Legarda v Miailhe
remaining balance of P70,000, and further reduced the interest
This is an appeal from a judgment of the Court of First Instance
of Manila rendered on August 5, 1949, dismissing the
complaint and ordering plaintiff Clara Tambunting de Legarda
to pay to the defendant the sum of P70,000, with interest
thereon at the rate of 3 per cent per annum, from January 1,
1942, up to the date of full payment thereof, plus the sum of
P2,500 as costs of suit and attorney's fees, within 120 days
from the date of notice, and ordering the sale of the property
mortgaged in accordance with law in the event of failure of said
plaintiff to pay the amount of the judgment within the period
above mentioned.
The background of this case, which originated during the
Japanese occupation, is correctly stated in the judgment of the
lower court, as follows:
On June 3, 1944, plaintiffs filed a complaint against the original
defendant William J. B. Burke, alleging defendant's unjustified
refusal to accept payment in discharge of a mortgage
indebtedness in his favor, and praying that the latter be
ordered (1) to receive the sum of P75,920.83 deposited by
plaintiff Clara Tambunting de Legarda, the mortgagor, on the
same date with the clerk of this court in payment of the
mortgage indebtedness of said plaintiff to defendant herein, (2)
to execute the corresponding deed of release of mortgage, and
(30 to pay damages in the sum of P1,000.
The gist of defendant's answer dated the 19th of July, 1944, is
that plaintiffs have no cause of action for the reason that at the
instance of plaintiff Clara Tambunting de Legarda an
agreement was had on May 26, 1944, whereunder defendant
condoned the interests due and to become due on the
mortgage indebtedness till the termination of the war, in
consideration of the undertaking of said plaintiff (with the
consent of her husband Vicente L. Legarda, the other plaintiff)
to pay her obligation to defendant upon such termination of the
war; and that the war then had not yet terminated.
Upon the issues raised, after due hearing, decision was
rendered by this Court through the then Judge, Honorable
Jose Gutierrez David (now Appellate Court Justice), ordering
defendant to accept the sum of P75,920.83 deposited by
plaintiff Clara Tambunting de Legarda in the office of the clerk
of court; to execute forthwith a deed of release of mortgage
covering the property in question; to pay plaintiff the sum of
P120.40 representing the cost of the certification of the check
deposited in the court and consignation, together with the
clerk's commission for the deposit of the money in court and
the costs of the suit.
Defendant, on or about January 14, 1945, presented a motion
to set aside the foregoing decision and for a new trial. Before
this court could act on this motion, liberation came.
On October 23, 1945, petition was filed on behalf of plaintiffs
for the reconstitution of the record of this case.
On October 23, 1945, defendant filed a supplements al answer
alleging that the payment (by way of consignation in Japanese
military notes made by plaintiff Clara Tambunting de Legarda in
satisfaction of the mortgage obligation in question, which was
originally contracted on the 17th of February, 1926, was null
and void, and did not discharge the said obligation; and that,
as plaintiffs well knew, defendant did not plead the foregoing
facts in his original answer because had he done so "he and
his attorneys would have been taken by the Japanese military
police to Fort Santiago where they would have been tortured
and most probably killed. The supplemental answer contains a
counter-claim whereunder defendant sought the foreclosure of
the real estate mortgage on the property in question. Basis of
the counter-claim are the averments that the original mortgage
executed by plaintiff Clara Tambunting de Legarda with the
consent of her husband, plaintiff Vicente de Legarda with the
consent of her husband, plaintiff Vicente L. Legarda, was for
the sum of P75,000; that said mortgage was renewed from
time to time until on March 16, 1940, at plaintiff Clara
Tambunting de Legarda's request, defendant entered into
another agreement with whereunder the latter granted said
plaintiff a fourth extension of three years for the payment of the
rate from 9 per cent to 7 per cent per annum; that in the said
agreement of March 16, 1940, defendant was granted an
option to demand the payment of the principal and interests
either in Philippine currency or in English currency at the rate
of two shillings ( .O2/Od.) for one peso, Philippine currency;
that in May, 1944, plaintiff Clara Tambunting de Legarda
attempted to pay her obligation to defendant in Japanese
military notes; that to defendant, as plaintiffs well knew, was
not disposed and did wish to receive payment in worthless
Japanese military notes; that to prevent his being reported to
the Japanese military police in Fort Santiago, defendant
agreed to condone the interests then due on the obligation
from December 1, 1941, until the termination of the war, with
the understanding that payment should not be effected until the
end of the war; that plaintiff Clara Tambunting de Legarda
violated her agreement with defendant, sought to force
payment by depositing the amount in Japanese military note
in court, and thereafter filed the complaint herein; that
notwithstanding demand made on October 16, 1945, plaintiff
failed to pay the principal of P70,000, together with interests
thereon at the rate of 7 per cent per annum which defendant
claims upon the allegation that plaintiff having violated her
agreement defendant was relieved from his undertaking to
condone the interest.
In the order of December 24, 1945, declaring that the record of
this case was reconstituted for all legal purposes, the then
Judge presiding this court, Honorable Jose Guttierez David,
denied the admission of the foregoing supplemental answer.
Appeal was taken by defendant from the above order of the
24th of December 1945.
The Honorable Supreme court in its decision on appeal (Clara
Tambuting de Legarda and Vicente L. Legarda, plaintiffs-
appellees vs. Antonio Carrascoso, Jr., substituting William J. B.
Burke, defendant-appellant, GRL-331) declared that the
supplemental answer heretofore adverted to should have been
allowed and consequently directed that a new trial be had. . . .
The record was returned to this court.
On March 31, 1949, a motion consisting of two parts was filed
on behalf of defendant. The first prayed for the substitution of
Victoria Desbarats Miailhe as party defendant for the reason
that William J. B. Burke died in the City of Manila on July 23,
1946, and his claim against plaintiffs was adjudicated to the
said Victoria Debarats Miailhe as heir of the said William J. B.
Burke. The second sought the admission of a amended
supplemental answer. In the main the amended supplemental
answer is a reproduction of the original supplemental answer
filed on October 23, 1945, with the significant change that
instead of demanding payment from plaintiffs Clara Tambunting
de Legarda, defendant now seeks payment in pounds sterling,
English currency. By order of this court of April 2, 1949, the
petition for substitution was granted and the amended
supplemental answer was admitted into the record of this case.
The issue raised in the counterclaim in the amended
supplemental answer were met in the plaintiffs' reply dated
April 4 1949, which substantially denies the allegation that
Burke was not disposed and did not wish to receive payments
in Japanese military notes and refused payment to avoid being
reported to the Japanese military police. The reply alleges that
the demand made by the new defendant Victoria Desbarats
Miailhe is unavailing because it was presented too late, that is,
after the present case had long been subjudice and the
obligation to be collected was already extinguished.
On August 5, 1949, the Court, presided over by Judge
Conrado Sanchez, rendered judgment for the defendant as
stated in the early part of this decision. From this judgment,
plaintiffs appealed.
The principal question of fact which is presented for our
determination in this appeal is whether the agreement had by
the plaintiffs and William J. B. Burke during the Japanese
occupation was that the rate of the annual interest of the
indebtedness was merely reduced to 3 per cent, as claimed
by plaintiffs, or whether said agreement was in the sense that
the defendant condoned the interests then due and which
might hereafter become due on said obligation with the
understanding that plaintiff Clara Tambunting de Legarda
would pay her obligation upon the termination of the war.
On this point, Judge Jose Guttierez David, who originally
decided this case, gave weight and credence to the evidence
presented in behalf of the plaintiffs, disregarding entirely the
evidence submitted in behalf of the defendant, and concluded
that the alleged agreement was never entered into, as
evidenced by the letters plaintiff Clara Tambunting de Legarda
sent to defendant William J. B. Burke, not only tendering the
payment of her obligation, but also giving notice that she will
deposit same in court as required by law to protect her
interests. The court also gave credence to the claim of the
plaintiffs that defendant Burke agreed to reduce the rate of
interest from 7 per cent to 3 1/2 per cent per annum from
January 1, 1942, in the conference they had sometime in
February or March, 1942. Judge Conrado Sanchez, who took
over the court after the case was returned following the
revocation by this court of the order denying the supplemental
answer of the defendant, adopted in full said findings of fact of
Judge Guttierez David.
We have carefully examined the evidence, testimonial as well
as documentary, submitted by both parties in this case with a
view to an enlightened determination of this important question
of fact which may be considered as the crux of this case, and
we have not been able to see eye to eye on this matter with
the two Judges who decided this case in the lower court. As a
rule, the determination of a question of fact depends largely on
the credibility of witnesses unless some documentary evidence
is available, which clearly substantiates the issue and whose
genuineness and probative value is not disputed. In this case,
most of the evidence presented is testimonial, with only some
corroborating letters, and on the basis of this evidence the
preponderance in our opinion militates in favor of the
defendant. And we say so because, on one hand, only Vicente
Legarda testified for the plaintiffs, whereas Antonio Carrascoso
and William J. B. Burke testified for the defendant. True, their
testimony is contradictory, but in our opinion the testimony of
witnesses Carrascoso and Burke deserve more weight and
credence. Of course these three witnesses are well known in
our community and their character for probity has never been
assailed, But we are more inclined to accept the view of
Carrascoso and Burke because it is more consonant with
fairness and the history of the transaction. It appears that the
indebtedness in question was granted to Clara Tambunting de
Legarda as far back as February 1926, with the obligation to
pay it within five (5) years but which period has been extended
from time to time with the gradual reduction of the rate of
interest up to January 1942, when, as intimated by the plaintiff,
a further reduction of the interest to 3 1/2 per cent per annum
was granted by the defendant. During this long period of time
the plaintiffs enjoyed the use of the money, with a continued
reduction of the rate of interest, and defendant had lavished
upon her his unusual liberality when he extended to her his
help and relief whenever she so requested as the exigencies of
her financial situation warranted. The life of this indebtedness
would not have been so prolonged as to be overtaken by war
were it not for the desire of the defendant to help the
mortgagor in her hour of need, Yet Vicente Legarda went out of
his way to propose that his wife Clara Tambunting be
exempted from paying all the interests due from January 1,
1942, up to the termination of the war, which caused the
defendant to utter some unkind words and to be resentful.
Nevertheless, through the mediation of Attorney Carrascoso,
plaintiffs at last became reasonable and agreed not to pay the
obligation until the termination of the war provided that all
interests due and which might become due be condoned. It is
not strange nor unnatural that should happen, considering the
background of the loan. And there is nothing incredible in it
considering the letter written by Burke to Clara Tambunting
wherein the same understanding was reiterated (Exhibit "B").
Doctor Burke would not have stated in his letter that there was
such an understanding if it was not true, considering the fact
that he was so sick then and had practically one leg in the
grave. We find no reason to discredit this statement of Burke
which find full corroboration in the testimony of Attorney
Corrascoso.
Granting, however, for the sake of argument that such an
agreement is not true and was set up by the defendant as a
mere defense to justify his refusal to accept payment of the
mortgage indebtedness in Japanese military notes, the next
question to be determined is whether or not the consignation
made by the plaintiffs during the Japanese time had the effect
of relieving Clara Tambunting de Legarda from the payment of
her mortgage obligation in contemplation of law.
There is no dispute that on June 3, 1944, Clara Tambunting de
Legarda deposited in court the sum of P75,920.83 for the
purpose of satisfying the full amount then due on her
obligation. But it is likewise true that the money deposited was
in certified check, representing Japanese Military notes, which
notes defendant Burke refuse to receive as payment a few
days before the consignation.
The offer of payment or consignation to be effective must
comply with some legal requirements. On this point our Civil
Code contains the following provisions:
A debt shall not be deemed paid unless there has been a
complete delivery of the thing or a performance of the
undertaking which constitute the subject-matter of the
obligation. (Art. 1157, Civil Code.).
The debtor of one thing cannot oblige his creditor to receive
another, even though it should be of equal or greater value
than that due.
In obligations to do, one undertaking cannot be substituted by
another against the will of the creditor. (Art. 1166, Civil Code.).
Payment of debts of money shall be made in the specie
stipulated and, should it not be possible to deliver such specie,
in silver or gold coin legally current in the Philippines. (Art.
1170, Civil Code.)
As formerly stated, in the mortgage renewal executed by
plaintiffs and defendant on March 16, 1940, defendant was
given the option to demand payment of the obligation either in
Philippine currency, or in English currency. And this option has
to be exercised "al tiempo del vencimiento de esta obligacion,"
(Exhibit "5"), or on February 17, 1943.
But defendant claims that on that date he could not very well
refuse to accept the worthless Japanese Military notes
tendered to him, nor insist on the payment of English currency,
for he then entertained the fear that, had he done so, he would
have been reported to the Japanese authorities, taken to Fort
Santiago, and killed. But could the defendant then insist on the
payment of English currency even if he could do so without
exposing himself to bodily peril under the stipulation just
mentioned?
Our answer is in the negative. As we have stated before, the
option to demand payment of the indebtedness has to be
exercised upon maturity of the obligation, which is February
17, 1943. On this date, the only currency available is the
Philippine currency, or the Japanese Military notes, because all
other currencies, including the English, were outlawed by a
proclamation issued by the Japanese Imperial Commander on
January 3, 1942. This means that the right of election ceased
to exist on that date because it had become legally impossible.
And this is so because in alternative obligations there is no
right to choose undertakings that are impossible or illegal (Civil
Code, art. 1132, par. 2). In other words, the obligation on the
part of the debtor to pay the mortgage indebtedness has since
then ceased to be alternative. (Articles 1134 & 1136(1) of the
Civil Code.)
It appears, therefore, that the tender of payment made by the
plaintiff in Japanese Military notes was a valid tender because
it was the only currency permissible at the time, and the same
was made in accordance with the agreement because
payment in Japanese Military notes during the occupation is
tantamount to payment in the Philippine currency. (Haw Pia vs.
China Banking Corporation, 45 Off. Gaz., Supp.[9] 229; Phil.
Trust vs. Araneta, 46 Off. Gaz., 4254; Allison D. Gibbs vs.
Eulogio Rodriguez, 47 Off. Gaz., 186.) But the consignation of
the sum of P75,920.83 in Japanese currency made by the
plaintiffs with clerk of court does not have any legal effect
because it was made in certified check, "does not meet the
requirements of a legal tender."
In her sole assigned error the plaintiff contends that the Court
erred in holding that the consignation of the check with the
clerk of court was in valid and that it did not have the effect of
paying her obligation. The court correctly held that the
consignation was unvailing and that it did not produced any
legal effect because the defendant did not accept it and it was
not in the form of money or legal tender. Article 1170 of the
Civil Code provides that payment of debts of money shall be
made in the specie stipulated and, should it not be possible to
deliver such specie, in silver or gold coin legally current; and
provides further, that the delivery of promissory notes payable
to order, or drafts or other commercial paper, shall produced
the effects of payment only when realized or when, by the fault
of the creditor, the privileges inherent in their negotiable
character have been lost. Under this legal provision the
defendant was under a duty to accept the check because it is
known that it does not constitute legal tender, and the
consignation having been refused, it did not produce any legal
effect and could not be considered as payment made by the
plaintiff of the repurchase price. In Belisario vs. Natividad
(1934, 60 Phil., 156) it was held that the creditor is not bound
to accept the check in satisfaction of his demand because a
check even if good when offered, does not meet the
requirements of a legal tender. (Villanueva vs. Santos, 39 Off.
Gaz., 681-682). (Emphasis supplied.)
It is not necessary, in our opinion, to examine all the questions
raised by appellant in his brief, in view of our conclusion on the
question of the validity of the consignation made in court.
Under article 1127 of the Civil Code, "Consignation should not
be efficacious unless made strictly in accordance with the
provision governing payment." And Article 1170 provides that,
"payment of debts of money shall be made in the specie
stipulated and, should it not be possible to deliver such specie,
in silver or gold coin which is legal-tender in the Philippines."
Under this provisions, a consignation by check is not binding
upon the creditor (Meliciano vs. Natividad, 60 Phil., 156),
unless accepted by him (Gutierrez vs. Carpio, 53 Phil., 334,
336), and in the instant case, there has been no such
acceptance. In one case it was held by this court that where a
person entitled to make a repurchase of some property,
deposits with the court, by way of consignation, a check for the
re-purchase price, the vendee is not under a duty to accept the
check and may refuse the consignation which cannot produce
the effect of payment. (Villanueva vs. Santos, 39 Off. Gaz.,
March 8, 1941, p. 681).
