quasi
pay to the Philippine Alien Property Administration the sum of P140,000; and that the
contract,crime,ornegligence(article1089,SpanishCivilCode).Ifoccupanttookpossession PhilippineAlienPropertyAdministrationbefreefromresponsibilityorliabilityforanyactof
ofthepropertywiththepermissionoftheAlienPropertyCustodian,withoutanyexpressor
theNationalCoconutCorporation,etc.Pursuanttotheagreementthecourtrenderedjudgment
impliedagreementbetweenthemthatrentalswouldbepaidfortheuseandoccupationofthe releasingthedefendantandtheintervenorfromliability,butreservingtotheplaintifftheright
enemyproperty,nonemayberecoveredbytheprewarowner.Astotherentalscollectedby torecoverfromtheNationalCoconutCorporationreasonablerentalsfortheuseandoccupation
saidoccupantfromitslessee,thesameshouldaccruetoit,asapossessoringoodfaith.
ofthepremises.(ExhibitA1.)
3.JUDGMENTS;RESERVATIONTHEREINOFASEPARATEACTION.Evenifinthe
ThepresentactionistorecoverthereasonablerentalsfromAugust,1946,thedatewhen
judgmentannullingthesale,reservationismadeofanewactionforsuchrentals,the
thedefendantbegantooccupythepremises,tothedateitvacatedit.Thedefendantdoesnot
reservationmaynotbeconsideredasvestinganewright;ifnorighttoclaimforrentalsexisted contestitsliabilityfortherentalsattherateofP3,000permonthfromFebruary28,1949(the
atthetimeofthereservation,norightscanariseoraccruefromsuchreservationalone.
datespecifiedinthejudgmentincivilcaseNo.5007),butresiststheclaimthereforpriortothis
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.Castelo,J.
date.Itinterposesthedefensethatitoccupiedthepropertyingoodfaith,undernoobligation
ThefactsarestatedintheopinionoftheCourt.
whatsoevertopayrentalsfortheuseandoccupationofthewarehouse.Judgmentwasrendered
First Assistant Corporate Counsel Federico C. Alikpala and Assistant Attorney fortheplaintifftorecoverfromthedefendantthesumofP3,000amonth,asreasonablerentals,
AugustoKalawforappellant.
fromAugust,1946,tothedatethedefendantvacatesthepremises.Thejudgmentdeclaresthat
Ramirez&Ortigasforappellee.
plaintiffhasalwaysbeentheowner,asthesaletotheJapanesepurchaserwasvoidabinitio;
LABRADOR,J.:
thattheAlienPropertyAdministrationneveracquiredanyrighttotheproperty,butthatitheld
thesameintrustuntilthedeterminationastowhetherornottheownerisanenemycitizen.The
Thisisanactiontorecoverthepossessionofapieceofrealproperty(landwithwarehouses) trialcourtfurtherdeclaresthatdefendantcannotclaimanybetterrightsthanitspredecessor,
situatedinPandacan,Manila,andtherentalsforitsoccupationanduse.Thelandbelongstothe the Alien Property Administrator, and that as defendant has used the property and had
plaintiff,inwhosenamethetitlewasregisteredbeforethewar.OnJanuary4,1943,duringthe subleasedportionthereof,itmustpayreasonablerentalsforitsoccupation.

Japanesemilitaryoccupation,thelandwasacquiredbyaJapanesecorporationbythenameof
Taiwan Tekkosho for the sum of P140,000, and thereupon title thereto issued in its name Againstthisjudgmentthisappealhasbeeninterposed,thefollowingassignmentoferrorhaving
(transfer certificate of title No. 64330, Register of Deeds, Manila). After liberation, more beenmadeondefendantappellant'sbehalf:
specificallyonApril4,1946,theAlienPropertyCustodianoftheUnitedStatesofAmerica "Thetrialcourterredinholdingthedefendantliableforrentalsorcompensationfortheuseand
tookpossession,control,andcustodythereofundersection12ofthe TradingwiththeEnemyoccupationofthepropertyfromthemiddleofAugust,1946,toDecember14,1948.
"1.Wantof"ownershiprights"ofthePhilippineAlienPropertyAdministratordidnotrender
Act,40Stat.,411,forthereasonthatitbelongedtoanenemynational.Duringtheyear1946
illegalorinvalidateitsgranttothedefendantofthefreeuseoftheproperty.
thepropertywasoccupiedbytheCopraExportManagementCompanyunderacustodianship
"2.ThedecisionoftheCourtofFirstInstanceofManiladeclaringthesalebytheplaintifftothe
agreementwiththeUnitedStatesAlienPropertyCustodian(ExhibitG),andwhenitvacated
Japanesepurchasernullandvoidabinitioandthattheplaintiffwasandhasremainedasthe

7.

10.

legalowneroftheproperty,withoutlegalinterruption,isnotconclusive.rentalsweredemandedfortheuseoftheproperty.WhentheNationalCoconutCorporation
"3.ReservationtotheplaintiffoftherighttorecoverfromthedefendantcorporationnotbindingsucceededtheCopraExportManagementCompanyinthepossessionanduseoftheproperty,it
onthelatter;must have been also free from payment of rentals, especially as it was a Government
8.
"4.Useofthepropertyforcommercialpurposesinitselfalonedoesnotjustifypaymentofcorporation, and steps were then being taken by the Philippine Government to secure the
rentals.propertyfortheNationalCoconutCorporation.Sothatthecircumstancesdonotjustifythe
9.
"5.Defendant'spossessionwasingoodfaith.findingthattherewasanimpliedagreementthatthedefendantappellantwastopayfortheuse
"6.Defendant'spossessioninthenatureofusufruct."
andoccupationofthepremisesatall.
Inreply,plaintiffappellee'scounselcontendsthatthePhilippineAlienPropertyAdministration
Theaboveconsiderationsshowthatplaintiffappellee'sclaimforrentalsbeforeitobtained
(PAPA)wasamereadministratoroftheowner(whoultimatelywasdecidedtobeplaintiff), the judgment annulling the sale to the Taiwan Tekkosho may not be predicated on any
andthatasdefendanthasuseditforcommercialpurposesandhasleasedportionofit,itshould negligenceoroffenseofthedefendantappellant,oronanycontract,expressorimplied,because
beresponsibletherefortotheowner,whohadbeendeprivedofthepossessionforsomany theAlienPropertyAdministrationwasneitheratrusteeofplaintiffappellee,noraprivytothe
years.(Appellee'sbrief,pp.20,23.)
obligationsoftheTaiwanTekkosho,itstitlebeingbasedbylegalprovisionontheseizureof
Wecannotunderstandhowthetrialcourt,fromthemerefactthatplaintiffappelleewasenemyproperty.Wehavealsotriedinvaintofindalaworprovisionthereof,oranyprinciple
theownerofthepropertyandthedefendantappellanttheoccupant,whichuseditforitsown in quasi contracts or equity, upon which the claim can be supported. On the contrary, as
benefitbutbytheexpresspermissionoftheAlienPropertyCustodianoftheUnitedStates,sodefendantappellantenteredintopossessionwithoutanyexpectationofliabilityforsuchuse
easily jumped to the conclusion that the occupant is liable for the value of such use and andoccupation,itisonlyfairandjustthatitmaynotbeheldliabletherefor.Andastotherents
occupation.Ifdefendantappellantisliableatall,itsobligationsmustarisefromanyofthefour itcollectedfromitslessee,thesameshouldaccruetoitasapossessoringoodfaith,asthis
sourcesofobigations,namely,law,contractorquasicontract,crime,ornegligence.(ArticleCourthasalreadyexpresslyheld.(Resolution,NationalCoconutCorporationvs.Geronimo,83
1089,SpanishCivilCode.)Defendantappellantisnotguiltyofanyoffenseatall,becauseit Phil.467.)
enteredthepremisesandoccupieditwiththepermissionoftheentitywhichhadthelegal
Lastly,thereservationofthisactionmaynotbeconsideredasvestinganewright;ifno
controlandadministrationthereof,theAlienPropertyAdministration.Neitherwasthereany righttoclaimforrentalsexistedatthetimeofthereservation,norightscanariseoraccruefrom
negligenceonitspart.Therewasalsonoprivity(ofcontractorobligation)betweentheAlien suchreservationalone.
PropertyCustodianandtheTaiwanTekkosho,whichhadsecuredthepossessionoftheproperty
Wherefore,thatpartofthejudgmentappealedfrom,whichsentencesdefendantappellant
fromtheplaintiffappelleebytheuseofduress,suchthattheAlienPropertyCustodianorits topayrentalsfromAugust,1946,toFebruary28,1949,isherebyreversed.Inallotherrespects
thejudgmentisaffirmed.Costsofthisappealshallbeagainsttheplaintiffappellee.
permittee(defendantappellant)maybeheldresponsibleforthesupposedillega ityofthe
Pars,C.J.,Pablo,Bengzon,Padilla,Tuazon,Montemayor,andBautistaAngelo,
occupationofthepropertybythesaidTaiwanTekkosho.TheAlienPropertyAdministration JJ.,concur.
hadthecontrolandadministrationofthepropertynotassuccessortotheinterestsoftheenemy
PartofthejudgmentsentencingappellanttopayrentalsfromAug.1946toFeb.28,1949
holderofthetitle,theTaiwanTekkosho,butbyexpressprovisionoflaw(Tradingwiththe isreversedandaffirmedinallotherrespects.
EnemyActoftheUnitedStates,40Stat,411;50U.S.C.A.,189).Neitherisitatrusteeofthe _______________
formerowner,theplaintiffappelleeherein,butatrusteeoftheGovernmentoftheUnitedStates
(32Op.Atty.Gen.249;50U.S,C.A.,283),initsownright,totheexclusionof,andagainst
theclaimortitleof,theenemyowner.(YoughioghenyciOhioCoalCo.vs.Lasevich[1920],
179N.W.,855;171Wis.,347;50U.S.C.A.,282283.)FromAugust,1946,whendefendant
appellanttookpossession,tothedateofthejudgmentonFebruary28,1948,theAlienProperty
AdministrationhadtheabsolutecontrolofthepropertyastrusteeoftheGovernmentofthe
UnitedStates,withpowertodisposeofitbysaleorotherwise,asthoughitweretheabsolute
owner.(U.S. vs. ChemicalFoundation[C.C.A.Del.1925],5F.[2d],191;50U.S.C,A.,
283.)Therefore,evenifdefendantappellantwereliabletotheAlienPropertyAdministration
forrentals,thesewouldnotaccruetothebenefitoftheplaintiffappellee,theoldowner,butto
theUnitedStatesGovernment.
Butthereisanothergroundwhytheclaimforrentalscannotbemadeagainstdefendant
appellant. There was no express agreement between the Alien Property Custodian and the
defendantappellantforthelattertopayrentalsontheproperty.Theexistenceofanimplied
agreement to that effect is contrary to the circumstances. The Copra Export Management
Company,whichprecededthedefendantappellantinthepossessionanduseoftheproperty,
doesnotappeartohavepaidrentalstherefor,asitoccupieditbywhatthepartiesdenominateda
"custodianshipagreement,"andthereisnoprovisionthereinforthepaymentofrentalsorof
anycompensationforitscustodyandoroccupationanduse.TheTradingwiththeEnemyAct,
asoriginallyenacted, was purely a measure of conservation, henceitisveryunlikelythat

9.Cangcovs.MRR

feetbetweenthesacksofmelonsandtheedgeoftheplatform;anditisclearthatthefallofthe
plaintiffwasduetothefactthathisfootalightedupononeofthesemelonsatthemomenthe
[No.12191.October14,1918.]
steppedupontheplatform.Hisstatementthathefailedtoseetheseobjectsinthedarknessis
JOSECANGCO,plaintiffandappellant,vs.MANILARAILROADCo.,defendantand
readilytobecredited.
appellee.
Theplaintiffwasdrawnfromunderthecarinanunconsciouscondition,anditappeared
1.MASTERANDSERVANT;CONTRACT;NEGLIGENCE..Failuretoperformacontract thattheinjurieswhichhehadreceivedwereveryserious.Hewasthereforebroughtatoncetoa
cannotbeexcuseduponthegroundthatthebreachwasduetothenegligenceofaservantofthe certain hospital in the city of Manila where an examination was made and his arm was
obligor,andthatthelatterexercisedduediligenceintheselectionandcontroloftheservant. amputated.Theresultofthisoperationwasunsatisfactory,andtheplaintiffwasthencarriedto
2.CONTRACTS;NEGLIGENCE;CULPAAQUILIANA;CULPACONTRACTUAL.The anotherhospitalwhereasecondoperationwasperformedandthememberwasagainamputated
distinctionbetweennegligenceasthesourceofanobligation(culpaaquiliana)andnegligence higher upnear theshoulder. It appearsin evidencethat theplaintiff expendedthe sumof
intheperformanceofacontract(culpacontractual)pointedout.
P790.25intheformofmedicalandsurgicalfeesandforotherexpensesinconnectionwiththe
3.CARRIERS;PASSENGERS;NEGLIGENCE;ALIGHTINGFROMMOVINGTRAIN.It processofhiscuration.
isnotnegligenceperseforatravelertoalightfromaslowlymovingtrain.
UponAugust31,1915,heinstitutedthisproceedingintheCourtofFirstInstaneeofthe
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.DelRosario,J.
cityofManilatorecoverdamagesofthedefendantcompany,foundinghisactionuponthe
negligenceoftheservantsandemployeesofthedefendantinplacingthesacksofmelonsupon
ThefactsarestatedintheopinionoftheCourt.
theplatformandinleavingthemsoplacedastobeamenacetothesecurityofpassenger
FiSHER,J.:
alightingfromthecompany'strains.AtthehearingintheCourtofFirstInstance,hisHonor,the
trialjudge,foundthefactssubstantiallyasabove stated,anddrewtherefromhisconclusionto
Atthetimeoftheoccurrencewhichgaverisetothislitigationtheplaintiff,JoseCangco,wasin theeffectthat,althoughnegligencewasattributabletothedefendantbyreasonofthefactthat
theemploymentoftheManilaRailroadCompanyinthecapacityofclerk,withamonthlywagethesacksofmelonsweresoplacedastoobstructpassengerspassingtoandfromthecars,
ofP25.HelivedinthepuebloofSanMateo,intheprovinceofRizal,whichislocateduponthe nevertheless,theplaintiffhimselfhadfailedtouseduecautioninalightingfromthecoachand
lineofthedefendantrailroadcompany;andincomingdailybytraintothecompany'sofficein wasthereforeprecludedfromrecovering.Judgmentwasaccordinglyenteredinfavorofthe
thecityofManilawhereheworked,heusedapass,suppliedbythecompany,whichentitled defendantcompany,andtheplaintiffappealed.
It can not be doubted that the employees of the railroad company were guilty of
himtorideuponthecompany'strainsfreeofcharge.Upontheoccasioninquestion,January
negligenceinpilingthesesacksontheplatforminthemannerabovestated;thattheirpresence
20,1915,theplaintiffwasreturninghomebyrailfromhisdailylabors;andasthetraindrewup
tothestationinSanMateotheplaintiffarosefromhisseatinthesecondclasscarwherehewas causedtheplaintifftofallashealightedfromthetrain;andthattheythereforeconstitutedan
ridingand,makinghisexitthroughthedoor,tookhispositionuponthestepsofthecoach,effectivelegalcauseoftheinjuriessustainedbytheplaintiff.Itnecessarilyfollowsthatthe
defendantcompanyisliableforthedamagetherebyoccasionedunlessrecoveryisbarredbythe
seizingtheuprightguardrailwithhisrighthandforsupport.
OnthesideofthetrainwherepassengersalightattheSanMateostationthereisacement plaintiff'sowncontributorynegligence.Inresolvingthisproblemitisnecessarythateachof
platformwhichbeginstorisewithamoderategradientsomedistanceawayfromthecompany'stheseconceptionsofliability,towit,theprimaryresponsibilityofthedefendantcompanyand
officeandextendsalonginfrontofsaidofficeforadistancesufficienttocoverthelengthof thecontributorynegligenceoftheplaintiffshouldbeseparatelyexamined.
Itisimportanttonotethatthefoundationofthelegalliabilityofthedefendantisthe
severalcoaches.Asthetrainsloweddownanotherpassenger,namedEmilioZufiiga,alsoan
employeeoftherailroadcompany,gotoffthesamecar,alightingsafelyatthepointwherethe contract ofcarriage, and thatthe obligationto respondfor thedamage whichplaintiff has
platformbeginstorisefromtheleveloftheground.Whenthetrainhadproceededalittle sufferedarises,ifatall,fromthebreachofthatcontractbyreasonofthefailureofdefendantto
farthertheplaintiffJoseCangcosteppedoffalso,butoneorbothofhisfeetcameincontact exercise due care in its performance. That is to say, its liability is direct and immediate,
withasackofwatermelonswiththeresultthathisfeetslippedfromunderhim.andhefell differing essentially, in the legal viewpoint from that presumptive responsibility for the
violentlyontheplatform.Hisbodyatoncerolledfromtheplatformandwasdrawnunderthe negligenceofitsservants,imposedbyarticle1903oftheCivilCode,whichcanberebuttedby
movingcar,wherehisrightarmwasbadlycrushedandlacerated.Itappearsthatafterthe proofoftheexerciseofduecareintheirselectionandsupervision.Article1903oftheCivil
plaintiffalightedfromthetrainthecarmovedforwardpossiblysixmetersbeforeitcametoa Code is not applicable to obligations arising ex contractu, but only to extracontractual
obligationsor to use the technical form of expression, that article relates only to culpa
fullstop.
Theaccidentoccurredbetween7and8o'clockonadarknight,andastherailroadstation aquiliana and not to culpa contractual. Manresa (vol. 8, p. 67) in his commentaries upon
waslighteddimlybyasinglelightlocatedsomedistanceaway,objectsonthe platformwherearticles1103and1104oftheCivilCode,clearlypointsoutthisdistinction,whichwasalso
theaccidentoccurredweredifficulttodiscern,especiallytoapersonemergingfromalighted recognizedbythisCourtinitsdecisioninthecaseofRakesvs.Atlantic,GulfandPacificCo.
(7Phil.Rep.,359).Incommentinguponarticle1093(vol.8,p.30)Manresaclearlypointsout
car.
Theexplanationofthepresenceofasackofmelonsontheplatformwheretheplaintiffthe difference between "culpa, substantive and independent, which of itself constitutes the
alightedisfoundinthefactthatitwasthecustomaryseasonforharvestingthesemelonsanda sourceofanobligationbetweenpersonsnotformerlyconnectedbyanylegaltie"and culpa
largelothadbeenbroughttothestationforshipmenttothemarket.Theywerecontainedin consideredasan"accidentintheperformanceofanobligationalreadyexisting***."
IntheRakescase(supra)thedecisionofthiscourtwasmadetorestsquarelyuponthe
numeroustowsackswhichhadbeenpiledontheplatforminarowoneuponanother.The
propositionthatarticle1903oftheCivilCodeisnotapplicabletoactsofnegligencewhich
testimonyshowsthatthisrowofsackswassoplacedthattherewasaspaceofonlyabouttwo
constitutethebreachofacontract.

UponthispointtheCourtsaid:
notonthatofhisservant.ThisisthenotablepeculiarityoftheSpanishlawofnegligence.Itis,
"Theactstowhichthesearticles[1902and1903oftheCivilCode]areapplicableare ofcourse,instrikingcontrasttotheAmericandoctrinethat,inrelationswithstrangers,the
understoodtobethosenotgrowingoutofpreexistingdutiesofthepartiestooneanotherBut negligenceoftheserVantisconclusivelythenegligenceofthemaster."
whererelationsalreadyformedgiverisetoduties,whetherspringingfromcontractorquasi
TheopinionthereexpressedbythisCourt,totheeffectthatincaseofextracontractual
contract,thenbreachesofthosedutiesaresubjecttoarticles1101,1103and1104ofthesame culpabaseduponnegligence,itisnecessarythatthereshallhavebeensomefaultattributableto
code."(Rakesvs.Atlantic,GulfandPacificCo.,7Phil.Rep.,359atp.365.)
the defendant personally, and that the last paragraph of article 1903 merely establishes a
Thisdistinctionisoftheutmostimportance.Theliabilitvwhich,undertheSpanishlaw, rebuttablepresumption,isincompleteaccordwiththeauthoritativeopinionofManresa,who
is, in certain cases imposed upon employers with respect to damages occasioned by the says(vol.12,p.611)thattheliabilitycreatedbyarticle1903isimposedbyreasonofthe
negligenceoftheiremployeestopersonstowhomtheyarenotboundbycontract,isnotbased, breachofthedutiesinherentinthespecialrelationsofauthorityorsuperiorityexistingbetween
asintheEndishCommonLaw,upontheprincipleofrespondentStTitwere,themasterwouldthepersoncalled upontorepairthedamageandtheonewho,byhisactoromission,wasthe
beliableineverycaseandunconditionallybutupontheprincipleannouncedinLwl1902ofthe causeofit.
On the other hand, the liability of masters and employers for the negligent acts or
CivilCode,whichimposesuponallBersonswhobytheirfaultornegligence,doinjurytoano
he,TheobUgationofmakinggoodthedamagecaused. gencewhichmakeshimliableforallomissions of their servants or agents, when such acts or omissions cause damages which
theconsequencesofhisimprudence.Theobligationtomakegoodthedamagearisesattheveryamounttothebreachofacontract, is not based upon a mere presumption of the master's
instantthattheunskillfulservant,whileactingwithinthescopeofhisemployment,causesthe negligenceintheirselectionorcontrol,andproofofexerciseoftheutmostdiligenceandcarein
injury.Theliabilityofthemasterispersonalanddirect.But,ifthemasterhasnotbeenguiltyof thisregarddoesnotrelievethemasterofhisliabilityforthebreachofhiscontract.
Every legal obligation must of necessity be extracontractual or contractual. Extra
anynegligencewhateverintheselectionand.directionoftheservant,heisnotliableforthe
actsofthelatter,whetherdonewithinthescopeofhisemploymentornot,ifthedamagedone contractualobligationhasitssourceinthebreachoromissionofthosemutualdutieswhich
bytheservantdoesnotamounttoabreachofthecontractbetweenthemasterandtheperson civilizedsocietyimposesuponitsmembers,orwhicharisefromtheserelations,otherthan
contractual, of certainmembers ofsociety toothers, generally embracedin theconcept of
injured.
Itisnotaccuratetosaythatproofofdiligenceandcareintheselectionandcontrolofthe status.Thelegalrightsofeachmemberofsocietyconstitutethemeasureofthecorresponding
servantrelievesthemasterfromliabilityforthelatter'sactsonthecontrary,thatproofshows legalduties,mainlynegativeincharacter,whichtheexistenceofthoserightsimposesuponall
thattheresponsibilityhasneverexisted.AsManresasays(vol.8,p.68)theliabilityarising othermembersofsociety.Thebreachofthesegeneraldutieswhetherduetowillfulintentorto
fromextracontractualculpaisalwaysbaseduponavoluntaryactoromissionwhich,withoutmereinattention,ifproductiveofinjury,givesrisetoanobligationtoindemnifytheinjured
willfulintent,butbymerenegligenceorinattention,hascauseddamagetoanother.Amaster party.Thefundamentaldistinctionbetweenobligationsofthischaracterandthosewhicharise
whoexercisesallpossiblecareintheselectionofhisservant,takingintoconsiderationthe fromcontract,restsuponthefactthatincasesofnoncontractualobligationitisthewrongfulor
qualificationstheyshouldpossessforthedischargeofthedutieswhichitishispurposeto negligent act or omission itself which creates the vinculum juris, whereas in contractual
confidetothem, and directs them with equal diligence, therebyperformshisdutytothird relationsthevinculumexistsindependentlyofthebreachofthevoluntarydutyassumedbythe
personstowhomheisboundbynocontractualties,andheincursnoliabilitywhateverif,by partieswhenenteringintothecontractualrelation.
reasonofthenegligenceofhisservants,evenwithinthescopeoftheiremployment,suchthird
Withrespecttoextracontractualobligationarisingfromnegligence,whetherofactor
personssufferdamage.Trueitisthatunderarticle1903oftheCivilCodethelawcreatesa omission,itiscompetentforthelegislaturetoelectandourLegislaturehassoelectedto
presumption thathehasbeennegligentintheselectionordirectionofhisservant,butthe limitsuchliabilitytocasesinwhichthepersonuponwhomsuchanobligationisimposedis
morally culpable or, on the contrary, for reasons of public policy, to extend that liability,
presumptionisrebuttableandyieldstoproofofduecareanddiligenceinthisrespect.
ThesupremecourtofPortoRico,ininterpretingidenticalprovisions,asfoundinthe withoutregardtothelackofmoralculpability,soastoincluderesponsibilityforthenegligence
PortoRicanCivilCode,hasheldthatthesearticlesareapplicabletocasesofextracontractual ofthosepersonswhoseactsoromissionsareimputable,byalegalfiction,tootherswhoarein
culpa exclusively. (Carmona vs. Cuesta,20PortoRicoReports, 215.) Thisdistinctionwasapositiontoexerciseanabsoluteorlimitedcontroloverthem.Thelegislaturewhichadopted
againmadepatentbythisCourtinitsdecisioninthecaseofBahiavs.LitonjuaandLeynes,(30our Civil Code has elected to limit extracontractual liabilitywith certain welldefined
Phil.Rep.,624),whichwasanactionbroughtuponthetheoryoftheextracontractualliability exceptionstocasesinwhichmoralculpabilitycanbedirectlyimputedtothepersonstobe
ofthedefendanttorespondforthedamagecausedbythecarelessnessofhisemployeewhile charged.Thismoralresponsibilitymayconsistinhavingfailedtoexerciseduecareinone's
actingwithinthescopeofhisemployment.TheCourt,aftercitingthelastparagraphofarticle ownacts,orinhavingfailedtoexerciseduecareintheselectionandcontrolofone'sagentsor
servants, or inthe controlof personswho, by reasonof theirstatus, occupy aposition of
1903oftheCivilCode,said:
"Fromthisarticletwothingsareapparent:(1)Thatwhenaninjuryiscausedbythe dependencywithrespecttothepersonmadeliablefortheirconduct.
Thepositionofanaturalorjuridicalpersonwhohasundertakenbycontracttorender
negligenceofaservantoremployeethereinstantlyarisesapresumptionoflawthattherewas
negligence on the part of the master or employer either in the selection of the servant or servicetoanother,iswhollydifferentfromthattowhicharticle1903relates.Whenthesource
employee,orinsupervisionoverhim,aftertheselection,orboth;and(2)thatthatpresumption oftheobligationuponwhichplaintiff'scauseofactiondependsisanegligentactoromission,
is juris tantum and not juris et de jure, and consequently, may be rebutted. It followstheburdenofproofrestsuponplaintifftoprovethenegligenceifhedoesnothisaction'fails.
necessarilythatiftheemployershowstothesatisfactionofthecourtthatinselectionand Butwhenthefactsaverredshowacontractualundertakingbydefendantforthebenefitof
supervision he has exercised the care and diligence of a good f ather of a f amily, the plaintiff,anditisallegedthatplaintiffhasfailedorrefusedtoperformthecontract,itisnot
necessaryforplaintifftospecifyinhispleadingswhetherthebreachofthecontractisdueto
presumptionisovercomeandheisrelievedfromliability.
"Thistheorybasestheresponsibilityofthemasterultimatelyonhisownnegligenceandwilfulfaultortonegligenceonthepartofthedefendant,orofhis,servantsoragents.Proofof

the"obligationofthedefendantgrewoutofacontractmadebetweenitandtheplaintiff**we
thecontractandofitsnonperformanceissufficientprimafacietowarrantarecovery.
"Asageneralrule***itislogicalthatincaseofextracontractual culpa, asuingdonotthinkthattheprovisionsofarticles1902and1903areapplicabletothecase."
creditorshouldassumetheburdenofproofofitsexistence,astheonlyfactuponwhichhis
InthecaseofChapmanvs.Underwood(27Phil.Rep.,374),plaintiffsuedthedefendant
actionisbased;whileonthecontrary,inacaseofnegligencewhichpresupposestheexistence torecoverdamagesforpersonalinjuriescausedbythenegligenceofdefendant'schauffeur
ofacontractualobligation,ifthecreditorshowsthatitexistsandthatithasbeenbroken,itis whiledrivingdefendant'sautomobileinwhichdefendantwasridingatthetime.Thecourt
foundthatthedamageswerecausedbythenegligenceofthedriveroftheautomobile,butheld
notnecessaryforhimtoprovethenegligence."(Manresa,vol.8,p.71[1907ed.,p.76].)
Asitisnotnecessaryfortheplaintiffinanactionforthebreachofacontracttoshowthatthe thatthemasterwasnotliable,althoughhewaspresentatthetime,saying:
"***unlessthenegligentactsofthedriverarecontinuedforsuchalengthoftimeasto
breachwasduetothenegligentconductofdefendantorofhisservants,eventhoughsuchbein
facttheactualcauseofthebreach,itisobviousthatproofonthepartofdefendantthatthe givetheownerareasonableopportunitytoobservethemandtodirectthedrivertodesist
negligenceoromissionofhisservantsoragentscausedthebreachofthecontractwouldnot therefrom.***Theactcomplainedofmustbecontinuedinthepresenceoftheownerforsuch
constituteadefensetotheaction.Ifthenegligenceofservantsoragentscouldbeinvokedasa alengthoftimethattheownerbyhisacquiescence,makesthedriver'sactshisown."
meansofdischargingtheliabilityarisingfromcontract,theanomalousresultwouldbethat
InthecaseofYamadavs.ManilaRailroadCo.andBachrachGarage&TaxicabCo.(33
personsactingthroughthemediumofagentsorservantsintheperformanceoftheircontracts, Phil.Rep.,8),itistruethatthecourtresteditsconclusionastotheliabilityofthedefendant
wouldbeinabetterpositionthanthose.actinginperson.Ifonedeliversavaluablewatchtoa upon article 1903, although the facts disclosed that the injury complained of by plaintiff
watchmakerwhocontractstorepairit,andthebailee,byapersonalnegligentactcausesits constitutedabreachofthedutytohimarisingoutofthecontractoftransportation.Theexpress
destruction,heisunquestionablyliable.Woulditbelogicaltofreehimfromhisliabilityforthe groundofthedecisioninthiscasewasthatarticle1903,indealingwiththeliabilityofamaster
breachofhiscontract,whichinvolvesthedutytoexerciseduecareinthepreservationofthe forthenegligentactsofhisservants"makesthedistinctionbetweenprivateindividualsand
watch,ifheshowsthatitwashisservantwhosenegligencecausedtheinjury?Ifsuchatheorypublicenterprise;"thatastothelatterthelawcreatesarebuttablepresumptionofnegligencein
couldbeaccepted,juridicalpersonswouldenjoypracticallycompleteimmunityfromdamages theselectionordirectionoftheservants;andthatintheparticularcasethepresumptionof
arisingfromthebreachoftheircontractsifcausedbynegligentactsofomissionorcommission negligencehadnotbeenovercome.
Itisevident,therefore,thatinitsdecisionintheYamadacase,thecourttreatedplaintiff's
onthepartoftheirservants,assuchjuridicalpersonscanofnecessityonlyactthroughagents
orservants,anditwouldnodoubtbetrueinmostinstancesthatreasonablecarehadbeentakenactionasthoughfoundedintortratherthanasbaseduponthebreachofthecontractofcarriage,
in the selection and direction of such servants. If one delivers securities to a banking andanexaminationofthepleadingsandofthebriefsshowsthatthequestionsoflawwerein
corporationascollateral,andtheyarelostbyreasonofthenegligenceof.someclerkemployed factdiscusseduponthistheory.Viewedfromthestandpointofthedefendantthepracticalresult
bythebank,woulditbejustandreasonabletopermitthebanktorelieveitselfofHabilityfor musthavebeenthesameinanyevent.Theproofdisclosedbeyonddoubtthatthedefendant's
thebreachofitscontracttoreturnthecollateraluponthepaymentofthedebtbyprovingthat servantwasgrosslynegligentandthat hisnegligencewastheproximatecauseofplaintiff's
injury.Italsoaffirmativelyappearedthatdefendanthadbeenguiltyofnegligenceinitsfailure
duecarehadbeenexercisedintheselectionanddirectionoftheclerk?
This distinction between culpa aquiliana, as the source of an obligation, and culpa toexerciseproperdiscretioninthedirectionoftheservant.Defendantwas,therefore,liablefor
contractualasamereincidenttotheperformanceofacontracthasfrequentlybeenrecognized the injury suffered by plaintiff, whether the breach of the duty were to be regarded as
by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, 1896; andconstitutingculpaaquilinaorculpacontractual.AsManresapointsout(vol.8,pp.29and69)
December13,1896.)InthedecisionofNovember20,1896,itappearedthatplaintiff'saction whethernegligenceoccursasanincidentinthecourseoftheperformanceofacontractual
aroseexcontractu,butthatdefendantsoughttoavailhimselfoftheprovisionsofarticle1902undertakingorisitselfthesourceofanextracontractualobligation,itsessentialcharacteristics
oftheCivilCodeasadefense.TheSpanishSupremeCourtrejecteddefendant'scontention, areidentical.Thereisalwaysanactoromissionproductiveofdamageduetocarelessnessor
inattentiononthepartofthedefendant.Consequently,whenthecourtholdsthatadefendantis
saying:
"Thesearenotcasesofinjurycaused, withoutanypreexistingobligation, byfaultorliableindamagesforhavingfailedtoexerciseduecare,eitherdirectly,orinfailingtoexercise
negligence,suchasthosetowhicharticle1902oftheCivilCoderelates,butofdamagescausedpropercareintheselectionanddirectionofhisservants,thepracticalresultisidenticalineither
case.Therefore,itfollowsthatitisnottobeinferred,becausethecourtheldintheYamada
bythedefendant'sfailuretocarryouttheundertakingsimposedbythecontracts***."
Abriefreviewoftheearlierdecisionofthiscourtinvolvingtheliabilityofemployersforcasethatthedefendantwasliableforthedamagesnegligentlycausedbyitsservanttoaperson
damagedonebythenegligentactsoftheirservantswillshowthatinnocasehasthecourtever towhomitwasboundbycontract,andmadereferencetothefactthatthedefendantwas
decidedthatthenegligenceofthedefendant'sservants[has]beenheldtoconstituteadefenseto negligentintheselectionandcontrolofitsservants,thatinsuchacasethecourtwouldhave
heldthatitwouldhavebeenagooddefensetotheaction,ifpresentedsquarelyuponthetheory
anactionfordamagesforbreachofcontract.
InthecaseofJohnsonvs. David(5Phil.Rep.,663),thecourtheldthattheownerofa ofthebreachofthecontract,fordefendanttohaveprovedthatitdidinfactexercisecareinthe
carriagewasnotliableforthedamagescausedbythenegligenceofhisdriver.Inthatcasethe selectionandcontroloftheservant.
Thetrueexplanationofsuchcasesistobefoundbydirectingtheattentiontotherelative
courtcommentedonthefactthatnoevidencehadbeenadducedinthetrialcourtthatthe
defendanthadbeennegligentintheemploymentof'thedriver,orthathehadanyknowledgeof spheresofcontractualandextracontractualobligations.Thefieldofnoncontractualobligation
ismuchmorebroaderthanthatofcontractualobligation,comprising,asitdoes,thewhole
hislackofskillorcarefulness.
InthecaseofBaerSenior&Co.'sSuccessorsvs.CompaniaMaritima(6Phil.Rep.,215),extentofjuridicalhumanrelations.Thesetwofields,figurativelyspeaking,concentric;thatisto
theplaintiffsuedthedefendantfordamagescausedbythelossofabargebelongingtoplaintiff say,themerefactthatapersonisboundtoanotherbycontractdoesnotrelievehimfromextra
whichwasallowedtogetadriftbythenegligenceofdefendant'sservantsinthecourseofthe contractualliabilitytosuchperson.Whensuchacontractualrelationexiststheobligormay
performanceofacontractoftowage.Thecourtheld,citingManresa(vol8,pp.29,69)thatif breakthecontractundersuchconditionsthatthesameactwhichconstitutesabreachofthe

contractwouldhaveconstitutedthesourceofanextracontractualobligationhadnocontract plaintiff had a right to assume, in the absence of some circumstance to warn him to the
existedbetweentheparties.
contrary,thattheplatformwasclear.Theplace,aswehavealreadystated,wasdark,ordimly
Thecontractofdefendanttotransportplaintiffcarriedwithit,byimplication,thedutyto lighted,andthisalsoisproofofafailureuponthepartofthedefendantintheperformanceofa
carryhiminsafetyandtoprovidesafemeansofenteringandleavingitstrains(CivilCode, dutyowingbyittotheplaintiff;forifitwerebyanypossibilityconcededthatithadarightto
article1258).Thatduty,beingcontractual,wasdirectandimmediate,anditsnonperformance pilethesesacksinthepathofalightingpassengers,theplacingoftheminthatpositiongaverise
couldnotbeexcusedbyproofthatthefaultwasmorallyimputabletodefendant'sservants.
tothedutytolightthepremisesadequatelysothattheirpresencewouldberevealed.
The railroad company's defense involves the assumption that even granting that the
Aspertinenttothequestionofcontributorynegligenceonthepartoftheplaintiffinthis
negligentconductofitsservantsinplacinganobstructionupontheplatformwasabreachof casethefollowingcircumstancesaretobenoted:Thecompany'splatformwasconstructed
itscontractualobligationtomaintainsafemeansofapproachingandleavingitstrains,thedirect uponalevelhigherthanthatoftheroadbedandthesurroundingground.Thedistancefromthe
andproximatecauseoftheinjurysufferedbyplaintiffwashisowncontributorynegligencein stepsofthecartothespotwherethealightingpassengerwouldplacehisfeetontheplatform
failingtowaituntilthetrainhadcometoacompletestopbeforealighting.Underthedoctrinewas thus reduced, thereby decreasing the risk incident to stepping off. The nature of the
ofcomparativenegligenceannouncedintheRakescase(supra),iftheaccidentwascausedbyplatform,constructedasitwasofcementmaterial,alsoassuredtothepassengerastableand
plaintiff'sownnegligence,noliabilityisimposedupondefendant,whereasiftheaccidentwas evensurfaceonwhichtoalight. Furthermore, theplaintiffwaspossessedofthevigorand
causedbydefendant'snegligenceandplaintiff'snegligencemerelycontributedtohisinjury,the agilityofyoungmanhood,anditwasbynomeanssoriskyforhimtogetoffwhilethetrain
damagesshouldbeapportioned.Itis,therefore,importanttoascertainifdefendantwasinfact was yetmovingasthesameactwouldhavebeeninanagedorfeebleperson.Indetermining
guiltyofnegligence.
thequestionofcontributorynegligenceinperformingsuchactthatistosay,whetherthe
Itmaybeadmittedthathadplaintiffwaiteduntilthetrainhadcometoafullstopbefore passengeractedprudentlyorrecklesslytheage,sex,andphysicalconditionofthepassenger
alighting,theparticularinjurysufferedbyhimcouldnothaveoccurred.Defendantcontends, arecircumstancesnecessarilyaffectingthesafetyofthepassenger,andshouldbeconsidered.
and cites many authorities in support of the contention, that it is negligence per se for aWomen,ithasbeenobserved,asageneralrule,arelesscapablethanmenofalightingwith
passengertoalightfromamovingtrain.Wearenotdisposedto subscribetothisdoctrineinitssafetyundersuchconditions,asthenatureoftheirwearingapparelobstructsthefreemovement
absolute form. We are of the opinion that this proposition is too broadly stated and is at ofthelimbs.Again,itmaybenotedthattheplacewasperfectlyfamiliartotheplaintiff,asit
variancewiththeexperienceofeverydaylife.Inthisparticularinstance,thatthetrainwas washisdailycustomtogetonandoffthetrainatthisstation.Therecould,therefore,beno
barelymovingwhenplaintiffalightedisshownconclusivelybythefactthatitcametostop uncertaintyinhismindwithregardeithertothelengthofthestepwhichhewasrequiredtotake
withinsixmetersfromtheplacewherehesteppedfromit.Thousandsofpersonsalightfrom orthecharacteroftheplatformwherehewasalighting.Ourconclusionisthattheconductof
trainsundertheseconditionseverydayoftheyear,andsustainnoinjurywherethecompany the plaintiff in undertaking to alight while the train was yet slightly under way was not
has kept its platform free from dangerous obstructions. There is no reason to believe thatcharacterizedbyimprudenceandthatthereforehewasnotguiltyofcontributorynegligence.
Theevidenceshowsthattheplaintiff,atthetimeoftheaccident,wasearningP25a
plaintiffwouldhavesufferedanyinjurywhateverinalightingashedidhaditnotbeenfor
monthasacopyistclerk,andthattheinjurieshehassufferedhavepermanentlydisabledhim
defendant'snegligentfailuretoperformitsdutytoprovideasafealightingplace.
Weareoftheopinionthatthecorrectdoctrinerelatingtothissubjectisthatexpressedin fromcontinuingthatemployment.Defendanthasnotshownthatanyothergainfuloccupationis
open to plaintiff. His expectancy of life, according to the standard mortality tables, is
Thompson'sworkonNegligence(vol.3,sec.3010)asfollows:
"Thetestbywhichtodeterminewhetherthepassengerhasbeenguiltyofnegligencein approximatelythirtythreeyears.Weareoftheopinionthatafaircompensationforthedamage
attemptingtoalightfromamovingrailwaytrain,isthatofordinaryorreasonablecare.Itisto sufferedbyhimforhispermanentdisabilityisthesumofP2,500,andthatheisalsoentitledto
be considered whether an ordinarily prudent person, of the age, sex and condition of the recoverofdefendanttheadditionalsumofP790.25formedicalattention,hospitalservices,and
passenger,wouldhaveactedasthepassengeractedunderthecircumstancesdisclosedbythe otherincidentalexpendituresconnectedwiththetreatmentofhisinjuries.
Thedecisionofthelowercourtisreversed,andjudgmentisherebyrenderedplaintifffor
evidence.Thiscarehasbeendefinedtobe,notthecarewhichmayorshouldbeusedbythe
prudentmangenerally,butthecarewhichamanofordinaryprudencewoulduseundersimilar thesumofP3,290.25,andforthecostsofbothinstances.Soordered.
circumstances,toavoidinjury."(Thompson,CommentariesonNegligence,vol.3,sec.3010.)
Arellano,C.J.,Torres,Street,andAvancena,JJ.,concur.
Or,ifweprefertoadoptthemodeofexpositionusedbythis'courtinPicartvs.Smith(37
Judgmentreversed.
Phil.Rep.,809),wemaysaythatthetestisthis;Wasthereanythinginthecircumstances _______________
surroundingtheplaintiffatthetimehealightedfromthetrainwhichwouldhaveadmonisheda
personofaverageprudencethattogetoffthetrainundertheconditionsthenexistingwas
dangerous?Ifso,theplaintiffshouldhavedesistedfromalighting;andhisfailuresotodesist
wascontributorynegligence.
Asthecasenowbeforeuspresentsitself,theonlyfactfromwhichaconclusioncanbe
drawntotheeffectthattheplaintiffwasguiltyofcontributorynegligenceisthathesteppedoff
thecarwithoutbeingabletodiscernclearlytheconditionoftheplatformandwhilethetrain
wasyetslowlymoving.Inconsideringthesituationthuspresented,itshouldnotbeoverlooked
thattheplaintifFwas,aswefind,ignorantofthefactthattheobstructionwhichwascausedby
thesacksofmelonspiledontheplatformexisted;andasthedefendantwasboundbyreasonof
itsdutyasapubliccarriertoaffordtoitspassengersfacilitiesforsafeegressfromitstrains,the

10.Gutierrezvs.Gutierrez

hisheadandsocontributedbyhisnegligencetotheaccident.Theguarantygivenbythefather
atthetimethesonwasgrantedalicensetooperatemotorvehiclesmadethefatherresponsible
[No.34840.September23,1931]
fortheactsofhisson.Basedonthesefacts,pursuanttotheprovisionsofarticle1903ofthe
NARCISOGUTIERREZ,plaintiffandappellee, vs. BONIFACIOGUTIERREZ,MARIAV.CivilCode,thefatheraloneandnottheminororthemother,wouldbeliableforthedamages
DE GUTIERREZ, MANUEL GUTIERREZ, ABELARDO VELASCO, and SATURNINOcausedbytheminor.
CORTEZ,defendantsandappellants.
Weareheredealingwiththecivillawliabilityofpartiesforobligationswhicharisefrom
1.DAMAGES;MASTERANDSERVANT;MOTORVEHICLES;LIABILITYOFHEADOF faultornegligence.Atthesametime,webelievethat,ashasbeendoneinothercases,wecan
HOUSEFORACTSOFDRIVERWHOisHISMINORCHILD.Theheadofahouse,the take cognizance of the common law rule on the same subject. In the United States, it is
ownerofanautomobile,whomaintainsitforthegeneraluseofhisfamily,isliableforits
uniformlyheldthattheheadofahouse,theownerofanautomobile,whomaintainsitforthe
negligentoperationbyoneofhischildren,whomhedesignatesorpermitstorunit,wherethe generaluseofhisfamilyisliableforitsnegligentoperationbyoneofhischildren,whomhe
carisoccupiedandbeingusedatthetimeoftheinjuryforthepleasureofothermembersofthedesignatesorpermitstorunit,wherethecarisoccupiedandbeingusedatthetimeoftheinjury
owner'sfamilythanthechilddrivingit.
forthepleasureofothermembersoftheowner'sfamilythanthechilddrivingit.Thetheoryof
2.ID.;ID.;ID.;ID.;CASEATBAR.OneG,apassengerinatruck,recoversdamagesinthe thelawisthattherunningofthemachinebyachildtocarryothermembersofthefamilyis
amountofP5,000fromtheownerofaprivateautomobilenotinthecar,themachinebeing
withinthescopeoftheowner'sbusiness,sothatheisliableforthenegligenceofthechild
operatedbyason18yearsofage,withothermembersofthefamilyaccommodatedtherein, becauseoftherelationshipofmasterandservant.(HuddyOnAutomobiles,6thed.,sec.660;
andfromthechauffeurandownerofthetruckwhichcollidedwiththeprivateautomobileona Missellvs.Hayes[1914],91Atl.,322.)
bridge,causingphysicalinjuriestoGasaresultoftheautomobileaccident.
TheliabilityofSaturninoCortez,theownerofthetruck,andofhischauffeurAbelardo
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.Sison,J.
Velasco rests on a different basis, namely, that of contract which, we think, has been
Thefactsarestatedintheopinionofthecourt.
sufficiently demonstrated by the allegations of the complaint, not controverted, and the
L.D.LockwoodforappellantsVelascoandCortez.
evidence.Thereasonforthisconclusionreachestothefindingsofthetrialcourtconcerningthe
SanAgustin&Roxasforotherappellants.
positionofthetruckonthebridge,thespeedinoperatingthemachine,andthelackofcare
RamonDioknoforappellee.27798312
employedbythechauffeur.Whilethesefactsarenotasclearlyevidencedasarethosewhich
MALCOLM,J.;
convicttheotherdefendant,weneverthelesshesitatetodisregardthepointsemphasizedbythe
trialjudge.Initsbroaderaspects,thecaseisoneoftwodriversapproachinganarrowbridge
ThisisanactionbroughtbytheplaintiffintheCourtofFirstInstanceofManilaagainstthefive fromoppositedirections,withneitherbeingwillingtoslowupandgivetherightofwaytothe
defendants,torecoverdamagesintheamountofP10,000,forphysicalinjuriessufferedasa other,withtheinevitableresultofacollisionandanaccident.
The defendants Velasco and Cortez further contend that there existed contributory
resultofanautomobileaccident.Onjudgmentbeingrenderedasprayedforbytheplaintiff,
negligenceonthepartoftheplaintiff,consistingprincipallyofhiskeepinghisfootoutsidethe
bothsetsofdefendantsappealed.
OnFebruary2,1930,apassengertruckandanautomobileofprivateownershipcollided truck,whichoccasionedhisinjury.Inthisconnection,itissufficienttostatethat,asidefromthe
whileattemptingtopasseachotherontheTalonbridgeontheManilaSouthRoadinthe factthatthedefenseofcontributorynegligencewasnotpleaded,theevidencebearingoutthis
municipalityofLasPias,ProvinceofRizal.ThetruckwasdrivenbythechauffeurAbelardo theory of the case is contradictory in the extreme and leads us far afield into speculative
Velasco,andwasownedbySaturninoCortez,TheautomobilewasbeingoperatedbyBonifaciomatters.
The last subject for consideration relates to the amount of the award. The appellee
Gutierrez,alad18yearsofage,andwasownedbyBonifacio'sfatherandmother,Mr.andMrs.
suggeststhattheamountcouldjustlyberaisedtoP16,517,butnaturallyisnotseriousinasking
ManuelGutierrez.Atthetimeofthecollision,thefatherwasnotinthecar,butthemother,
togetherwithseveralothermembersoftheGutierrezfamily,seveninall,wereaccommodated forthissum,sincenoappealwastakenbyhimfromthejudgment,Theotherpartiesunitein
therein.Apassengerintheautobus,bythenameofNarcisoGutierrez,wasenroutefromSan challenging the award of P10,000, as excessive. All facts considered, including actual
Pablo,Laguna,toManila.ThecollisionbetweenthebusandtheautomobileresultedinNarciso expenditures and damages for the injury to the leg of the plaintiff, which may cause him
Gutierrezsufferingafracturedrightlegwhichrequiredmedicalattendanceforaconsiderable permanentlameness,inconnectionwithotheradjudicationsofthiscourt,leadustoconclude
thatatotalsumfortheplaintiffofP5,000wouldbefairandreasonable.Thedifficultyin
periodoftime,andwhichevenatthedateofthetrialappearsnottohavehealedproperly.
Itisconcededthatthecollisionwascausedbynegligencepureandsimple.Thedifference approximatingthedamagesbymonetarycompensationiswellelucidatedbythedivergenceof
betweenthepartiesisthat,whiletheplaintiffblamesbothsetsofdefendants,theownerofthe opinionamongthemembersofthecourt,threeofwhomhaveinclinedtotheviewthatP3,000
passengertruckblamestheautomobile,andtheowneroftheautomobile,inturn,blamesthe wouldbeamplysufficient,whileafourthmemberhasarguedthatP7,500wouldbenonetoo
truck.Wehavegivencloseattentiontothesehighlydebatablepoints,andhavingdoneso,a much.
Inconsonancewiththeforegoingrulings,thejudgmentappealedfromwillbemodified,
majorityofthecourtareoftheopinionthatthefindingsofthetrialjudgeonallcontroversial
and
theplaintiff
willhave judgmentin hisfavor againstthe defendantsManuel Gutierrez,
questionsoffactfindsufficientsupportintherecord,andsoshouldbemaintained.Withthis
AbelardoVelasco,andSaturninoCortez,jointlyandseverally,forthesumofP5,000,andthe
general statement set down, we turn to consider the respective legal obligations of the
defendants.InamplificationofsomuchoftheabovepronouncementasconcernstheGutierrezcostsofbothinstances.
Avancea,C.J.,Johnson,Street,Villamor,Ostrand,Romualdez, and Imperial,JJ.,
family,itmaybeexplainedthattheyouthBonifaciowasanincompetentchauffeur,thathewas
concur.
drivingatanexcessiverateofspeed,andthat,onapproachingthebridgeandthetruck,helost