True that the consignation in the instant case was made by
means of a manager's check. But a manager's check is, like an
ordinary check, not legal-tender in the Philippines. Even
treasury certificates are not legal-tender except for the
payment of taxes and public debts, under sec. 1626 of Act No.
2711 as amended by Act No. 3058. In the United States, "the
general rule is that an offer of a bank check for the amount due
is not a good tender and this is true even though the check is
certified" (62 C. J., p. 668), except "where no objection is made
on the ground" (62 C. J., p. 668). Again it is said that, "on the
same principle a check is not good legal-tender as against an
objection duly made, whether the check is certified or not . . ."
40 Am. Jur., p. 764; Cuaycong vs. Rius, (47 Off. Gaz., 6125).
To recapitulate, we may state that, even if the claim of the
plaintiff that Clara Tambunting de Legarda did not enter into
any agreement with the defendant William J. B. Burke
regarding payment of her obligation, subject to condonation of
interest, after the termination of the war, is correct, and even if
the tender of payment by Clara Tambunting of her obligation
was made in Philippine currency in pursuance of the mortgage
contract, yet the consignation made in Court can not have any
legal effect for the simple reason that it was made by means of
a certified check, which is not a legal tender within the meaning
of the law. It is obvious, therefore, that such consignation did
not have the effect of relieving her from her obligation to the
defendant.
As regards the other issues, we find correct the findings and
conclusions reached by the lower court on the matter.
Wherefore, the decision appealed from is hereby affirmed in
toto, with costs against the appellants.
INIMACO v NLRC
This is a petition for certiorari assailing the Resolution dated
September 4, 1991 issued by the National Labor Relations
Commission in RAB-VII-0711-84 on the alleged ground that it
committed a grave abuse of discretion amounting to lack of
jurisdiction in upholding the Alias Writ of Execution issued by
the Labor Arbiter which deviated from the dispositive portion of
the Decision dated March 10, 1987, thereby holding that the
liability of the six respondents in the case below is solidary
despite the absence of the word "solidary" in the dispositive
portion of the Decision, when their liability should merely be
joint.
The factual antecedents are undisputed:
In September 1984, private respondent Enrique Sulit, Socorro
Mahinay, Esmeraldo Pegarido, Tita Bacusmo, Gino Niere,
Virginia Bacus, Roberto Nemenzo, Dariogo, and Roberto
Alegarbes filed a complaint with the Department of Labor and
Employment, Regional Arbitration Branch No. VII in Cebu City
against Filipinas Carbon Mining Corporation, Gerardo Sicat,
Antonio Gonzales, Chiu Chin Gin, Lo Kuan Chin, and petitioner
Industrial Management Development Corporation (INIMACO),
for payment of separation pay and unpaid wages. Sc-jj
In a Decision dated March 10, 1987, Labor Arbiter Bonifacio B.
Tumamak held that:
"RESPONSIVE, to all the foregoing, judgment is hereby
entered, ordering respondents Filipinas Carbon and Mining
Corp. Gerardo Sicat, Antonio Gonzales/Industrial Management
Development Corp. (INIMACO), Chiu Chin Gin and Lo Kuan
Chin, to pay complainants Enrique Sulit, the total award of
P82,800.00; ESMERALDO PEGARIDO the full award of
P19,565.00; Roberto Nemenzo the total sum of P29,623.60
and DARIO GO the total award of P6,599.71, or the total
aggregate award of ONE HUNDRED THIRTY-EIGHT
THOUSAND FIVE HUNDRED EIGHTY-EIGHT PESOS AND
31/100 (P138,588.31) to be deposited with this Commission
within ten (10) days from receipt of this Decision for
appropriate disposition. All other claims are hereby Dismiss
(sic) for lack of merit.
"SO ORDERED.
"Cebu City, Philippines.
"10 March 1987."0[1]
No appeal was filed within the reglementary period thus, the
above Decision became final and executory. On June 16,
1987, the Labor Arbiter issued a writ of execution but it was
returned unsatisfied. On August 26, 1987, the Labor Arbiter
issued an Alias Writ of Execution which ordered thus: Ed-pm-is
"NOW THEREFORE, by virtue of the powers vested in me by
law, you are hereby commanded to proceed to the premises of
respondents Antonio Gonzales/Industrial Management
Development Corporation (INIMACO) situated at Barangay
Lahug, Cebu City, in front of La Curacha Restaurant, and/or to
Filipinas Carbon and Mining corporation and Gerardo Sicat at
4th Floor Universal RE-Bldg. 106 Paseo de Roxas, Legaspi
Village, Makati Metro Manila and at Philippine National Bank,
Escolta, Manila respectively, and collect the aggregate award
of ONE HUNDRED THIRTY-EIGHT THOUSAND FIVE
HUNDRED EIGHTY-EIGHT PESOS AND THIRTY ONE
CENTAVOS (P138,588.31) and thereafter turn over said
amount to complainants ENRIQUE SULIT, ESMERALDO
PEGARIDO, ROBERTO NEMENZO AND DARIO GO or to this
Office for appropriate disposition. Should you fail to collect the
said sum in cash, you are hereby authorized to cause the
satisfaction of the same on the movable or immovable
property(s) of respondents not exempt from execution. You are
to return this writ sixty (6) (sic) days from your receipt hereof,
together with your corresponding report.
"You may collect your legal expenses from the respondents as
provided for by law.
"SO ORDERED."[2]
On September 3, 1987, petitioner filed a "Motion to Quash
Alias Writ of Execution and Set Aside Decision,"[3] alleging
among others that the alias writ of execution altered and
changed the tenor of the decision by changing the liability of
therein respondents from joint to solidary, by the insertion of
the words "AND/OR" between "Antonio Gonzales/Industrial
Management Development Corporation and Filipinas Carbon
and Mining Corporation, et al." However, in an order dated
September 14, 1987, the Labor Arbiter denied the motion.
On October 2, 1987, petitioner appealed[4] the Labor Arbiters
Order dated September 14, 1987 to the respondent NLRC.
The respondent NLRC dismissed the appeal in a Decision[5]
dated August 31, 1988, the pertinent portions of which read:
"In matters affecting labor rights and labor justice, we have
always adopted the liberal approach which favors the exercise
of labor rights and which is beneficial to labor as a means to
give full meaning and import to the constitutional mandate to
afford protection to labor. Considering the factual
circumstances in this case, there is no doubt in our mind that
the respondents herein are called upon to pay, jointly and
severally, the claims of the complainants as was the latters
prayers. Inasmuch as respondents herein never controverted
the claims of the complainants below, there is no reason why
complainants prayer should not be granted. Further, in line with
the powers granted to the Commission under Article 218 (c) of
the Labor code, to waive any error, defect or irregularity
whether in substance or in form in a proceeding before Us, We
hold that the Writ of Execution be given due course in all
respects."
On July 31, 1989, petitioner filed a "Motion To Compel Sheriff
To Accept Payment Of P23,198.05 Representing One Sixth
Pro Rata Share of Respondent INIMACO As Full and Final
Satisfaction of Judgment As to Said Respondent."[6] The
private respondents opposed the motion. In an Order[7] dated
August 15, 1989, the Labor Arbiter denied the motion ruling
thus:
"WHEREFORE, responsive to the foregoing respondent
INIMACOs Motions are hereby DENIED. The Sheriff of this
Office is order (sic) to accept INIMACOs tender payment (sic)
of the sum of P23,198.05, as partial satisfaction of the
judgment and to proceed with the enforcement of the Alias Writ
of Execution of the levied properties, now issued by this Office,
for the full and final satisfaction of the monetary award granted
in the instant case.
"SO ORDERED."
Petitioner appealed the above Order of the Labor Arbiter but
this was again dismissed by the respondent NLRC in its
Resolution[8] dated September 4, 1991 which held that:
"The arguments of respondent on the finality of the dispositive
portion of the decision in this case is beside the point. What is
important is that the Commission has ruled that the Writ of
Execution issued by the Labor Arbiter in this case is proper. It
is not really correct to say that said Writ of Execution varied the
terms of the judgment. At most, considering the nature of labor
proceedings there was, an ambiguity in said dispositive portion
which was subsequently clarified by the Labor Arbiter and the
Commission in the incidents which were initiated by INIMACO
itself. By sheer technicality and unfounded assertions,
INIMACO would now reopen the issue which was already
resolved against it. It is not in keeping with the established
rules of practice and procedure to allow this attempt of
INIMACO to delay the final disposition of this case.
"WHEREFORE, in view of all the foregoing, this appeal is
DISMISSED and the Order appealed from is hereby
AFFIRMED.
"With double costs against appellant."
Dissatisfied with the foregoing, petitioner filed the instant case,
alleging that the respondent NLRC committed grave abuse of
discretion in affirming the Order of the Labor Arbiter dated
August 15, 1989, which declared the liability of petitioner to be
solidary.
The only issue in this petition is whether petitioners liability
pursuant to the Decision of the Labor Arbiter dated March 10,
1987, is solidary or not. Calrs-pped
Upon careful examination of the pleadings filed by the parties,
the Court finds that petitioner INIMACOs liability is not solidary
but merely joint and that the respondent NLRC acted with
grave abuse of discretion in upholding the Labor Arbiters Alias
Writ of Execution and subsequent Orders to the effect that
petitioners liability is solidary.
A solidary or joint and several obligation is one in which each
debtor is liable for the entire obligation, and each creditor is
entitled to demand the whole obligation.[9] In a joint obligation
each obligor answers only for a part of the whole liability and to
each obligee belongs only a part of the correlative rights.[10]
Well-entrenched is the rule that solidary obligation cannot
lightly be inferred.[11] There is a solidary liability only when the
obligation expressly so states, when the law so provides or
when the nature of the obligation so requires.[12]
In the dispositive portion of the Labor Arbiter, the word
"solidary" does not appear. The said fallo expressly states the
following respondents therein as liable, namely: Filipinas
Carbon and Mining Corporation, Gerardo Sicat, Antonio
Gonzales, Industrial Management Development Corporation
(petitioner INIMACO), Chiu Chin Gin, and Lo Kuan Chin. Nor
can it be inferred therefrom that the liability of the six (6)
respondents in the case below is solidary, thus their liability
should merely be joint.
Moreover, it is already a well-settled doctrine in this jurisdiction
that, when it is not provided in a judgment that the defendants
are liable to pay jointly and severally a certain sum of money,
none of them may be compelled to satisfy in full said judgment.
In Oriental Commercial Co. vs. Abeto and Mabanag[13] this
Court held:
"It is of no consequence that, under the contract of suretyship
executed by the parties, the obligation contracted by the
sureties was joint and several in character. The final judgment,
which superseded the action for the enforcement of said
contract, declared the obligation to be merely joint, and the
same cannot be executed otherwise."[14]
Granting that the Labor Arbiter has committed a mistake in
failing to indicate in the dispositive portion that the liability of
respondents therein is solidary, the correction -- which is
substantial -- can no longer be allowed in this case because
the judgment has already become final and executory. Scc-alr
It is an elementary principle of procedure that the resolution of
the court in a given issue as embodied in the dispositive part of
a decision or order is the controlling factor as to settlement of
rights of the parties.[15] Once a decision or order becomes
final and executory, it is removed from the power or jurisdiction
of the court which rendered it to further alter or amend it.[16] It
thereby becomes immutable and unalterable and any
amendment or alteration which substantially affects a final and
executory judgment is null and void for lack of jurisdiction,
including the entire proceedings held for that purpose.[17] An
order of execution which varies the tenor of the judgment or
exceeds the terms thereof is a nullity.[18]
None of the parties in the case before the Labor Arbiter
appealed the Decision dated March 10, 1987, hence the same
became final and executory. It was, therefore, removed from
the jurisdiction of the Labor Arbiter or the NLRC to further alter
or amend it. Thus, the proceedings held for the purpose of
amending or altering the dispositive portion of the said decision
are null and void for lack of jurisdiction. Also, the Alias Writ of
Execution is null and void because it varied the tenor of the
judgment in that it sought to enforce the final judgment against
"Antonio Gonzales/Industrial Management Development Corp.
(INIMACO) and/or Filipinas Carbon and Mining Corp. and
Gerardo Sicat," which makes the liability solidary.
WHEREFORE, the petition is hereby GRANTED. The
Resolution dated September 4, 1991 of the respondent
National Labor Relations is hereby declared NULL and VOID.
The liability of the respondents in RAB-VII-0711-84 pursuant to
the Decision of the Labor Arbiter dated March 10, 1987 should
be, as it is hereby, considered joint and petitioners payment
which has been accepted considered as full satisfaction of its
liability, without prejudice to the enforcement of the award,
against the other five (5) respondents in the said case.
Honrado v CA
Before this Court is a petition for review of the Decision[1] of
the Court of Appeals (CA) in CA-G.R. SP No. 77488 dated
June 30, 2004 dismissing the petition for certiorari for the
nullification of the April 14, 2003
Resolution of the Regional Trial Court (RTC) of Quezon City,
Branch 222 in Civil Case No. Q-97-32965. Also assailed in this
petition is the CA Resolution dated December 2, 2004 denying
the motion for reconsideration of the said decision.
On December 11, 1997, Premium Agro-Vet Products, Inc.
(Premium) filed with the RTC of Quezon City a complaint for
sum of money against Jose Honrado, who was doing business
under the name and style of J.E. Honrado Enterprises. The
case was docketed as Civil Case No. Q-97-32965. Premium
sought to collect the amount of P240,765.00 representing the
total price of veterinary products purchased on credit by
Honrado from November 18, 1996 until June 30, 1997.
For failure of Honrado, as well as his counsel, to appear at the
pre-trial conference, he was declared in default. Premium was,
thus, allowed to present evidence ex parte.
It turned out that the Spouses Jose and Andrerita Honrado had
filed a petition with the RTC of Calamba City for the judicial
constitution of the parcel of land registered in Honrados name
under Transfer Certificate of Title (TCT) No. T-143175 located
in Calamba, Laguna, and the house thereon, as their family
house. The case was docketed as SP Case No. 489-1998-C.
In his petition, Honrado declared that his creditors were Atty.
Domingo Luciano, P & J Agriculture Trading, Inc., and Mr. Tito
Dela Merced, and that the estimated value of the property was
not more than P240,000.00.
On February 23, 1999, the RTC rendered judgment in favor of
Premium:
WHEREFORE, premises considered, judgment is hereby
rendered in favor of plaintiff and against defendant directing
the latter to pay plaintiff the following:
1) P240,765.00 representing the total overdue account plus
interest of 28% per annum thereon computed from their
respective dates of deliveries until the same shall have been
paid in full;
2) 25% of the total amount awarded, plus acceptance fee of
P50,000.00 and additional P1,500.00 for each day of court
appearance, as attorneys fees; and
3) Costs of this suit.
SO ORDERED.[2]
Honrado filed a Notice of Appeal. However, on March 20, 2000,
the appeal was dismissed for his failure to file his brief as
appellant. Entry of judgment was made on April 26, 2000.[3]
On October 10, 2000, Premium filed a Motion for Issuance of
Writ of Execution.[4] The RTC granted the motion[5] and a writ
of execution was issued on March 29, 2001.[6]
The Sheriff levied on the parcel of land covered by TCT No. T-
143175. The Notice of Levy was annotated at the dorsal
portion of the title on April 4, 2001.[7] The Sheriff set the sale of
the property at public auction on April 4, 2001. Honrado was
served with a copy of the notice of such sale but he opposed
the same.
On May 17, 2001, the property was sold to Premium, the
highest bidder, for the amount of P650,204.10.[8] On May 23,
2001, the corresponding Certificate of Sale was issued[9] and
annotated at the dorsal portion of the title.[10] Honrado failed
to redeem the property.
In the meantime, the RTC of Calamba City rendered a
Decision[11] in SP Case No. 489-1998-C on April 29, 2002,
declaring the property a family home.
On May 3, 2002, Honrado filed a Motion to Declare Properties
Exempt from Execution under Article 155 of the Family Code of
the Philippines in Civil Case No. Q-97-32965. It was alleged
therein that the property is exempt from execution because it is
a family home which had been constituted as such before he
incurred his indebtedness with Premium. He also alleged that
he and his family had no other real property except the land
which was levied upon and sold on execution.[12] Premium
opposed the motion on the ground that Honrado was already
estopped or barred by laches from claiming the exemption, and
that said claim has been mooted by the lapse of the
redemption period for Honrado to redeem the property.
Premium averred that, after the sale at public auction, Honrado
and his family even vacated the property. Honrado re-occupied
the property only in April or May 2002.[13] It further averred
that the law does not automatically exempt a family home from
levy or execution and there was no showing that its present
value does not exceed the amount allowed by law under Article
157 of the Family Code.[14]
On September 18, 2002, the RTC denied said motion on the
ground that Honrado is deemed to have waived the exemption
considering that he failed to object to the sale of the property
on execution on May 17, 2001.[15] Honrado did not assail the
said order.