below). The HSBCLSRP is a retirement plan established by HSBC through its Board of
Trusteesforthebenefitoftheemployees.
OnOctober1,1990,petitioner[Editha]Broquezaobtainedacarloanintheamountof
1.HK&ShanghaiBankingCorpvs.Sps/Broqueza
Php175,000.00.OnDecember12,1991,sheagainappliedandwasgrantedanapplianceloanin
theamountofPhp24,000.00.Ontheotherhand,petitionerGerongappliedandwasgrantedan
G.R.No.178610.November17,2010.*
emergencyloanintheamountofPhp35,780.00onJune2,1993.Theseloansarepaidthrough
HONGKONGANDSHANGHAIBANKINGCORP.,LTD.STAFFRETIREMENTPLAN, automaticsalarydeduction.
(now HSBC Retirement Trust Fund, Inc.), petitioner, vs. SPOUSES BIENVENIDO AND
Meanwhile[in1993],alabordisputearosebetweenHSBCanditsemployees.Majorityof
EDITHABROQUEZA,respondents.
HSBCsemployeeswereterminated, amongwhomarepetitionersEdithaBroquezaandFe
LaborLaw;Benefits;Retirement;Payrolldeductionismerelyaconvenientmodeof Gerong.TheemployeesthenfiledanillegaldismissalcasebeforetheNationalLaborRelations
payment and not the sole source of payment for the loans.In their Answer, the spousesCommission (NLRC) against HSBC. The legality or illegality of such termination is now
BroquezaadmittedthatpriortoEdithaBroquezasdismissalfromHSBCinDecember1993, pendingbeforethisappellateCourtinCAG.R.CVNo.56797,entitled HongkongShanghai
shereligiouslypaidtheloanamortizations,whichHSBCcollectedthroughpayrollcheckoff.BankingCorp.EmployeesUnion,etal.vs.NationalLaborRelationsCommission,etal.
A definite amount is paid to HSBCLSRP on a specific date. Editha Broqueza authorized
Becauseoftheirdismissal,petitionerswerenotabletopaythemonthlyamortizationsof
HSBCLSRP to make deductions from her payroll until her loans are fully paid. Editha theirrespectiveloans.Thus,respondentHSBCLSRPconsideredtheaccountsofpetitioners
Broqueza,however,defaultedinhermonthlyloanpaymentduetoherdismissal.Despitethedelinquent.Demandstopaytherespectiveobligationsweremadeuponpetitioners,butthey
spouses Broquezas protestations, the payroll deduction is merely a convenient mode of failedtopay.6
paymentandnotthesolesourceofpaymentfortheloans.HSBCLSRPneveragreedthatthe
HSBCLSRP, acting through its Board of Trustees and represented by Alejandro L.
loanswillbepaidonlythroughsalarydeductions.NeitherdidHSBCLSRPagreethatifEdithaCustodio,filedCivilCaseNo.52400againstthespousesBroquezaon31July1996.On19
BroquezaceasestobeanemployeeofHSBC,herobligationtopaytheloanswillbesuspended. September1996,HSBCLSRPfiledCivilCaseNo.52911againstGerong.Bothsuitswerecivil
HSBCLSRPcanimmediatelydemandpaymentoftheloansatanytimebecausetheobligation actionsforrecoveryandcollectionofsumsofmoney.
topayhasnoperiod. Moreover, thespousesBroquezahavealreadyincurredindefaultin
TheMetropolitanTrialCourtsRuling
payingthemonthlyinstallments.
Same; Same;Same; Theenforcement ofa loanagreement involvesdebtorcreditor
On28December1999,theMeTCpromulgateditsDecision 7 infavorofHSBCLSRP.
relations founded on contract and does not in any way concern employee relations.The
enforcementofaloanagreementinvolvesdebtorcreditorrelationsfoundedoncontractand TheMeTCruledthatthenatureofHSBCLSRPsdemandsforpaymentiscivilandhasno
doesnotinanywayconcernemployeerelations. Assuchitshouldbeenforcedthrougha connection to the ongoing labor dispute. Gerong and Editha Broquezas termination from
employmentresultedinthelossofcontinuedbenefitsundertheirretirementplans.Thus,the
separatecivilactionintheregularcourtsandnotbeforetheLaborArbiter.
loans secured by their future retirement benefits to which they are no longer entitled are
PETITIONforreviewoncertiorariofadecisionoftheCourtofAppeals.
reducedtounsecuredandpurecivilobligations.Asunsecuredandpureobligations,theloans
ThefactsarestatedintheopinionoftheCourt.
areimmediatelydemandable.
Cruz,EnvergaandLuceroforpetitioner.
ThedispositiveportionoftheMeTCsdecisionreads:
Taada,VivoandTanforrespondents.
WHEREFORE,premisesconsideredandinviewoftheforegoing,theCourtfindsthat
CARPIO,J.:
G.R. No. 178610is apetition forreview1 assailing theDecision2 promulgatedon 30theplaintiffwasabletoprovebyapreponderanceofevidencetheexistenceandimmediate
March2006bytheCourtofAppeals(CA)inCAG.R.SPNo.62685.Theappellatecourt demandabilityofthedefendantsloanobligationsasjudgmentisherebyrenderedinfavorof
grantedthepetitionfiledbyFeGerong(Gerong)andSpousesBienvenidoandEdithaBroqueza theplaintiffandagainstthedefendantsinbothcases,orderingthelatter:
1.InCivilCaseNo.52400,topaytheamountofPhp116,740.00atsixpercentinterest
(spouses Broqueza) and dismissed the consolidated complaints filed by Hongkong and
per
annum
from the time of demand and in Civil Case No. 52911, to pay the amount of
ShanghaiBankingCorporation,Ltd.StaffRetirementPlan(HSBCLSRP)forrecoveryofsum
of money. The appellate court reversed and set aside the Decision 3 of Branch 139 of thePhp25,344.12atsixpercent perannum fromthetimeofthefilingofthesecases,untilthe
RegionalTrialCourtofMakatiCity(RTC)inCivilCaseNo.00787dated11December2000, amountisfullypaid;
2.TopaytheamountofPhp20,000.00eachasreasonableattorneysfees;
aswellasitsOrder4dated5September2000.TheRTCsdecisionaffirmedtheDecision 5dated
3.Costofsuit.
28December1999ofBranch61oftheMetropolitanTrialCourt(MeTC)ofMakatiCityin
SOORDERED.8
CivilCaseNo.52400forRecoveryofaSumofMoney.
GerongandthespousesBroquezafiledajointappealoftheMeTCsdecisionbeforethe
TheFacts
RTC.GerongscasewasdocketedCivilCaseNo.00786,whilethespousesBroquezascase
wasdocketedasCivilCaseNo.00787.
Theappellatecourtnarratedthefactsasfollows:
TheRegionalTrialCourtsRuling
Petitioners Gerong and [Editha] Broqueza (defendants below) are employees of
HongkongandShanghaiBankingCorporation(HSBC).Theyarealsomembersofrespondent
TheRTCinitiallydeniedthejointappealbecauseofthebelatedfilingofGerongandthe
HongkongShanghaiBankingCorporation,Ltd.StaffRetirementPlan(HSBCLSRP,plaintiff
spousesBroquezasmemorandum.TheRTClaterreconsideredtheorderofdenialandresolved
Judgmentmodified.D.KINDSOFCIVILOBLIGATIONS
1.AstoPerfection&Extinguishment

theissuesintheinterestofjustice.
percent(6%)perannum,payablemonthly.
On11December2000,theRTCaffirmedtheMeTCsdecisionintoto.9
The RTC ruled that Gerong and Editha Broquezas termination from employment
I/WEagreethatthePLANmay,uponwrittennotice,increasetheinterestratestipulatedin
disqualifiedthemfromavailingofbenefitsundertheirretirementplans.Asaconsequence, thisnoteatanytimedependingonprevailingconditions.
there is no longer any security for the loans. HSBCLSRP has a legal right to demand
I/WEherebyexpresslyconsenttoanyextensionsorrenewalshereofforaportionorwhole
immediate settlement of the unpaid balance because of Gerong and Editha Broquezas oftheprincipalwithoutnoticetotheother(s),andinsuchacaseourliabilityshallremainjoint
continued default in payment and their failure to provide new security for their loans. andseveral.
Moreover,theabsenceofaperiodwithinwhichtopaytheloanallowsHSBCLSRPtodemand
Incasecollectionismadebyorthroughanattorney,I/WEjointlyandseverallyagreeto
immediatepayment.Theloanobligationsareconsideredpureobligations,thefulfillmentof paytenpercent(10%)oftheamountdueonthisnote(butinnocaselessthanP200.00)asand
whicharedemandableatonce.
forattorneysfeesinadditiontoexpensesandcostsofsuit.
GerongandthespousesBroquezathenfiledaPetitionforReviewunderRule42before
Incaseofjudicialexecution,I/WEherebyjointlyandseverallywaiveourrightsunderthe
theCA.
provisionsofRule39,Section12oftheRulesofCourt.15
TheRulingoftheCourtofAppeals
InrulingforHSBCLSRP,weapplythefirstparagraphofArticle1179oftheCivilCode:
Art.1179.Every obligation whose performance does not depend upon a future or
uncertainevent,oruponapasteventunknowntotheparties,isdemandableatonce.
On30March2006,theCArendereditsDecision10whichreversedthe11December2000
xxx.(Emphasissupplied.)
DecisionoftheRTC.TheCAruledthattheHSBCLSRPscomplaintsforrecoveryofsumof
We affirm the findings of the MeTC and the RTC that there is no date of payment
moneyagainstGerongandthespousesBroquezaareprematureastheloanobligationshavenot
indicatedinthePromissoryNotes.TheRTCiscorrectinrulingthatsincethePromissoryNotes
yetmatured.Thus,nocauseofactionaccruedinfavorofHSBCLSRP.Thedispositiveportion
donotcontainaperiod,HSBCLSRPhastherighttodemandimmediatepayment.Article1179
oftheappellatecourtsDecisionreadsasfollows:
WHEREFORE,theassailedDecisionoftheRTCisREVERSEDandSETASIDE.A oftheCivilCodeapplies.ThespousesBroquezasobligationtopayHSBCLSRPisapure
newoneisherebyrenderedDISMISSINGtheconsolidatedcomplaintsforrecoveryofsumofobligation. The fact that HSBCLSRP was content with the prior monthly checkoff from
EdithaBroquezassalaryisofnomoment.OnceEdithaBroquezadefaultedinhermonthly
money.
payment,HSBCLSRPmadeademandtoenforceapureobligation.
11
SOORDERED.
IntheirAnswer,thespousesBroquezaadmittedthatpriortoEdithaBroquezasdismissal
\HSBCLSRPfiledamotionforreconsiderationwhichtheCAdeniedforlackofmeritin
fromHSBCinDecember1993,
she religiously paid the loan amortizations, whichHSBC
12
itsResolution promulgatedon19June2007.
16
collectedthroughpayrollcheckoff.
AdefiniteamountispaidtoHSBCLSRPonaspecific
On6August2007,HSBCLSRPfiledamanifestationwithdrawingthepetitionagainst
date.EdithaBroquezaauthorizedHSBCLSRPtomakedeductionsfromherpayrolluntilher
Gerongbecauseshealreadysettledherobligations.InaResolution 13 ofthisCourtdated10
September 2007, this Court treated the manifestation as a motion to withdraw the petitionloansarefullypaid.EdithaBroqueza,however,defaultedinhermonthlyloanpaymentdueto
against Gerong, granted the motion, and considered the case against Gerong closed and herdismissal.DespitethespousesBroquezasprotestations,thepayrolldeductionismerelya
convenientmodeofpaymentandnotthesolesourceofpaymentfortheloans.HSBCLSRP
terminated.
neveragreedthattheloanswillbepaidonlythroughsalarydeductions.NeitherdidHSBCL
Issues
SRPagreethatifEdithaBroquezaceasestobeanemployeeofHSBC,herobligationtopaythe
loans will be suspended. HSBCLSRP can immediately demand payment of the loans at
HSBCLSRPenumeratedthefollowinggroundstosupportitsPetition:
anytimebecausetheobligationtopayhasnoperiod.Moreover,thespousesBroquezahave
I.TheCourtofAppealshasdecidedaquestionofsubstanceinawaynotinaccordwith alreadyincurredindefaultinpayingthemonthlyinstallments.
lawandapplicabledecisionsofthisHonorableCourt;and
Finally,theenforcementofaloanagreementinvolvesdebtorcreditorrelationsfounded
II.TheCourtofAppealshasdepartedfromtheacceptedandusualcourseofjudicial oncontractanddoesnotinanywayconcernemployeerelations.Assuchitshouldbeenforced
proceedings in reversing the decision of the Regional Trial Court and the throughaseparatecivilactionintheregularcourtsandnotbeforetheLaborArbiter.17
MetropolitanTrialCourt.14
WHEREFORE,weGRANTthepetition.TheDecisionoftheCourtofAppealsinCA
TheCourtsRuling
G.R.SPNo.62685promulgated
_______________
Thepetitionismeritorious.WeagreewiththerulingsoftheMeTCandtheRTC.
ThePromissoryNotesuniformlyprovide:
PROMISSORYNOTE
P_____Makati,M.M.____19__
_______________FORVALUERECEIVED,I/WE_____jointlyandseverallypromiseto
paytoTHEHSBCRETIREMENTPLAN(hereinaftercalledthePLAN)atitsofficeinthe
MunicipalityofMakati,MetroManila,onorbeforeuntilfullypaidthesumofPESOS___
(P___)PhilippineCurrencywithoutdiscount,withinterestfromdatehereofattherateofSix

againsttheadministratrix."1 Itthenstatedthatthepetitioncouldnotprosperastherewasa
refusalonthepartofSegundinaChuaVda.dePalancatobeappointedasadministratrix;that
thepropertysoughttobeadministerednolongerbelongedtothedebtor,thelateJustoPalanca;
2.Payvs.Palanca
andthattherightsofpetitionercreditorhadalreadyprescribed.Thepromissorynote,dated
January30,1962,iswordedthus:"'Forvaluereceivedfromtimetotimesince1947,we
No.L29900.June28,1974.*
IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA, Deceased, [jointlyandseverallypromiseto]paytoMr.[GeorgePay]athisofficeattheChinaBanking
GEORGE PAY, petitionerappellant, vs. SEGUNDINA CHUA VDA. DE PALANCA,Corporationthesumof[TwentySixThousandNineHundredPesos](P26,900.00),withinterest
thereonattherateof12%perannumuponreceiptbyeitheroftheundersignedofcashpayment
oppositorappellee.
Civillaw;Promissorynote;Prescription;Apromissorynotepayable"ondemand"is from the Estate of the late Don Carlos Palanca or upon demand.' * * * As stated, this
immediatelydueanddemandable;actionthereonprescribeswithintenyears.TheobligationpromissorynoteissignedbyRosaGonzalesVda.deCarlosPalancaandJustoPalanca."2Then
beingdueanddemandable,itwouldappearthatthefilingofthesuitafterfifteenyearswas camethisparagraph:"TheCourthasinquiredwhetheranycashpaymenthasbeenreceivedby
muchtoolate.Foragain,accordingtotheCivilCode,whichisbasedonSection43ofActNo. either of the signers of this promissory note from the Estate of the late Carlos Palanca.
90,theprescriptiveperiodforawrittencontractisthatoftenyears.Thisisanotherinstance Petitionerinformedthathedoesnotinsistonthisprovisionbutthatpetitionerisonlyclaiming
onhisrightunderthepromissorynote."3Afterwhich,cametherulingthatthewordingofthe
wherethisCourthasconsistentlyadheredtotheexpresslanguageoftheapplicablenorm.
Same;Same;Same;Same.Article1179oftheCivilCodeprovides:"Everyobligation promissory'notebeing"upondemand,"theobligationwasimmediatelydue.Sinceitwasdated
whoseperformancedoesnotdependuponafutureoruncertainevent,oruponapastevent January30,1952,itwasclearthatmore"thanten(10)yearshasalreadytranspiredfromthat
unknowntotheparties,isdemandableatonce."ThisusedtobeArticle1113oftheSpanish timeuntiltodate.Theaction,therefore,ofthecreditorhasdefinitelyprescribed."4Theresult,
CivilCodeof1889.AsfarbackasFlorianov.Delgado(11Phil.154),a1908decision,ithas asabovenoted,wasthedismissalofthepetition.
In anexhaustive briefprepared byAttorney FlorentinoB. del Rosario, petitionerdid
been applied according to its express language. The wellknown Spanish commentator,
Manresa,onthispoint,states:"Dejando,conacierto,elcaractermastericoygraficodelacto,assailthecorrectnessoftherulingsofthelowercourtastotheeffectoftherefusalofthe
osealaperfecciondeste,sefija,paradeterminarelconceptodelaobligacionpura,enel survivingspouseofthelateJustoPalancatobeappointedasadministratrix,astotheproperty
soughttobeadministerednolongerbelongingtothedebtor,thelateJustoPalanca,andasto
distintivodeesta,yqueesconsecuenciadeaqul:laexigibilidadimmediata."
the rightsof petitionercreditorhaving alreadyprescribed. As notedat theoutset, only the
APPEALfromadecisionoftheCourtofFirstInstanceofManila.Bocar,J.
questionofprescriptionneeddetainusinthedispositionofthisappeal.Likewise,asintimated,
thedecisionmustbeaffirmed,consideringthecleartenorofthepromissorynote.
ThefactsarestatedintheopinionoftheCourt.
From the manner in which the promissory note was executed, it would appear that
_________________
petitionerwashopefulthatthesatisfactionofhiscreditcouldberealizedeitherthroughthe
debtorsuedreceivingcashpaymentfromtheestateofthelateCarlosPalancapresumptivelyas
FERNANDO,J.:
oneoftheheirs,or,asexpressedtherein,"upondemand."Thereisnothingintherecordthat
wouldindicatewhetherornotthefirstalternativewasfulfilled.Whatisundeniableisthaton
Thereisnodifficultyattendingthedispositionofthisappealbypetitioneronquestionsoflaw. August26,1967,morethanfifteenyearsaftertheexecutionofthepromissorynoteonJanuary
While several points were raised, the decisive issue is whether a creditor is barred by 30,1952,thispetitionwasfiled.Thedefenseinterposedwasprescription.Itsmeritisrather
prescriptioninhisattempttocollectonapromissorynoteexecutedmorethanfifteenyears obvious.Article1179oftheCivilCodeprovides:"Everyobligationwhoseperformancedoes
earlierwiththedebtorsuedpromisingtopayeitheruponreceiptbyhimofhissharefroma notdependuponafutureoruncertainevent,oruponapasteventunknowntotheparties,is
certainestateorupondemand,thebasisfortheactionbeingthelatteralternative.Thelower demandableatonce."ThisusedtobeArticle1113oftheSpanishCivilCodeof1889.Asfar
courtheldthatthetenyearperiodoflimitationofactionsdidapply,thenotebeingimmediately backasFlorianov.Delgado,5 a1908decision,ithasbeenappliedaccordingtoitsexpress
dueanddemandable,thecreditoradmittingexpresslythathewasrelyingonthewording"upon language.ThewellknownSpanishcommentator,Manresa,onthispoint,states:"Dejando,con
demand."Ontheabovefactsasfound,andwiththelawbeingasitis,itcannotbesaidthatits acierto,elcaractermasteoricoygraficodelacto,osealaperfecciondeeste,sefija,para
decisionisinfectedwitherror.Weaffirm.
determinarelconceptodelaobligacionpura,eneldistintivodeesta,yqueesconsecuenciade
Fromtheappealeddecision,thefollowingappears:'Thepartiesinthiscaseagreedto aquel:laexigibilidadimmediata."6
submitthematterforresolutiononthebasisoftheirpleadingsandannexesandtheirrespective
Theobligationbeingdueanddemandable,itwouldappearthatthefilingofthesuitafter
memorandasubmitted.PetitionerGeorgePayisacreditoroftheLateJustoPalancawhodiedin fifteenyearswasmuchtoolate.Foragain,accordingtotheCivilCode,whichisbasedon
ManilaonJuly3,1963.TheclaimofthepetitionerisbasedonapromissorynotedatedJanuarySection43ofActNo.190,theprescriptiveperiodforawrittencontractisthatoftenyears. 7
30,1952,wherebythelateJustoPalancaandRosaGonzalesVda.deCarlosPalancapromised ThisisanotherinstancewherethisCourthasconsistentlyadheredtotheexpresslanguageof
topayGeorgePaytheamountofP26,900.00,withinterestthereonattherateof12%per the applicable norm.8 There is no necessity therefore of passing upon the other two legal
annum.GeorgePayisnowbeforethisCourt,askingthatSegundinaChuavda.dePalanca, questionsraisedastowhetherornotitdidsufficeforthepetitiontofailjustbecausethe
survivingspouseofthelateJustoPalanca,heappointedasadministratrixofacertainpieceof survivingspouserefusestobemadeadministratrix,orjustbecausetheestatewasleftwithno
propertywhichisaresidentialdwellinglocatedat2656TaftAvenue,Manila,coveredbyTax otherproperty.Thedecisionofthelowercourtcannotbeoverturned.
DeclarationNo.3114inthenameofJustoPalanca,assessedatP41,800.00.Theideaisthat
WHEREFORE, the lower court decision of July 24, 1968 is affirmed. Costs against
oncesaidpropertyisbroughtunderadministration,GeorgePay,ascreditor,canfilehisclaim GeorgePay.

Zaldivar(Chairman),Barredo,Antonio,FernandezandAquino,JJ.,concur.
Decisionaffirmed.
Notes.Extinctiveprescriptionisgenerallyappliedinalitigationasdefenseagainsta
complaint.TheRulesofCourtprovidesthatextinctiveprescriptionmaybepleadedeitherina
motiontodismissorasanaffirmativedefenseintheanswer.(Hodgesvs.Salas,63Phil.567;
Franciscovs.Robles,50O.G.1071;Cordovavs.Cordova,L9936,January14,1958.SeeRule
18,RulesofCourt).
Ifextinctiveprescriptionisassertedinamotiontodismiss,thecourtmaygiveitdue
coursewithoutahearingonthemeritsifthecomplaintshowsonitsfacethattheactionhas
alreadyprescribed.(Franciscovs.Robles,50O.G.1071;Bambaovs.Lednicky,1SCRA330).
If it does not appear in the complaint that the action has prescribed, the determination of
extinctiveprescriptioncanwaituntilthetrialonthemerits.(Convets,Inc.vs.NationalDev.
Co.,L10232,February28,1958;Cordovavs.Cordova,L9936,January14,1958).
Ifthedefenseofextinctiveprescriptionisnotsetupinamotiontodismissorpleadedas
anaffirmativedefenseinananswer,theommissionisdeemedawaiverthereof,unlessthe
complaintitselfshowsextinctiveprescription.(Pascuavs.Copuyoc,L9595,November28,
1958;ChuaLamkovs.Dioso,L6923,October31,1955).Itwouldthusbeerrorforthetrial
courttopermitproofofprescription,ifthisdefensewasnotpleadedandtheproofthereofis
objectedto..(PhilippineNationalBankvs.Escudero,72Phil.150).However,ifbeforethetrial
apartyhasnomeansofknowingthattheopponent'sclaimhasalreadylapsed,prescriptionasa
defensemaybepleadedlaterassoonasthetruenatureoftheclaimsisdiscovered.(Guazovs.
Ramirez,32Phil.492).
Apromissorynotepayableininstallmentgivesrisetoaseparatecauseofactionforeach
installment.Thestatuteoflimitationsbeginstorunastoeachunpaidinstallmentfromthedate
thecreditorcouldsuethedebtortherefor.Theprescriptiveperiodiscountedfromthedaythe
actionmaybebrought.(Sorianovs.Ubat,1SCRA366).
o0o

Exceptions.)
Intheiranswer,thedefendant,Mr.Sotelo,andtheintervenor,theManilaOilRefining
3.SMITH&BELLVS.SOTELOMATTI
andByProductsCo.,Inc.,deniedtheplaintiff'sallegationsastotheshipmentofthesegoods
andtheirarrivalatManila,thenotificationtothedefendant,Mr.Sotelo,thelatter'srefusalto
[No.16570.March9,1922]
receive them and pay their price, and the good condition of the expellers and the motors,
SMITH, BELL & Co., LTD., plaintiff and appellant, vs. VICENTE SOTELO MATTI,allegingasspecialdefensethatMr.Sotelohadmadethecontractsinquestionasmanagerofthe
defendantandappellant.
intervenor,theManilaOilRefiningandByProductsCo.,Inc.,whichfactwasknowntothe
1.CONTRACTS;PURCHASEANDSALEOFMERCHANDISE;UNCERTAINTYOFTIMEplaintiff,andthat"itwasonlyinMay,1919,thatitnotifiedtheintervenorthatsaidtankshad
OFFULFILLMENT.OFOBLIGATION.Asnodefinitedatewasfixedforthedeliveryofthe arrived, the motors and the expellers having arrived incomplete and long after the date
goods,whichtheplaintiffundertooktodeliver,thetermwhichthepartiesattemptedtoestablishstipulated."Asacounterclaimorsetoff,theyalsoallegethat,asaconsequenceoftheplaintiff's
beingsouncertain,thatonecannottellwhether,asamatteroffact,theaforesaidgoodscould, delayinmakingdeliveryofthegoods,whichtheintervenorintendedtouseinthemanufacture
orcouldnot,beimportedintoManila,theobligationmustberegardedasconditionalandnot ofcocoanutoil,theintervenorsuffereddamagesinthesumsofonehundredsixteenthousand
onewithaterm.
sevenhundredeightythreepesosandninetyonecentavos(P116,783.91)forthenondeliveryof
2.lD.;ID.;WHENFULFILLMENTOFCONDITIONNOTDEPENDENTONTHEWILLOF thetanks,andtwentyonethousandtwohundredandfiftypesos(P21,250)onaccountofthe
OBLIGOR.Wherethefulfillmentoftheconditiondoesnotdependonthewilloftheobligor, expellersandthemotorsnothavingarrivedinduetime.
butonthatofathirdpersonwhocaninnowaybecompelledtocarryitout,theobligor'spart
Thecasehavingbeentried,thecourtbelowabsolvedthedefendantsfromthecomplaint
ofthecontractiscompliedwith,ifhedoesallthatisinhispower,anditthenbecomes
insofarasthetanksandtheelectricmotorswereconcerned,butrenderedjudgmentagainst
incumbentupontheothercontractingpartytocomplywiththetermsofthecontract.
them,orderingthemto"receivetheaforesaidexpellersandpaytheplaintiffthesumoffifty
3.ID.;ID.;WHENTIMENOTESSENTIAL.Wherenodateisfixedinthecontractforthe thousandpesos(P50,000),thepriceofthesaidgoods,withlegalinterestthereonfromJuly26,
deliveryofthethingsold,timeisconsideredunessential,anddeliverymustbemadewithina 1919,andcosts."
reasonabletimetobedeterminedbythecourtsinaccordancewiththecircumstancesofthe
Bothpartiesappealfromthisjudgment,eachassigningseveralerrorsinthefindingsof
case.
thelowercourt.
4.PRINCIPALANDAGENT;THIRDPERSONS.Whenanagentactsinhisownname,the
Theprincipalpointatissueinthiscaseiswhetherornot,underthecontractsenteredinto
principalhasnorightofactionagainstthepersonswithwhomtheagenthascontracted,orsuchand the circumstances established in the record, the plaintiff has fulfilled, in due time, its
personsagainsttheprincipal.Insuchcase,theagentisdirectlyliabletothepersonwithwhom obligationtobringthegoodsinquestiontoManila.Ifithas,thenitisentitledtotherelief
hehascontracted,asifthetransactionwerehisown.(Art.1717,CivilCode.)
prayedfor;otherwise,itmustbeheldguiltyofdelayandliablefortheconsequencesthereof.
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.DelRosario,J.
Tosolvethisquestion,itisnecessarytodeterminewhatperiodwasfixedforthedelivery
Thefactsarestatedintheopinionofthecourt.
ofthegoods.
Ross&LawrenceandEwaldE.Selphforplaintiffappellant.
Asregardsthetanks,thecontractsAandB(pages61and62oftherecord)aresimilar,
RamonSotelofordefendantappellant.
andinbothofthemwefindthisclause:
ROMUALDEZ,J.:
"Tobedeliveredwithin3or4monthsThepromiseorindicationofshipmentcarries
withitabsolutelynoobligationonourpartGovernmentregulations,railroadembargoes,lack
InAugust,1918,theplaintiffcorporationandthedefendant,Mr.VicenteSotelo,enteredintoof vesselspace, the exigenciesof therequirements ofthe UnitedStates Government, ora
contractswherebytheformerobligateditselftosell,andthelattertopurchasefromit,twosteel numberofcausesmayacttoentirelyvitiatetheindicationofshipmentasstated.Inotherwords,
tanks,forthetotalpriceoftwentyonethousandpesos(P21,000),thesametobeshippedfrom theorderisacceptedonthebasisofshipmentatMill'sconvenience,timeofshipmentbeing
NewYorkanddeliveredatManila"withinthreeorfourmonths;"twoexpellersatthepriceof merelyanindicationofwhatwehopetoaccomplish."
InthecontractExhibitC(page63oftherecord),withreferencetotheexpellers,the
twentyfivethousandpesos(P25,000)each,whichweretobshippedfromSanFranciscointhe
followingstipulationappears:
monthofSeptember1918orassoonaspossible;andtwoelectricmotorsatthepriceoftwo
"Thefollowingarticles,hereinbelowmoreparticularlydescribed,tobeshippedatSan
thousandpesos(P2,000)each,astothedeliveryofwhichstipulationwasmade,couchedin
Francisco within the month of September /18, or as soon as possible.Two Anderson oil
thesewords:"Approximatedeliverywithinninetydays.Thisisnotguaranteed."
ThetanksarrivedatManilaonthe27thofApril,1919;theexpellersonthe26thof expellers***."
Andinthecontractrelativetothemotors(ExhibitD,page64,rec.)thefollowingappears:
October,1918;andthemotorsonthe27thofFebruary,1919.
"Approximatedeliverywithinninetydays.Thisisnotguaranteed.Thissaleissubject
Theplaintiffcorporationnotifiedthedefendant,Mr.Sotelo,ofthearrivalofthesegoods,
to

our
being able to obtain Priority Certificate, subject to the United States Government
butMr.Sotelorefusedtoreceivethemandtopaythepricesstipulated.
requirementsandalsosubjecttoconfirmationofmanufacturers."
Theplaintiffbroughtsuitagainstthedefendant,basedonfourseparatecausesofaction,
Inallthesecontracts,thereisafinalclauseasfollows:
alleging,amongotherfacts,thatitimmediatelynotifiedthedefendantofthearrivalofthe
"Thesellersarenotresponsiblefordelayscausedbyfires,riotsonlandoronthesea,
goods, and asked instructions from him as to the delivery thereof, and that the defendant
strikesorothercausesknownas'ForceMajeure'entirelybeyondthecontrolofthesellersor
refusedtoreceiveanyofthemandtopaytheirprice.Theplaintiff,further,allegedthatthe
expellersandthemotorswereingoodcondition.(Amendedcomplaint,pages1630,Billof theirrepresentatives."
Underthesestipulations,itcannotbesaidthatanydefinitedatewasfixedforthedelivery

ofthegoods.Astothetanks,theagreementwasthatthedeliverywastobemade"within3or4 court,nolaworprecedentis;allegedtohavebeenviolated."(JurisprudenciaCivilpublished;
months,"butthatperiodwassubjecttothecontingenciesreferredtoinasubsequentclause. bythedirectorsoftheRevistaGeneraldeLegislacinyJurisprudencia[1866],vol.14,page
Withregardtotheexpellers,thecontractsays"withinthemonthofSeptember,1918,"butto 656.)
thisisadded"orassoonaspossible."Andwithreferencetothemotors,thecontractcontains
Intheseconddecision,thefollowingdoctrineislaiddown:
thisexpression,"Approximatedeliverywithinninetydays,"butrightafterthis,itisnotedthat
"Second.Thatwhenthefulfillmentoftheconditiondoesnotdependonthewillofthe
"thisisnotguaranteed."
obligor,butonthatofathirdperson,whocaninnowaybecompelledtocarryitout,the
Theoralevidencefallsshortoffixingsuchperiod.
obligor'spartofthecontractiscompliedwithifhedoesallthatisinhispower,andhasthe
Fromtherecorditappearsthatthesecontractswereexecutedatthetimeoftheworldwar righttodemandperformanceofthecontractbytheotherparty,whichisthedoctrinelaiddown
whenthereexistedrigidrestrictionsontheexportfromtheUnitedStatesofarticleslikethe alsobythesupremecourt."(Thesamepublication[1871],vol.23,page492.)
machineryinquestion,andmaritime,aswellasrailroad,transportationwasdifficult,whichfact
Itissufficientlyprovenintherecordthattheplaintiffhasmadealltheeffortsitcould
wasknowntotheparties;henceclauseswereinsertedinthecontracts,regarding"Government possiblybeexpectedtomakeunderthecircumstances,tobringthegoodsinquestiontoManila,
regulations,railroadembargoes,lackofvesselspace,theexigenciesoftherequirementsofthe assoonaspossible.And,asamatteroffact,throughsuchefforts,itsucceededinimporting
UnitedStatesGovernment,"inconnectionwiththetanksand"PriorityCertificate,subjecttothemandplacingthematthedisposalofthedefendant,Mr.Sotelo,inApril,1919.Underthe
theUnitedStatesGovernmentrequirements,"withrespecttothemotors.Atthetimeofthe doctrinejustcited,which,aswehaveseen,isofthesamejuridicaloriginasourCivilCode,it
executionofthecontracts,thepartieswerenotunmindfulofthecontingencyoftheUnited isobviousthattheplaintiffhascompliedwithitsobligation.
StatesGovernmentnotallowingtheexportofthegoods,norofthefactthattheotherforeseen
Inconnectionwiththisobligationtodeliver,occurringinacontractofsalelikethosein
circumstancesthereinstatedmightpreventit.
question,theruleinNorthAmericaisthatwhenthetimeofdeliveryisnotfixedinthecontract,
Consideringthesecontractsinthelightofthecivillaw,wecannotbutconcludethatthetimeisregardedunessential.
termwhichthepartiesattemptedtofixissouncertainthatonecannottelljustwhether,asa
"Whenthetimeofdeliveryisnotfixedorisstatedingeneralandindefiniteterms,timeis
matteroffact,thosearticlescouldbebroughttoManilaornot.Ifthatisthecase,aswethinkit notoftheessenceofthecontract."(35Cyc.,179. Andsee Montgomery vs. Thompson,152
is,theobligationmustberegardedasconditional.
Cal.,319;92Pac.,866;O'Brienvs.Higley,162Ind.,316;70N.E.,242;Prattvs.Lincoln[Me.
"Obligations for the performance of which a day certain has been fixed shall be 1888],13Atl.,689;Whitevs.McMillan,114N.C.,349;19S.E.,234;Ballantynevs.Watson,
demandableonlywhenthedayarrives.
30U.C.C.P.,529.)
"Adaycertainisunderstoodtobeonewhichmustnecessarilyarrive,eventhoughits
Insuchcases,thedeliverymustbemadewithinareasonabletime.
datebeunknown."//theuncertaintyshouldconsistinthearrivalornonarrivaloftheday,the
"The lawimplies, however, that ifno timeis fixed, deliveryshall bemade withina
obligationisconditionalandshallbegovernedbytherulesofthenextprecedingsection" reasonabletime,intheabsenceofanythingtoshowthatanimmediatedeliveryisintended."(35
(referringtopureandconditionalobligations).(Art.1125,Civ.Code.)
Cyc.,179,180.)
Andastheexportofthemachineryinquestionwas,asstatedinthecontract,contingent
"Whenthecontractprovidesfordelivery'assoonaspossible'thesellerisentitledtoa
upon the sellers obtaining certificate of priority and permission of the United States reasonabletime,inviewofallthecircumstances,suchasthenecessitiesofmanufacture,orof
Government,subjecttotherulesandregulations,aswellastorailroadembargoes,thenthe puttingthegoodsinconditionfordelivery.Thetermdoesnotmeanimmediatelyorthatthe
deliverywassubjecttoaconditionthefulfillmentofwhichdependednot onlyupontheeffortsellermuststopallhisotherworkanddevotehimselftothatparticularorder.Buttheseller
ofthehereinplaintiff,butuponthewillofthirdpersonswhocouldinnowaybecompelledto mustneverthelessactwithallreasonablediligenceorwithoutunreasonabledelay.Ithasbeen
fulfill.thecondition.Incaseslikethis,whicharenotexpresslyprovidedfor,butimpliedly heldthatarequirementthattheshipmentofgoodsshouldbethe'earliestpossible'mustbe
covered,bytheCivilCode,theobligorwillbedeemedtohavesufficientlyperformedhispart construedasmeaningthatthegoodsshouldbesentassoonasthesellercouldpossiblysend
oftheobligation,ifhehasdoneallthatwasinhispower,eveniftheconditionhasnotbeen them,andthatitsignifiedrathermorethanthatthegoodsshouldbesentwithinareasonable
fulfilledinreality.
time.
"Insuchcases,thedecisionspriortotheCivilCodehaveheldthattheobligeehaving
"Delivery 'Shortly.'In a contract for the sale of personal property to be delivered
doneallthatwasinhispower,wasentitledtoenforceperformanceoftheobligation.This 'shortly,'itisthedutyofthesellertotenderdeliverywithinareasonabletimeandifhetenders
performance,whichisfictitiousnotrealisnotexpresslyauthorizedbytheCode,which deliveryaftersuchtimethebuyermayreject.
limitsitselfonlytodeclarevalidthoseconditionsandtheobligationtherebyaffected;butitis
*******
neither disallowed, and the Code being thus silent, the old view can be maintained as a
"Thequestionastowhatisareasonabletimeforthedeliveryofthegoodsbytheselleris
doctrine."(Manresa'scommentariesontheCivilCode[1907],vol.8,page132.)
tobedeterminedbythecircumstancesattendingtheparticulartransaction,suchasthecharacter
ThedecisionsreferredtobyMr.Manresaarethoserenderedbythesupremecourtof ofthegoods,andthepurposeforwhichtheyareintended,theabilityofthesellertoproducethe
SpainonNovember19,1866,andFebruary23,1871.Intheformeritisheld:
goodsiftheyaretobemanufactured,thefacilitiesavailablefortransportation,andthedistance
"First.Thatwhenthefulfillmentoftheconditiondoesnotdependonthewillofthe thegoodsmustbecarried,andtheusualcourseofbusinessintheparticulartrade."(35Cyc.,
obligor,butonthatofathirdpersonwhocaninnowaybecompelledtocarryitout,anditis 181184.)
found by the lower court that the obligor has done all in his power to comply with the
Whetherornotthedeliveryofthemachineryinlitigationwasofferedtothedefendant
obligation,thejudgmentofthesaidcourt,orderingtheotherpartytocomplywithhispartof withinareasonabletime,isaquestiontobedeterminedbythecourt.
the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10, of the
"Applications of rule.A contract for delivery 'about Nov. 1' is complied with by
'NovsimaRecopilacin,'orLaw12,Tit.11,ofPartida5,wheninthesaidfindingofthelower deliveryonNovember10 (Whiltevs.McMillan,114N.C.,349;19S,E.,234.AndseeO'Brien

vs. Higley,162Ind.,316;70N.E.,242);andacontracttodeliver'aboutthelastofMayor
Judgmentmodified.
June' is complied with by delivery on the last day of June (New Bedford Copper Co. vs._________________
Southard,95Me.,209;49Atl.,1062,holdingalsothatifthegoodsweretobeusedforashipto
arrive'aboutApril'andthevesselwasdelayed,thesellermightdeliverwithinareasonabletime
afterherarrival,althoughsuchreasonabletimeextendedbeyondthelastofJune);soundera
contracttodelivergoodssold'aboutJune,1906,'deliverymaybemadeduringthemonthof
June,orinareasonabletimethereafter(Loomis vs. NormanPrinters'SupplyCo.,81Conn.,
343;71Atl.,358)."(35Cyc.,180,note16.)
Therecordshows,aswehavestated,thattheplaintiffdidallwithinitspowertohavethe
machineryarriveatManilaassoonaspossible,andimmediatelyuponitsarrivalitnotifiedthe
purchaserofthefactandofferedtodeliverittohim.Takingthesecircumstancesintoaccount,
weholdthatthesaidmachinerywasbroughttoManilabytheplaintiffwithinareasonable
time.
Therefore,theplaintiffhasnotbeenguiltyofanydelayinthefulfillmentofitsobligation,
and,consequently,itcouldnothaveincurredanyoftheliabilitiesmentionedbytheintervenor
initscounterclaimorsetoff.
Besides,itdoesnotappearthattheintervenor,theManilaOilRefiningandByProducts
Co.,Inc.,hasinanywaytakenpartinthesecontracts.Thesecontractsweresignedbythe
defendant,Mr.VicenteSotelo,inhisindividualcapacityandownname.Ifhewasthenacting
asagentoftheintervenor,thelatterhasnorightofactionagainstthehereinplaintiff.
"Whenanagentactsinhisownname,theprincipalshallhavenorightofactionagainst
thepersonswithwhomtheagenthascontracted,orsuchpersonsagainsttheprincipal.
"Insuchcase,theagentisdirectlyliabletothepersonwithwhomhehascontracted,asif
thetransactionwerehisown.Casesinvolvingthingsbelongingtotheprincipalareexcepted.
"The provisionsof thisarticle shallbe understoodto bewithout prejudiceto actions
betweenprincipalandagent."(CivilCode,art.1717.)"Whentheagenttransactsbusinessinhis
ownname,itshallnotbenecessaryforhimtostatewhoistheprincipalandheshallbedirectly
liable,asifthebusinesswereforhisownaccount,tothepersonswithwhomhetransactsthe
same,saidpersonsnothavinganyrightofactionagainsttheprincipal,northelatteragainstthe
former,theliabilitiesoftheprincipalandoftheagenttoeachotheralwaysbeingreserved."
(CodeofCom.,art.246.)
"Iftheagenttransactsbusinessinthenameoftheprincipal,hemuststatethatfact;andif
thecontractisinwriting,hemuststateitthereinorinthesubscribingclause,givingthename,
surname,anddomicileofsaidprincipal.
"Inthecaseprescribedintheforegoingparagraph,thecontractandtheactionsarising
therefromshallbeeffectivebetweentheprincipalandthepersonsorpersonwhomayhave
transactedbusinesswiththeagent;butthelattershallbeliabletothepersonswithwhomhe
transactedbusinessduringthetimehedoesnotprovethecommission,iftheprincipalshould
denyit,withoutprejudicetotheobligationandproperactionsbetweentheprincipalandagent."
(CodeofCom.,art.247.)
Theforegoingprovisionsleadustotheconclusionthattheplaintiffisentitledtotherelief
prayedforinitscomplaint,andthattheintervenorhasnorightofaction,thedamagesalleged
tohavebeensustainedbyitnotbeingimputabletotheplaintiff.
Wherefore, the judgment appealed from is modified, and the defendant, Mr. Vicente
SoteloMatti,sentencedtoacceptandreceivefromtheplaintiffthetanks,theexpellersandthe
motorsinquestion,andtopaytheplaintiffthesumofninetysixthousandpesos(P96,000),
withlegal interestthereonfromJuly17,1919,thedateofthefilingofthecomplaint,untilfully
paid,andthecostsofbothinstances.Soordered.
Araullo,C.J.,Johnson,Street,Malcolm,Avancea,Villamor,Ostrand,andJohns,JJ.,
concur.

5.ENCARNACIONVS.BALDOMAR

house indefinitely and while they should faithfully fulfill their obligation as respects the
paymentoftherentals,andthatthisagreementhadbeenratifiedwhenanotherejectmentcase
[No.L264.October4,1946]
betweenthepartiesfiledduringtheJapaneseregimeconcerningthesamehousewasallegedly
VICENTESINGSONENCARNACION,plaintiffandappellee, vs. JACINTABALDOMARcompoundedinthemunicipalcourt.TheCourtofFirstInstancegavemorecredittoplaintiff's
ETAL.,defendantsandappellants.
witness,VicenteSingsonEncarnacion,jr.,whotestifiedthattheleasehadalwaysandsincethe
OBLIGATIONS AND CONTRACTS; LEASE; VALIDITY ANDbeginningbeenuponamonthtomonthbasis.Thecourtaddedinitsdecisionthatthisdefense
FULFILLMENT CANNOT BE LEFT TO EXCLUSIVE WlLL OF LESSEE.The whichwasputupbydefendantLefradoFernandoduringthetrialhadnotbeenallegedin
continuanceandfulfillmentofthecontractofleasecannotbemadetodependsolelyand defendant'sanswer,forwhichreasontheCourtconsidereditasindicativeofaneleventhhour
exclusively upon the free and uncontrolled choice of the lessees between continuing theory.WethinkthattheCourtofFirstInstancewasrightinsodeclaring.Furthermore,carried
payingtherentalsornot,completelydeprivingtheownerofallsayinthematter.Forif toitslogicalconclusion,thedefensethussetupbydefendantLefradoFernandowouldleaveto
thiswereallowed,solongasdefendantselectedtocontinuetheleasebycontinuingthe thesoleandexclusivewillofoneofthecontractingparties(defendantsinthiscase)thevalidity
payment of the rentals. the owner would never be able to discontinue it; conversely,andfulfillmentofthecontractoflease,withinthemeaningofarticle1256oftheCivilCode,
althoughtheownershoulddesiretheleasetocontinue,thelesseescouldeffectivelythwartsincethecontinuanceandfulfillmentofthecontractwouldthendependsolelyandexclusively
hispurposeiftheyshouldprefertoterminatethecontractbythesimpleexpedientof upon their free and uncontrolled choice between continuing paying therentals or not,
stoppingpaymentoftherentals.This,ofcourse,isprohibitedbyarticle1256oftheCivilcompletelydeprivingtheownerofallsayinthematter.Ifthisdefenseweretobeallowed,so
Code.
longasdefendantselectedtocontinuetheleasebycontinuingthepaymentoftherentals,the
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.Roxas,J.
ownerwouldneverbeabletodiscontinueit;conversely,althoughtheownershoulddesirethe
Thefactsarestatedintheopinionofthecourt.
lease to continue, the lessees could effectively thwart his purpose if they should prefer to
Bausa,&Ampilforappellants.
terminatethecontractbythesimpleexpedientofstoppingpaymentoftherentals.This,of
Tolentino&Aguasforappellee.
course,isprohibitedbytheaforesaidarticleoftheCivilCode.(8Manresa,3ded.,pp.626,627;
HILADO,J.:
Cuyuganvs.Santos,34Phil.,100.)
DuringthependencyoftheappealintheCourtofFirstInstanceandbeforethejudgment
appealedfromwasrenderedonOctober31,1945,therentalsinarrearswerethosepertainingto
VicenteSingsonEncarnacion,ownerofthehousenumbered589LegardaStreet,Manila,some
sixyearsagoleasedsaidhousetoJacintaBaldomarandherson,LefradoFernando,upona themonthofAugust,1945,tothedateofsaidjudgmentattherateofP35amonth.Duringthe
monthtomonthbasisforthemonthlyrentalofP35.AfterManilawasliberatedinthelastwar, pendencyoftheappealinthatcourt,certaindepositsweremadebydefendantsonaccountof
specificallyonMarch16,1945,andonApril7,ofthesameyear,plaintiffSingsonEncarnacion rentalswiththeclerkofsaidcourt,andinsaidjudgmentitisdisposedthattheamountsthus
notifieddefendants,thesaidmotherandson,tovacatethehouseabovementionedonorbefore depositedshouldbedeliveredtoplaintiff.
Uponthewhole,weareclearlyofopinionthatthejudgmentappealedfromshouldbe,as
April15,1945,becauseplaintiffneededitforhisofficesasaresultofthedestructionofthe
itishereby,affirmed,withthecostsofthethreeinstancestoappellants.Soordered.
buildingwheresaidplaintiffhadsaidofficesbefore.Despitethisdemand,defendantsinsisted
Pars,Pablo,Perfecto,andPadilla,,JJ.,concur.
oncontinuingtheiroccupancy.WhentheoriginalactionwaslodgedwiththeMunicipalCourt
Judgmentaffirmed.
of Manila on April 20, 1945, defendants were in arrears in the payment of the rental
correspondingtosaidmonth,theagreedrentalbeingpayablewithinthefirstfivedaysofeach ________________
month. That rental was paid prior to the hearing of the case in the municipal court, as a
consequenceofwhichsaidcourtenteredjudgmentforrestitutionandpaymentofrentalsatthe
rate of P35 a month from May 1, 1945, until defendants completely vacate the premises.
AlthoughplaintiffincludedinsaidoriginalcomplaintaclaimforP500damagespermonth,that
claimwaswaivedbyhimbeforethehearinginthemunicipalcourt,onaccountofwhich
nothingwassaidregardingsaiddamagesinthemunicipalcourt'sdecision.
WhenthecasereachedtheCourtofFirstInstanceofManilauponappeal,defendantsfiled
thereinamotiontodismiss(whichwassimilartoamotiontodismissfiledbytheminthe
municipalcourt)baseduponthegroundthatthemunicipalcourthadnojurisdictionjectmatter
duetotheaforesaidclaimfordamagesandthat,therefore,theCourtofFirstInstancehadno
appellatejurisdictionoverthesubjectmatteroftheaction.Thatmotiontodismisswasdenied
byHisHonor,JudgeMamertoRoxas,byorderdatedJuly21,1945,onthegroundthatinthe
municipal court plaintiff had waived said claim for damages and that, therefore, the same
waiverwasunderstoodalsotohavebeenmadeintheCourtofFirstInstance.
IntheCourtofFirstInstancethegravamenofthedefenseinterposedbydefendants,asit
wasexpressedbydefendantLefradoFernandoduringthetrial,wasthatthecontractwhichthey
hadcelebratedwithplaintiffsincethebeginningauthorizedthemtocontinueoccupyingthe

6.EleizeguivsLawTennisClub

permonth."(P.11,BillofExceptions.)
Inaccordancewithsuchatheory,theplaintiffsmighthaveterminatedtheleasethemonth
[No.967.May19,1903.]
following the making of the contractat any time after the first month, which, strictly
DARIOANDGAUDENCIOELEIZEGUI,plaintiffsandappellees,vs.THEMANILALAWNspeaking,wouldbetheonlymonthwithrespecttowhichtheywereexpresslybound,theynot
TENNISCLUB,defendantandappellant.
beingboundforeachsuccessivemonthexceptbyatacitrenewal(art.1566)aneffectwhich
1.REALPROPERTY;LEASE;CONVENTIONALANDLEGALTERM.Article1581of theymightpreventbygivingtherequirednotice.
theCivilCode,fixinglegaltermsforleasesinwhichnoconventionaltermisstipulated,hasno
Althoughthereliefaskedforinthecomplaint,drawninaccordancewiththenewformof
applicationtoaleasewhoseterminationisexpresslylefttothewillofthelessee.
procedureestablishedbytheprevailingCode,istherestitutionofthelandtotheplaintiffs(a
2.ID.;ID.;TERMATWILLOFLESSEE.Thetermofaleasewhoseterminationisexpressly formulacommontovariousactions),neverthelesstheactionwhichismaintainedcanbeno
lefttothewillofthelesseemustbefixedbythecourtsaccordingtothecharacterand
other thanthatof desahucio, inaccordancewiththesubstantivelawgoverningthecontract.
conditionsofthemutualundertakings,inanactionbroughtforthatpurpose,inaccordancewith Thelessorsaysarticle1569oftheCivilCodemayjudiciallydispossessthelesseeuponthe
article1128oftheCivilCode.
expirationoftheconventionaltermorofthelegalterm;theconventionaltermthatis,theone
3.OBLIGATIONS;CONTRACTS;GENERALPROVISIONS.Thegeneralprinciples
agreeduponbytheparties;thelegalterm,indefectoftheconventional,fixedforleasesby
establishedbytheCivilCodewithrespecttoobligationsandcontractsareapplicableto
articles1577and1581.Wehavealreadyseenwhatthislegaltermiswithrespecttourban
contractsofallkinds.
properties,inaccordancewitharticle1581.
Hence, it follows that the judge has only to determine whether there is or is not a
PerWILLARD,J.,concurring:
conventionalterm.Iftherebeaconventionalterm,hecannotapplythelegaltermfixedin
4.REALPROPERTY;LEASE;CONVENTIONALANDLEGALTERM.Article1128of subsidiumtocoveracaseinwhichthepartieshavemadenoagreementwhatsoeverwithrespect
theCivilCodehasnoapplicationtoaleasewhoseterminationislefttothewillofthelessee; tothedurationofthelease.Inthiscasethelawinterpretsthepresumptiveintentionofthe
suchleaseinfavorofanaturalpersoncreatesanestatewhichmayamounttoalifetenancyand parties,theyhavingsaidnothinginthecontractwithrespecttoitsduration."Obligationsarising
infavorofajudicialpersonmayendureuntilthedissolutionoftheentityoruntilterminatedbyfromcontractshavetheforceoflawbetweenthecontractingpartiesandmustbecompliedwith
breachofsomeconditionofthecontract.
accordingtothetenorofthecontracts."(Art.1091oftheCivilCode.)
Theobligationswhich,withtheforceoflaw,thelessorsassumedbythecontractentered
APPEALfromajudgmentoftheCourtofFirstInstanceofManila.
into,sofaraspertainingtotheissues,arethefollowing:"First.***Theyleasetheabove
Thefactsarestatedintheopinionofthecourt.
describedlandtoMr.Williamson,whotakesitonlease,***forallthetimethemembersof
Pillsbury&Sutro,forappellant.
thesaidclubmaydesiretouseit***Third.***theownersofthelandundertaketomaintain
ManuelTorres,Vergara,forappellee.
theclubastenantaslongasthelattershallsecfit,withoutalteringintheslightestdegreethe
ARELLANO,C.J.:
conditionsofthiscontract,eventhoughtheestatebesold."
Itisnecessary,therefore,toanswerthefirstquestion:Wasthere,orwastherenot,a
Thissuitconcernstheleaseofapieceoflandforafixedconsiderationandtoendureatthewill conventionalterm,aduration,agreeduponinthecontractinquestion?Iftherewasanagreed
ofthelessee.Bythecontractofleasethelesseeisexpresslyauthorizedtomakeimprovementsduration, a conventional term, thenthelegaltermthetermfixedinarticle1581hasno
upontheland,byerectingbuildingsofbothpermanentandtemporarycharacter,bymaking application;thecontractisthesupremelawofthecontractingparties.Overandabovethe
fills,layingpipes,andmakingsuchotherimprovementsasmightbeconsidereddesirablefor generallawisthespeciallaw,expresslyimposeduponthemselvesbythecontractingparties.
thecomfortandamusementofthemembers.Withrespecttothetermoftheleasethepresent Withouttheseclauses1and3,thecontractwouldcontainno stipulationwithrespecttothe
questionhasarisen.Initsdiscussionthreetheorieshavebeenpresented:Onewhichmakesthe durationofthelease,andthenarticle1581,inconnectionwitharticle1569,wouldnecessarily
durationdependuponthewillofthelessor,who,upononemonth'snoticegiventothelessee, beapplicable.Inviewoftheseclauses,however,itcannotbesaidthatthereisnostipulation
mayterminatetheleasesostipulated;anotherwhich,onthecontrary,makesitdependentupon withrespecttothedurationofthelease,orthat,notwithstandingtheseclauses,article1581,in
thewillofthelessee,asstipulated;andthethird,inaccordancewithwhichtherightisreserved connectionwitharticle1569,canbeapplied.Ifthiswereso,itwouldbenecessarytoholdthat
thelessorsspokeinvainthattheirwordsaretobedisregardedaclaimwhichcannotbe
tothecourtstofixthedurationoftheterm.
Thefirsttheoryisthatwhichhasprevailedinthejudgmentbelow,asappearsfromthe advancedbytheplaintiffsnorupheldbyanycourtwithoutcitingthelawwhichdetractsall
languageinwhichthebasisofthedecisionisexpressed:"Thecourtisoftheopinionthatthe legalforcefromsuchwordsordespoilsthemoftheirliteralsense.
It having been demonstrated that the legal term can not be applied, there being a
contractofleasewasterminatedbythenoticegivenbytheplaintiffsonAugust28oflastyear*
conventionalterm,thisdestroystheassumptionthatthecontractofleasewaswhollyterminated
**."Andsuchisthetheorymaintainedbytheplaintiffs,whichexpresslyrestsuponarticle
1581oftheCivilCode,thelawwhichwasinforceatthetimethecontractwasenteredinto by the notice given by the plaintiffs, this notice being necessary only when it becomes
(January 25, 1890). Thejudge, in givingto thisnotice theeffect ofterminating thelease, necessarytohaverecoursetothelegalterm.Norhadtheplaintiffs,underthecontract,anyright
undoubtedlyconsidersthatitisgovernedbythearticlerelieduponbytheplaintiffs,whichisof togivesuchnotice.Itisevidentthattheyhadnointentionofstipulatingthattheyreservedthe
thefollowingtenor:"Whenthetermhasnotbeenfixedforthelease,itisunderstoodtobefor right to give such notice. Clause 3 begins as follows: "Mr. Williamson, or whoever may
yearswhenanannualrentalhasbeenfixed,formonthswhentherentismonthly***."Thesucceedhimassecretaryofsaidclub,mayterminatethisleasewheneverdesiredwithoutother
secondclauseofthecontractprovidesasfollows:"Therentofthesaidlandisfixedat25pesos formalitythanthatofgivingamonth'snotice.Theownersofthelandundertaketomaintainthe
clubastenantaslongasthelattershallseefit."Therightoftheoneandtheobligationofthe