On October 14, 2002, Premium filed a Motion for Issuance of
Final Deed of Conveyance and Writ of Possession[16]
asserting that the one-year redemption period had already
lapsed on May 23, 2002, without any redemption being made
by Honrado. The latter opposed the said motion claiming that
the RTC of Calamba, Laguna, had already rendered a decision
declaring the property a family home. Honrado further averred
that his family resided in the house before the Family Code
became effective and was entitled to the exemption under the
Code.[17]
On April 14, 2003, the respondent Judge issued an Order[18]
granting the motion of Premium and directing Honrado to: (1)
execute a final deed of conveyance over the subject parcel of
land covered by TCT No. T-143175 of the Registry of Deeds of
Calamba, Laguna; and (2) surrender of the subject title, TCT
No. T-143175. The respondent Judge further ordered that after
execution of the deed of conveyance, a writ of possession be
issued over the aforesaid property in favor of the plaintiff and
against the defendant or his successors-in-interest who are in
possession of the said premises.
Honrado filed a petition for certiorari with the CA assailing the
April 14, 2003 Resolution of the RTC. On June 30, 2004, the
CA dismissed the petition.[19] The CA declared that there was
no proof that the public respondents committed grave abuse of
discretion. The CA ruled that the petitioner failed to assert his
claim for exemption at the time of the levy or within a
reasonable time thereafter. It held that once a judgment
becomes final and executory, the prevailing party can have it
executed as a matter of right, and the issuance of a writ of
execution becomes a ministerial duty of the court.[20]
On December 2, 2004, the CA denied the motion for
reconsideration filed by Honrado.[21]
In this petition for review, the petitioner alleges that the CA
committed serious errors of law and facts:
5:A IN FINDING AND CONCLUDING THAT ARTICLE 153 OF
THE FAMILY CODE FINDS NO APPLICATION IN THE
INSTANT CASE;
5:B IN FINDING AND CONCLUDING THAT HONRADOS
FAILURE TO ASSERT HIS CLAIM FOR EXEMPTION OF HIS
FAMILY HOME FROM EXECUTION AT THE TIME OF THE
LEVY OR WITHIN A REASONABLE TIME IS FATAL TO HIS
CLAIM;
5:C IN NOT FINDING THAT THE RIGHT TO CLAIM
EXEMPTION CANNOT BE WAIVED BECAUSE IT IS
CONTRARY TO LAW AND/OR PUBLIC POLICY.[22]
The petitioner contends that the trial court committed grave
abuse of discretion in disallowing his prayer for exemption of
his family home from execution. The petitioner avers that the
ruling of the RTC of Calamba, Laguna, Branch 35 in SP Case
No. 489-1998-C, declaring that the property in question is a
family home, has already become final; hence, it can no longer
be disturbed. The family home cannot be levied upon
considering that the debt, which was the basis of the judgment
under execution, was incurred between the period from
November 18, 1996 and June 30, 1997, or after the Family
Code had been in effect. Hence, the family home of the
petitioner is exempt from execution under Article 155 of the
Family Code.[23]
The petitioner further asserts that he and his family had been
occupying the property as their family home as early as 1992.
Under Article 153 of the Family Code, his house was
constituted as a family home in that year. Thus, even if he
failed to contest the levy on his property or move for the lifting
thereof, the same cannot be deemed a waiver of his right to
claim the exemption of his family home. He avers that his right
cannot be waived, for it would be contrary to public policy. He
claims that the policy of the State, in conferring such
exemption, is to allow a particular family to occupy, use and
enjoy their family home, which must remain with the person
constituting it and his heirs. Moreover, the waiver must be
shown by
overt acts and it cannot be presumed from the mere failure to
assert the claim for exemption within a reasonable time.[24]
The private respondent avers that the petitioner is estopped
from claiming that the property is exempt from execution and
from assailing the levy of the property, the sale thereof at
public auction and the September 18, 2002 and April 14, 2003
Orders of the RTC. It points out that the petitioner agreed to
the levy and sale of the property at public auction; he even
surrendered the key to the house and vacated the property
after it was purchased by the private respondent at the public
auction. The private respondent averred that the petitioner
hoped to get a higher amount than his debt. The petitioner
never adverted to his petition in the RTC of Calamba, Laguna,
for the constitution of the property as a family home. The
petitioner revealed the decision of the RTC in SP Case No.
489-1998-C only on November 25, 2002 when he opposed the
private respondents motion for a final deed of conveyance. It
was only after the RTC of Calamba, Laguna, rendered its
decision that the petitioner re-occupied the property and
claimed, for the first time, that the property is a family home
and exempt from execution. By then, the period for the
petitioner to redeem the property had long lapsed.
The petition has no merit.
In dismissing Honrados petition, the CA declared that:
Article 153 of the Family Code provides that the family home is
deemed constituted on a house and lot from the time it is
occupied as the family residence. From the time of its
constitution and so long as its beneficiaries actually resides
therein, the family home continues to be such and is exempt
from execution, forced sale or attachment, except as
hereinafter provided and to the extent of the value allowed by
Law. A family home is a real right, which is gratuitous,
inalienable and free from attachment, constituted over the
dwelling place and the land on which it is situated, which
confers upon a particular family the right to enjoy such
properties, which must remain with the person constituting it
and his heirs. It cannot be seized by creditors except in certain
special cases. Such provision finds no application in this case.
Although the Rules of Court does not prescribe the period
within which to claim the exemption, the rule is, nevertheless,
well-settled that the right of exemption must be claimed by the
debtor himself at the time of levy or within a reasonable period
thereafter. It is self-evident that petitioner did not assert their
claim of exemption within a reasonable time. Any claim for
exemption from execution of properties under Section 12 of
Rule 39 of the Rules of Court must be presented before its sale
on execution by the sheriff. Petitioner and his wife failed to
disclose in their petition for the judicial constitution of a family
home that Premium Agro-Vet Products, Inc. is one of their
creditors considering the fact that the collection case filed
against Honrado was filed in 1997 or prior to the institution of
said petition in 1998. Petitioner never raised the argument of
exemption of his family home before the trial court before and
during the auction sale. We find that such actions reveal a
dilatory intent to render nugatory the sale on execution and
defeat the very purpose of execution to put an end to litigation.
Petitioner previously failed to appear in the pre-trial
conference, failed to submit his appellants brief and now
conveniently raised the issue of exemption almost a year from
the auction sale.
We find no proof of grave abuse of discretion [on] the part of
public respondents. Once a judgment becomes final and
executory, the prevailing party can have it executed as a
matter of right, and the issuance of a Writ of Execution
becomes a ministerial duty of the court. It is well-settled that
the sheriffs duty in the execution of a writ issued by a court is
purely ministerial. The function of ordering the execution of a
judgment, being judicial, devolves upon the judge.[25]
The ruling of the appellate court is correct. The respondent
court, tribunal or administrative agency acts without jurisdiction
if it does not have the legal power to determine the case. There
is excess of jurisdiction where the respondent, being clothed
with the power to determine the case, oversteps its authority as
determined by law. There is grave abuse of discretion where
the public respondent acts in a capricious, whimsical, arbitrary
or despotic manner in the exercise of its judgment as to be
said to be equivalent to lack of jurisdiction. Mere abuse of
discretion is not enough.[26]
Moreover, in a petition for certiorari, the jurisdiction of the court
is narrow in scope. It is limited to resolving only cases of
jurisdiction.[27] A writ of certiorari is an equitable remedy and
he who comes to court for equity must do so with clean hands.
In this case, the RTC acted in accord with case law when it
issued the assailed order. The petitioner admits to having been
notified of the levy of his property and of its sale at public
auction at 9:30 a.m. on May 17, 2001 at the Municipal Hall of
Calamba, Laguna. However, he did not bother to object to the
levy and the projected sale on the ground that the property and
the house thereon was a family home. The petitioner allowed
the sale at public auction to proceed and the Sheriff to execute
a certificate of sale over the property in favor of the private
respondent for P650,204.10. He even vacated the property
after the said sale. The petitioner remained silent and failed to
seek relief from the Sheriff or the court until May 3, 2002, when
he filed his motion to declare the property exempt from
execution under Article 155 of the Family Code and Section 13,
Rule 39 of the Rules on Civil Procedure. Even then, there was
no showing that, during the hearing of said motion, the
petitioner adduced evidence to prove the value of the property
and that it is, indeed, a family home.
Moreover, the petitioner set the hearing of his motion on May
10, 2002 at 8:30 a.m. The private respondent opposed the
motion, but the petitioner did not file any reply thereto.
Moreover, the petitioner never informed the Court that the RTC
of Calamba, Laguna, had rendered judgment in SP Case No.
489-1998-C earlier on April 29, 2002. It was only on November
25, 2002 that the petitioner revealed to the RTC of Quezon
City that there was such a case and a decision had already
been rendered. The petitioner has not justified why he
concealed such matters for such considerable period of time.
While it is true that the family home is constituted on a house
and lot from the time it is occupied as a family residence and is
exempt from execution or forced sale under Article 153 of the
Family Code, such claim for exemption should be set up and
proved to the Sheriff before the sale of the property at public
auction. Failure to do so would estop the party from later
claiming the exemption. As this Court ruled in Gomez v.
Gealone:[28]
Although the Rules of Court does not prescribe the period
within which to claim the exemption, the rule is, nevertheless,
well-settled that the right of exemption is a personal privilege
granted to the judgment debtor and as such, it must be claimed
not by the sheriff, but by the debtor himself at the time of the
levy or within a reasonable period thereafter;
In the absence of express provision it has variously held that
claim (for exemption) must be made at the time of the levy if
the debtor is present, that it must be made within a reasonable
time, or promptly, or before the creditor has taken any step
involving further costs, or before advertisement of sale, or at
any time before sale, or within a reasonable time before the
sale, or before the sale has commenced, but as to the last
there is contrary authority.
In the light of the facts above summarized, it is self-evident that
appellants did not assert their claim of exemption within a
reasonable time. Certainly, reasonable time, for purposes of
the law on exemption, does not mean a time after the
expiration of the one-year period provided for in Section 30 of
Rule 39 of the Rules of Court for judgment debtors to redeem
the property sold on execution, otherwise it would render
nugatory final bills of sale on execution and defeat the very
purpose of executionto put an end to litigation. We said before,
and We repeat it now, that litigation must end and terminate
sometime and somewhere, and it is essential to an effective
administration of justice that, once a judgment has become
final, the winning party be not, through a mere subterfuge,
deprived of the fruits of the verdict. We now rule that claims for
exemption from execution of properties under Section 12 of
Rule 39 of the Rules of Court must be presented before its sale
on execution by the sheriff.[29]
IN VIEW OF ALL THE FOREGOING, the petition is DENIED.
Costs against the petitioner.
SO ORDERED.
Perez v Gutierrez
This appeal from the decision dated June 9, 1967 of the Court
of First Instance of Davao in its civil case 3163 poses
objections to the manner the trial court adjudicated the claim
for damages filed by the plaintiff-appellant Fe Perez against
the defendant-third-party plaintiff-appellee Josefina Gutierrez.
The complaint (later amended) filed on October 29, 1959 by Fe
Perez with the Court of First Instance of Davao against
Josefina Gutierrez, for breach of contract of carriage, alleges
that on September 6, 1959 while she, together with nine co-
teachers, was a passenger of an AC jeepney registered under
the name of the defendant Gutierrez, the said vehicle, due to
the reckless negligence of its driver Leopoldo Cordero, met
with an accident, resulting in injuries to herself which required
her hospitalization. In her answer, Josefina Gutierrez averred
that if the claim of Fe Perez is at all justified, responsibility
therefor should devolve on one Panfilo Alajar, the actual owner,
by purchase, of the said passenger jeepney when the accident
occurred and against whom she has filed a third-party
complaint.
The deed of sale attached to the third-party complaint recites,
inter alia,
That it is mutually agreed by the herein vendor and vendee
that the TITLE to the aforementioned vehicle shall remain with
the VENDOR, pending approval of the herein SALE by the
Public Service Commission, said motor vehicle being
registered as a public utility auto-calesa under "AC"
denomination; ...
That the vendee herein, by these presents, do [sic] hereby
binds himself and do [sic] hereby assume, [sic] responsibility
for all actions, claims, demands, and rights of action, and
whatever kind and nature, that may hereafter develop as a
consequence of or in the course of operation of the
aforementioned vehicle; ...
In his answer to the third-party complaint, Panfilo Alajar
disclaimed responsibility for the accident, alleging that (a) the
mentioned deed of sale is null and void because it has not
been registered with the Public Service Commission despite
repeated demands on the 3rd-party complainant to do so; (b)
the said passenger jeepney remained in the control of the 3rd-
party complainant who, together with her lawyer-husband, had
been collecting rentals from him for the use of the said vehicle;
and (c) by express agreement, title to the said vehicle
remained with the 3rd-party complainant pending approval of
the sale by the Public Service Commission.
The defendant Leopoldo Cordero was declared in default and
did not appeal.
On June 9, 1967, after trial on the merits, the court a quo
rendered its decision, in the main finding Leopoldo Cordero
guilty of reckless imprudence, and finding that Panfilo Alajar
owned and operated the auto calesa in question and, in fact,
after the accident, even assumed responsibility for the
payment of the hospital bills due to the Brokenshire Memorial
Hospital for treatment of the injuries suffered by Fe Perez.
Based on these findings as well as the proof of the damages
suffered by Fe Perez, the court adjudged as follows:
WHEREFORE, premises considered, judgment is hereby
rendered ordering third-party defendant Panfilo Alajar to pay
plaintiff the amount of P1,552.20 hospital expenses;
P2,000.00, actual damages; P5,000.00 moral damages;
P500.00 incidental expenses; and P2,000.00 attorney's fees.
Ordering likewise Panfilo Alajar to pay defendant third-party
plaintiff Josefina Gutierrez P500.00 moral damages; and
P1,000.00 attorney's fees, and to pay the costs of the
proceedings on both cases.
The present appeal questions the correctness of the
dispositive portion of the decision a quo which adjudged
Panfilo Alajar, instead of Josefina Gutierrez, as the party liable
to her for the payment of the damages adjudicated in her favor.
Specifically, Fe Perez argues that the registered owner of a
motor vehicle should be the one held liable for damages
resulting from breach of contract of carriage by a common
carrier.
We find the appeal meritorious and in accord with settled law
on the matter.
In Peralta vs. Mangusang 1 this Court, in approbation of a
similar argument, said:
The law (Sec. 20 [g], Public Service Act) really requires the
approval of the Public Service Commission in order that a
franchise, or any privileges pertaining thereto, may be sold or
leased without infringing the certificate issued to the grantee.
The reason is obvious. Since a franchise is personal in nature
any transfer or lease thereof should be submitted for approval
of the Public Service Commission, so that the latter may take
proper safeguards to protect the interest of the public. It follows
that if the property covered by the franchise is transferred or
leased to another without obtaining the requisite approval, the
transfer is not binding on the Public Service Commission and,
in contemplation of law, the grantee continues to be
responsible under the franchise in relation to the Commission
and to the public for the consequences incident to the
operation of the vehicle, one of them being the collision under
consideration. (Montoya v. Ignacio, 50 O.G. No. 1. 108; Vda.
de Medina, et al. v. Cresencia, et al., 52 O.G. No. 10, 4604;
Erezo v. Jepte, et al., G.R. No. L-9605, Sept. 30, 1957; Tamayo
v. Aquino, 56 O.G. No. 36,5617).
In the earlier case of Erezo vs. Jepte, 2 which is cited in the
foregoing opinion, this Court held that the doctrine making the
registered owner of a common carrier answerable to the public
for negligence injuries to its passengers or third persons, even
though the vehicle had already been transferred to another, is
based upon the principle
... that in dealing with vehicles registered under the Public
Service Law, the public has the right to assume or presume
that the registered owner is the actual owner thereof, for it
would be difficult for the public to enforce the actions that they
may have for injuries caused to them by the vehicles being
negligently operated if the public should be required to prove
who the actual owner is. How would the public or third persons
know against whom to enforce their rights in case of
subsequent transfers of the vehicles? We do not imply by this
doctrine, however, that the registered owner may not recover
whatever amount he had paid by virtue of his liability to third
persons from the person to whom he had actually sold,
assigned or conveyed the vehicle.
In Tamayo vs. Aquino, 3 also cited in Mangusang, supra, this
Court, reiterating what was stated en passant in Jepte, supra,
described the nature of the liability of the actual transferee of a
vehicle the negligent operation of which gives rise to injuries to
its passengers:
The question that is posed, therefore, is how should the holder
of the certificate of public convenience Tamayo participate with
his transferee operator Rayos, in the damages recoverable by
the heirs of the deceased passenger, if their liability is not that
of joint tortfeasors in accordance with Article 2194 of the Civil
Code. The following considerations must be borne in mind in
determining this question. As Tamayo is the registered owner
of the truck, his responsibility to the public or to any passenger
riding in the vehicle or truck must be direct, for the reasons
given in our decision in the case of Erezo vs. Jepte, supra, as
quoted above. But as the transferee, who operated the vehicle
when the passenger died, is the one directly responsible for
the accident and death, he should in turn be made responsible
to the registered owner for what the latter may have been
adjudged to pay. In operating the truck without transfer thereof
having been approved by the Public Service Commission, the
transferee acted merely as agent of the registered owner and
should be responsible to him (the registered owner), for any
damages that he may cause the latter by his negligence."
Upon the foregoing, it is quite clear that the court below erred
in holding Panfilo Alajar, rather than Josefina Gutierrez, as the
one directly liable to Fe Perez for the latter's injuries and the
corresponding damages incurred. This Court notes moreover,
that the court below inexplicably failed to hold the driver
(Leopoldo Cordero), whom it found guilty of reckless
imprudence, jointly and solidarily liable with Josefina Gutierrez
to Fe Perez in accordance with the provisions of article 2184 in
relation to article 2180 of the new Civil Code. 4
ACCORDINGLY, the judgment below is hereby modified in the
sense that Josefina Gutierrez and Leopoldo Cordero are
hereby adjudged directly and jointly and solidarily liable to Fe
Perez for the sums adjudicated in the judgment below in her
(Fe Perez') favor, while Panfilo Alajar is, in turn, hereby held
answerable to Josefina Gutierrez for such amount as the latter
may pay to Fe Perez in satisfaction of the judgment appealed
from. Costs against both the defendant-third party plaintiff-
appellee Josefina Gutierrez and the third party defendant-
appellee Panfilo Alajar.
Marsman v Philippine Geoanalytics
On February 12, 1997, Marsman Drysdale Land, Inc.
(Marsman Drysdale) and Gotesco Properties, Inc. (Gotesco)
entered into a Joint Venture Agreement (JVA) for the
construction and development of an office building on a land
owned by Marsman Drysdale in Makati City.[1]
The JVA contained the following pertinent provisions:
SECTION 4. CAPITAL OF THE JV
It is the desire of the Parties herein to implement this
Agreement by investing in the PROJECT on a FIFTY (50%)
PERCENT- FIFTY (50%) PERCENT basis.
4.1. Contribution of [Marsman Drysdale]-[Marsman Drysdale]
shall contribute the Property.
The total appraised value of the Property is PESOS: FOUR
HUNDRED TWENTY MILLION (P420,000,000.00).
For this purpose, [Marsman Drysdale] shall deliver the
Property in a buildable condition within ninety (90) days from
signing of this Agreement barring any unforeseen
circumstances over which [Marsman Drysdale] has no control.
Buildable condition shall mean that the old building/structure
which stands on the Property is demolished and taken to
ground level.
4.2. Contribution of [Gotesco]- [Gotesco] shall contribute the
amount of PESOS: FOUR HUNDRED TWENTY MILLION
(P420,000,000.00) in cash which shall be payable as follows:
4.2.1. The amount of PESOS: FIFTY MILLION
(P50,000,000.00) upon signing of this Agreement.
4.2.2. The balance of PESOS: THREE HUNDRED
SEVENTY MILLION (P370,000,000.00) shall be paid based on
progress billings, relative to the development and construction
of the Building, but shall in no case exceed ten (10) months
from delivery of the Property in a Buildable condition as
defined in section 4.1.
A joint account shall be opened and maintained by both Parties
for handling of said balance, among other Project concerns.
4.3. Funding and Financing
4.3.1 Construction funding for the Project shall be obtained
from the cash contribution of [Gotesco].
4.3.2 Subsequent funding shall be obtained from the pre-
selling of units in the Building or, when necessary, from loans
from various banks or financial institutions. [Gotesco] shall
arrange the required funding from such banks or financial
institutions, under such terms and conditions which will provide
financing rates favorable to the Parties.
4.3.3 [Marsman Drysdale] shall not be obligated to fund
the Project as its contribution is limited to the Property.
4.3.4 If the cost of the Project exceeds the cash
contribution of [Gotesco], the proceeds obtained from the pre-
selling of units and proceeds from loans, the Parties shall
agree on other sources and terms of funding such excess as
soon as practicable.
4.3.8 All funds advanced by a Party (or by third parties in
substitution for advances from a Party) shall be repaid by the
JV.
4.3.9 If any Party agrees to make an advance to the
Project but fails to do so (in whole or in part) the other party
may advance the shortfall and the Party in default shall
indemnify the Party making the substitute advance on demand
for all of its losses, costs and expenses incurred in so doing.
(emphasis supplied; underscoring in the original)
Via Technical Services Contract (TSC) dated July 14, 1997,[2]
the joint venture engaged the services of Philippine
Geoanalytics, Inc. (PGI) to provide subsurface soil exploration,
laboratory testing, seismic study and geotechnical engineering
for the project. PGI, was, however, able to drill only four of five
boreholes needed to conduct its subsurface soil exploration
and laboratory testing, justifying its failure to drill the remaining
borehole to the failure on the part of the joint venture partners
to clear the area where the drilling was to be made.[3] PGI was
able to complete its seismic study though.
PGI then billed the joint venture on November 24, 1997 for
P284,553.50 representing the cost of partial subsurface soil
exploration; and on January 15, 1998 for P250,800
representing the cost of the completed seismic study.[4]
Despite repeated demands from PGI,[5] the joint venture failed
to pay its obligations.
Meanwhile, due to unfavorable economic conditions at the
time, the joint venture was cut short and the planned building
project was eventually shelved.[6]
PGI subsequently filed on November 11, 1999 a complaint for
collection of sum of money and damages at the Regional Trial
Court (RTC) of Quezon City against Marsman Drysdale and
Gotesco.
In its Answer with Counterclaim and Cross-claim, Marsman
Drysdale passed the responsibility of paying PGI to Gotesco
which, under the JVA, was solely liable for the monetary
expenses of the project.[7]
Gotesco, on the other hand, countered that PGI has no cause
of action against it as PGI had yet to complete the services
enumerated in the contract; and that Marsman Drysdale failed
to clear the property of debris which prevented PGI from
completing its work.[8]
By Decision of June 2, 2004,[9] Branch 226 of the Quezon City
RTC rendered judgment in favor of PGI, disposing as follows:
WHEREFORE, in view of all the foregoing, judgment is hereby
rendered in favor of plaintiff [PGI].
The defendants [Gotesco] and [Marsman Drysdale] are
ordered to pay plaintiff, jointly:
(1) the sum of P535,353.50 with legal interest from the
date of this decision until fully paid;
(2) the sum of P200,000.00 as exemplary damages;
(3) the sum of P200,000.00 as and for attorneys fees;
and
(4) costs of suit.
The cross-claim of defendant [Marsman Drysdale] against
defendant [Gotesco] is hereby GRANTED as follows:
a) Defendant [Gotesco] is ordered to reimburse co-
defendant [Marsman Drysdale] in the amount of P535,353.[50]
in accordance with the [JVA].
b) Defendant [Gotesco] is further ordered to pay co-
defendant [Marsman Drysdale] the sum of P100,000.00 as and
for attorneys fees.
SO ORDERED. (underscoring in the original; emphasis
supplied)
Marsman Drysdale moved for partial reconsideration,
contending that it should not have been held jointly liable with
Gotesco on PGIs claim as well as on the awards of exemplary
damages and attorneys fees. The motion was, by Resolution of
October 28, 2005, denied.
Both Marsman Drysdale and Gotesco appealed to the Court of
Appeals which, by Decision of January 28, 2008,[10] affirmed
with modification the decision of the trial court. Thus the
appellate court disposed:
WHEREFORE, premises considered, the instant appeal is
PARTLY GRANTED. The assailed Decision dated June 2,
2004 and the Resolution dated October 28, 2005 of the RTC of
Quezon City, Branch 226, in Civil Case No. Q99-39248 are
hereby AFFIRMED with MODIFICATION deleting the award of
exemplary damages in favor of [PGI] and the P100,000.00
attorneys fees in favor of [Marsman Drysdale] and ordering
defendant-appellant [Gotesco] to REIMBURSE [Marsman
Drysdale] 50% of the aggregate sum due [PGI], instead of the
lump sum P535,353.00 awarded by the RTC. The rest of the
Decision stands. SO ORDERED.
In partly affirming the trial courts decision, the appellate court
ratiocinated that notwithstanding the terms of the JVA, the joint
venture cannot avoid payment of PGIs claim since [the JVA]
could not affect third persons like [PGI] because of the basic
civil law principle of relativity of contracts which provides that
contracts can only bind the parties who entered into it, and it
cannot favor or prejudice a third person, even if he is aware of
such contract and has acted with knowledge thereof.[11]
Their motions for partial reconsideration having been denied,
[12] Marsman Drysdale and Gotesco filed separate petitions
for review with the Court which were docketed as G.R. Nos.
183374 and 183376, respectively. By Resolution of September
8, 2008, the Court consolidated the petitions.
In G.R. No. 183374, Marsman Drysdale imputes error on the
appellate court in
A. ADJUDGING [MARSMAN DRYSDALE] WITH JOINT
LIABILITY AFTER CONCEDING THAT [GOTESCO] SHOULD
ULTIMATELY BE SOLELY LIABLE TO [PGI].
B. AWARDING ATTORNEYS FEES IN FAVOR OF [PGI]
C. IGNORING THE FACT THAT [PGI] DID NOT COMPLY
WITH THE REQUIREMENT OF SATISFACTORY
PERFORMANCE OF ITS PRESTATION WHICH, PURSUANT
TO THE TECHNICAL SERVICES CONTRACT, IS THE
CONDITION SINE QUA NON TO COMPENSATION.
D. DISREGARDING CLEAR EVIDENCE SHOWING
[MARSMAN DRYSDALES] ENTITLEMENT TO AN AWARD OF
ATTORNEYS FEES.[13]
On the other hand, in G.R. No. 183376, Gotesco peddles that
the appellate court committed error when it
ORDERED [GOTESCO] TO PAY P535,353.50 AS COST OF
THE WORK PERFORMED BY [PGI] AND P100,000.00 [AS]
ATTORNEYS FEES [AND] TO REIMBURSE [MARSMAN
DRYSDALE] 50% OF P535,353.50 AND PAY [MARSMAN
DRYSDALE] P100,000.00 AS ATTORNEYS FEES. [14]
On the issue of whether PGI was indeed entitled to the
payment of services it rendered, the Court sees no imperative
to re-examine the congruent findings of the trial and appellate
courts thereon. Undoubtedly, the exercise involves an
examination of facts which is normally beyond the ambit of the
Courts functions under a petition for review, for it is well-settled
that this Court is not a trier of facts. While this judicial tenet
admits of exceptions, such as when the findings of facts of the
appellate court are contrary to those of the trial courts, or when
the judgment is based on a misapprehension of facts, or when
the findings of facts are contradicted by the evidence on
record,[15] these extenuating grounds find no application in the
present petitions.
AT ALL EVENTS, the Court is convinced that PGI had more
than sufficiently established its claims against the joint venture.
In fact, Marsman Drysdale had long recognized PGIs
contractual claims when it (PGI) received a Certificate of
Payment[16] from the joint ventures project manager[17] which
was endorsed to Gotesco for processing and payment.[18]
The core issue to be resolved then is which between joint
venturers Marsman Drysdale and Gotesco bears the liability to
pay PGI its unpaid claims.
To Marsman Drysdale, it is Gotesco since, under the JVA,
construction funding for the project was to be obtained from
Gotescos cash contribution, as its (Marsman Drysdales)
participation in the venture was limited to the land.
Gotesco maintains, however, that it has no liability to pay PGI
since it was due to the fault of Marsman Drysdale that PGI was
unable to complete its undertaking.
The Court finds Marsman Drysdale and Gotesco jointly liable
to PGI.
PGI executed a technical service contract with the joint venture
and was never a party to the JVA. While the JVA clearly spelled
out, inter alia, the capital contributions of Marsman Drysdale
(land) and Gotesco (cash) as well as the funding and financing
mechanism for the project, the same cannot be used to defeat
the lawful claim of PGI against the two joint venturers-partners.
The TSC clearly listed the joint venturers Marsman Drysdale
and Gotesco as the beneficial owner of the project,[19] and all
billing invoices indicated the consortium therein as the client.
As the appellate court held, Articles 1207 and 1208 of the Civil
Code, which respectively read:
Art. 1207. The concurrence of two or more creditors or of two
or more debtors in one and the same obligation does not imply
that each one of the former has a right to demand, or that each
one of the latter is bound to render, entire compliance with the
prestations. There is a solidary liability only when the obligation
expressly so states, or when the law or nature of the obligation
requires solidarity.
Art. 1208. If from the law, or the nature or the wording of the
obligations to which the preceding article refers the contrary
does not appear, the credit or debt shall be presumed to be
divided into as many equal shares as there are creditors or
debtors, the credits or debts being considered distinct from one
another, subject to the Rules of Court governing the multiplicity
of suits. (emphasis and underscoring supplied),
presume that the obligation owing to PGI is joint between
Marsman Drysdale and Gotesco.
The only time that the JVA may be made to apply in the
present petitions is when the liability of the joint venturers to
each other would set in.
A joint venture being a form of partnership, it is to be governed
by the laws on partnership.[20] Article 1797 of the Civil Code
provides:
Art. 1797. The losses and profits shall be distributed in
conformity with the agreement. If only the share of each
partner in the profits has been agreed upon, the share of each
in the losses shall be in the same proportion.
In the absence of stipulation, the share of each in the profits
and losses shall be in proportion to what he may have
contributed, but the industrial partner shall not be liable for the
losses. As for the profits, the industrial partner shall receive
such share as may be just and equitable under the
circumstances. If besides his services he has contributed
capital, he shall also receive a share in the profits in proportion
to his capital. (emphasis and underscoring supplied)
In the JVA, Marsman Drysdale and Gotesco agreed on a 50-50
ratio on the proceeds of the project.[21] They did not provide
for the splitting of losses, however. Applying the above-quoted
provision of Article 1797 then, the same ratio applies in splitting
the P535,353.50 obligation-loss of the joint venture.
The appellate courts decision must be modified, however.
Marsman Drysdale and Gotesco being jointly liable, there is no
need for Gotesco to reimburse Marsman Drysdale for 50% of
the aggregate sum due to PGI.
Allowing Marsman Drysdale to recover from Gotesco what it
paid to PGI would not only be contrary to the law on
partnership on division of losses but would partake of a clear
case of unjust enrichment at Gotescos expense. The grant by
the lower courts of Marsman Drysdale cross-claim against
Gotesco was thus erroneous.
Marsman Drysdales supplication for the award of attorneys
fees in its favor must be denied. It cannot claim that it was
compelled to litigate or that the civil action or proceeding
against it was clearly unfounded, for the JVA provided that, in
the event a party advances funds for the project, the joint
venture shall repay the advancing party. [22]
Marsman Drysdale was thus not precluded from advancing
funds to pay for PGIs contracted services to abate any legal
action against the joint venture itself. It was in fact hardline
insistence on Gotesco having sole responsibility to pay for the
obligation, despite the fact that PGIs services redounded to the
benefit of the joint venture, that spawned the legal action
against it and Gotesco.
Finally, an interest of 12% per annum on the outstanding
obligation must be imposed from the time of demand[23] as the
delay in payment makes the obligation one of forbearance of
money, conformably with this Courts ruling in Eastern Shipping
Lines, Inc. v. Court of Appeals.[24] Marsman Drysdale and
Gotesco should bear legal interest on their respective
obligations.
WHEREFORE, the assailed Decision and Resolution of the
Court of Appeals are AFFIRMED with MODIFICATION in that
the order for Gotesco to reimburse Marsman Drysdale is
DELETED, and interest of 12% per annum on the respective
obligations of Marsman Drysdale and Gotesco is imposed,
computed from the last demand or on January 5, 1999 up to
the finality of the Decision.