othersbeingthusplacedinantithesis,thereissomethingmore,muchmore,thantheinclussio 1608.)
Ontheotherhand,itcannotbeconcludedthattheterminationofthecontractistobeleft
unius,exclussioalterius.Itisevidentthatthelessorsdidnotintendtoreservetothemselvesthe
right to rescind that which they expressly conferred upon the lessee by establishing itcompletelyatthewillofthelessee,becauseithasbeenstipulatedthatitsdurationistobeleftto
hiswill.
exclusivelyinfavorofthelatter.
TheCivilCodehasmadeprovisionforsuchacaseinallkindsofobligations.Inspeaking
Itwouldbethegreatestabsurditytoconcludethatinacontractbywhichthelessorhas
left the termination of the lease to the will of the lessee, such a lease can or should be ingeneralofobligationswithatermithassuppliedthedeficiencyoftheformerlawwith
respecttothe"durationoftheterMwhenithasbeenlefttothewillofthedebtor,"andprovides
terminatedatthewillofthelessor.
Itwouldappeartofollow,fromtheforegoing,that,ifsuchistheforceoftheagreement, thatinthiscasethetermshallbefixedbythecourts.(Art.1128,sec.2.)Ineverycontract,as
therecanbenoothermodeofterminatingtheleasethanbythewillofthelessee,asstipulatedin laid down by the authorities, there is always a creditor who is entitled to demand the
thiscase.Suchistheconclusionmaintainedbythedefendantinthedemonstrationofthefirst performance, and a debtor upon whom rests the obligation to perform the undertaking. In
erroroflawinthejudgment,asallegedbyhim.Hegoessofar,underthistheory,astomaintain bilateral contracts the contracting parties are mutually creditors and debtors. Thus, in this
thepossibilityofaperpetuallease,eitherassuchlease,ifthenamecanbeapplied,orelseasan contractoflease,thelesseeisthecreditorwithrespecttotherightsenumeratedinarticle1554,
innominatecontract,orunderanyotherdenomination,inaccordancewiththeagreementofthe andisthedebtorwithrespecttotheobligationsimposedbyarticles1555and1501.Theterm
parties,whichis,infine,thelawofthecontract,superiortoallotherlaw,providedthattherebe withinwhichperformanceofthelatterobligationisdueiswhathasbeenlefttothewillofthe
debtor.Thistermitiswhichmustbefixedbythecourts.
noagreementagainstanyprohibitivestatute,morals,orpublicpolicy.
Theonlyactionwhichcanbemaintainedunderthetermsofthecontractisthatbywhich
Itisunnecessaryheretoenterintoadiscussionofaperpetualleaseinaccordancewiththe
lawanddoctrinepriortotheCivilCodenowinforce,andwhichhasbeenoperativesince1889. itissoughttoobtainfromthejudgethedeterminationofthisperiod,andnottheunlawful
HencethejudgmentofthesupremecourtofSpainofJanuary2,1891,withrespecttoalease detaineractionwhichhasbeenbroughtanactionwhichpresupposestheexpirationofthe
madein1887,citedbythedefendant,andadecisionstatedbyhimtohavebeenrenderedbythe termandmakesitthedutyofthejudgetosimplydecreeaneviction.Tomaintainthelatter
AudienciaofPamplonain1885(itappearstoberatheradecisionbytheheadofficeofland actionitissufficienttoshowtheexpirationofthetermofthecontract,whetherconventionalor
registrationofJuly1, 1885), andanyotherdecisionwhichmightbecitedbaseduponthe legal;inordertodecreetherelieftobegrantedintheformeractionitisnecessaryforthejudge
constitutionsofCatalua,accordingtowhichaleaseofmorethantenyearsisunderstoodto tolookintothecharacterandconditionsofthemutualundertakingswithaviewtosupplying
createalifetenancy,orevenaperpetualtenancy,areentirelyoutofpointinthiscase,inwhich thelackingelementofatimeatwhichtheleaseistoexpire.Inthecaseofaloanofmoneyora
thesubjectmatterisaleaseenteredintoundertheprovisionsofthepresentCivilCode,in commodatum of furniture, the payment or return to be made when the borrower "can
accordancewiththeprinciplesofwhichalonecanthisdoctrinebeexamined.
convenientlydoso"doesnotmeanthatheistobeallowedtoenjoythemoneyortomakeuse
Itisnottobeunderstoodthatweadmitthattheleaseenteredintowasstipulatedasalife of the thing indefinitely or perpetually. The courts will fix in each case, according to the
tenancy,andstilllessasaperpetuallease.Thetermsofthecontractexpressnothingtothis circumstances,thetimeforthepaymentorreturn.Thisisthetheoryalsomaintainedbythe
effect.Theydo,however,implythisidea.Iftheleasecouldlastduringsuchtimeasthelessee defendantinhisdemonstrationofthefifthassignmentoferror."Underarticle1128oftheCivil
mightseefit,becauseithasbeensostipulatedbythelessor,itwouldlast,first,aslongasthe Code,"thushispropositionconcludes,"contractswhosetermislefttothewillofoneofthe
willofthelesseethatis,allhislife;second,duringallthetimethathemayhavesuccession, contractingpartiesmustbefixedbythecourts,***theconditionastothetermofthislease
inasmuchashewhocontractsdoessoforhimselfandhisheirs.(Art.1257oftheCivilCode.) hasadirectlegislativesanction,"andhecitesarticle1128.
"Inplaceoftheruthlessmethodofannihilatingasolemnobligation,whichtheplaintiffs
Theleaseinquestiondoesnotfallwithinanyofthecasesinwhichtherightsandobligations
arisingfromacontractcannotbetransmittedtoheirs,eitherbyitsnature,byagreement,orby inthiscasehavesoughttopursue,theCodehasprovidedalegitimateandeasilyavailable
remedy.***TheCodehasprovidedfortheproperdispositionofthosecovenants,andacase
provisionoflaw.Furthermore,thelesseeisanEnglishassociation.
Usufructisarightofsuperiordegreetothatwhicharisesfromalease.Itisarealright canhardlyarisemoreclearlydemonstratingtheusefulnessofthatprovisionthanthecaseat
andincludesallthe jusutendi and jusfruendi. Nevertheless,theutmostperiodforwhicha bar."(Pp.52and53ofappellant'sbrief.)
Theplaintiffs,withrespecttothisconclusiononthepartoftheiropponents,onlysaythat
usufruct can endure, if constituted in favor of a natural person, is the lifetime of the
usufructuary(art.513,sec.1);andifinfavorofajuridicalperson,itcannotbecreatedfor article1128"expresslyreferstoobligationsincontractsingeneral,andthatitiswellknown
more than thirty years. (Art. 515. If the lease might be perpetual, in what would it be thataleaseisincludedamongspecialcontracts."Buttheydonotobservethatifcontracts,
distinguished from an emphyteusis? Why should the lessee have a greater right than the simplybecausespecialrulesareprovidedforthem,couldbeexceptedfromtheprovisionsof
usufructuary,asgreatasthatofanemphyteuta,withrespecttothedurationoftheenjoymentof thearticlesoftheCoderelativetoobligationsandcontractsingeneral,suchgeneralprovisions
thepropertyofanother?Whydidtheynotcontractforausufructoranemphyteusis?Itwas wouldbewhollywithoutapplication.ThesystemoftheCodeisthatofestablishinggeneral
repeatedlystatedinthedocumentthatitwasalease,andnothingbutalease,whichwasagreed rulesapplicabletoallobligationsandcontracts,andthenspecialprovisionspeculiartoeach
upon:"Beinginthefullenjoymentofthenecessarylegalcapacitytoenterintothiscontractof speciesofcontract.InnopartofTitleVIofBookIV,whichtreatsofthecontractoflease,are
lease***theyhaveagreedupontheleaseofsaidestate***TheyleasetoMr.Williamson,thereanyspecialrulesconcerningpureorconditionalobligationswhichmaybestipulatedina
whoreceivesitassuch***Therentalisfixedat25pesosamonth.***Theownersbind lease,because,withrespecttothesematters,theprovisionsofsection1,chapter3,TitleI,on
themselvestomaintaintheclubastenant.***Upontheforegoingconditionstheymakethe thesubjectofobligations,arewhollysufficient.Withequalreasonshouldwerefertosection2,
presentcontractoflease.***"(Pp.9.11,and12,billofexceptions.)Ifitisalease,thenit whichdealswithobligationswithaterm,inthesamechapterandtitle,ifaquestionconcerning
mustbeforadeterminateperiod.(Art.1543.)Byitsverynatureitmustbetemporary,justasthetermarisesoutofacontractoflease,asinthepresentcase,andwithinthissectionwefind
byreasonofitsnatureanemphyteusismustbeperpetual,orforanunlimitedperiod.(Art. article1128,whichdecidesthequestion.

Thejudgmentwasenteredbelowuponthetheoryoftheexpirationofalegaltermwhich
Thetenantistheonlypersonwhohasbeengiventherighttosayhowlongthecontract
doesnotexist,.asthecaserequiresthatatermbefixedbythecourtsundertheprovisionsof shallcontinue.Thatrightispersonaltohim,andisnotpropertyinsuchasenseastopasstohis
article1128withrespecttoobligationswhich,asisthepresent,areterminableatthewillofthe heirs.
obligee.Itfollows,therefore,thatthejudgmentbelowiserroneous.
Inthiscasethequestionismademoredifficultbythefactthatthetenantissaidtobea
The judgment is reversed and the case will be remanded to the court below with juridicalperson,anditissaidthattheleaseisthereforeaperpetualone.Justwhatkindofa
directionstoenterajudgmentof dismissaloftheactioninfavorofthedefendant,theManila partnershiporassociationthedefendantisdoesnotappear,andwithoutknowingwhatkindof
LawnTennisClub,withoutspecialallowanceastotherecoveryofcosts.Soordered.
anentityitiswecannotsaythatthiscontractisaperpetuallease.Evenifthedefendanthas
MapaandLadd,JJ.,concur.
perpetualsuccession,theleasewouldnotnecessarilylastforever.Abreachofanyoneofthe
obligationsimposeduponthelesseebyarticle1555oftheCivilCodewouldgivethelandlord
Torres,J.,disqualified.
therighttoterminateit.
WILLARD,J.,concurring:
Judgmentreversed.
Iconcurintheforegoingopinionsofarasitholdsthatarticle1581hasnoapplicationtothe
caseandthattheactioncannotbemaintained.Butastotheapplicationofarticle1128Idonot
concur.Thatarticleisasfollows:
"Shouldtheobligationnotfixaperiod,butitcanbeinferredfromitsnatureandcircumstances
thattherewasanintentiontograntittothedebtor,thecourtsshallfixthedurationofthesame.
"Thecourtshallalsofixthedurationoftheperiodwhenitmayhavebeenlefttothewill
ofthedebtor."
Thecourthasappliedthelastparagraphofthearticletothecaseofalease.But,applyingthe
firstparagraphtoleases,wehaveadirectconflictbetweenthisarticleandarticle1581.Letus
supposetheleaseofahousefor50pesosamonth.Nothingissaidaboutthenumberofmonths
duringwhichthelesseeshalloccupyit.Ifarticle1581isapplicabletothiscase,thelawfixes
thedurationofthetermandthecourtshavenopowertochangeit.Ifarticle1128isappliedto
it,thecourtsfixthedurationoftheleasewithoutreferencetoarticle1581.Itwill,Ithink,be
agreedbyeveryonethatarticle1581isthelawapplicabletothecase,andthatarticle1128has
nothingtodowithit.
Itseemsclearthatbothpartsofthearticlemustrefertothesamekindofobligations.The
firstparagraphrelatestoobligationsInwhichthepartieshavenamednoperiod,thesecondto
thesamekindofobligationsinwhichtheperiodislefttothewillofthedebtor.Ifthefirst
paragraphisnotapplicabletoleases,thesecondisnot.
Thewholearticlewas,Ithink,intendedtoapplygenerallytounilateralcontractsto
thoseinwhichthecreditorhadpartedwithsomethingofvalue,leavingittothedebtortosay
whenitshouldbereturned.Insuchcasesthedebtormightneverreturnit,andthecreditor
might thusbedeprivedofhispropertyandentirelydefeatedinhisrights.Itwastopreventsuch
awrongthatthearticlewasadopted.Butithasnoapplicationtothiscase.Theplaintiffsarenot
deprivedoftheirrights.Theygeteverymonththevaluewhichtheythemselvesputuponthe
useoftheproperty.Thetimeforthepaymentofthisrenthasnotbeenleftbythecontracttothe
willofthedebtor.Itisexpresslyprovidedinthecontractthatitshallbepaid"withinthefirst
fivedaysaftertheexpirationofeachmonth."
Article1255oftheCivilCodeisasfollows:
"The contractingparties maymake theagreement andestablish theclauses andconditions
whichtheymaydeemadvisable,provided they arenotincontraventionoflaw,morals,or
publicorder."
Thatthepartiestothiscontractdistinctlyagreedthatthedefendantshouldhavethispropertyso
longashewaswillingtopay25pesosamonthforit,isundisputed.
IfindnothingintheCodetoshowthatwhenanaturalpersonisthetenantsuchan
agreementwouldbecontrarytolaw,morality,orpublicpolicy.Insuchacasethecontract
would terminate at the death of the tenant. Such is the doctrine of the French Cour de
Cassation.(Houetvs.Lamarge,July20,1840.)

7.Philbankingvs.LuiShe

Civillaw;Contracts;Saleofrealestatetoaliens;Paridelictoruleinpreviouscases
expresses extreme view.The statement that the sales entered into prior to the Krivenko
No.L17587.September12,1967.
decisionwereatthattimealreadyvitiatedbyaguiltyknowledgeofthepartiesmaybetoo
PHILIPPINEBANKINGCORPORATION,representingtheestateofJUSTINASANTOSYextremeaview.Itappearstoignoreapostulateofaconstitutionalsystem,whereinthewordsof
CANON FAUSTINO,deceased, plaintiffappellant, vs. Lui SHE in her own behalf and astheConstitutionacquiremeaningthroughSupremeCourtadjudication.
administratrixoftheintestateestateofWongHeng,deceased,defendantappellant.
Same;AlienvendeeisincapacitatedtoacquireorholdrealestatesinceNov.15,1935;
Civillaw;Contracts;Resolutorycondition;Art.1308,CivilCode.Article1308oftheRemedy of vendor.Alienvendee is incapacitated or disqualified to acquire and hold real
Civil Code creates no impediment to the insertion in a contract for personal services of aestate. That incapacity and that disqualification should date from the adoption of the
resolutoryconditionpermittingthecancellationofthecontractbyoneoftheparties.Sucha ConstitutiononNovember15,1935.Alienvendee,therefore,cannotbeallowedtocontinue
stipulationdoesnotmakeeitherthevalidityorthefulfillmentofthecontractdependentupon owningandexercisingactsofownershipoversaidproperty,whenitisclearlyincludedwithin
the will of the party to whom is conceded the privilege of cancellation; for where the theconstitutionalprohibition.Alienvendeeshouldthusbemadetorestorethepropertywithits
contractingpartieshaveagreedthatsuchoptionshallexist,theexerciseoftheoptionisasmuch fruitsandrentstoFilipinovendor,itspreviousowner,ifitcouldbeshownthat,intheutmost
inthefulfillmentofthecontractasanyotheractwhichmayhavebeenthesubjectofthe good faith, he transferred his title over the same to alienvendee, upon restitution of the
agreement.Indeed,thecancellationofacontractinaccordancewithconditionsagreedupon purchaseprice,ofcourse.
beforehandisfulfillment.
APPEALfromadecisionoftheCourtofFirstInstanceofManila.
Same;Leasecontract;Validityofprovisionforrescissiontherein.AprovisioninaThefactsarestatedintheopinionoftheCourt.
leasecontractthatthelessee,atanytimebeforeheerectedanybuildingonthelandmayrescind
NicanorS.Sisonforplaintiffappellant.
theleasecanhardlyberegardedasaviolationofArticle1308oftheCivilCode.
Ozaeta,Gibbs&Ozaetafordefendantappellant.
Same;Consideration;Considerationneednotpassattimeofexecutionofcontract.CASTRO,J.:
Theconsiderationneednotpassfromonepartytotheotheratthetimeacontractisexecuted
becausethepromiseofoneistheconsiderationfortheother.
JustinaSantosyCanonFaustinoandhersisterLorenzaweretheownersincommonofapiece
Same;Validityofleaseoroptiontobuyrealestatetoanalien.Aleasetoanalienfor
oflandinManila.Thisparcel,withanareaof2,582.30squaremeters,islocatedonRizal
areasonableperiodisvalid.Soisanoptiongivinganalientherighttobuyrealpropertyon
AvenueandopensintoFlorentinoTorresstreetatthebackandKatubusanstreetononeside.In
conditionthatheisgrantedPhilippinecitizenship.Aliensarenotcompletelyexcludedbythe
it are two residential houses with entrance on Florentino Torres street and the Hen Wah
Constitution from the use of lands for residential purposes. Since their residence in the
RestaurantwithentranceonRizalAvenue.Thesisterslivedinoneofthehouses,whileWong
Philippinesistemporary,theymaybegrantedtemporaryrightssuchasaleasecontractwhichis
Heng,aChinese,livedwithhisfamilyintherestaurant.Wonghadbeenalongtimelesseeofa
notforbiddenbytheConstitution.Shouldtheydesiretoremainhereforeverandshareour
portionoftheproperty,payingamonthlyrentalofP2,620.
fortuneandmisfortune,Filipinocitizenshipisnotimpossibletoacquire.
OnSeptember22,1957JustinaSantosbecametheowneroftheentirepropertyasher
Same;Same;Wheninvalid.Ifanalienisgivennotonlyaleaseof,butalsoanoption
sisterdiedwithnootherheir.Thenalreadywelladvancedinyears,beingatthetime90years
tobuy,apieceofland,byvirtueofwhichtheFilipinoownercannotsellorotherwisedispose
old,blind,crippledandaninvalid,shewasleftwithnootherrelativetolivewith.Heronly
ofhisproperty,thistolastfor50years,thenitbecomesclearthatthearrangementisavirtual
companionsinthehousewereher17dogsand8maids.Herotherwisedrearyexistencewas
transferofownershipwherebytheownerdivestshimselfinstagesnotonlyoftherighttoenjoy
brightenednowandthenbythevisitsofWongsfourchildrenwhohadbecomethejoyofher
theland (juspossidendi,jusutendi,jusfruendi, and jusabutendi), butalsooftherightto
life. Wong himself was the trusted man to whom she delivered various amounts for
disposeofit(jusdisponendi)rightsthesumtotalofwhichmakeupownershipItisjustasif
safekeeping,includingrentalsfromherpropertyatthecornerofOngpinandSalazarstreetsand
todaythepossessionistransferred,tomorrowtheuse,thenextdaythedisposition,andsoon,
therentalswhichWonghimselfpaidaslesseeofapartoftheRizalAvenueproperty.Wong
untilultimatelyalltherightsofwhichownershipismadeupareconsolidatedinanalien.Ifthis
alsotookcareofthepayment,inherbehalf,oftaxes,lawyersfees,funeralexpenses,masses,
can be done, then the constitutional ban against alien landholding in the Philippines, as
salariesofmaidsandsecurityguard,andherhouseholdexpenses.
announcedinKrivenkovs.RegisterofDeeds(79Phil.461)isindeedingraveperil.
Ingratefulacknowledgmentofthepersonalservicesofthelesseetoher,JustinaSantos
Same;Same;Same;Remedyofparties;Exceptiontoparidelictodoctrine.Itdoesnot
executedonNovember15,1957acontractoflease(PlffExh.3)infavor ofWong,covering
followthatbecausethepartiesareinparidelictotheywillbeleftwheretheyarewithoutrelief.
theportionthenalreadyleasedtohimandanotherportionfrontingFlorentinoTorresstreet.The
Article1416oftheCivilCodeprovidesasanexceptiontotheruleofinparidelictothatwhen
leasewasfor50years,althoughthelesseewasgiventherighttowithdrawatanytimefromthe
the agreementis notillegal perse butis merelyprohibited, and theprohibition bylaw is
agreement; the monthly rental was P3,120. The contract covered an area of 1,124 square
designedfortheprotectionoftheplaintiff,hemay,ifpublicpolicyistherebyenhanced,recover
meters.Tendayslater(November25),thecontractwasamended(PlffExh.4)soastomakeit
whathehadpaidordelivered.
covertheentireproperty,includingtheportiononwhichthehouseofJustinaSantosstood,at
Same;Same;Same;Same;Sec.5,Art.XIIIoftheConstitutionisanexpressionof
anadditionalmonthlyrentalofP360.ForhispartWongundertooktopay,outoftherentaldue
publicpolicy.Theconstitutionalprovisionthatsaveincasesofhereditarysuccession,no
fromhim,anamountnotexceedingP1,000amonthforthefoodofherdogsandthesalariesof
privateagriculturallandshallbetransferredorassignedexcepttoindividuals,corporations,or
hermaids.
associationsqualifiedtoacquireorholdlandsofthepublicdomaininthePhilippinesisan
OnDecember21sheexecutedanothercontract(PlffExh.7)givingWongtheoptionto
expressionofpublicpolicytoconservelandsfortheFilipinos.
buytheleasedpremisesforP120,000,payablewithintenyearsatamonthlyinstallmentof
FERNANDO,J.,concurring:

Pl,000.Theoption,writteninTagalog,imposedonhimtheobligationtopayforthefoodofthecondemnedtopayuntoplaintiffthruguardianofherpropertythesumofP55,554.25withlegal
dogsandthesalariesofthemaidsinherhousehold,thechargenottoexceedP1,800amonth. interestfromthedateofthefilingoftheamendedcomplaint;heisalsoorderedtopaythesum
TheoptionwasconditionedonhisobtainingPhilippinecitizenship,apetitionforwhichwas ofP3,120.00foreverymonthofhisoccupationaslesseeunderthedocumentofleaseherein
thenpendingintheCourtofFirstInstanceofRizal.Itappears,however,thatthisapplication sustained, from 15 November 1959, and the moneys he has consigned since then shall be
fornaturalizationwaswithdrawnwhenitwasdiscoveredthathewasnotaresidentofRizal.Onimputedtothat;costsagainstWongHeng.
October28,1958shefiledapetitiontoadopthimandhischildrenontheerroneousbeliefthat FromthisjudgmentbothpartiesappealeddirectlytothisCourt.Afterthecasewassubmitted
adoption would confer on them Philippine citizenship. The error was discovered and thefor decision, both parties died, Wong Heng on October 21, 1962 and Justina Santos on
proceedingswereabandoned.
December28,1964.Wongwassubstitutedbyhiswife,LuiShe,theotherdefendantinthis
OnNovember18,1958sheexecutedtwoothercontracts,one(PlffExh.5)extendingthecase,whileJustinaSantoswassubstitutedbythePhilippineBankingCorporation.
termoftheleaseto99years,andanother(PlffExh.6)fixingthetermoftheoptionof50years.
JustinaSantosmaintainednowreiteratedbythePhilippineBankingCorporationthat
BothcontractsarewritteninTagalog.
theleasecontract(PlffExh.3)shouldhavebeenannulledalongwiththefourothercontracts
IntwowillsexecutedonAugust24and29,1959(Def.Exhs.285&279),shebadeher (PlffExhs.47)becauseitlacksmutuality;becauseitincludedaportionwhich,atthetime,was
legateestorespectthecontractsshehadenteredintowithWong,butinacodicil(PlffExh.17) incustodialegis;becausethecontractwasobtainedinviolationofthefiduciaryrelationsofthe
ofalaterdate(November4,1959)sheappearstohaveachangeofheart.Claimingthatthe parties; because her consent was obtained through undue influence, fraud and
variouscontractsweremadebyherbecauseofmachinationsandinducementspractisedbyhim, misrepresentation;andbecausetheleasecontract,liketherestofthecontracts,isabsolutely
shenowdirectedherexecutortosecuretheannulmentofthecontracts.
simulated.
OnNovember18thepresentactionwasfiledintheCourtofFirstInstanceofManila.The
Paragraph5oftheleasecontractstatesthatThelesseemayatanytimewithdrawfrom
complaintallegedthatthecontractswereobtainedbyWongthroughfraud,misrepresentation, thisagreement.Itisclaimedthatthisstipulationoffendsarticle1308ofthCivilCodewhich
inequitable conduct, undueinfluence andabuse ofconfidence andtrust ofand (by)taking providesthatthecontractmustbindbothcontractingparties;itsvalidityorcompliancecannot
advantageofthehelplessnessoftheplaintiffandweremadetocircumventtheconstitutional belefttothewillofoneofthem.
provisionprohibitingaliensfromacquiringlandsinthePhilippinesandalsoofthePhilippine
Wehavehadoccasiontodelineatethescopeandapplicationofarticle1308intheearly
NaturalizationLaws.ThecourtwasaskedtodirecttheRegisterofDeedsofManilatocancel caseofTaylorv.UyTiengPiao.1Wesaidinthatcase:
theregistrationofthecontractsandtoorderWongtopayJustinaSantostheadditionalrentof Article1256[nowart.1308]oftheCivilCodeinouropinioncreatesnoimpedimenttothe
P3,120amonthfromNovember15,1957ontheallegationthatthereasonablerentalofthe insertioninacontractforpersonalserviceofaresolutoryconditionpermittingthecancellation
leasedpremiseswasP6,240amonth.
ofthecontractbyoneoftheparties.Suchastipulation,ascanbereadilyseen,doesnotmake
Inhisanswer,Wongadmittedthatheenjoyedhertrustandconfidenceasproofofwhich eitherthevalidityorthefulfillmentofthecontractdependentuponthewillofthepartyto
hevolunteeredtheinformationthat,inadditiontothesumofP3,000whichhesaidshehad whomisconcededtheprivilegeofcancellation;forwherethecontractingpartieshaveagreed
deliveredtohimforsafekeeping,anothersumofP22,000hadbeendepositedinajointaccount thatsuchoptionshallexist,theexerciseoftheoptionisasmuchinthefulfillmentofthe
whichhehadwithoneofhermaids.Buthedeniedhavingtakenadvantageofhertrustinorder contract as any other act which may have been the subject of agreement. Indeed, the
tosecuretheexecutionofthecontractsinquestion.Ascounterclaimhesoughttherecoveryof cancellation of a contract in accordance with conditions agreed upon beforehand is
P9,210.49whichhesaidsheowedhimforadvances.
fulfillment.2
WongsadmissionofthereceiptofP22,000andP3,000wasthecueforthefilingofan AndsoitwasheldinMelenciov.DyTiaoLay3thataprovisioninaleasecontractthatthe
amendedcomplaint.ThusonJune9,1960,asidefromthenullityofthecontracts,thecollection lessee,atanytimebeforeheerectedanybuildingontheland,mightrescindthelease,can
ofvariousamountsallegedlydeliveredondifferentoccasionswassought.Theseamountsand hardlyberegardedasaviolationofarticle1256[nowart.1308]oftheCivilCode.
thedatesoftheirdeliveryareP33,724.27(Nov.4,1957);P7,344.42(Dec.1,1957);P10,000
ThecaseofSingsonEncarnacionv.Baldomar4cannotbecitedinsupportoftheclaimof
(Dec.6,1957);P22,000andP3,000(asadmittedinhisanswer).Anaccountingoftherentals wantofmutuality,becauseofadifferenceinfactualsetting.Inthatcase,thelesseesarguedthat
fromtheOngpinandRizalAvenuepropertieswasalsodemanded.
theycouldoccupythepremisesaslongastheypaidtherent.Thisisofcourseuntenable,foras
In the meantime as a result of a petition for guardianship filed in the Juvenile andthisCourtsaid,Ifthisdefenseweretobeallowed,solongasdefendantselectedtocontinue
Domestic Relations Court, the Security Bank & Trust Co. was appointed guardian of the the lease by continuing the payment of the rentals, the owner would never be able to
properties of Justina Santos, while Ephraim G. Gochangco was appointed guardian of herdiscontinueit;conversely,althoughtheownershoulddesiretheleasetocontinuethelessees
person.
couldeffectivelythwarthispurposeiftheyshouldprefertoterminatethecontractbythesimple
Inhisanswer,Wonginsistedthatthevariouscontractswerefreelyandvoluntarilyexpedient ofstopping paymentof therentals.Here, in contrast, theright ofthe lesseeto
entered into by the parties. He likewise disclaimed knowledge of the sum of P33,724.27,continuetheleaseortoterminateitissocircumscribedbythetermofthecontractthatitcannot
admittedreceiptofP7,344.42andP10,000,butcontendedthattheseamountshadbeenspentin besaidthatthecontinuanceoftheleasedependsuponhiswill.Atanyrate,evenifnotermhad
accordancewiththeinstructionsofJustinaSantos;heexpressedreadinesstocomplywithany beenfixedintheagreement,thiscasewouldatmostjustifythefixingofaperiod5butnotthe
orderthatthecourtmightmakewithrespecttothesumsofP22,000inthebankandP3,000in annulmentofthecontract.
hispossession.
Noristheremeritintheclaimthatastheportionofthepropertyformerlyownedbythe
Thecasewasheard,afterwhichthelowercourtrenderedjudgmentasfollows:
sisterofJustinaSantoswasstillintheprocessofsettlementintheprobatecourtatthetimeit
[A]llthedocumentsmentionedinthefirstcauseofaction,withtheexceptionofthefirst wasleased,theleaseisinvalidastosuchportion.JustinaSantosbecametheowneroftheentire
whichistheleasecontractof15November1957,aredeclarednullandvoid;WongHengis propertyuponthedeathofhersisterLorenzaonSeptember22,1957byforceofarticle777of