If the adjudged amount and the interest remain unpaid
thereafter, the interest rate shall be 12% per annum computed
from the time the judgment becomes final and executory until it
is fully satisfied. The appealed decision is, in all other respects,
affirmed.
Costs against petitioners Marsman Drysdale and Gotesco.
SO ORDERED.
Operators v American Biscuit
These appeals by certiorari, are the result of a three-cornered
controversy involving the American Biscuit Company, Inc., the
Operators Incorporated, and the Associated Biscuit, Inc., in
connection with the operation of American Biscuit's business
by Operators and Associated. The trial court dismissed the
claimS of the parties against each other. The Court of Appeals
rendered a modified decision condemning Associated to
respond with certain damages. Notwithstanding such a
modification, an three parties came to this Court on separate
petitions.
We consolidated the three cases and gave due course thereto.
The facts, as found by the Court of Appeals, * are not disputed:
From the evidence adduced by the parties, it appears that
plaintiff American Biscuit Company was, before World War II, a
manufacturer of biscuit, candy and bubble gum products. After
the liberation, it reopened its candy department. Financial
difficulties and reverses, however, forced it to discontinue its
business operations.
To bail itself out of this financial distress, plaintiff, on
September 26, 1953, entered into an agreement with
defendant Operators, Inc. Under this agreement, it ceded the
entire, total and complete present operation of its business to
defendant Operators, Inc., in consideration for which
Operators, Inc. undertook to answer for existing obligations of
the plaintiff to its several creditors and to compensate plaintiff
with a percentage of the gross profits realized in the course of
its operations. Insofar as are pertinent to this case, the terms of
this agreement, otherwise known as the Operating Contract,
provides as follows:
l. ABC gives, grants and cedes the entire, total and
complete present operation of the ABC unto the OPERATOR
and the OPERATOR in turn agrees and accepts to operate
said business of the ABC;
6. This contract shall remain in full force and effect for a
period of ten (10) years extendable to another ten (10) years at
the option of the OPERATOR herein; and any breach of the
terms and conditions of this agreement, the suspension,
cancellation, or desistance on the part of the ABC with respect
to the continuance of this operating contract shall render the
latter liable for damages unto the OPERATOR in a sum not
less than P300,000.00 by way of liquidated damages, besides
other damages that may be demandable and such further
sums as by then the OPERATOR may have disbursed on
account of the indebtedness of the ABC recoverable with
twelve (12%) per centum interest per annum;
10. That as aforesaid the ABC is presently indebted in the
sum of P220,000.00 more or less and that the ABC hereby
gives full power and authority unto the OPERATOR to settle
said obligations through partial payments and discounts;
12. ABC shall receive from the gross profits realized by
the OPERATOR an amount equivalent to TWENTY (20%) per
cent, the remaining EIGHTY (80%) per cent to be the property
of the OPERATORS;
The 20% herein set aside for the ABC shall however be first
used to amortize any and all advances, payments and
disbursements made by the OPERATOR on account of the
ABC's obligations as under this contract to be advanced, paid
and disbursed by the OPERATOR, whatever shall be
remaining after deducting said amortization shall be delivered
to the ABC;
IT BEING UNDERSTOOD, that the 20% herein reserved for
the ABC shall be increased to 30% leaving 70% to the
OPERATOR as soon as the OPERATOR has fully reimbursed
itself from the disbursements which it has made in payment of
the indebtedness of the ABC and of other items herein
mentioned.
13. Should any different or disagreement arises between
the parties hereto on the meaning or effect of this contract or
any clause thereof, or in respect to the amount of percentage
accruing to both parties, such difference or disagreement shall
be referred to a Board of Arbitrators to be composed of one
arbitrator appointed by the ABC,
"one by the OPERATOR, and a third to be selected by the two
aforementioned arbitrators, the decision of said arbitrators to
be binding among the parties herein in so far as the same is
permitted by law. No action shall be instituted in any court by
any party hereto arising out of any such difference or
disagreement, unless the same shall have been submitted to
said Board of Arbitrators, and any such action shall be based
only upon the award so obtained." (Operating Contract, Exh. A;
Exh. 9-Associated).
On June 12, 1954, or barely 10 months thereafter, plaintiff and
Operators, Inc., entered into another agreement, this time with
defendant Associated Biscuit Operators, Inc., with the consent
of plaintiff, who was a formal party thereto. In this agreement,
known as the Tripartite Agreement, Associated agreed to
engage in the manufacture and marketing of the biscuit
products of American Biscuit Company, Inc., under the terms
and conditions of the Operating Contract of September 26,
1953. This Agreement in turn, among others, contains the
following pertinent covenants and stipulations:
l. Grant of Right.
The American Biscuit Co., Inc., with full knowledge and
consent of the Operators Incorporated, hereby grants unto the
Associated Biscuit Operator's Inc., the exclusive and
irrevocable right to manufacture and market the biscuit
products of all kinds and denominations of said American
Biscuit Co., and for such quality and quantity and during the
period hereinbelow specified, subject to the same terms and
conditions, stipulations and agreements contained in the
contract between the American Biscuit Co., Inc., and the
Operators Incorporated of September 26, 1953 and the further
agreements and stipulations hereinbelow stated.
4. Capitalization.
The sum of TWO HUNDRED THOUSAND PESOS
(P200,000.00) minimum will be spent by the Associated Biscuit
Operators, Inc. exclusively for the manufacture and marketing
of biscuit products, the construction of buildings and
improvements and the purchase of machineries, equipments,
appliances, furnitures and fixtures needed and necessary and
required for the biscuit business subject of this contract, the
Associated Biscuit Operators Inc., representing hereby that it
will invest any and all other capital necessary should
circumstances so demand;
6. Machineries and Equipments
All machineries, appliances, equipment, furnitures and fixtures
and any all that may be necessary and required for the
business operation provided for under this contract shall be
acquired and purchased by the Associated Biscuit Operators
Inc., at their own expenses and for their own account without
any charges whatsoever against the American Biscuit Co., Inc.;
The Associated Biscuit Operators Inc., shall keep said
machineries, equipments, appliances, furnitures and fixtures
insured and in the event of their destruction by fire or
otherwise, the Associated Biscuit Operators, Inc., shall
immediately replace the same for purposes agreed upon under
this Contract;
7. Operation.
The Associated Biscuit Operators Inc. shall commence
operation as agreed upon under this contract and by virtue
hereof within SIX (6) MONTHS after dollar allocations have
been granted to the Associated Biscuit Operators Inc., and/or
the American Biscuit Co., Inc., and the purchase and
importation of necessary machineries and equipments;
9. Allowances.
(A) Upon signing of this agreement, the Associated
Biscuit Operators Inc., shall advance to the American Biscuit
Co., Inc., the sum of ONE THOUSAND FIVE HUNDRED
PESOS (Pl,500.00) and every month(s) thereafter during the
existence of this contract, a minimum allowance of FIVE
HUNDRED PESOS (P500.00), which may be increased from
time to time as the parties hereto may agree;
(B) It shall be the obligation of the Associated Biscuit
Operators Inc. to share equally with the Operators
Incorporated in the payment of any and all obligations and
expenses in connection therewith of the American Biscuit Co.,
Inc., existing as of September 26, 1953 and as stipulated in the
agreement of the same date, deductible, however, from the
American Biscuit Co., Inc.'s participation as hereinbelow
stipulated. (Exh. B; Exh. 10-Associated).
On June 17, 1954, or 5 days after the conclusion of the
Tripartite Agreement, the defendants, Operators and
Associated, entered into an agreement in application of their
right(s) and obligations acquired under the terms of the
foregoing agreements. The defendants agreed
1. That the Associated Biscuit Operators Inc., shall be
entitled to the same right and privileges acquired by the
Operators Incorporated under the original contract. It is
understood and agreed that the Associated Biscuit Operators
Inc., shag have full and exclusive control and supervision over
the management of its business affairs.
2. That as provided for in Paragraph 6 of the original
contract, this agreement shall remain in full force and effect for
a period of TEN (10) YEARS extendible for another period of
TEN (10) YEARS at the option of the Associated Biscuit
Operators Inc.
3. That any building or buildings that may be
constructed, and any and are machineries, equipments,
furnitures and fixtures that may be installed therein, by the
Associated Biscuit Operators, Inc., shall remain the property of
said corporation, subject only to the right of the American
Biscuit Co., Inc., to acquire and purchase the same as
provided for in the original and supplementary contracts.
4. That immediately upon the signing of this agreement,
the Associated Biscuit Operators, Inc., shall pay unto the
Operators Inc., FIFTY (50%) PER CENTUM of any and all
advances and payments made by the latter for the account of
the American Biscuit Co., Inc., prior to the signing of this
contract: and, thereafter, as provided for in the supplementary
contract, the Associated Biscuit Operators, Inc., shall pay and
deliver unto the Operators Incorporated FIFTY (50%) PER
CENTUM of the monthly cash advances and payments to be
made for the account of the obligations of the American Biscuit
Co., Inc., still remaining unpaid.
5. That the Associated Biscuit Operators Inc., hereby
further agreed with the Operators Incorporated to pay the latter
FIFTY (50%) PER CENTUM of the monthly cash advance of
ONE THOUSAND (Pl,000.00) PESOS, Philippine Currency,
payable to the American Biscuit Co., Inc., under paragraph 7,
subparagraph 3 of the original contract and another FIFTY
(50%) per centum of the FIVE HUNDRED (P500.00) PESOS
monthly cash advance to the American Biscuit Co., Inc., as
provided for in sub-paragraph A of paragraph 9 of the
supplementary contract; it being understood that the remaining
FIFTY (50%) PER CENTUM of the aforesaid FIVE HUNDRED
(P500.00) PESOS monthly cash advance shall be paid by the
Operators Incorporated to the American Biscuit Co., Inc.
6. That in the construction of the factory or any other
building, the Associated Biscuit Operators Inc. shall leave
unoccupied certain space on the lot, where said factory or
building shall be built, for the use and occupation of the
Operators Inc. Such vacant space to be reserved shall be
determined by the parties hereto before the start of the
construction of the factory or building.
7. That the Associated Biscuit Operators, Inc., shall be
entitled to the use and occupation of FIFTY (50%) PER
CENTUM of American Biscuit Co., Inc. building at the factory
site presently occupied by the Operators Incorporated,
including such furniture, fixtures and rolling equipments owned
by the American Biscuit Co., Inc., which are presently in the
possession of, and are being used by, the Operators
Incorporated. (Exh. 11-Associated).
Meanwhile, after the conclusion of the original operating
contract between ABC and Operators Inc., it appears that
Operators Inc. commenced with its operations in the
manufacture of plaintiff's chiclet and bubble gum products,
utilizing for this purpose the plaintiff's site and establishment. In
December 1954, Eu C. Leh became the general manager of
Operators Inc. Leh reorganized the Operators Inc., improving
the quality of the chewing gum which it was manufacturing. For
this purpose, Operators Inc. took over the machinery used for
the manufacture of chewing gum only, such as gum cutter,
mixer, pulverizers and moving fans.
In March 1955 i.e., some eight (8) months after the
conclusion of the Tripartite Agreement it appears that
differences had arisen between the two defendants on the
utilization of plaintiff's establishment and equipment. A
conference was held in plaintiff's premises in Paranaque, upon
the instructions of its president, Mr. Jorge Vargas. In the said
conference, Operators Inc. was represented by Eu C. Leh,
Judge Rafael Dinglasan and Go Khe Bing. President for
Associated were Juan Wong Locsin, its president; Yan Won
Can, its manager; and Atty. Demetrio Salem. In said
conference the parties agreed to divide the factory building into
two portions, the northern-portion having been assigned to
Operators Inc. and the southern-portion to Associated. The
parties also divided the ABC's facilities, equipment and
furniture. The Chevrolet truck was assigned to was only for the
manufacture of chewing gum, was assigned to defendant
Operators. The arrangement was approved by the plaintiff.
Associated Biscuit was allowed the use of the sugar pulverizer,
the water pump and the airconditioning facilities, on condition
that it would pay the expenses of maintenance, before the
arrival of its own machinery. After the foregoing division of
factory premises, equipment and furniture, the parties took
possession of their respective shares. Operators continued
with its manufacture of chiclet and chewing gum. Associated
commenced its manufacture of biscuits with the machinery it
had imported from Hongkong, awaiting meanwhile the arrival
of the machinery they undertook to import from their purpose
from the United States thru the dollar allocation secured from
them by the American Biscuit.
Meanwhile also, since the two defendants operators and
Associated-had both undertaken to pay ABC's obligation,
owing to its various creditors-accounts which had been
outstanding before the entry into the agreements and which,
in fact, were the motivating factors for the entry of the plaintiff
into the operating agreements arrangements were made
between the parties with the China Banking Corporation
whereby the defendants would share fifty-fifty in the payment
by monthly installments of the P110,000.00 unpaid balance of
the loan by the bank to plaintiff (Exh. 3-A-Operators). This
arrangement was religiously complied with by Operators Inc.
which paid Pl,500.00 monthly, making a total payment of more
than P100,000.00 including interest. Defendant Associated in
turn, failed to make good its commitments to pay its share of
P55,000.00.
As a result of Associated's failure to observe its commitments
towards the liquidation of ABC's pending accounts, China
Banking Corporation filed against plaintiff-Civil Case No. 37045
(Exhs. F, F-1, F-2, F-3; Exh. 4 Operators). This case was
again dismissed on joint motion of the parties, upon the
undertaking of Operators Inc., to pay the obligations with the
approval of Mr. Jorge Vargas. Operators Inc. thus fully
complied with its obligation under the contracts, and then
plaintiff, in October 1963, upon the termination of the operating
contracts, entered into a contract of lease (Exh. 14
Operators) with Operators Inc., for the continued use of the
premises and the equipment of the plaintiff for another term of
10 years, renewable for the same period. It also appears that
in August 1958 Chua Tee re-filed the original cases filed in the
Court of First Instance of Rizal, i.e., Civil Cases Nos. 5123 and
5124 (Exhs. G and sub-parts and K and sub-parts) 1
In addition, the Court of Appeals observed:
... It is true that Operators and Associated made periodical
payments so as to partially satisfy the claims of the creditors,
but they were not enough; the creditors were not satisfied, that
was why on 23 June, 1955, Exh. P American Biscuit asked
Operators and Associated to wake up and warned them of
rescission, and Associated, which was the party that had failed
to perform, replied in Exh. 1 Associated that,
we wish to inform you that the settlement of the obligation of
the China Banking Corporation is under negotiation with said
bank and we are just waiting for the action of the Board of said
Bank on our proposal.
but nothing tangible came out of that, so much so that on 23
August, 1955, a three cornered conference took place in the
office of American Biscuit, from which WW be seen that
American Biscuit confessed its plight with China Banking unto
both Associated and Operators, and therefore warned of
rescission, see tsn. Exh. Y; ... 2
2nd. Again, under Exh. A in connection with Exh. B,
Associated had bound itself to pay to American Biscuit as
monthly advances, the sum of P500.00 a month from July,
1954, par. 9, Exh. B, as well as binding itself solidarity with
Operators to advance the monthly overhead of P1,000.00, par.
7, Exh. A; this was demanded from Associated not only in the
latter, Exh. P of 23 June, 1955, but more emphatically in the
conference, the tripartite conference, on 23 August, 1955, Exh-
Y, again according to Exh. AA and AA-1 and as admitted by
Juan Locsin Wong, Associated's witness, Associated paid only
up to February, 1955 and this only in October, 1955; ... 3
... [I]t is not denied that Associated removed a Hudson Sharp
Biscuit Cracker Wrapper and a Sandwich Machine on 19 and
24 June, 1957, as well as a cutting machine and a mixer,
having sold the Hudson Biscuit Cracker and the Sandwich
Machine to one Kong Nian of Cebu, Exh. 12 and 13
Associated; representing them to be;
"free from all liens and encumbrances," most contrary to par. 6
of Exh. B that had made them partial securities in favor of
American Biscuit ... 4
Amid this setting, American Biscuit filed a complaint against
Operators Incorporated and Associated Biscuit for the
cancellation of the Operating Contract and the Tripartite
Agreement, with prayers to put Associated Biscuit under
receivership and for damages. The complaint alleged that
there was a breach of the aforesaid agreements owing to the
failure of Associated Biscuit to pay its share in American
Biscuit's indebtedness to its (American Biscuit's) creditors, and
the failure of Associated Biscuit to pay its share in the monthly
overhead expenses of American Biscuit, in addition to the
removal by Associated Biscuit of machineries used in the
business. American Biscuit maintained that the payment of its
indebtedness and of its overhead expenses was a joint and
solidary obligation of Operators and Associated Biscuit.