theCivilCode.Hence,whensheleasedthepropertyonNovember15,shedidsoalreadyas makesclearthatshevoluntarilyconsentedtotheleasecontract. Thiswitnesssaidthatthe

ownerthereof.AsthisCourtexplainedinupholdingthesalemadebyanheirofaproperty originaltermfixedfortheleasewas99yearsbutthatashedoubtedthevalidityofaleasetoan
underjudicialadministration:
alienforthatlengthoftime,hetriedtopersuadehertoenterinsteadintoaleaseonamonthto
Thatthelandcouldnotordinarilybelevieduponwhileincustodiolegisdoesnotmeanthatmonthbasis. She was, however, firm and unyielding. Insteadofheedingtheadviceofthe
oneoftheheirsmaynotselltheright,interestorparticipationwhichhehasormighthavein lawyer,sheorderedhim,JustfollowMr.WongHeng.9Recountingtheincident,Atty.Yumol
the lands under administration. The ordinary execution of property in custodia legis isdeclaredoncrossexamination:
prohibitedinordertoavoidinterferencewiththepossessionbythecourt.ButthesalemadebyConsideringherage,ninety(90)yearsoldatthetimeandhercondition,sheisawealthy
anheirofhisshareinaninheritance,subjecttotheresultofthependingadministration,inno woman, it is just natural when she said This is what I want and this will be done. In
wisestandsinthewayofsuchadministration.6
partiticularreferencetothiscontractoflease,whenIsaidThisisnotproper,shesaidYou
ItisnextcontendedthattheleasecontractwasobtainedbyWonginviolationofhisfiduciary justgoahead,youpreparethat,Iamtheowner,andifthereisanyillegality,Iamtheonlyone
relationshipwithJustinaSantos,contrarytoarticle1646,inrelationtoarticle1941oftheCivil thatcanquestiontheillegality.10
Code,whichdisqualifiesagents(fromleasing)thepropertywhoseadministrationorsalemay Atty.Yumolfurthertestifiedthatshesignedtheleasecontractinthepresenceofherclose
havebeenentrustedtothem.ButWongwasneveranagentofJustinaSantos.Therelationshipfriend,HermenegildaLao,andhermaid,NatividadLuna,whowasconstantlybyherside.11
oftheparties,althoughadmittedlycloseandconfidential,didnotamounttoanagencysoasto AnyofthemcouldhavetestifiedontheundueinfluencethatWongsupposedlywieldedover
bringthecasewithintheprohibitionofthelaw.
JustinaSantos,butneitherofthemwaspresentedasawitness.Thetruthisthatevenafter
Justthesame,itisarguedthatWongsocompletelydominatedherlifeandaffairsthatthe givinghisclienttimetothinkthematterover,thelawyercouldnotmakeherchangehermind.
contractsexpressnotherwillbutonlyhis.CounselforJustinaSantoscitesthetestimonyof Thispersuadedthelowercourttoupholdthevalidityoftheleasecontractagainsttheclaimthat
Atty.TomasS.Yumolwhosaidthathepreparedtheleasecontractonthebasisofdatagivento itwasprocuredthroughundueinfluence.
himbyWongandthatshetoldhimthatwhateverMr.Wongwantsmustbefollowed.7
Indeed,thechargeofundueinfluenceinthiscaserestsonamereinference12drawnfrom
ThetestimonyofAtty.Yumolcannotbereadoutofcontextinordertowarrantafinding thefactthatJustinaSantoscouldnotread(asshewasblind)anddidnotunderstandtheEnglish
thatWongpracticallydictatedthetermsofthecontract.Whatthiswitnesssaidwas:
languageinwhichthecontractiswritten,butthatinferencehasbeenovercomebyherown
evidence.

Didyouexplaincarefullytoyourclient,DonaJustina,thecontentsofthisdocumentbeforeshesignedit?
Noristheremeritintheclaimthatherconsenttotheleasecontract,aswellastotherest
Q
ofthecontractsinquestion,wasgivenoutofamistakensenseofgratitudetoWongwho,she
wasmadetobelieve,hadsavedherandhersisterfromafirethatdestroyedtheirhouseduring

IexplainedtohereachandeveryoneoftheseconditionsandIalsotoldhertheseconditionswerequite
the liberationof Manila. Forwhile awitness claimedthat thesisters weresaved byother
A onerousforher,IdontreallyknowifIhaveexpressedmyopinion,butItoldherthatwewouldrathernot
persons(thebrothersEdilbertoandMarianoSta.Ana)13 itwasJustinaSantosherselfwho,
executeanycontractanymore,buttoholditasitwasbefore,onaverbalmonthtomonthcontractoflease.
accordingtoherownwitness,BenjaminC.Alonzo,saidveryemphaticallythatsheandher

But,shedidnotfollowyouradvice,andshewentwiththecontractjustthesame?
sisterwouldhaveperishedinthefirehaditnotbeenforWong.14Hencetherecitalinthedeed
Q
ofconditionaloption(PlffExh.7)that[I]tongsiWongHengangsiyangnagligtassaaming
dalawangmagkapatidsahalosaytiyaknakamatayan,andtheequallyemphaticavowalof

Sheagreedfirst...
gratitudeintheleasecontract(PlffExh.3).
A
Asitwaswiththeleasecontract(PlffExh.3),soitwaswiththerestofthecontracts(Plff
Exhs,47)theconsentofJustinaSantoswasgivenfreelyandvoluntarily.AsAtty.Alonzo,

Agreedwhat?
testifyingforher,said:
Q
[I]nnearlyalldocuments,itwaseitherMr.WongHengorJudgeTorresand/orboth.Whenwe

AgreedwithmyobjectivesthatitisreallyonerousandthatIwasreallyright,butafterthat,Iwascalled
hadconferences,theyusedtotellmewhatthedocumentsshouldcontain.But,asIsaid,Iwould
A againbyherandshetoldmetofollowthewishesofMr.WongHeng.
alwaysasktheoldwomanaboutthemandinvariablytheoldwomanusedtotellme:Thats
okay.Itsallright.15

xxxxx
But thelower courtset asideall thecontracts, with theexception ofthe leasecontract of
November15,1957,onthegroundthattheyarecontrarytotheexpressedwishofJustina

So,asfarasconsentisconcerned,youweresatisfiedthatthisdocumentwasperfectlyproper?
Santosandthattheirconsiderationsarefictitious.Wongstatedinhisdepositionthathedidnot
Q
payP360amonthfortheadditionalpremisesleasedtohimbecauseshedidnotwanthimto,

xxxxx
butthetrialcourtdidnotbelievehim.NeitherdiditbelievehisstatementthathepaidPl,000as
considerationforeachofthecontracts(namely, theoptiontobuytheleasedpremises,the

YourHonor,ifIhavetoexpressmypersonalopinion,Iwouldsaysheisnot,because,asIsaidbefore,she
extensionoftheleaseto99years,andthefixingofthetermoftheoptionat50years),butthat
A toldmeWhateverMr.Wongwantsmustbefollowed.8
WongmightindeedhavesuppliedthedatawhichAtty.Yumolembodiedintheleasecontract, the amount was returned to him by her for safekeeping. Instead, the court relied on the
buttosaythisisnottodetractfromthebindingforceofthecontract.Forthecontractwasfully testimonyofAtty.Alonzoinreachingtheconclusionthatthecontractsarevoidforwantof
explainedtoJustinaSantosbyherownlawyer.Oneincident,relatedbythesamewitness, consideration.
Atty.Alonzodeclaredthathesawnomoneypaidatthetimeoftheexecutionofthe

documents,buthisnegativetestimonydoesnotruleoutthepossibilitythattheconsiderations temporaryorpermanent)ofrightsundera99yearleasewasnotconsidered.
werepaidatsomeothertimeasthecontractsinfactrecite.Whatismore,theconsideration
21Thecontract(PlffExh.6)ofNovember18,1958providesthatSaloobnangnabanggit
neednotpassfromonepartytotheotheratthetimeacontractisexecutedbecausethepromise napanahonlimangpung(50)taonnahindipaginagamitniWONGokaniyangkaanakang
ofoneistheconsiderationfortheother.16
karapatannilangbumili,ayangnabanggitnalupaayhindimaaringipagbili,ibigay,isangla,o
WithrespecttothelowercourtsfindingthatinallprobabilityJustinaSantoscouldnot italingMAYARIsaiba(Withinthesaidperiodoffifty(50)yearsduringwhichneithernor
haveintendedtopartwithherpropertywhileshewasalivenoreventoleaseitinitsentiretyasanyofhischildrenhasexercisedtheoptiontobuythesaidpieceoflandcannotbesold,
herhousewasbuiltonit,sufficeittoquotethetestimonyofherownwitnessandlawyerwho donated,mortgagedorencumberedinfavorofotherpersonsbytheowner.Ifthiscanbedone,
preparedthecontracts(PlffExhs.47)inquestion,Atty.Alonzo:
then the Constitutional ban against alien landholding in the Philippines, as announced in
Theambitionoftheoldwoman,beforeherdeath,accordingtoherrevelationtome,wasto Krivenkov.RegisterofDeeds,22isindeedingraveperil.
seetoitthatthesepropertiesbeenjoyed,eventoownthem,byWongHengbecauseDoa
Itdoesnotfollowfromwhathasbeensaid,however,thatbecausethepartiesareinpari
Justinatoldmethatshedidnothaveanyrelatives,nearorfar,andsheconsideredWongHeng delictotheywillbeleftwheretheyare,withoutrelief.Foronething,theoriginalpartieswho
asasonandhischildrenhergrandchildren;especiallyherconsolationinlifewaswhenshe wereguiltyofaviolationofthefundamentalcharterhavediedandhavesincebeensubstituted
wouldhearthechildrenrecitingprayersinTagalog.17
bytheiradministratorstowhomitwouldbeunjusttoimputetheirguilt.23Foranotherthing,
Shewasveryemphaticinthecareoftheseventeen(17)dogsandofthemaidswho andthisisnotonlycogentbutalsoimportant,article1416oftheCivilCodeprovides,asan
helpedhermuch,andshetoldmetoseetoitthatnoonecoulddisturbWongHengfromthose exceptiontotheruleon paridelicto, thatWhentheagreementisnotillegal perse butis
properties.Thatiswhywethoughtoftheninetynine(99)yearslease;wethoughtofadoption, merelyprohibited,andtheprohibitionbylawisdesignedfortheprotectionoftheplaintiff,he
believingthatthruadoptionWongHengmightacquireFilipinocitizenship;beingtheadopted may, if public policy is thereby enhanced, recover what he has paid or delivered. The
childofaFilipinocitizen.18
ConstitutionalprovisionthatSaveincasesofhereditarysuccession,noprivateagricultural
Thisisnottosay,however,thatthecontracts(PlffExhs.37)arevalid.Forthetestimonyjust land shall be transferred or assigned except to individuals, corporations, or associations
quoted,whiledispellingdoubtastotheintentionofJustinaSantos,atthesametimegivesthe qualifiedtoacquireorholdlandsofthepublicdomaininthePhilippines24isanexpressionof
cluetowhatweviewasaschemetocircumventtheConstitutionalprohibitionagainstthe publicpolicytoconservelandsfortheFilipinos.AsthisCourtsaidinKrivenko:
transferoflandstoaliens.Theillicitpurposethenbecomestheillegalcausa19renderingtheItiswelltonoteatthisjuncturethatinthepresentcasewehavenochoice.Weareconstruing
contractsvoid.
theConstitutionasitisandnotaswemaydesireittobe.Perhapstheeffectofourconstruction
Taken singly, the contracts show nothing that is necessarily illegal, but considered istoprecludewheretheymaybuildaliensadmittedfreelyintothePhilippinesfromowning
collectively,theyrevealaninsidiouspatterntosubvertbyindirectionwhattheConstitution sitestheirhomes.ButifthisisthesolemnmandateoftheConstitution,wewillnotattemptto
directlyprohibits.Tobesure,aleasetoanalienforareasonableperiodisvalid.Soisanoptioncompromiseiteveninthenameofamityorequity,xxx
giving an alien the right to buy real property on condition that he is granted Philippine
Foralltheforegoing,weholdthatundertheConstitutionaliensmaynotacquireprivate
citizenship.AsthisCourtsaidinKrivenkov.RegisterofDeeds:20
orpublicagriculturallands,includingresidentiallands,and,accordingly,judgmentisaffirmed,
[A]liensarenotcompletelyexcludedbytheConstitutionfromtheuseoflandsforresidentialwithoutcosts.25
purposes.SincetheirresidenceinthePhilippinesistemporarytheymaybegrantedtemporary
Thatpolicywouldbedefeatedanditscontinuedviolationsanctionedif,insteadofsetting
rightssuchasaleasecontractwhichisnotforbiddenbytheConstitution.ShouldtheydesiretothecontractsasideandorderingtherestorationofthelandtotheestateofthedeceasedJustina
remain here forever and share our fortunes and misfortunes, Filipino citizenship is not Santos,thisCourtshouldapplythegeneralruleofparidelicto.Totheextentthatourrulingin
impossibletoacquire.
thiscaseconflictswiththatlaiddowninRellosav.GawCheeHun26andsubsequentsimilar
Butifanalienisgivennotonlyaleaseof,butalsoanoptiontobuy,apieceofland,byvirtuecases,thelattermustbeconsideredasprotantoqualified.
ofwhichtheFilipinoownercannotsellorotherwisedisposeofhisproperty,21thistolastfor
Theclaimforincreasedrentalsandattorneysfees,madeinbehalfofJustinaSantos,must
50years,thenitbecomesclearthatthearrangementisavirtualtransferofownershipwhereby bedeniedforlackofmerit.
theownerdivestshimselfinstagesnotonlyoftherighttoenjoytheland(juspossidendi,jus
AndwhatofthevariousamountswhichWongreceivedintrustfromher?Itappearsthat
utendi,jusfruendi and jusabutendi) butalsooftherighttodisposeofit (jusdisponendi)hekepttwoclassesofaccounts,onepertainingtoamountswhichsheentrustedtohimfrom
rights the sum total of which make up ownership. It is just as if today the possession is timetotime,andanotherpertainingtorentalsfromtheOngpinpropertyandfromtheRizal
transferred,tomorrow,theuse,thenextday,thedisposition,andsoon,untilultimatelyallthe Avenueproperty,whichhehimselfwasleasing.
rightsofwhichownershipismadeupareconsolidatedinanalien.Andyetthisisjustexactly
Withrespecttothefirstaccount, theevidenceshowsthathereceivedP33,724.27on
whatthepartiesinthiscasedidwithinthespaceofoneyear,withtheresultthatJustinaSantosNovember8,1957(PlffExh,16);P7,354.42onDecember1,1957(PlffExh.13);P10,000on
ownershipofherpropertywasreducedtoahollowconcept.
December6,1957(PlffExh.14);andP18,928.50onAugust26,1959(Def.Exh.246),ora
________________
totalofP70,007.19.Heclaims,however,thathesettledhisaccountsandthatthelastamount
ofP18,928.50wasinfactpaymenttohimofwhatintheliquidationwasfoundtobeduetohim.
HemadedisbursementsfromthisaccounttodischargeJustinaSantosobligationsfor
20 79Phil.461,480481(1947)(italicsadded).Thestatementin Smith,Bell&Co.v.
RegisterofDeeds,96Phil.53,6162(1954),totheeffectthatanalienmayleaselandsinthe taxes,attorneysfees,funeralservicesandsecurityguardservices,butthechecks(Def.Exhs.
Philippinesforaslongas99yearsunderarticle1643oftheCivilCode,isobiterasthetermof247278)drawnbyhimforthispurposeamounttoonlyP38,442.84.27Besides,ifhehadreally
theleaseinthatcasefor25yearsonly,renewableforalikeperiod,andthecharacter(whether settled his accounts with her on August 26, 1959, we cannot understand why he still had
P22,000inthebankandP3,000inhispossession,oratotalofP25,000.Inhisanswer,he

offeredtopaythisamountifthecourtsodirectedhim.Onthesetwogrounds,therefore,hisof the facts leaves nothing to be desired and the statement of the law is notable for its
claimofliquidationandsettlementofaccountsmustberejected.AftersubtractingP38,442.84comprehensivenessandclarity.Thisconcurringopinionhasbeenwrittensolelytoexpresswhat
(expenditures)fromP70,007.19(receipts),thereisadifferenceofP31,564which,addedtotheI consider to be the unfortunate and deplorable consequences of applying the pari delicto
amountofP25,000,leavesabalanceofP56,564.3528infavorofJustinaSantos.
concept,aswas,tomymind,indiscriminatelydone,toalienlandholdingdeclaredillegalunder
Astothesecondaccount,theevidenceshowsthatthemonthlyincomefromtheOngpin the Krivenko doctrineinsomepastdecisions.Itistoberememberedthatin Krivenkov.The
propertyuntilitssaleinJuly,1959wasPl,000,andthatfromtheRizalAvenueproperty,of Register of Deeds of Manila,1 this Court over strong dissents held that residential and
whichWongwasthelessee,wasP3,120.Againstthisaccountthehouseholdexpensesand commercial lots may be considered agricultural within the meaning of the constitutional
disbursementsforthecareofthe17dogsandthesalariesofthe8maidsofJustinaSantoswere provisionprohibitingthetransferofanyprivateagriculturallandtoindividuals,corporationsor
charged.Thisaccountiscontainedinanotebook(Def. Exh. 6)whichshowsabalanceof associationsnotqualifiedtoacquireorholdlandsofthepublicdomaininthePhilippinessave
P9,210.49infavorofWong.ButitisclaimedthattherentalfromboththeOngpinandRizal incasesofhereditarysuccession.
Avenuepropertieswasmorethanenoughtopayforhermonthlyexpensesandthat,asamatter
That provision of the Constitution took effect on November 15, 1935 when the
offact,thereshouldbeabalanceinherfavor.Thelowercourtdidnotalloweitherpartyto CommonwealthGovernmentwasestablished.Theinterpretationassetforthinthe Krivenko
recoveragainsttheother.Saidthecourt:
decisionwasonlyhandeddownonNovember15,1947.Priortothatdatethereweremanywho
[T]hedocumentsbeartheearmarksofgenuineness;thetroubleisthattheyweremadeonlyby wereoftheopinionthatthephrase agriculturalland shouldbeconstruedstrictlyandnotbe
FranciscoWongandAntoniaMatias,nicknamedToning,whichwasthewayshesignedthe madetocoverresidentialandcommerciallots.Actingonthatbelief,severaltransactionswere
loosesheets,andthereisnoclearproofthatDoaJustinahadauthorizedthesetwotoactfor enteredintotransferringsuchlotstoalienvendeesbyFilipinovendors.
herinsuchliquidation;onthecontraryiftheresultofthatwasadeficitasallegedandsought
AftertheKrivenkodecision,someFilipinovendorssoughtrecoveryofthelotsinquestion
tobethereshown,ofP9,210.49,thatwasnotwhatDonaJustinaapparentlyunderstoodforas onthegroundthatthesaleswerenullandvoid.NodefiniterulingwasmadebythisCourtuntil
theCourtunderstandsherstatementtotheHonorableJudgeoftheJuvenileCourtxxxthe Septemberof1953,whenonthe29thofsaidmonth,Rellosav.GawCheeHun,2Bautistav.Uy
reasonwhyshepreferred.tostayinherhomewasbecausethereshedidnotincurinanydebts Isabelo,Talentov.Makiki,4Caoilev.ChiaoPeng5weredecided.
xxxthisbeingthecase,xxxtheCourtwillnotadjudicateinfavorofWongHengonhis
OfthefourdecisionsinSeptember,1953,themostextensivediscussionofthequestionis
counterclaim;ontheotherhand,whileitisclaimedthattheexpensesweremuchlessthanthefoundinRellosav.GawCheeHun,theopinionbeingpennedbyretiredJusticeBautistaAngelo
rentalsandthereinfactshouldbeasuperavit,xxxthisCourtmustconcedethatdailyexpenses withtheconcurrenceonlyofoneJustice,JusticeLabrador,alsoretired.FormerChiefJustice
arenoteasytocompute,forthisreason,theCourtfacedwiththechoiceofthetwoalternatives Paras aswell asthe formerJustices Tuasonand Montemayorconcurred inthe result. The
willchoosethemiddlecoursewhichafterallispermittedbytherulesofproof,Sec.69,Rule necessarysixthvoteforadecisionwasgivenbythethenJusticeBengzon,whohadatwo
123 for in the ordinary course of things, a person will live within his income so that the paragraphconcurringopiniondisagreeingwiththemainopinionastotheforcetobeaccorded
conclusionoftheCourtwillbethatthereisneitherdeficitnorsuperavitandwillletthematter tothetwocases,6thereincited.ThereweretwodissentingopinionsbyformerJusticesPablo
resthere.
andAlexReyes.
Bothpartiesonappealreiteratetheirrespectiveclaimsbutweagreewiththelowercourtthat
ThedoctrineasannouncedintheRellosacaseisthatwhilethesalebyaFilipinovendor
bothclaimsshouldbedenied.Asidefromthereasonsgivenbythecourt,wethinkthatthe toanalienvendeeofaresidentialoracommerciallotisnullandvoidasheldintheKrivenko
claimofJustinaSantostotallingP37,235,asrentalsduetoherafterdeductingvariousexpenses, case,stilltheFilipinovendorhasnorighttorecoverunderacivillawdoctrine,theparties
shouldberejectedastheevidenceisnonetooclearabouttheamountsspentbyWongfor beinginparidelicto.TheonlyremedytopreventthiscontinuingviolationoftheConstitution
food,29 masses30 and salaries of her maids.31 His claim for P9,210.49 must likewise be which the decision impliedly sanctions by allowing the alien vendees to retain the lots in
rejectedashisavermentofliquidationisbeliedbyhisownadmissionthatevenaslateas1960 questioniseitherescheatorreversion.Thus:Byfollowingeitheroftheseremedies,orby
hestillhadP22,000inthebankandP3,000inhispossession.
approvinganimplementarylawasabovesuggested,wecanenforcethefundamentalpolicyof
ACCORDINGLY,thecontractsinquestion(PlffExhs.37)areannulledandsetaside; ourConstitutionregardingournaturalresourceswithoutdoingviolencetotheprincipleofpari
thelandsubjectmatterofthecontractsisorderedreturnedtotheestateofJustinaSantosas delicto.7
represented by the Philippine Banking Corporation; Wong Heng (as substituted by the
Werethepartiesreallyinparidelicto?HadthesalebyandbetweenFilipinovendorand
defendantappellantLuiShe)isorderedtopaythePhilippineBankingCorporationthesumofalienvendeeoccurredafterthedecisioninthe Krivenko case,thentheaboveviewwouldbe
P56,564.35,withlegalinterestfromthedateofthefilingoftheamendedcomplaint;andthe correctthatbothFilipinovendorandalienvendeecouldnotbeconsideredasinnocentparties
amountsconsignedincourtbyWongHengshallbeappliedtothepaymentofrentalfrom withinthecontemplationofthelaw.Bothofthemshouldbeheldequallyguiltyofevasionof
November15,1959untilthepremisesshallhavebeenvacatedbyhisheirs.Costsagainstthe theConstitution.
defendantappellant.
Since,however,thesalesinquestiontookplacepriortotheKrivenkodecision,atatime
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, whentheassumptioncouldbehonestlyentertainedthattherewasnoconstitutionalprohibition
SanchezandAngeles,JJ.,concur.
againstthesaleofcommercialorresidentiallotsbyFilipinovendortoalienvendee,inthe
Fernando,J.,concursinaseparateopinion.
absenceofadefinitedecisionbytheSupremeCourt,itwouldnotbedoingviolencetoreasonto
FERNANDO,J.,concurring:
freethemfromtheimputationofevadingtheConstitution.Forevidentlyevasionimpliesatthe
very least knowledge of what is being evaded. The new Civil Code expressly provides:
WiththeableandwellwrittenopinionofJusticeCastro,Iaminfullagreement.Theexposition Mistakesuponadoubtfulordifficultquestionoflawmaybethebasisofgoodfaith.8