Operators submitted in its answer that the Operating Contract
had been novated by the Tripartite Agreement which allegedly
severed its obligation from Associated Biscuit's own liabilities,
and since it had fully complied with its obligations, American
Biscuit had no cause of action against it. Operators
counterclaimed for damages for alleged breach by American
Biscuit of the arbitration provisions of the Tripartite Agreement
by coming to court directly.
For its part, Associated Biscuit averred that it had paid a
substantial portion of its obligations under the Tripartite
Agreement and that it stopped payment only because
American Biscuit had deprived it of its contractual share in the
latter's dollar allocations. Associated Biscuit likewise submitted
a counterclaim on the contention that it was American Biscuit
that breached the Tripartite Agreement. It filed a cross-claim
against Operators for the latter's alleged failure to comply with
their agreement affording Associated Biscuit the right to half of
American Biscuit's buildings, furniture, fixtures, and rolling
equipment. Associated Biscuit likewise alleged that Operators
had connived with American Biscuit in denying it of its share in
the said dollar allocations.
As we said, the trial court dismissed the claims of all the
parties against each other.
The Court of Appeals on the other hand, held:
... [T]he final result must be that between American Biscuit and
Operators, while Operators should be liable solidarity for
breach of Exh. B by Associated, and must therefore together
with Associated, pay unto American Biscuit the liquidated
damages of P300.000.00, yet, American Biscuit must also be
liable unto Operators for breach of the same contract in regard
to the arbitration clause and be liable therefor for the same
amount of P300,000.00, so that these claims will offset each
other, but as to Associated, it having been so clearly shown to
be the transgressor, it must respond unto American Biscuit in
the liquidated damages of P300,000.00, but as these liquidated
damages due to American Biscuit from Associated and
Operators as solidary debtors are already offset by American
Biscuit's liability to Operators for the same amount of liquidated
damages by reason of American Biscuit's own breach of
contract as against Operators, therefore American Biscuit can
no longer recover from Operators nor Associated but as of the
two solidary debtors, Associated and Operators, it was
Associated that was solely at fault and had given occasion for
American Biscuit to impose the liquidated damages, therefore,
Operator should in turn be entitled to shift the responsibility
therefor upon Associated, thus permitting it to recover from
Associated the P300,000.00 it had offset against American
Biscuit; and even as between Associated and Operators, as
there has not been shown any cause nor reason for Associated
to complain against Operators, once, again under Art. 2208,
this Court finds it only just to grant attorney's fees unto
Operators therefor, which it win fix at P5,000.00; 5
and ruled that:
IN VIEW WHEREOF, judgment will have to be as it is hereby
modified so that a new one is dictated as follows: Associated is
condemned to pay Operators the sum of P300,000.00 plus
attorney's fees in the sum of P5,000.00 plus costs; and as
against Associated, Exh. A and B are declared rescinded; costs
of American Biscuit to be paid by Associated. 6
In G.R. No. L-35024, Associated Biscuit submits the following:
ASSIGNMENT OF ERRORS
I. THE COURT OF APPEALS ERRED IN NOT HOLDING
AMERICAN BISCUIT COMPANY, INC., LIABLE FOR
BREAKING THE TEN-YEAR TERM OF THE TRIPARTITE
AGREEMENT IN PLACING PETITIONER'S BISCUIT
BUSINESS UNDER RECEIVERSHIP WITHOUT JUST
CAUSE.
II. THE COURT OF APPEALS ERRED IN REVERSING THE
CONCLUSION OF THE TRIAL COURT THAT PETITIONER'S
USE OF THE PRODUCERS' DOLLAR QUOTA OF
RESPONDENT AMERICAN BISCUIT COMPANY, INC. WAS A
CONTRACTUAL RIGHT UNDER THE TRIPARTITE
AGREEMENT.
III. THE COURT OF APPEALS ERRED IN REVERSING THE
TRIAL COURT'S CONCLUSION THAT RESPONDENTS
BROKE PETITIONER'S CONTRACTUAL RIGHT TO THE
DOLLAR QUOTA AND ABSOLVING THEM FROM LIABILITY
THEREFROM.
IV. THE COURT OF APPEALS ERRED IN JUSTIFYING
RESPONDENTS' BREACH OF PETITIONER'S
CONTRACTUAL RIGHT TO THE DOLLAR QUOTA BY
HOLDING THAT PETITIONER HAD FAILED TO SATISFY THE
CREDITORS OF AMERICAN BISCUIT COMPANY, INC.
SINCE AUGUST, 1955.
V. THE COURT OF APPEALS ERRED IN NOT HOLDING
THAT PETITIONER HAD FULFILLED ITS OBLIGATIONS
REGARDING THE INDEBTEDNESS OF AMERICAN BISCUIT
COMPANY, INC.
VI. THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER VIOLATED THE TRIPARTITE AGREEMENT
BECAUSE CHINA BANKING CORPORATION, CHUA TEE
AND CHUA TEE & CO., FILED SUITS AGAINST AMERICAN
BISCUIT COMPANY, INC. IN AUGUST, 1958, INSTEAD OF
CONDEMNING AMERICAN BISCUIT COMPANY, INC. TO
PAY MORAL DAMAGES FOR ITS FRAUDULENT
COMPLAINT.
VII. THE COURT OF APPEALS ERRED IN RULING THAT
PETITIONER'S DISCONTINUANCE OF ITS MONTHLY
ALLOWANCE FOR OVERHEAD EXPENSES TO AMERICAN
BISCUIT COMPANY, INC. AFTER FEBRUARY, 1955 WAS A
BREACH OF THE TRIPARTITE AGREEMENT.
VIII. THE COURT OF APPEALS ERRED IN CONSIDERING
AS A CONTRACTUAL BREACH PETITIONER'S DISPOSAL
OF TWO PIECES OF EQUIPMENT, ALTHOUGH THE TRIAL
COURT HAD NOT RULED ON THAT POINT AND THE LONE
ASSIGNMENT OF ERROR THRUST IN BY AMERICAN
BISCUIT COMPANY, INC. WAS ADMITTEDLY GENERAL OR
NON-SPECIFIC.
IX. THE COURT OF APPEALS FURTHER ERRED IN NOT
DECLARING THE RESCISSION OF THE CONTRACTS AT
THE INSTANCE OF PETITIONER, WITH REIMBURSEMENT
OF ITS ADVANCES AND DAMAGES, LIQUIDATED AND
MORAL, PLUS LEGAL INTEREST.
X. THE COURT OF APPEALS ERRED IN DISMISSING
PETITIONER'S CROSS-CLAIM AGAINST OPERATORS
INCORPORATED AND CONDEMNING PETITIONER TO PAY
IT P300,000.00 INSTEAD.
XI. THE COURT OF APPEALS ERRED IN ENTERTAINING
RESPONDENTS' APPEAL OVER PETITIONER'S
OBJECTIONS. 7
Operators Incorporated, as the petitioner in G.R. No. L-34767,
in turn assigns these errors:
I. THE COURT OF APPEALS ERRED IN NOT HOLDING
THAT UNDER THE OPERATING CONTRACT (Exh. A) AND
THE TRIPARTITE AGREEMENT (Exh. B) DEFENDANT-
APPELLANT OPERATORS INC. IS NOT ANSWERABLE OR
RESPONSIBLE UNTO PLAINTIFF-APPELLANT AMERICAN
BISCUIT CO., INC., IN SOLIDUM WITH DEFENDANT-
APPELLANT ASSOCIATED BISCUIT INC., FOR THE
LATTER'S MISFEASANCES
II. THE COURT OF APPEALS ERRED IN HOLDING THAT
"DEFENDANT-APPELLANT OPERATORS INC., IS LIABLE
FOR THE LIQUIDATED DAMAGES PRESCRIBED AT
P300,000 IN PARAGRAPH 13 OF THE TRIPARTITE
AGREEMENT (EXH. B).
III. THE COURT OF APPEALS ERRED IN NOT SENTENCING
OR CONDEMNING PLAINTIFF-APPELLEE AMERICAN
BISCUIT CO., TO PAY DEFENDANT-APPELLANT
OPERATORS INC., THE SUM OF P300,000.00 BY WAY OF
LlQUIDATED DAMAGES AND THE SUM OF P20,000 AS
ATTORNEY'S FEES, UNDER PARAGRAPH 6 OF THE
OPERATING AGREEMENT (EXH. A) 8
And in G.R. No. L-35073, American Biscuit argues that:
I. THE COURT OF APPEALS ERRED IN HOLDING THAT
PETITIONER'S "ACCUSATION OF BREACH" WAS,
PURSUANT TO THE GOVERNING CONTRACTS,
REFERABLE TO ARBITRATION, CONSIDERING THAT THE
SAME IS BASED ON THE FAILURE OF DEFENDANT
ASSOCIATED BISCUIT, INC. TO CARRY OUT THEIR TERMS
AND CONDITIONS, ESPECIALLY ITS FAILURE TO SATISFY
THE INDEBTEDNESS OF PETITIONER MENTIONED
THEREIN, WHICH, UNDER SAID GOVERNING
AGREEMENTS, EXPRESSLY GRANTS PETITIONER THE
RIGHT TO FILE, SUIT FOR THE CANCELLATION OR
ABROGATION OF THE SAME.
IT IS NOT BASED ON ANY DISAGREEMENT AS TO THE
MEANING OR EFFECT OF THE GOVERNING CONTRACTS
OR ANY CLAUSE THEREOF OR IN RESPECT TO THE
PERCENTAGE ACCRUING TO THE PARTIES, ANY OF
WHICH CASES IS REFERABLE TO A BOARD OF
ARBITRATORS UNDER THE SAME CONTRACTS.
II. PETITIONER AND DEFENDANT OPERATIONS, INC. HAD
NOTHING AT ALL REFERABLE TO ARBITRATION BECAUSE
THEY HAD NO QUARREL WHATSOEVER AS BORNE OUT
BY THE EVIDENCE ON RECORD AND AS EXPRESSLY
NOTED BY THE COURT OF APPEALS IN ITS DECISION.
III. ASSUMING ARGUENDO THAT PETITIONER'S
"ACCUSATION OF BREACH" WAS SUBJECT TO
ARBITRATION, WHEN DEFENDANT OPERATORS FILED
ITS ANSWER, ENTERED INTO TRIAL AND COMPLETED ITS
EVIDENCE WITHOUT EVEN FILING A MOTION TO STAY
THE PROCEEDING PURSUANT TO SEC. 7 OF REPUBLIC
ACT 876 (ARBITRATION LAW) FROM THE FILING OF THE
COMPLAINT ON 15 SEPTEMBER 1958 UP TO THE
RENDITION OF THE LOWER COURT'S JUDGMENT ON 14
APRIL 1969, IT UNQUESTIONABLY WAIVED ITS RIGHT TO
AVAIL ITSELF OF THE CONTRACTUAL ARBITRATION
CLAUSE.
IV. IF THE COURT OF APPEALS CONSIDERS THE
IMPOSITION OF P300,000.00 IN LIQUIDATED DAMAGES
AGAINST PETITIONER AS FAIR, NOTWITHSTANDING THE
FACT THAT OPERATORS, INC. WAIVED ITS RIGHT TO
ARBITRATION, THEN FOR EACH AND EVERY BREACH OF
ASSOCIATED BISCUIT, INC. THE COURT OF APPEALS
SHOULD HAVE IMPOSED P300,000.00 LIKEWISE AS
LIQUIDATED DAMAGES AGAINST IT AND IN TURN
AGAINST OPERATORS, INC., BEING A SOLIDARITY
OBLIGOR. 9
The threshold inquiry is whether or not the appeals (in the
Court of Appeals) of American Biscuit and Operators Inc.
should have been dismissed at the outset since they assigned
no errors. There is no merit in this contention. In Miguel vs.
Court of Appeals, 10 citing Cabrera vs. Belen, 11 we declared
that:
... [A]pellants need not make specific assignment of errors
provided they discuss at length and assail in their brief the
correctness of the trial court's findings regarding the matter.
Said discussion warrants the appellate court to rule upon the
point because it substantially complies with sec. 7, Rule 51 of
the Revised Rules of Court, intended merely to compel the
appellant to specify the questions which he wants to raise and
be disposed of in his appeal. A clear discussion regarding an
error allegedly committed by the trial court accomplishes the
purpose of a particular assignment of error.
As correctly noted by the appellate court, "an examination of
the briefs of American Biscuit and Operators who show that
while their assignments of error are really general, the bodies
of their briefs are specific enough." 12
The fundamental question is whether or not Associated Biscuit
violated the terms of the Operating Contract and the Tripartite
Agreement. On this question, both the trial and appellate
courts were agreed that Associated Biscuit failed to comply
with its dual contractual commitments of settling the financial
obligations of American Biscuits and of paying its monthly
overhead expenses. It is a finding that finds ample support in
the evidence. The Court of Appeals pointed out that (1) on
June 23, 1955, American Biscuit had asked Associated Biscuit
and Operators, under pain of rescission of the contract, to
satisfy the claims of its creditors, but in spite of assurances by
Associated Biscuit, nothing tangible came about, leading to the
tripartite conference of August 13, 1955. As a result, the parties
arrived at an arrangement that obliged Associated and
Operators to make a promissory note payable on March 13,
1957. But again, this was not paid; and (2) in both the letter of
June 23, 1955 and the tripartite conference of August 23, 1955,
American Biscuit demanded from Associated Biscuit the
payment of the former's monthly overhead expenses but
Associated made payments good only up to February, 1955,
and the payment itself was made only in October, 1955. These
are factual findings that bind this Court. 13
We are not convinced with the following arguments of
Associated Biscuit:
... Short of execution of judgments and consequent closure of
the candy department, there could be no breach of paragraph
9 of the Operating Contract; and there had been neither
judgment nor execution on those cases [filed by the creditors
of American Biscuit against the latter] before American Biscuit
Company, Inc., commenced [the instant case] Civil Case No.
37540 on or about September 12, 1958. 14
The theory then, of Associated Biscuit is that paragraph 9 of
the Operating Contract stipulating that:
9. The OPERATOR hereby agrees, guarantees and
represents that it will at all times protect and safeguard the A B
C from lawsuits arising from the claims of its present creditors
by and through the payment and satisfaction of the latter's
claims.
is violated only upon an actual execution of any judgment
against American Biscuit and a physical takeover of the
company's properties.
Such a stand is not only patently against the clear wordings of
the Operating Contract, it is absurd. It should be observed that
Associated Biscuit itself outlined in its brief that American
Biscuit had entered into the Operating Contract at a time when
its creditors had already commenced foreclosure proceedings
upon its properties and at a time when its equipment and
machineries were already in danger of being sold at public
auction.15 That was why Operators and Associated Biscuit,
under paragraph 9 of the Operating Contract, obligated
themselves to "protect and safeguard the ABC from lawsuits ...
by and through the payment and satisfaction of the [creditors']
claims." The "execution of judgments" and the "consequent
closure of the candy department" were precisely the
consequences American Biscuit had feared and foreseen, for
which Operators and Associated Biscuit were made to assume
the liabilities they now deny. Clearly, when there is insufficient
payment, as factually shown in the cases at bar, there is a
violation of the Operating Contract.
For one of the essential ingredients of payment as a mode of
extinguishing obligations is integrity, that is, the payment must
be complete or full. Article 1233 of the Civil Code states: "A
debt shag not be understood to have been paid unless the
thing or service in which the obligation consists has been
completely delivered or rendered, as the case may be."
Associated Biscuit cannot claim that its share in the dollar
quota of American Biscuit is a contractual right. The fact is that,
as found by the appellate court, American Biscuit did not refuse
to share the quota with Associated Biscuit. Furthermore, in its
very brief, Associated Biscuit avers:
Honoring the adjustments, American Biscuit Company, Inc.
allowed petitioner to use half of its dollar quota as petitioner
prepared to operate the biscuit department in 1955; and
petitioner had enjoyed the quota equally with the Operators
Incorporated until June 1957, when the quota was suspended
by the Central Bank for failure of American Biscuit Company,
Inc. to file the required production report. 16
As the Court of Appeals correctly noted, after the Operating
Contract and the Tripartite Agreement had gone into effect,
American Biscuit went into inactivity, and since Operators and
Associated Biscuit had then taken charge of the business, it
was their foremost obligation to see that the production report
was duly filed.
We agree with the Court of Appeals that Associated had failed
to exercise due diligence with respect to the American Biscuit's
quota allocations. It was a part of its contractual undertaking
and its efforts were wanting in that regard. Moreover, even as
Associated Biscuit was actually sharing in the quota allocations
until June, 1957, it, as late as March, 1957, had continuously
failed to satisfy the of American Biscuit's creditors and to pay
the overhead expenses of the biscuit company. These are hard
facts Associated Biscuit cannot now disavow by a torture of the
words of the contracts.
The position of Operators that under the Operating Contract
and the Tripartite Agreement it is not answerable for the
misfeasance of Associated, is belied by the very provisions of
the Tripartite Agreement, thus:
10. Incorporating Clauses.
Paragraphs 9, 10, 11, the provisions on Board of Arbitrators,
14, 15, 16 and 17 of the contract of September 26, 1953
between the American Biscuit Co., Inc. and Operators
Incorporated are hereby incorporated into this Contract by way
of reference and made an essential part hereof; and the word
"OPERATORS" mentioned in said paragraphs is to be
understood as to include the Associated Biscuit Operators Inc.,
for purposes of this Contract; and both the Operators
Incorporated and the Associated Biscuit Operators Inc., in so
far as liabilities and obligations therein contained in said
paragraphs shall be made answerable to the American Biscuit
Co., Inc., jointly and severally. 17
There is thus no mistaking the fact that Operators and
Associated had assumed, per their agreements, American's
liabilities to its creditors in solidum.
Article 1207 of the new Civil Code states that: "there is a
solidary liability when the obligation expressly so states .... " 18
What may have led Operators in denying the solidary character
of its obligations was the fact that it was engaged in the
manufacture of candy whereas Associated Biscuit was
supposed to manufacture biscuits, and the fact that the two
operators were required to invest different minimum amounts
in the venture. But these conditions do not alter the solidary
nature of their obligations as expressly provided. According to
Article 1211 of the Civil Code, "solidarity may exist although the
debtors may not be bound in the same manner and by the
same periods and conditions." 19 Accordingly, the disparity in
their functions under the contracts does not vary the fact that
they were bound, in connection with American's liabilities,
jointly and severally.
American Biscuit's own submission, however, that:
The Court of Appeals erred in holding that petitioner's
"accusation of breach" was, pursuant to the defendant
Associated Biscuit, Inc. to carry out their terms and conditions,
especially its failure to satisfy the indebtedness of petitioner
mentioned therein, which, under said governing agreements,
expressly grants petitioner the right to file suit for the
cancellation or abrogation of the same. 20
lacks merit.
A closer scrutiny of the contracts in question will show that,
contrary to the contention of American Biscuit, there was, as
between itself and Operators, a disagreement as to the
meaning and effect of the governing contracts, a disagreement
referable, indeed, to a Board of Arbitrators pursuant to the
arbitration clause. And this was violated by American Biscuit
when it made Operators a co-defendant in the complaint for
the cancellation of the aforesaid agreements.
To be sure, even if the solidary nature of Operators' liability is
self-evident, American Biscuit cannot disregard such an
arbitration clause stipulated in the contracts. Solidarity does
not make a solidary obligor an indispensable party in a suit
filed by the creditor. Article 1216 of the Civil Code says that the
creditor "may proceed against anyone of the solidary debtors
or some or all of them simultaneously. 21
At the very least then, the inclusion of Operators in the case
filed below is a dead issue. The dispute between the parties
should have been the subject of arbitration as agreed upon.
IN VIEW OF THE FOREGOING, the decision appealed from is
hereby affirmed in toto. No costs.
IT IS SO ORDERED.
Baas v Asia Pacific
C. G. DIZON CONSTRUCTION INC. and CENEN DIZON in
this petition for review seek the reversal of the 24 July 1996
Decision of the Court of Appeals dismissing their appeal for
lack of merit and affirming in toto the decision of the trial court
holding them liable to Asia Pacific Finance Corporation in the
amount of P87,637.50 at 14% interest per annum in addition to
attorney's fees and costs of suit, as well as its 21 March 1997
Resolution denying reconsideration thereof.[2]
On 20 March 1981 Asia Pacific Finance Corporation (ASIA
PACIFIC for short) filed a complaint for a sum of money with
prayer for a writ of replevin against Teodoro Baas, C. G. Dizon
Construction and Cenen Dizon. Sometime in August 1980
Teodoro Baas executed a Promissory Note in favor of C. G.
Dizon Construction whereby for value received he promised to
pay to the order of C. G. Dizon Construction the sum of
P390,000.00 in installments of "P32,500.00 every 25th day of
the month starting from September 25, 1980 up to August 25,
1981."[3]
Later, C. G. Dizon Construction endorsed with recourse the
Promissory Note to ASIA PACIFIC, and to secure payment
thereof, C. G. Dizon Construction, through its corporate
officers, Cenen Dizon, President, and Juliette B. Dizon, Vice
President and Treasurer, executed a Deed of Chattel Mortgage
covering three (3) heavy equipment units of Caterpillar
Bulldozer Crawler Tractors with Model Nos. D8-14A, D8-2U
and D8H in favor of ASIA PACIFIC.[4] Moreover, Cenen Dizon
executed on 25 August 1980 a Continuing Undertaking
wherein he bound himself to pay the obligation jointly and
severally with C. G. Dizon Construction.[5]
In compliance with the provisions of the Promissory Note, C.
G. Dizon Construction made the following installment
payments to ASIA PACIFIC: P32,500.00 on 25 September
1980, P32,500.00 on 27 October 1980 and P65,000.00 on 27
February 1981, or a total of P130,000.00. Thereafter, however,
C. G. Dizon Construction defaulted in the payment of the
remaining installments, prompting ASIA PACIFIC to send a
Statement of Account to Cenen Dizon for the unpaid balance of
P267,737.50 inclusive of interests and charges, and
P66,909.38 representing attorney's fees. As the demand was
unheeded, ASIA PACIFIC sued Teodoro Baas, C. G. Dizon
Construction and Cenen Dizon.
While defendants (herein petitioners) admitted the
genuineness and due execution of the Promissory Note, the
Deed of Chattel Mortgage and the Continuing Undertaking,
they nevertheless maintained that these documents were
never intended by the parties to be legal, valid and binding but
a mere subterfuge to conceal the loan of P390,000.00 with
usurious interests.
Defendants claimed that since ASIA PACIFIC could not directly
engage in banking business, it proposed to them a scheme
wherein plaintiff ASIA PACIFIC could extend a loan to them
without violating banking laws: first, Cenen Dizon would secure
a promissory note from Teodoro Baas with a face value of
P390,000.00 payable in installments; second, ASIA PACIFIC
would then make it appear that the promissory note was sold
to it by Cenen Dizon with the 14% usurious interest on the loan
or P54,000.00 discounted and collected in advance by ASIA
PACIFIC; and, lastly, Cenen Dizon would provide sufficient
collateral to answer for the loan in case of default in payment
and execute a continuing guaranty to assure continuous and
prompt payment of the loan. Defendants also alleged that out
of the loan of P390,000.00 defendants actually received only
P329,185.00 after ASIA PACIFIC deducted the discounted
interest, service handling charges, insurance premium,
registration and notarial fees.
Sometime in October 1980 Cenen Dizon informed ASIA
PACIFIC that he would be delayed in meeting his monthly
amortization on account of business reverses and promised to
pay instead in February 1981. Cenen Dizon made good his
promise and tendered payment to ASIA PACIFIC in an amount
equivalent to two (2) monthly amortizations. But ASIA PACIFIC
attempted to impose a 3% interest for every month of delay,
which he flatly refused to pay for being usurious.
Afterwards, ASIA PACIFIC allegedly made a verbal proposal to
Cenen Dizon to surrender to it the ownership of the two (2)
bulldozer crawler tractors and, in turn, the latter would treat the
former's account as closed and the loan fully paid. Cenen
Dizon supposedly agreed and accepted the offer. Defendants
averred that the value of the bulldozer crawler tractors was
more than adequate to cover their obligation to ASIA PACIFIC.
Meanwhile, on 21 April 1981 the trial court issued a writ of
replevin against defendant C. G. Dizon Construction for the
surrender of the bulldozer crawler tractors subject of the Deed
of Chattel Mortgage. Of the three (3) bulldozer crawler tractors,
only two (2) were actually turned over by defendants - D8-14A
and D8-2U - which units were subsequently foreclosed by ASIA
PACIFIC to satisfy the obligation. D8-14A was sold for
P120,000.00 and D8-2U for P60,000.00 both to ASIA PACIFIC
as the highest bidder.
During the pendency of the case, defendant Teodoro Baas
passed away, and on motion of the remaining defendants, the
trial court dismissed the case against him. On the other hand,
ASIA PACIFIC was substituted as party plaintiff by International
Corporate Bank after the disputed Promissory Note was
assigned and/or transferred by ASIA PACIFIC to International
Corporate Bank. Later, International Corporate Bank merged
with Union Bank of the Philippines. As the surviving entity after
the merger, and having succeeded to all the rights and
interests of International Corporate Bank in this case, Union
Bank of the Philippines was substituted as a party in lieu of
International Corporate Bank.[6]
On 25 September 1992 the Regional Trial Court ruled in favor
of ASIA PACIFIC holding the defendants jointly and severally
liable for the unpaid balance of the obligation under the
Promissory Note in the amount of P87,637.50 at 14% interest
per annum, and attorney's fees equivalent to 25% of the
monetary award.[7]
On 24 July 1996 the Court of Appeals affirmed in toto the
decision of the trial court thus -
Defendant-appellants' contention that the instruments were
executed merely as a subterfuge to skirt banking laws is an
untenable defense. If that were so then they too were parties to
the illegal scheme. Why should they now be allowed to take
advantage of their own knavery to escape the liabilities that
their own chicanery created?
Defendant-appellants also want us to believe their story that
there was an agreement between them and the plaintiff-
appellee that if the former would deliver their 2 bulldozer
crawler tractors to the latter, the defendant-appellants'
obligation would fully be extinguished. Again, nothing but the
word that comes out between the teeth supports such story.
Why did they not write down such an important agreement? Is
it believable that seasoned businessmen such as the
defendant-appellant Cenen G. Dizon and the other officers of
the appellant corporation would deliver the bulldozers without a
receipt of acquittance from the plaintiff-appellee x x x x In our
book, that is not credible.
The pivotal issues raised are: (a) Whether the disputed
transaction between petitioners and ASIA PACIFIC violated
banking laws, hence, null and void; and (b) Whether the
surrender of the bulldozer crawler tractors to respondent
resulted in the extinguishment of petitioners' obligation.
On the first issue, petitioners insist that ASIA PACIFIC was
organized as an investment house which could not engage in
the lending of funds obtained from the public through receipt of
deposits. The disputed Promissory Note, Deed of Chattel
Mortgage and Continuing Undertaking were not intended to be
valid and binding on the parties as they were merely devices to
conceal their real intention which was to enter into a contract of
loan in violation of banking laws.
We reject the argument. An investment company refers to any
issuer which is or holds itself out as being engaged or
proposes to engage primarily in the business of investing,
reinvesting or trading in securities.[8] As defined in Sec. 2, par.
(a), of the Revised Securities Act,[9] securities "shall include x
x x x commercial papers evidencing indebtedness of any
person, financial or non-financial entity, irrespective of maturity,
issued, endorsed, sold, transferred or in any manner conveyed
to another with or without recourse, such as promissory notes
x x x x" Clearly, the transaction between petitioners and
respondent was one involving not a loan but purchase of
receivables at a discount, well within the purview of "investing,
reinvesting or trading in securities" which an investment
company, like ASIA PACIFIC, is authorized to perform and
does not constitute a violation of the General Banking Act.[10]
Moreover, Sec. 2 of the General Banking Act provides in part -
Sec. 2. Only entities duly authorized by the Monetary Board of
the Central Bank may engage in the lending of funds obtained
from the public through the receipt of deposits of any kind, and
all entities regularly conducting such operations shall be
considered as banking institutions and shall be subject to the
provisions of this Act, of the Central Bank Act, and of other
pertinent laws (underscoring supplied).
Indubitably, what is prohibited by law is for investment
companies to lend funds obtained from the public through
receipts of deposit, which is a function of banking institutions.
But here, the funds supposedly "lent" to petitioners have not
been shown to have been obtained from the public by way of
deposits, hence, the inapplicability of banking laws.
On petitioners' submission that the true intention of the parties
was to enter into a contract of loan, we have examined the
Promissory Note and failed to discern anything therein that
would support such theory. On the contrary, we find the terms
and conditions of the instrument clear, free from any ambiguity,
and expressive of the real intent and agreement of the parties.
We quote the pertinent portions of the Promissory Note -
FOR VALUE RECEIVED, I/We, hereby promise to pay to the
order of C.G. Dizon Construction, Inc. the sum of THREE
HUNDRED NINETY THOUSAND ONLY (P390,000.00),
Philippine Currency in the following manner:
P32,500.00 due every 25th of the month starting from
September 25, 1980 up to August 25, 1981.
I/We agree that if any of the said installments is not paid as
and when it respectively falls due, all the installments covered
hereby and not paid as yet shall forthwith become due and
payable at the option of the holder of this note with interest at
the rate of 14% per annum on each unpaid installment until
fully paid.
If any amount due on this note is not paid at its maturity and
this note is placed in the hands of an attorney for collection,
I/We agree to pay in addition to the aggregate of the principal
amount and interest due, a sum equivalent to TEN PERCENT
(10%) thereof as Attorney's fees, in case no action is filed,
otherwise, the sum will be equivalent to TWENTY FIVE (25%)
of the said principal amount and interest due x x x x
Makati, Metro Manila, August 25, 1980.
ENDORSED TO ASIA PACIFIC FINANCE CORPORATION
WITH RECOURSE, C.G. DIZON CONSTRUCTION, INC.
By: (Sgd.) Cenen Dizon (Sgd.) Juliette B. Dizon
President VP/Treasurer
Likewise, the Deed of Chattel Mortgage and Continuing
Undertaking were duly acknowledged before a notary public
and, as such, have in their favor the presumption of regularity.
To contradict them there must be clear, convincing and more
than merely preponderant evidence. In the instant case, the
records do not show even a preponderance of evidence in
favor of petitioners' claim that the Deed of Chattel Mortgage
and Continuing Undertaking were never intended by the
parties to be legal, valid and binding. Notarial documents are
evidence of the facts in clear and unequivocal manner therein
expressed.[11]
Interestingly, petitioners' assertions were based mainly on the
self-serving testimony of Cenen Dizon, and not on any other
independent evidence. His testimony is not only unconvincing,
as found by the trial court and the Court of Appeals, but also
self-defeating in light of the documents presented by
respondent, i.e., Promissory Note, Deed of Chattel Mortgage
and Continuing Undertaking, the accuracy, correctness and
due execution of which were admitted by petitioners. Oral
evidence certainly cannot prevail over the written agreements
of the parties. The courts need only rely on the faces of the
written contracts to determine their true intention on the
principle that when the parties have reduced their agreements
in writing, it is presumed that they have made the writings the
only repositories and memorials of their true agreement.
The second issue deals with a question of fact. We have ruled
often enough that it is not the function of this Court to analyze
and weigh the evidence all over again, its jurisdiction being
limited to reviewing errors of law that might have been
committed by the lower court.[12] At any rate, while we are not
a trier of facts, hence, not required as a rule to look into the
factual bases of the assailed decision of the Court of Appeals,
we did so just the same in this case if only to satisfy petitioners
that we have carefully studied and evaluated the case, all too
mindful of the tenacity and vigor with which the parties, through
their respective counsel, have pursued this case for nineteen
(19) years.
Petitioners contend that the parties already had a verbal
understanding wherein ASIA PACIFIC actually agreed to
consider petitioners' account closed and the principal obligation
fully paid in exchange for the ownership of the two (2)
bulldozer crawler tractors.
We are not persuaded. Again, other than the bare allegations
of petitioners, the records are bereft of any evidence of the
supposed agreement. As correctly observed by the Court of
Appeals, it is unbelievable that the parties entirely neglected to
write down such an important agreement. Equally incredulous
is the fact that petitioner Cenen Dizon, a seasoned
businessman, readily consented to deliver the bulldozers to
respondent without a corresponding receipt of acquittance.
Indeed, even the testimony of petitioner Cenen Dizon himself
negates the supposed verbal understanding between the
parties -
Q: You said and is it not a fact that you surrendered the
bulldozers to APCOR by virtue of the seizure order?
A: There was no seizure order. Atty. Carag during that time
said if I surrender the two equipment, we might finally close a
deal if the equipment would come up to the balance of the
loan. So I voluntarily surrendered, I pulled them from the job
site and returned them to APCOR x x x x
Q: You mentioned a certain Atty. Carag, who is he?