AccordingtotheRellosaopinion,bothpartiesareequallyguiltyofevasionoftheConstitution,November 15, 1947. Alienvendee, therefore, cannot be allowed to continue owning and
basedonthebroaderprinciplethatbothpartiesarepresumedtoknowthelaw.Thisstatementexercising acts of ownership over said property, when it is clearly included within the
thatthesalesenteredintopriortotheKrivenkodecisionwereatthattimealreadyvitiatedbya Constitutionalprohibition.Alienvendeeshouldthusbemadetorestorethepropertywithits
guiltyknowledgeofthepartiesmaybetooextremeaview.Itappearstoignoreapostulateofa fruitsandrentstoFilipinovendor,itspreviousowner,ifitcouldbeshownthatintheutmost
constitutionalsystem,whereinthewordsoftheConstitutionacquiremeaningthroughSupreme good faith, he transferred his title over the same to alienvendee, upon restitution of the
purchasepriceofcourse.
Courtadjudication.
TheConstitutionbarsalienvendeesfromowningthepropertyinquestion.Bydismissing
Referencemaybemadebywayofanalogytoadecisionadjudgingastatutevoid.Under
theorthodoxtheoryofconstitutionallaw,theacthavingbeenfoundunconstitutionalwasnota those suits, the lots remained in alien hands. Notwithstanding the solution of escheat or
law,conferrednorights,imposednoduty,affordednoprotection.9Aspointedoutbyformerreversionoffered,theyarestillatthemomentofwriting,forthemostpartinalienhands.There
ChiefJusticeHughesthoughinChicotCountyDrainageDistrictv.BaxterStateBank:10Itishavebeenafteralmosttwentyyearsnoproceedingsforescheatorreversion.
Yetitisclearthatanalienvendeecannotconsistentlywiththeconstitutionalprovision,as
quite clear, however, that such broad statements as to the effect of a determination of
unconstitutionalitymustbetakenwithqualifications.Theactualexistenceofastatute,priorto interpretedintheKrivenkodecision,continueowningandexercisingactsofownershipoverthe
suchadetermination,isanoperativefactandmayhaveconsequenceswhichcannotjustlybe realestateinquestion.Itoughttofollowthen,ifsuchacontinuingviolationofthefundamental
ignored. The past cannot always be erased by a new judicial declaration. The effect of lawistobeputanendto,thattheFilipinovendor,whoingoodfaithenteredinto,acontract
subsequentrulingastoinvaliditymayhavetobeconsideredinvariousaspects,withrespect withanincapacitatedperson,transferringownershipofapieceoflandaftertheConstitution
toparticularrelations,individualandcorporate,andparticularconduct,privateandofficial. wentintofullforceandeffect,should,inthelightoftherulingintheKrivenkocase,berestored
Questionsofrightsclaimedtohavebecomevested,ofstatus,ofpriordeterminationsdeemedto tothepossessionandownershipthereof,wherehehasfiledtheappropriatecaseorproceeding.
havefinalityandacteduponaccordingly,ofpublicpolicyinthelightofthenaturebothofthe Anyotherconstructionwoulddefeattheendsandpurposesnotonlyofthisparticularprovision
inquestionbuttherestoftheConstitutionitself.
statuteandofitspreviousapplication,demandexamination.
TheConstitutionfrownsuponthetitleremaininginthealienvendees.Restorationofthe
AftertheKrivenkodecision,thereisnodoubtthatcontinuedpossessionbyalienvendee
ofpropertyacquiredbeforeitspromulgationisviolativeoftheConstitution.Itisasifanact propertyuponpaymentofpricereceivedbyFilipinovendororitsreasonableequivalentas
granting aliens the right to acquire residential and commercial lots were annulled by the fixedbythecourtistheanswer.Togivetheconstitutionalprovisionfullforceandeffect,in
Supreme Court as contrary to the provision of the Constitution prohibiting aliens fromconsonancewiththedictatesofequityandjustice,therestorationtoFilipinovendoruponthe
paymentofapricefixedbythecourtisthebetterremedy.Hethoughthecouldtransferthe
acquiringprivateagriculturalland.
Thequestionthenasnow,therefore,wasandishowtodivestthealienofsuchproperty propertytoanalienanddidso.AftertheKrivenkocasehadmadeclearthathehadnorightto
rightsontermsequitabletobothparties.Thatquestionshouldbejustlyresolvedinaccordance sellnoranalienvendeetopurchasethepropertyinquestion,theobvioussolutionwouldbefor
withthemandatesoftheConstitutionnotbyawholesalecondemnationofbothpartiesfor himtoreacquirethesame.ThatwaytheConstitutionwouldbegiven,asitoughttobegiven,
enteringintoacontractatatimewhentherewasnobanasyetarisingfromthe Krivenkorespectanddeference.
Itmaybesaidthatitistoolateatthisstagetohopeforsuchasolution,the Rellosa
decision,whichcouldnothavebeenanticipated.Unfortunately,undertheRellosacase,itwas
assumedthattheparties,beinginparidelicto,wouldbeleftinthesituationinwhichtheywere, opinion,althoughoriginallyconcurredinbyonlyonejustice,beingtoofirmlyimbedded.The
writerhoweverseesawelcomesignintheadoptionbytheCourtinthiscaseoftheconcurring
neitherbeinginapositiontoseekjudicialredress.
WoulditnothavebeenmoreinconsonancewiththeConstitution,ifinsteadthedecision opinion of the then Justice, later Chief Justice, Bengzon. Had it been followed then, the
compelledtherestitutionofthepropertybythealienvendeetotheFilipinovendor?Krivenkoproblem would not be still with us now. Fortunately, it is never too latenot even in
decisionheldinclear,explicitandunambigouslanguagethat:Wearedecidingtheinstantcase constitutionaladjudication.
Judgmentreversedinpartandaffirmedinpart.
undersection5ofArticleXIIIoftheConstitutionwhichismorecomprehensiveandmore
absoluteinthesensethatitprohibitsthetransfertoaliensofanyprivateagriculturalland
Notes.TheothercasesenunciatingtheparidelictorulingmodifiedbytheLuiShecase
includingresidentiallandwhateveritsoriginmighthavebeenxxx.Thisprohibition[Rep.Actare,asidefromRellosav.GawCheeHurt,93Phil.827:Bautistav.Uy,93Phil.843;Talentov.
No.133]makesnodistinctionbetweenprivatelandsthatarestrictlyagriculturalandprivate Makiki,93Phil.855;Caoilev.YuChiaoPeng,93Phil.861;Mercadov.GoBio,93Phil.918;
landsthatareresidentialorcommercial.TheprohibitionembracesthesaleofprivatelandsofCortezv.0Po,93Phil.1117;Vasquezv.LiSengGiap,96Phil.447;Ricamarav.NgoKi,92
any kind in favor of aliens, which is again a clear implementation and a legislative Phil.1084;Albertov.TanSing,94Phil.1031;Dinglasanv.LeeBunTing,99Phil.427;and
interpretationoftheconstitutionalprohibition,xxxItiswelltonoteatthisjuncturethatintheSorianov.OngBoo,103Phil.829.
presentcasewehavenochoice.WeareconstruingtheConstitutionasitisandnotaswemay
TheCourthasalsorefusedtoenforcetherulethatoneinparidelictocanneitherrescind
desireittobe.Perhapstheeffectofourconstructionistoprecludealiens,admittedfreelyinto norseekannulmentofanillegalcontract,inthefollowingcases:(a)saleoflandacquiredunder
thePhilippines,fromowningsiteswheretheymaybuildtheirhomes.ButifthisisthesolemnthePublicLandAct (DelosSantosv.RomanCatholicChurchofMidsayap, 94Phil.405;
mandateoftheConstitution,wewillnotattempttocompromiseiteveninthenameofamityor Angelesvs. CourtofAppeals, 102Phil. 1006);(b)contractsrequiringpublicbidding (San
equity.11
Diegov.MunicipalityofNaujan, L9920,Feb.29,1960);(c)wheretheenforcementwould
Alienvendeeisthereforeincapacitatedordisqualifiedtoacquireandholdrealestate. resultinthedefraudationoftheotherparty(Incov.Enriquez,L13367,Feb.29,1960);and(d)
ThatincapacityandthatdisqualificationshoulddatefromtheadoptionoftheConstitutionon usurious contracts (Go Chioco v. Martinez, 45 Phil. 256; Nullet v. People, 73 Phil. 63).
November15,1935.Thatincapacityandthatdisqualification,however,wasmadeknownto Enforcementoftheruleinsuchcases,theCourtheld,runscountertoavowedpublicpolicyor
Filipinovendorandtoalienvendeeonlyuponthepromulgationofthe Krivenko decisiononpublicinterest.

petitionerforthecrimecharged.
Thedoctrineofinparidelictoappliesonlywherethefaultonbothsidesismoreorless
Thefindingsoffactsoftheappellatecourtareasfollows:
equivalent(Boughv.Cantiveros,40Phil.209).Itdoesnot,therefore,applywhereonepartyis
xxxTheappellantisabusinesswoman.OnJanuary10,1966,theappellantwenttothehouse
literateorintelligentandtheotherisnot(Mangayaov.Lasur,L19252,May29,1964)or
whereonepartywasamanwhowasadvancedinyearsandmatureexperienceandtheother ofMariaAyrosoandproposedtosellAyrosostobacco.Ayrosoagreedtothepropositionofthe
wasaminorof16yearswhowasnotfullyawareofthetermsoftheagreementshehadentered appellanttosellhertobaccoconsistingof615kilosatP1.30akilo.Theappellantwasto
receivetheoverpriceforwhichshecouldsellthetobacco.Thisagreementwasmadeinthe
into(Liguezv.CourtofAppeals,102Phil.577)8.Limvs.People
presenceofplaintiffssister,SaludG.Bantug.SalvadorBantugdrewthedocument,Exh.A,
No.L34338.November21,1984.*
datedJanuary10,1966,whichreads:
LOURDESVALERIOLIM,petitioner,vs.PEOPLEOFTHEPHILIPPINES,respondent.
ToWhomItMayConcern:
Criminal Law; Contracts; Where a person obliged himself to pay to another the
proceedsofthelatterstobaccoassoonastheyaredisposedof,aperiodexistsforpaymentof
ThisistocertifythatIhavereceivedfromMrs.MariadeGuzmanVda.deAyroso,of
theobligationand,therefore,Art.1197,N.C.C.doesnotapply.Itisclearintheagreement,Gapan,NuevaEcija,sixhundredfifteenkilosofleaftobaccotobesoldatP1.30perkilo.The
Exhibit A, that the proceeds of the sale of the tobacco should be turned over to heproceedintheamountofSevenHundredNinetyNinePesosand50/100(P799.50)willbe
complainantassoonasthesamewassold,or,thattheobligationwasimmediatelydemandable giventoherassoonasitwassold.
assoonasthetobaccowasdisposedof.Hence,Article1197oftheNewCivilCode,which Thiswassignedbytheappellantandwitnessedbythecomplainantssister,SaludBantug,and
providesthatthecourtsmayfixthedurationoftheobligationifitdoesnotfixaperiod,does thelattersmaid,GenovevaRuiz.Theappellantatthattimewasbringingajeep,andthe
notapply.
tobaccowasloadedinthejeepandbroughtbytheappellant.OfthetotalvalueofP799.50,the
Same;Same;Agency;Estafaispresentwherecontracttosellconstitutedanotheras appellanthadpaidtoAyrosoonlyP240.00,andthiswaspaidonthreedifferenttimes.Demands
mereagent.AsidefromthefactthatMariaAyrosotestifiedthattheappellantaskedhertobe forthepaymentofthebalanceofthevalueofthetobaccoweremadeupontheappellantby
her agent in selling Ayrosos tobacco, the appellant herself admitted that there was an Ayroso,andparticularlybyhersister,SaludBantug.SaludBantugfurthertestifiedthatshehad
agreementthatuponthesaleofthetobaccoshewouldbegivensomething.Theappellantisa gonetothehouseoftheappellantseveraltimes,buttheappellantofteneludedher;andthatthe
businesswoman,anditisunbelievablethatshewouldgototheextentofgoingtoAyrosos camarinoftheappellantwasempty.Althoughtheappellantdeniedthatdemandsforpayment
houseandtakethetobaccowithajeepwhichshehadbroughtifshedidnotintendtomakea weremadeuponher,itisafactthatonOctober19,1966,shewrotealettertoSaludBantug
profitoutofthetransaction.Certainly,ifshewasdoingafavortoMariaAyrosoanditwas whichreadsasfollows:
Ayrosowhohadrequestedhertosellhertobacco,itwouldnothavebeentheappellantwho
wouldhavegonetothehouseofAyroso,butitwouldhavebeenAyrosowhowouldhavegone
DearSalud,
tothehouseoftheappellantanddeliverthetobaccototheappellant.
Same;Same;Same;Sale;Thereisnocontractofsale,butmereagencytosell,where
agreementwastopayovertotobaccoownertheproceedsthereofassoonasitwassold.TheHindiakonakapuntadiannoona17nitongnakaraan,dahilkokontepaangnasisingilkong
factthatappellantreceivedthetobaccotobesoldatP1.30perkiloandtheproceedstobegivenpera,magintaykahanggangditosalinggoitoattiaknaakoaymagdadalasaiyo.Gostoko
tocomplainantassoonasitwassold,stronglynegatestransferofownershipofthegoodstothe Saludaymakapagbigaymanlangakongmaramiparahindimasiadongkahiyahiyasaiyo.
petitioner.Theagreement(ExhibitA)constitutedherasanagentwiththeobligationtoreturn Ngayonkunggostomoaykahitkontemunaaybibigyankita.PupuntalangkaminiMinasa
thetobaccoifthesamewasnotsold.
Maynilangayon.Saludkungtalagangkailanganmoaybukasaydadalhankitangpera.
ThefactsarestatedintheopinionoftheCourt.
MediomahirapangmaningilsapalengkengCabanatuandahilnagsisilipatangmgasuki
RELOVA,J.:
kongpuesto.Huwagkangmabahalaattiyaknababayarankita.
PatnubayantayongmahalnapanginoonDios.(Exh.B).
Ludy
PetitionerLourdesValerioLimwasfoundguiltyofthecrimeofestafaandwassentencedto
Pursuanttothisletter,theappellantsentamoneyorderforP100.00onOctober24,1967,
sufferanimprisonmentoffour(4)monthsandone(1)dayasminimumtotwo(2)yearsand
Exh.4,andanotherforP50.00onMarch8,1967;andshepaidP90.00onApril18,1967as
four(4)monthsasmaximum,toindemnifytheoffendedpartyintheamountofP559.50,with
evidencedbythereceiptExh.2,datedApril18,1967,oratotalofP240.00.Asnofurther
subsidiaryimprisonmentincaseofinsolvency,andtopaythecosts.(p.14,Rollo)
amountwaspaid,thecomplainantfiledacomplaintagainsttheappellantforestafa.(pp.14,
Fromthisjudgment,appealwastakentothethenCourtofAppealswhichaffirmedthe
15,16,Rollo)
decisionofthelowercourtbutmodifiedthepenaltyimposedbysentencinghertosufferan
In this petition for review by certiorari, Lourdes Valerio Lim poses the following
indeterminatepenaltyofone(1)monthandone(1)dayofarrestomayorasminimumtoone
questionsoflaw,towit:
(1)yearandone(1)dayofprisioncorreccionalasmaximum,toindemnifythecomplainantin
1.WhetherornottheHonorableCourtofAppealswaslegallyrightinholdingthattheforegoing
theamountofP550.50withoutsubsidiaryimprisonment,andtopaythecostsofsuit.(p.24,
document(ExhibitA)fixedaperiodandtheobligationwastherefore,immediately
Rollo)
demandableassoonasthetobaccowassold(Decision,p.6)asagainstthetheoryofthe
Thequestioninvolvedinthiscaseiswhetherthereceipt,ExhibitA,isacontractof
petitionerthattheobligationdoesnotfixaperiod,butfromitsnatureandthecircumstancesit
agency to sell or a contract of sale of the subject tobacco between petitioner and the
canbeinferredthataperiodwasintendedinwhichcasetheonlyactionthatcanbemaintained
complainant, Maria de Guzman Vda. de Ayroso, thereby precluding criminal liability of
isapetitiontoaskthecourttofixthedurationthereof;

11.

12.

2.WhetherornottheHonorableCourtofAppealswaslegallyrightinholdingthatArt.1197of
theNewCivilCodedoesnotapplyasagainstthealternativetheoryofthepetitionerthatthe
foregoingreceipt(ExhibitA)givesrisetoanobligationwhereinthedurationoftheperiod
dependsuponthewillofthedebtorinwhichcasetheonlyactionthatcanbemaintainedisa
petitiontoaskthecourttofixthedurationoftheperiod;and
3.WhetherornottheHonorableCourtofAppealswaslegallyrightinholdingthattheforegoing
receiptisacontractofagencytosellasagainstthetheoryofthepetitionerthatitisacontractof
sale,(pp.34,Rollo)
Itisclearintheagreement,ExhibitA,thattheproceedsofthesaleofthetobaccoshouldbe
turned over to the complainant as soon as the same was sold, or, that the obligation was
immediatelydemandableassoonasthetobaccowasdisposedof.Hence,Article1197ofthe
NewCivilCode,whichprovidesthatthecourtsmayfixthedurationoftheobligationifitdoes
notfixaperiod,doesnotapply.
AnenttheargumentthatpetitionerwasnotanagentbecauseExhibitAdoesnotsaythat
shewouldbepaidthecommissionifthegoodsweresold, the Court of Appeals correctly
resolvedthematterasfollows:
xxxAsidefromthefactthatMariaAyrosotestifiedthattheappellantaskedhertobeher
agentinsellingAyrosostobacco,theappellantherselfadmittedthattherewasanagreement
that upon the sale of the tobacco she would be given something. The appellant is a
businesswoman,anditis,unbelievablethatshewouldgototheextentofgoingtoAyrosos
houseandtakethetobaccowitha jeepwhichshehadbroughtifshedidnotintendtomakea
profitoutofthetransaction.Certainly,ifshewasdoingafavortoMariaAyrosoanditwas
Ayrosowhohadrequestedhertosellhertobacco,itwouldnothavebeentheappellantwho
wouldhavegonetothehouseofAyroso,butitwouldhavebeenAyrosowhowouldhavegone
tothehouseoftheappellantanddeliverthetobaccototheappellant.(p.19,Rollo)
ThefactthatappellantreceivedthetobaccotobesoldatP1.30perkiloandtheproceedstobe
giventocomplainantassoonasitwassold,stronglynegatestransferofownershipofthegoods
tothepetitioner.Theagreement(ExhibitA)constitutedherasanagentwiththeobligationto
returnthetobaccoifthesamewasnotsold.
ACCORDINGLY,thepetitionforreviewoncertiorariisdismissedforlackofmerit.
Withcosts.
SOORDERED.
Teehankee (Chairman), MelencioHerrera, Plana, Gutierrez, Jr. and De la
Fuente,JJ.,concur.
Petitiondismissed.
Notes.InestafaunderArticle315,paragraph1(b)oftheRevisedPenalCodewhichis
committedwithabuseofconfidencepreviousdemandisnecessary;whereasinparagraph2(a)
nodemandisnecessary.(Balitaanvs.CourtofFirstInstanceofBatangas,115SCRA729.)
Elementsofestafabymeansofissuingbouncingchecksaredifferentfromestafaby
meansoffalsepretensesorbymeansofmisappropriation.(KoBuLenvs.CourtofAppeals,
118SCRA573.)
Afterthefilingofinformationforestafa,liabilityofaccusedcannotbenovatedintoa
civil one anymore by the parties compromise agreement. (Ong vs. Court of Appeals, 124
SCRA578.)
o0o

9.AranetavsPhilSugarEstates

plaintiff,versusJ.M.Tuason&Co.,Inc.andGregorioAraneta,Inc.,defendants".
AsfoundbytheCourtofAppeals,thefactsofthiscaseare:
No.L22558.May31,1967.
J.M.Tuason & Co.,Inc.istheownerofabigtractoflandsituatedinQuezonCity,
GREGORIO ARANETA, INC., petitioner, vs. THE PHILIPPINE SUGAR ESTATESotherwiseknownastheSta.MesaHeightsSubdivision,andcoveredbyaTorrenstitleinits
DEVELOPMENTCo.,LTD.,respondent.
name.OnJuly28,1950,throughGregorioAraneta,Inc.,it(Tuason&Co.)soldaportion
Obligations; Contracts; Sale; Pleadings; When court should not fix the period for thereofwithanareaof43,034.4squaremeters,moreorless,forthesumofP430,514.00,to
performinganobligation.Wheretheissueraisedinthepleadingswaswhetherthesellerof PhilippineSugarEstatesDevelopmentCo.,Ltd.Thepartiesstipulated,amongothers,inthe
thelandwasgiveninthecontractofsaleareasonabletimewithinwhichtoconstructthestreetscontractofpurchaseandsalewithmortgage,thatthebuyerwill
aroundtheperimeterofthelandsold,thecourt,inanactionforspecificperformancetocompel "BuildonthesaidparceloflandtheSto.DomingoChurchandConvent"
theconstructionofsaid.streetsorforrecoveryof'damages,cannotfixaperiodwithinwhich whilethesellerforitspartwill
thesellershouldconstructthestreets.Thecourtshoulddeterminewhether.thepartieshad
agreedthatthesellershouldhavereasonabletimetoperformitspartofthebargain.Ifthe
"ConstructstreetsontheNEandNWandSWsidesofthelandhereinsoldsothatthe
contractsoprovided,thentherewasaperiodfixed,a"reasonabletime",andallthatthecourt latterwillbeablocksurroundedbystreetsonallfoursides;andthestreetontheNEsideshall
shouldhavedonewastodetermineifthatreasonabletimehadalreadyelapsedwhenthesuit benamed'Sto.DomingoAvenue';"
wasfiled.Ifithadpassed,thenthecourtshould'declarethatthepetitionerhadbreachedthe Thebuyer,PhilippineSugarEstatesDevelopmentCo.,Ltd.,finishedtheconstructionofSto.
contract,asaverredinthecomplaint.andfixtheresultingdamages.Ontheotherhand,ifthe DomingoChurchandConvent,buttheseller,GregorioAraneta,Inc.,whichbeganconstructing
reasonabletimehadnotyetelapsed,thecourtperforcewasboundtodismisstheactionfor thestreets,isunabletofinishtheconstructionofthestreetintheNortheastside(namedSto.
being premature. But in no case can it be logically held that, under the pleadings, the DomingoAvenue)becauseacertainthirdparty,bythenameofManuelAbundo,whohasbeen
interventionofthecourttofixtheperiodforperformancewaswarranted,forArticle1197of physicallyoccupyingamiddlepartthereof,refusedtovacatethesame;hence,onMay7,1958,
theNewCivilCodeispreciselypredicated.ontheabsenceofanyperiodfixedbytheparties. PhilippineSugarEstatesDevelopmentCo.,Ltd.fileditscomplaintagainstJ.M.Tuason&Co.,
Same; Pleading and practice; When amendment of complaint is necessary.If theInc.andGregorioAraneta,Inc.,intheabovestatedcourtoffirstinstance,seekingtocompel
complaintdidnotaskthataperiodfortheperformanceofanobligationbefixed,andthecourt thelattertocomplywiththeirobligation,asstipulatedintheabovementioneddeedofsale,
wantstofixaperiod,itcannotproceedtodosounlessthecomplaintisfirstamended.
and/ortopaydamagesintheeventtheyfailedorrefusedtoperformsaidobligation.
Same;Specificperformance;Powerofcourttofixperiod.Article1197oftheNew
Both defendants J. M. Tuason and Co. and Gregorio Araneta, Inc. answered the
CivilCodeinvolvesatwostepprocess.Thecourtmustfirstdeterminethattheobligationdoes complaint,thelatterparticularlysettinguptheprincipaldefensethattheactionwaspremature
notfixaperiod(orthattheperioddependsuponthedebtor'swill)andthattheintentionofthe sinceitsobligationtoconstructthestreetsinquestionwaswithoutadefiniteperiodwhich
parties,asmaybeinferredfromthenatureandcircumstancesoftheobligation,istohavea needstobefixedfirstbythecourtinapropersuitforthatpurposebeforeacomplaintfor
periodforitsperformance.Thesecondstepistoascertaintheperiodprobablycontemplatedby specificperformancewillprosper.
theparties.Thecourtcannotarbitrarilyfixaperiodoutofthinair.
Theissueshavingbeenjoined,thelowercourtproceededwiththetrial,anduponits
Same; Period within which obligation to construct streets on land occupied by termination,itdismissed plaintiff'scomplaint(inadecisiondatedMay31,1960),upholding
squattersshouldbeperformed.Wherethesellerobligateditselftoconstructstreetsaroundthe thedefensesinterposedbydefendantGregorioAraneta,Inc.
perimeterofthelandsold(siteoftheSantoDomingoChurchinQuezonCity)andtheparties
Plaintiffmovedtoreconsiderandmodifytheabovedecision,prayingthatthecourtfixa
wereawarethattheland,onwhichthestreetswouldbeconstructed,wasoccupiedbysquatters, periodwithinwhichdefendantswillcomplywiththeirobligationtoconstructthestreetsin
thetimefortheperformanceoftheseller'sobligationshouldbefixedatthedatethatallthe question.
squattersontheaffectedareasarefinallyevictedtherefrom.Whilethissolutionwouldrender
Defendant Gregorio Araneta, Inc. opposed said motion, maintaining that plaintiff's
the date of performance indefinite, still the circumstances of the case admit of no othercomplaintdidnotexpresslyorimpliedlyallegeandprayforthefixingofaperiodtocomply
reasonableview.Thisveryindefinitenessexplainswhythecontractdidnotspecifyanyexact withitsobligationandthattheevidencepresentedatthetrialwasinsufficienttowarrantthe
periodofperformance.Therulingthattheobligationshouldbeperformedwithintwoyearsis fixingofsuchaperiod.
notwarranted.
OnJuly16,1960,thelowercourt,afterfindingthat"theprovenfactspreciselywarrants
PETITIONforreviewbycertiorariofadecisionoftheCourtofAppeals.
thefixingofsuchaperiod",issuedanordergrantingplaintiff'smotionforreconsiderationand
amendingthedispositiveportionofthedecisionofMay31,1960,toreadasfollows:
"WHEREFORE,judgmentisherebyrenderedgivingdefendantGregorioAraneta,Inc.,aperiod
oftwo(2)yearsfromnoticehereof,withinwhichtocomplywithitsobligationunderthe
contract,AnnexA."
DefendantGregorioAraneta,Inc.presentedamotiontoreconsidertheabovequotedorder,
whichmotion,plaintiffopposed.
OnAugust16,1960,thelowercourtdenieddefendantGregorioAraneta,Inc.'smotion;
PetitionforcertioraritoreviewajudgmentoftheCourtofAppeals,initsCAG.R.No.28249
andthelatterperfecteditsappealtotheCourtofAppeals.
R, affirming with modification, an amendatory decision of the Court of First Instance of
Insaidappellatecourt,defendantappellantGregorioAraneta,Inc.contendedmainlythat
Manila,initsCivilCaseNo.36303,entitled"PhilippineSugarEstatesDevelopmentCo.,Ltd.,
ThefactsarestatedintheopinionoftheCourt.
Araneta&Aranetaforpetitioner.
RosauroAlvarezandErnaniCruzPaoforrespondent.
REYES,J.B.L.,J.:

thereliefgranted,i.e.,fixingofaperiod,undertheamendatorydecisionofJuly16,1960,was 1197isclearthattheperiodcannotbesetarbitrarily.Thelawexpresslyprescribesthat
notjustifiedbythepleadingsandnotsupportedbythefactssubmittedatthetrialofthecasein "theCourtsshalldeterminesuchperiodasmayunderthecircumstanceshavebeenprobably
thecourt'belowandthatthereliefgrantedineffectallowedachangeoftheoryafterthe contemplatedbytheparties."
submissionofthecasefordecision.
Rulingontheabovecontention,theappellatecourtdeclaredthatthefixingofaperiod Allthatthetrialcourt'samendeddecision(Rec.onAppeal,p.124)saysinthisrespectisthat
waswithinthepleadingsandthattherewasnotruechangeoftheoryafterthesubmissionofthe "the proven facts precisely warrant the fixing of such a period", a statement manifestly
casefordecisionsincedefendantappellantGregorioAraneta,Inc.itselfsquarelyplacedsaid insufficienttoexplainhowthetwoyearperiodgiventopetitionerhereinwasarrivedat.
issuebyalleginginparagraph7oftheaffirmativedefensescontainedinitsanswerwhichreads
ItmustberecalledthatArticle1197of.theCivilCodeinvolvesatwostepprocess.The

Courtmustfirstdeterminethat"theobligationdoesnotfixaperiod"(orthat theperiodismade
"7.UndertheDeedofSalewithMortgageofJuly28,1950,hereindefendanthasareasonable todependuponthewillofthedebtor),"butfromthenatureandthecircumstancesitcanbe
timewithinwhichtocomplywithitsobligationstoconstructandcompletethestreetsonthe inferredthataperiodwasintended"(Art.1197,pars.1and2).Thispreliminarypointsettled,
NE,NWandSWsidesofthelotinquestion;thatunderthecircumstances,saidreasonabletime the Court must then proceed to the second step, and decide what period was "probably
hasnotelapsed;
contemplated bytheparties" (Do.,par.3).Sothat,ultimately,theCourtcannotfixaperiod
Disposingoftheotherissuesraisedbyappellantwhichwereruledasnotmeritoriousandwhichmerelybecauseinitsopinionitisorshouldbereasonable,butmustsetthetimethattheparties
arenotdecisiveintheresolutionofthelegalissuesposedintheinstantappealbeforeus,said areshowntohaveintended.Astherecordstands,thetrialCourtappearstohavepulledthetwo
appellatecourtrendereditsdecisiondatedDecember27,1963,thedispositivepartofwhich yearperiodsetInitsdecisionoutofthinair,sincenocircumstancesarementionedtosupportit.
reads
Plainly,thisisnotwarrantedbytheCivilCode.
"INVIEWWHEREOF,judgmentaffirmedandmodified;asaconsequence,defendantisgiven
Inthisconnection,itistobeborneinmindthatthecontractshowsthatthepartieswere
two(2)yearsfromthedateoffinalityofthisdecisiontocomplywiththeobligationtoconstruct fully aware that the land described therein was occupied by squatters, because the fact is
streetsontheNE,NWandSWsidesofthelandsoldtoplaintiffsothatthesamewouldbea expressly mentioned therein (Rec. on Appeal, Petitioner's Appendix B, pp. 1213). As the
blocksurroundedbystreetsonallfoursides,"
partiesmusthaveknownthattheycouldnottakethelawintotheirownhands,butmustresort
Unsuccessfulinhavingtheabovedecisionreconsidered,defendantappellantGregorioAraneta, tolegalprocessesinevictingthesquatters,theymusthaverealizedthatthedurationofthesuits
Inc.resortedtoapetitionforreviewbycertioraritothisCourt.Wegaveitduecourse.
tobebroughtwouldnotbeundertheircontrolnorcouldthesamebedeterminedinadvance.
WeagreewiththepetitionerthatthedecisionoftheCourtofAppeals,affirmingthatof Theconclusionisthusforcedthatthepartiesmusthaveintendedtodefertheperformanceof
theCourtof"FirstInstanceislegallyuntenable.Thefixingofaperiodbythecourtsunder theobligationsunderthecontractuntilthesquattersweredulyevicted,ascontendedbythe
Article1197oftheCivilCodeofthePhilippinesissoughttobejustifiedonthebasisthat petitionerGregorioAraneta,Inc.
petitioner(defendantbelow)placedtheabsenceofaperiodinissuebypleadinginitsanswer
The Court of Appeals objected to this conclusion that it would render the date of
that the contract with respondent Philippine Sugar Estates Development Co., Ltd. gave performanceindefinite.Yet,thecircumstancesadmitnootherreasonableview;andthisvery
petitionerGregorioAraneta,Inc."reasonabletimewithinwhichtocomplywithitsobligationto indefinitenessiswhatexplainswhytheagreementdidnotspecifyanyexactperiodsordatesof
constructandcompletethestreets."Neitherofthecourtsbelowseemstohavenoticedthat,on performance.
thehypothesisstated,whattheanswerputinissuewasnotwhetherthecourtshouldfixthetime
Itfollowsthatthereisnojustificationinlawforthesettingthedateofperformanceatany
ofperformance,butwhetherornotthepartiesagreedthatthepetitionershouldhavereasonableothertimethanthatoftheevictionofthesquattersoccupyingthelandinquestion;andinnotso
timetoperformitspartofthebargain.Ifthecontractsoprovided,thentherewasaperiodfixed, holding,boththetrialCourtandtheCourtofAppealscommittedreversibleerror,Itisnot
a"reasonabletime";andallthatthecourtshouldhavedonewastodetermineifthatreasonable deniedthatthecaseagainstoneofthesquatters,Abundo,wasstillpendingintheCourtof
timehadalreadyelapsedwhensuitwasfiled.Ifithadpassed,thenthecourtshoulddeclarethatAppealswhenitsdecisioninthiscasewasrendered. Inviewoftheforegoing,thedecision
petitionerhadbreachedthecontract,asaverredinthecomplaint,andfixtheresultingdamages.appealedfromisreversed,andthetimefortheperformanceoftheobligationsofpetitioner
Ontheotherhand,ifthereasonabletimehadnotyetelapsed,thecourtperforcewasboundto GregorioAraneta,Inc.isherebyfixedatthedatethatallthesquattersonaffectedareasare
dismisstheactionforbeingpremature.Butinnocasecanitbelogicallyheldthatunderthe finallyevictedtherefrom.
plea above quoted, the intervention of the court to f ix the period for performance was
CostsagainstrespondentPhilippineSugarEstatesDevelopment,Co.,Ltd.Soordered.
warranted,forArticle1197ispreciselypredicatedontheabsenceofanyperiodfixedbythe
Concepcion,C.J.,Dizon,Regala,Makalintal,Bengzon,J.P.,Zaldivar,Sanchez and
parties.
Castro,JJ.,concur.
Evenontheassumption.thatthecourtshouldhavefoundthatnoreasonabletimeorno
Decisionreversed.
periodatallhadbeenfixed(andthetrialcourt'samendeddecisionnowheredeclaredanysuch _______________
fact)still,thecomplaintnothavingsoughtthattheCourtshouldsetaperiod,thecourtcould
notproceedtodosounlessthecomplaintwasfirstamended;fortheoriginaldecisionisclear
thatthecomplaintproceededonthetheorythattheperiodforperformancehadalreadyelapsed,
thatthecontracthadbeenbreachedanddefendantwasalreadyanswerableindamages.
Granting,however,thatitlaywithintheCourt'spowertofixtheperiodofperformance,
stilltheamendeddecisionisdefectiveinthatnobasisisstatedtosupporttheconclusionthat
theperiodshouldbesetattwoyearsafterfinalityofthejudgment.ThelastparagraphofArticle

10.Millarevs.Hernando

On17June1975,afiveyearContractofLease1 wasexecutedbetweenpetitionerPacifica
MillareaslessorandprivaterespondentElsaCo,marriedtoAntonioCo,aslessee.Underthe
No.L55480.June30,1987.*
writtenagreement,whichwasscheduledtoexpireon31May1980,thelessorpetitioneragreed
PACIFICAMILLARE,petitioner, vs. HON.HAROLDM.HERNANDO,InhiscapacityastorentouttothelesseeatamonthlyrateofP350.00thePeoplesRestaurant,acommercial
PresidingJudge,CourtofFirstInstanceofAbra,SecondJudicialDistrict,BranchI,ANTONIO establishmentlocatedatthecornerofMcKinleyandPrattStreetsinBangued,Abra,
COandELSACO,respondents.
ThepresentdisputearosefromeventswhichtranspiredduringthemonthsofMayand
RemedialLaw;JurisdictionofCourts;ConciliationprocedureunderP.D.1508isnota Julyin1980.AccordingtotheCospouses,sometimeduringthelastweekofMay1980,the
jurisdictionalrequirementTurningtothefirstissue,petitionersattackonthejurisdictionof lessorinformedthemthattheycouldcontinueleasingthePeoplesRestaurantsolongasthey
thetrialcourtmustfail,thoughforreasonsdifferentfromthosecitedbytherespondentjudge. wereamenabletopayingincreasedrentalsofP1,200.00amonth.Inresponse,acounterofferof
We would note firstly that the conciliation procedure required under P.D. 1508 is not a P700.00amouthwasmadebytheCospouses.Atthispoint,thelessorallegedlystatedthatthe
jurisdictionalrequirementinthesensethatfailuretohavepriorrecoursetosuchprocedure amountofmonthlyrentalscouldberesolvedatalatertimesincethematterissimpleamong
wouldnotdepriveacourtofitsjurisdictioneitheroverthesubjectmatteroroverthepersonof us,whichallegedremarkwassupposedlytakenbythespousesCotomeanthattheContractof
thedefendant,Secondly,therecordshowsthattwocomplaintsweresubmittedtothebarangay Leasehadbeenrenewed,promptingthemtocontinueoccupyingthesubjectpremisesandto
authorities for conciliationone by petitioner for ejectment and the other by private foregotheirsearchforasubstituteplacetorent.2 Incontrast,thelessorflatlydeniedever
respondentsforrenewaloftheContractofLease.Itappearsfurtherthatbothcomplaintswere, havingconsidered,muchlessoffered,arenewaloftheContractofLease.
infact,heardbytheLupongTagapayapaintheafternoonof30August1980.Afterattemptsat
Thevarianceinversionsnotwithstanding,therecordshowsthaton22July1980,Mrs.
conciliationhadprovenfruitless,CertificationstoFileActionauthorizingthepartiestopursue MillarewrotetheCospousesrequestingthemtovacatetheleasedpremisesasshehadno
theirrespectiveclaimsincourtwerethenissuedat5:20p.m.ofthatsameafternoon,asattested intentionofrenewingtheContractofLeasewhichhad,inthemeantime,alreadyexpired.3In
tobytheBarangayCaptaininaCertificationpresentedinevidencebypetitionerherself.
reply, the Co spouses reiterated their unwillingness to pay the P1,200.00 monthly rentals
Same; Same; Same; Procedural defect was cured by subsequent issuance of the supposedlysoughtbyMrs.Millarewhichtheyconsideredhighlyexcessive,oppressiveand
certificationtofileactionbytheLupongTagapayapa.Petitionerwould,nonetheless,assailcontrarytoexistinglaws.Theyalsosignifiedtheirintentiontodeposittheamountofrentalsin
theproceedingsinthetrialcourtonatechnicality,i.e.,privaterespondentsallegedlyfiledtheir court,inviewofMrs.Millaresrefusaltoaccepttheircounteroffer.4Anotherletterofdemand
complaintat4:00p.m.of30August1980,oronehourandtwentyminutesbeforetheissuance from Mrs. Millare was received on 28 July 1980 by the Co spouses, who responded by
oftherequisitecertificationbythe LupongTagapayapa. Thedefectinprocedureadmittedly depositingtherentalsforJuneandJuly(at700.00amonth)incourt.
initiallypresentatthatparticularmomentwhenprivaterespondentsfirstfiledthecomplaintin
On30August1980,aSaturday,theCospousesjumpedthegun,asitwere,andfileda
thetrialcourt,wascuredbythesubsequentissuanceoftheCertificationstoFileActionbythe Complaint5 (docketedasCivilCaseNo.1434)withthethenCourtofFirstInstanceofAbra
barangay Lupong Tagapayapa. Such certifications in any event constituted substantialagainstMrs.Millareandseekingjudgment(a)orderingtherenewaloftheContractofLeaseat
compliancewiththerequirementofP.D.1508.
arentalrateofP700.00amonthandforaperiodoftenyears,(b)orderingthedefendantto
Contracts;Lease;Article1197oftheNewCivilCodeappliesonlywhereacontractof collect the sum of P1,400.00 deposited by plaintiffs with the court, and (c) ordering the
lease clearly exists.The first paragraph of Article 1197 is clearly inapplicable, since the defendant to pay damages in the amount of P50,000.00. The following Monday, on 1
ContractofLeasedidinfactfixanoriginalperiodoffiveyears,whichhadexpired.Itisalso September1980,Mrs.MillarefiledanejectmentcaseagainsttheCospousesintheMunicipal
clearfromparagraph13oftheContractofLeasethatthepartiesreservedtothemselvesthe CourtofBangued,Abra,docketedasCivilCaseNo.661.ThespousesCo.defendantstherein,
facultyofaggreeingupontheperiodoftherenewalcontract.ThesecondparagraphofArticle subsequentlysetuplispendensasadefenseagainstthecomplaintforejectment.
1197isequallyclearlyinapplicablesincethedurationoftherenewalperiodwasnotlefttothe
Mrs.Millare,defendantinCivilCaseNo.1434,counteredwithanOmnibusMotionto
will of the lessee alone, but rather to the will of both the lessor and the lessee. Most Dismiss6groundedon(a)lackofcauseofactionduetoplaintiffsfailuretoestablishavalid
importantly, Article 1197 applies only where a contract of lease clearly exists. Here, the renewal of the Contract of Lease, and (b) lack of jurisdiction by the trial court over the
contractwasnotrenewedatall,therewasinfactnocontractatalltheperiodofwhichcould complaintforfailureofplaintiffstosecureacertificationfromtheLupongTagapayapaofthe
havebeenffixed.
barangaywhereinbothdisputantsresideattestingthatnoamicablesettlementbetweenthemhad
Same;Same;SaveinthelimitedandexceptionalsituationsprovidedinArticles1197 beenreacheddespiteeffortstoarriveatone,asrequiredbySection6ofPresidentialDecreeNo.
and1670oftheCivilCode;Courtshavenoauthoritytoprescribethetermsandconditionsof 1508.TheCospousesopposedthemotiontodismiss.7
contractfortheparties.Itfollowsthattherespondentjudgesdecisionrequiringrenewalof
InanOrderdated15October1980,respondentjudgedeniedthemotiontodismissand
theleasehasnobasisinlaworinfact.Saveinthelimitedandexceptionalsituationsenvisaged orderedtherenewaloftheContractofLease.Furthermoreplaintiffswereallowedtodepositall
inArticles1197and1670oftheCivilCode,whichdonotobtainhere,courtshavenoauthority accruingmonthlyrentalsincourt,whiledefendantMillarewasdirectedtosubmitheranswerto
toprescribethetermsandconditionsofacontractfortheparties.
thecomplaint.8Amotionforreconsideration9wassubsequentlyfiledwhich,however,was
PETITIONforcertiorari,prohibitionandmandamustoreviewtheorderoftheCourtof likewisedenied.10Hence,on13November1980,Mrs.MillarefiledtheinstantPetitionfor
FirstInstanceofAbra,Br.I.Hernando,J.
Certiorari,ProhibitionandMandamus,seekinginjunctiverelieffromtheabovementioned
ThefactsarestatedintheopinionoftheCourt.
orders.ThisCourtissuedatemporaryrestrainingorderon21November1980enjoining
FELICIANO,J.:
respondent,judgefromconductingfurtherproceedingsinCivilCaseNo.1434.11Apparently,
beforethetemporaryrestrainingordercouldbeservedontherespondentjudge,herendereda
JudgmentbyDefaultdated26November1980orderingtherenewaloftheleasecontractfor

atermof5yearscountedfromtheexpirationdateoftheoriginalleasecontract,andfixing
monthlyrentalsthereunderatP700.00amonth,payableinarrears.On18March1981,this
CourtgaveduecoursetothePetitionforCertiorari,ProhibitionandMandamus.12

impressedwithpublicinterest,socialjusticeandequity;reasonforwhich,thisCourtcannot
sanctionlotownersbusinessandcommercialspeculationsbyallowingthemwithunbridled
discretiontoraiserentalseventotheextentofextraordinarygargantuanproportions,and
calculatedtounreasonablyandunjustlyejectthehelplesslesseebecausehecannotaffordsaid
Two issues are presented for resolution: (1) whether or not the trial court acquired inflatedmonthlyrental,andtherebysaidlesseeisplacedwithoutanyalternative,exceptto
jurisdictionoverCivilCaseNo.1434;and(2)whetherornotprivaterespondentshaveavalid surrenderandvacatethepremisesimmediately;Manybusinessestablishmentswouldbeclosed
andthepublicwoulddirectlysufferthedirectconsequences;Nonetheless,thisisnotthecorrect
causeofactionagainstpetitioner.
Turningtothefirstissue,petitionersattackonthejurisdictionofthetrialcourtmustfail, conceptorperspectiveofthelawoflease,thatis,toplacethelesseealwaysatthemercyofthe
thoughforreasonsdifferentfromthosecitedbytherespondentjudge.13Wewouldnotefirstlylessors Merchant of Venice and to agit the latters personal whims and caprices; the
thattheconciliationprocedurerequiredunderP.D.1508isnotajurisdictionalrequirementin defendantlessorshostileattitudebyimposinguponthelesseehereinan unreasonableand
thesensethatfailuretohavepriorrecoursetosuchprocedurewouldnotdepriveacourtofits extraordinarygargantuanmonthlyrentalofP1,200.00', tothemindofthisCourt,is flyby
jurisdictioneitheroverthesubjectmatteroroverthepersonofthedefendant.14Secondly,thenight unjust enrichment attheexpenseofsaidlessees;but,noManshouldunjustlyenrich
recordshowsthattwocomplaintsweresubmittedtothebarangayauthoritiesforconciliation himselfattheexpenseofanother;underthesefactsandcircumstancessurroundingthiscase,
onebypetitionerforejectmentandtheotherbyprivaterespondentsforrenewaloftheContract theactionthereforetorenewtheleasecontractistenablebecauseitfallssquarelywithinthe
of Lease. It appears further that both complaints were, in fact, heard by the Lupong coverageandcommandofArticles1197and1670oftheNewCivilCode,towit:
xxx
Tagapayapa intheafternoonof30August1980.Afterattemptsatconciliationhadproven
fruitless,CertificationstoFileActionauthorizingthepartiestopursuetheirrespectiveclaimsin
courtwerethenissuedat5:20p.m.ofthatsameafternoon,asattestedtobytheBarangay
Thetermtoberenewedasexpresslystipulatedbythehereinpartiesintheoriginal
CaptaininaCertificationpresentedinevidencebypetitionerherself.15
contractofleasemeansthattheleasemayberenewedforanothertermoffive(5)years;itis
Petitionerwould,nonetheless,assailtheproceedingsinthetrialcourtonatechnicality,equivalenttoapromisemadebythelessortothelessee,andasaunilateralstipulation,obliges
i.e.,privaterespondentsallegedlyfiledtheircomplaintat4:00p.m.of30August1980,orone the lessor to fulfill her promise; of course the lessor is free to comply and honor her
hour and twenty minutes before the issuance of the requisite certification by the Lupong commitmentorbackoutfromherpromisetorenewtheleasecontract;but,onceexpressly
Tagapayapa. Thedefectinprocedureadmittedlyinitiallypresentatthatparticularmoment stipulated,thelessorshallnotbeallowedtoevadeorviolatetheobligationtorenewthelease
whenprivaterespondentsfirstfiledthecomplaintinthetrialcourt,wascuredbythesubsequentbecause, certainly, the lessor may be held liable for damages caused to the lessee as a
issuance of the Certifications to File Action by the barangay Lupong Tagapayapa, Suchconsequence of the unjustifiable termination of the lease or renewal of the same; In other
certifications in any event constituted substantial compliance with the requirement of P.D. words,thelessorisguiltyofbreachofcontract:Sincetheoriginalleasewasfixedforfive(5)
1508.
years,itfollows,therefore,thattheleasecontractisrenewableforanotherfive(5)yearsandthe
Weturntothesecondissue,thatis,whetherornotthecomplaintinCivilCaseNo.1434 lesseeisnotrequiredbeforehandtogiveexpressnoticeofthisfacttothelessorbecauseitwas
filedbytherespondentCospousesclaimingrenewalofthecontractofleasestatedavalidcauseexpresslystipulatedintheoriginalleasecontracttoberenewed;Wherefore,thebarerefusalof
ofaction.Paragraph13oftheContractofLeasereadsasfollows:
thelessortorenewtheleasecontractunlessthemonthlyrentalisP1,200.00iscontrarytolaw,
13.Thiscontractofleaseissubjecttothelawsandregulationsofthegovernment;andthatthis morals,goodcustoms,publicpolicy,justiceandequitybecausenooneshouldunjustlyenrich
contractofleasemayberenewedafteraperiodoffive(5)yearsunderthetermsandconditions herselfattheexpenseofanother.Article1197and1670oftheNewCivilCodemusttherefore
aswillbemutuallyagreeduponbythepartiesatthetimeofrenewal;xxx(Italicssupplied.) governthecaseatbarandwherebythisCourtisauthorizedtofixtheperiodthereofbyordering
Therespondentjudge,inhisAnswerandCommenttothePetition,urgesthatunderparagraph therenewaloftheleasecontracttoanotherfixedtermoffive(5)years.17
13quotedabove.
Clearly,therespondentjudgesgraspofboththelawandtheEnglishlanguageistenuousat
therewasalreadyaconsummatedandfinishedmutualagreementofthepartiestorenewthe best.Weareotherwiseunabletocomprehendhowhearrivedatthereadingsetforthabove.
contractofleaseafterfiveyears;whatisonlyleftunsettledbetweenthepartiestothecontract Paragraph13oftheContractofLeasecanonlymeanthatthelessorandlesseemayagreeto
ofleaseistheamountofthemonthlyrental;thelessorinsistsP1,200amonth,whilethelessee renewthecontractupontheirreachingagreementonthetermsandconditionstobeembodied
isbeggingP700amonthwhichdoubledtheP350monthlyrentalundertheoriginalcontractxx insuchrenewalcontract.Failuretoreachagreementonthetermsandconditionsoftherenewal
x.Inshort,theleasecontracthasneverexpiredbecauseparagraph13thereofhadexpressly contractwillofcoursepreventthecontractfrombeingrenewedatall.Intheinstantcase,the
mandatedthatitisrenewable.xxx16
lessorandthelesseeconspicuouslyfailedtoreachagreementbothontheamountoftherental
In the Judgment by Default he rendered, the respondent Judge elaborated his views tobepayableduringtherenewalterm,andonthetermoftherenewedcontract.
obviouslyhighlyemotionalincharacterinthefollowingextraordinarystatements:
The respondent judge cited Articles 1197 and 1670 of the Civil Code to sustain the
However,itisnowthenegativepostureofthedefendantlessortoblock,rejectandrefuseto JudgmentbyDefaultbywhichheorderedtherenewaloftheleaseforanothertermoffive
renewsaidleasecontract.Itisthedefendantlessorsassertionandpositionthatshecanatthe yearsandfixedmonthlyrentalsthereunderatP700.00amonth.Article1197oftheCivilCode
mereclickofherfingers,justthrowouttheplaintiffslesseesfromtheleasedpremisesandanyprovidesasfollows:
timeaftertheoriginaltermoftheleasecontracthadalreadyexpired;Thisnegativepositionof Iftheobligationdoesnotfixaperiod, butfromitsnatureandthecircumstancesitcanbe
thedefendantlessor,tothemindofthisCourtdoesnotconformtotheprinciplesandcorrect inferredthataperiodwasintended,thecourtsmayfixthedurationthereof.
application of the philosophy underlying the law of lease; for indeed, the law of lease is
Thecourtsshallalsofixthedurationoftheperiodwhenitdependsuponthewillofthe

[P]artiescannotbecoercedtoenterintoacontractwherenoagreementishadbetweenthemas
debtor.
Ineverycase,thecourtsshalldeterminesuchperiodasmay,underthecircumstances, to theprincipal termsand conditionsof thecontract. Freedom tostipulate suchterms and
havebeenprobablycontemplatedbytheparties.Oncefixedbythecourts,theperiodcannotbeconditionsisoftheessenceofourcontractualsystem,andbyexpressprovisionofthestatute,a
changedbythem.(Italicssupplied.)
contractmaybeannullediftaintedbyviolence,intimidationorundueinfluence(Article1306,
ThefirstparagraphofArticle1197isclearlyinapplicable,sincetheContractofLeasedidin 1336,1337,CivilCodeofthePhilippines).
factfixanoriginalperiodoffiveyears,whichhadexpired.Itisalsoclearfromparagraph13of Contractualtermsandconditionscreatedbyacourtfortwopartiesareacontradictioninterms.
theContractofLeasethatthepartiesreservedtothemselvesthefacultyofagreeinguponthe Iftheyareimposedbyajudgewhodrawsuponhisownprivatenotionsofwhatmorals,good
period of the renewal contract. The second paragraph of Article 1197 is equally clearly customs, justice, equity and public policy demand, the resulting agreement cannot, by
inapplicablesincethedurationoftherenewalperiodwasnotlefttothewillofthelesseealone, definition,beconsensualorcontractualinnature.Itwouldalsofollowthatsuchcoercedterms
butrathertothewillofboththelessorandthelessee.Mostimportantly,Article1197applies andconditionscannotbethelawasbetweenthepartiesthemselves.Contractsspringfromthe
onlywhereacontractofleaseclearlyexists.Here,thecontractwasnotrenewedatall,there volitionoftheparties.Thatvolitioncannotbesuppliedbyajudgeandajudgewhopretendsto
wasinfactnocontractatalltheperiodofwhichcouldhavebeenfixed.
doso,actstyrannically,arbitrarilyandinexcessofhisjurisdiction.19
Article1670oftheCivilCodereadsthus:
WHEREFORE,thePetitionforCertiorari,ProhibitionandMandamusisgranted.The
Ifattheendofthecontractthelesseeshouldcontinueenjoying thethingleftfor15dayswith OrdersoftherespondentjudgeinCivilCaseNo.1434dated26September1980(denying
theacquiescenceofthelessorandunlessanoticetothecontrarybyeitherpartyhaspreviously petitioners motion to dismiss) and 4 November 1980 (denying petitioners motion for
beengiven.Itisunderstoodthatthereisanimpliednewlease,notfortheperiodoftheoriginal reconsideration),andtheJudgmentbyDefaultrenderedbytherespondentjudgedated26
contract,butforthetimeestablishedinArticles1682and1687.Theothertermsoftheoriginal November 1980, are hereby annulled and set aside and Civil Case No. 1434 is hereby
dismissed.Thetemporaryrestrainingorderdated21November1980issuedbythisCourtis
contractshallberevived.(Italicssupplied.)
Therespondentsthemselves,publicandprivate,donotpretendthatthecontinuedoccupancyof herebymadepermanent.Nopronouncementastocosts.
SOORDERED.
theleasedpremisesafter31May1980,thedateofexpirationofthecontract,waswiththe
Yap(Chairman),Narvasa,MelencioHerrera,Cruz,GancaycoandSarmiento,JJ.,
acquiescenceofthelessor.Evenifitbeassumedthattacitareconduccin hadoccurred,the
impliednewleasecouldnotpossiblyhaveaperiodoffiveyears,butratherwouldhavebeena concur.
Petitiongranted.
monthtomonthleasesincetherentals(undertheoriginalcontract)werepayableonamonthly
basis.Atthelatest,animpliednewlease(hadonearisen)wouldhaveexpiredasoftheendof
Notes.A judge commits no misconduct for not allowing referral of a case to
July1980inviewofthewrittendemandsservedbythepetitionerupontheprivaterespondents Katarungang Pambarangay pursuant to Presidential Decree No. 1508 where there is no
tovacatethepreviouslyleasedpremises,
certification yet by the Ministry of Local Government and Community Development the
ItfollowsthattherespondentjudgesdecisionrequiringrenewaloftheleasehasnobasisLupongTagapayapahasbeenorganizedinhislocality.(Escardavs.Manalo,101SCRA1).
inlaworinfact.SaveinthelimitedandexceptionalsituationsenvisagedinArticles1197and
CourtsarenotboundtorefercasestoKatarunganPambarangay. (Escardavs.Manalo,
1670oftheCivilCode,whichdonotobtainhere,courtshavenoauthoritytoprescribethe 101SCRA1.)
termsandconditionsofacontractfortheparties.AspointedoutbyMr.JusticeJ.B.L.Reyesin o0o
Republicvs.PhilippineLongDistanceTelephone,Co.,18