A: He was the former legal counsel of APCOR. They were
handling cases. In fact, I talked with Atty. Carag, we have a
verbal agreement if I surrender the equipment it might suffice
to pay off the debt so I did just that (underscoring ours).[13]
In other words, there was no binding and perfected contract
between petitioners and respondent regarding the settlement
of the obligation, but only a conditional one, a mere conjecture
in fact, depending on whether the value of the tractors to be
surrendered would equal the balance of the loan plus interests.
And since the bulldozer crawler tractors were sold at the
foreclosure sale for only P180,000.00,[14] which was not
enough to cover the unpaid balance of P267,637.50,
petitioners are still liable for the deficiency.
Barring therefore a showing that the findings complained of are
totally devoid of support in the records, or that they are so
glaringly erroneous as to constitute serious abuse of discretion,
we see no valid reason to discard them. More so in this case
where the findings of both the trial court and the appellate court
coincide with each other on the matter.
With regard to the computation of petitioners' liability, the
records show that petitioners actually paid to respondent a
total sum of P130,000.00 in addition to the P180,000.00
proceeds realized from the sale of the bulldozer crawler
tractors at public auction. Deducting these amounts from the
principal obligation of P390,000.00 leaves a balance of
P80,000.00, to which must be added P7,637.50 accrued
interests and charges as of 20 March 1981, or a total unpaid
balance of P87,637.50 for which petitioners are jointly and
severally liable. Furthermore, the unpaid balance should earn
14% interest per annum as stipulated in the Promissory Note,
computed from 20 March 1981 until fully paid.
On the amount of attorney's fees which under the Promissory
Note is equivalent to 25% of the principal obligation and
interests due, it is not, strictly speaking, the attorney's fees
recoverable as between the attorney and his client regulated
by the Rules of Court. Rather, the attorney's fees here are in
the nature of liquidated damages and the stipulation therefor is
aptly called a penal clause. It has been said that so long as
such stipulation does not contravene the law, morals and
public order, it is strictly binding upon the obligor. It is the
litigant, not the counsel, who is the judgment creditor entitled to
enforce the judgment by execution.[15]
Nevertheless, it appears that petitioners' failure to fully comply
with their part of the bargain was not motivated by ill will or
malice, but due to financial distress occasioned by legitimate
business reverses. Petitioners in fact paid a total of
P130,000.00 in three (3) installments, and even went to the
extent of voluntarily turning over to respondent their heavy
equipment consisting of two (2) bulldozer crawler tractors, all in
a bona fide effort to settle their indebtedness in full. Article
1229 of the New Civil Code specifically empowers the judge to
equitably reduce the civil penalty when the principal obligation
has been partly or irregularly complied with. Upon the
foregoing premise, we hold that the reduction of the attorney's
fees from 25% to 15% of the unpaid principal plus interests is
in order.
Finally, while we empathize with petitioners, we cannot close
our eyes to the overriding considerations of the law on
obligations and contracts which must be upheld and honored
at all times. Petitioners have undoubtedly benefited from the
transaction; they cannot now be allowed to impugn its validity
and legality to escape the fulfillment of a valid and binding
obligation.
WHEREFORE, no reversible error having been committed by
the Court of Appeals, its assailed Decision of 24 July 1996 and
its Resolution of 21 March 1997 are AFFIRMED. Accordingly,
petitioners C.G. Construction Inc. and Cenen Dizon are
ordered jointly and severally to pay respondent Asia Pacific
Finance Corporation, substituted by International Corporate
Bank (now known as Union Bank of the Philippines),
P87,637.50 representing the unpaid balance on the
Promissory Note, with interest at fourteen percent (14%) per
annum computed from 20 March 1981 until fully paid, and
fifteen percent (15%) of the principal obligation and interests
due by way of attorney's fees. Costs against petitioners.
SO ORDERED.
Siy v CA
This is a petition for review which seeks to annul and set aside
the decision of the Court of Appeals, now Intermediate
Appellate Court affirming the trial court's decision, ordering,
among others, the rescission of the contract of sale entered
into between the petitioner and the private respondents.
The private respondents, spouses Valdez are the owners of a
parcel of land containing an area of 155 square meters, more
or less, and the house constructed thereon, situated at No. 333
Jefferson Street, Makati, and covered by Transfer Certificate of
Title No. 32718 of the Registry of Deeds of Rizal. There is no
dispute that the petitioner and private respondents entered into
a contract of sale regarding the said property. The controversy,
however, stemmed from subsequent agreements executed by
the parties.
The first agreement entered into by the petitioner and private
respondents was the Deed of Conditional Sale (Exh. A)
whereby for and in consideration of P22,000.00, the private
respondents as vendors agreed to sell to the petitioner as
vendee the lot covered by TCT No. 32718 with all the
improvements thereon. The sale was subject to the condition
that immediately upon the approval of the petitioner's loan with
the Social Security System (SSS) and its payment to the
respondents, the vendor shall execute the deed of absolute
sale in favor of the vendee. The petitioner applied for a loan
with the SSS, through the Home Financing Commission (HFC).
Since the property in question was mortgaged to the
Government Service Insurance System (GSIS), the HFC
requested both parties to execute a Deed of Sale with
Assumption of Mortgage (Exh. G) which they did, stating
among others that the respondents sell, transfer, and convey to
the petitioner the property for and in consideration of the sum
of P22,000.00, of which P6,400.00 (representing the amount
allegedly incurred by the petitioners for improvements on said
property) had been paid and the balance of P15,600. 00
payable upon approval of the petitioners loan with the SSS. In
reality, however, the respondents had not received a single
centavo from the petitioner at the time. Subsequently, the
parties executed three more contracts. The first contract (Exh.
I) which was executed more than one month after Exhibit A
provided that the respondents agreed to sell the property to the
petitioner at P14,000.00 while the latter must negotiate a loan
with the SSS in order to settle the amount within a period of
thirty days from March 17, 1963. The contract also provided for
the payment of rentals by the petitioner at P50.00 a month
from March 1, 1963 until the date of final settlement and
damages at the rate of P30.00 a day for each day of delay. The
next day, another contract was executed by the parties which
was essentially the same as Exh. "1". Respondent Virginia
Valdez explained that she did not agree with the granting of
another thirty-day extension to the petitioner and so Exh. "1"
was torn up. However, the respondents changed their minds
after the mother of the petitioner pleaded with them for another
extension. Thus, Exh. "2" came into being. It provided that the
full amount of P14,000.00 would be paid on or before the 30th
day from the date of the execution of the contract and that
failure of the petitioner to settle his obligation within that period
shall make him liable for damages at P30.00 for every day of
delay.
The last agreement entered into by the parties, (Exh. 5),
provided among others, that the respondents agreed to receive
the partial amount of P12,000.00 on the condition that the
balance of P4,376.00 is completely paid forty-five days after
the date fixed by them and that failure of the petitioner to pay
the said balance on the agreed time will entitle the respondents
to damages at P20.00 for every day of delay until said balance
shall have been fully paid.
Within the forty-five (45) days deadline, however, the petitioner
failed to pay both the P12,000.00 which was supposed to be
received by the respondents upon the execution of the
agreement, (Exh. 5) and the balance of P4,376.00. Thus, when
the petitioner's loan with the SSS was finally ready for release,
he requested the respondents to sign the deed of absolute sale
and other papers required by the SSS but the latter refused on
the ground that the petitioner had already breached their latest
agreement (Exh. 5). The petitioner filed an action for specific
performance with writ of preliminary mandatory injunction
seeking to compel the respondents to execute the deed of
absolute sale of the property and other such documents
required by the SSS for the immediate release of the approved
loan.
In its first decision, the trial court rendered judgment in favor of
the petitioner making the following findings:
Apparently, the defendants are of the impression that the
provision in the agreement that 'failure of the plaintiff to settle
said balance on or before the stipulated date will entitle the
defendants to collect P20.00 for every day of delay until
balance is fully paid' and just because plaintiff so failed to
comply with it this will release them from compliance with the
condition mentioned in Exhibits 'A' and 'G'. The court agrees
with the defendant that plaintiff committed a breach granting
that plaintiff failed to comply with the stated proviso, but this is
not the breach contemplated by law and cannot be considered
a sufficient cause for them to depart from their unfulfilled
obligation to the plaintiff because as the provision clearly
states, defendants' rights are adequately protected and
compensated in the form of damages recoverable from the
plaintiff in case of non-compliance by the plaintiff.
Under the law (Article 119, New Civil Code), in reciprocal
obligations, in case one of the obligors should not comply with
what is incumbent upon him, the injured party may choose
between the fulfillment and the rescission of the obligation with
the payment of damages in either case. In the instant case,
plaintiff seeks not rescission but fulfillment of the obligation. It
is obvious when the parties herein agreed that the
consideration mentioned in Exhibits 'A' & 'G ' that will be paid
upon the approval of the loan, they mean approval and release
of the loan. Weighing the evidence presented both by the
plaintiff and defendants, it is the opinion of the court that the
defendants by virtue of their contracts Exhibits 'A' and 'G', the
defendants can be compelled to fulfill the condition agreed
thereon.
In due time, the private respondents filed a motion for
reconsideration stating, among others, that the decision of the
lower court failed to consider the other contracts executed by
the parties. Among them was the agreement marked as Exhibit
"5" which would clearly show that there was a limited period
within which the petitioner was given time to secure a loan
from the SSS and pay P14,000.00, the real consideration for
the property agreed upon by the parties.
The petitioner filed his opposition to the respondents' motion
for reconsideration. The respondents in turn asked the lower
court for five (5) days within which to submit a rejoinder. The
extension was granted in open court. However, even before
the end of the five-day period, the court already issued an
order denying the respondents' motion for reconsideration.
Another motion to reconsider was, therefore, filed by the
respondents praying that their rejoinder be taken into account
since the same was filed within the five-day period granted by
the court.
Realizing its error, another decision was consequently
rendered by the trial court, this time, in favor of the private
respondents, stating the following:
This Court observes that Exhibit '5' is an implementation or
confirmation of the provisions of both Exhibits '1' and '2' which
are supplementary contracts providing for a definite period of
payment of the agreed purchase price of the property involved
herein. This period of payment is not provided for in Exhibits 'A'
and 'G' thereby modifying the later contracts in this regard.
Article 1374 of the new Civil Code of the Philippines, the Court
believes, is also applicable to the instant case wherein it is
provided that the various stipulations of a contract shall be
interpreted together, attributing to the doubtful ones that sense
which may result from all of them taken together. Exhibits 'A',
'G', '1', '2' and '5' being complementary contracts, they should
be construed to correctly arrive at the true intention of the
parties.
The wordings of Exhibit '5' when it states that the defendants-
spouses agreed to receive the partial amount of P12,000.00
only show that when Exhibit '5' was executed, defendants did
not yet receive said amount. It is still to be received, and
evidence of the plaintiff is wanting to show that he paid this
amount of P12,000.00. Neither is there any showing that the
balance of P4,763.00 agreed upon in Exhibit '5' had been paid
by the plaintiff within forty-five days from July 9, 1963. This
clearly constitutes a breach of their last agreement Exhibit '5'.
Article 1191 of the New Civil Code provides that the power to
rescind obligations is implied in reciprocal ones in case one of
the obligors should not comply with what is incumbent upon
him. The injured party may choose between the fulfillment and
the rescission of the obligation, with the payment of damages
in either case. There is no dispute that all the contracts entered
into by the parties herein are reciprocal ones. There is,
likewise, no question that the plaintiff is guilty of delay and the
defendants- spouses are entitled to damages occasioned by it
in the light of the provisions of Article 1170 of the New Civil
Code providing that those who, in the performance of their
obligations, are guilty of delay and those who, in any manner,
contravene the tenor thereof, are liable for damages. The
defendants-spouses elected rescission of their agreement of
purchase and sale with damages.
The petitioner filed a motion for reconsideration which the trial
court denied. On appeal, the Court of Appeals affirmed the
decision in toto. Hence, this petition.
The issues raised are:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
RULING THAT THE FIRST DECISION OF THE TRIAL COURT
WAS NOT FINAL WHEN THE SAME WAS SET ASIDE AND
SUPERSEDED BY THE SECOND DECISION AND THUS,
THE TRIAL COURT HAD NO MORE JURISDICTION TO
RENDER SAID SECOND DECISION, AND
II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN
SUSTAINING THE TRIAL COURT IN ORDERING THE
RESCISSION OF THE AGREEMENT (EXHIBIT 5) AND THE
PAYMENT OF DAMAGES AND ATTORNEY'S FEES.
The petitioner maintains that the motions for reconsideration
filed by the respondents are both pro forma because they
presented issues which the trial court had already considered
and ruled upon and that the second motion for reconsideration
merely asked the court to consider two documents which were
already submitted by respondents in evidence. The petitioner
argues that the said motion did not interrupt the running of the
period to appeal and thus, when the second decision was
rendered the trial court had already lost its jurisdiction over the
case, making such decision null and void.
The above contentions are untenable.
In the first place, the very purpose of a motion for
reconsideration is to point out the findings and conclusions of
the decision which in the movant's view, are not supported by
law or the evidence. The movant is, therefore, very often
confined to the amplification or further discussion of the same
issues already passed upon by the court. Otherwise, his
remedy would not be a reconsideration of the decision but a
new trial or some other remedy. In the case of Vina v. Court of
Appeals (126 SCRA 381-382), we emphasized the nature of a
motion for reconsideration. We ruled:
Contrary to petitioner's contention, REPUBLIC's Motion for
Reconsideration dated January 10, 1973 was not pro forma,
even if we were to concede that it was a reiteration of its
previous Motion for suspension of the proceedings.
... Among the ends to which a motion for reconsideration is
addressed, one is precisely to convince the court that its ruling
is erroneous and improper, contrary to the law or the evidence
(Rule 37, Section 1, subsection [c]; and in doing so, the
movant has to dwell of necessity upon the issues passed upon
by the court. If a motion for reconsideration may not discuss
these issues, the consequence would be that after a decision
is rendered, the losing party would be confined to filing only
motions for reopening and new trial. We find in the Rules of
Court no warrant for ruling to that effect, a ruling that would, in
effect eliminate subsection (c) of Section I of Rule 37. (Guerra
Enterprises Co., Inc. v. Court of First Instance of Lanao del
Sur, 32 SCRA 317 [1970]).
Secondly, as far as the second motion of respondents is
concerned, the same should not be strictly construed as a
motion for reconsideration although captioned as such
because in reality, it is merely a supplementary pleading aimed
to call the court's attention to the fact that it had given the
respondents five days to file their rejoinder, with which they
complied and, therefore, said rejoinder should have been
considered before the court acted upon the respondents' first
motion for reconsideration. Supplemental pleadings are meant
to supply deficiencies in aid of original pleadings, not to entirely
substitute the latter (See Pasay City Government v. CFI of
Manila, 132 SCRA 169), and neither should they be considered
independently nor separately from such original pleadings.
We, therefore, hold that the appellate court did not commit
grave abuse of discretion in upholding the trial court's
jurisdiction when it rendered the second decision.
In the second assignment of error, the petitioner contends that
the Court of Appeals committed a reversible error in affirming
the rescission of the contract when the respondents did not
pray for rescission and in ordering the payment of damages
and attorney's fees notwithstanding the fact that the complaint
for specific performance was not instituted in bad faith.
It is noteworthy to mention that in their answer to the
petitioner's complaint, the respondents prayed for the
annulment of both the Deed of Conditional Sale (Exh. 'A') and
the Deed of Sale with Assumption of Mortgage (Exh. 'G') which
are the very bases of the supplemental agreements (Exhs. '1',
'2' and '5') executed between the petitioner and the
respondent. The technical argument that the respondents
never prayed for the rescission of the contracts and that the
trial court and the appellate court should never have rescinded
the same has no merit. Furthermore, by failing to pay the
amount of P12,000.00 and the balance of P4,376.00 as
stipulated in the contract within the forty-five (45) days period,
the petitioner clearly committed a breach of contract which
sufficiently and justly entitled the respondents to ask for the
rescission of the contracts. In the case of Nagarmull v.
Binalbagan-Isabel Sugar Co., Inc. (33 SCRA 52), we ruled that
" ... The Breach of contract committed by appellee gave
appellant, under the law and even under general principles of
fairness, the right to rescind the contract or to ask for its
specific performance, in either case with right to demand
damages ... It is evident, in the case at bar, that the
respondents chose to rescind the contracts after the petitioner
repeatedly failed to pay not only the balance but the initial
amount as downpayment in consideration of which the
contracts or agreements were executed. As a matter of fact,
the petitioner later asked the SSS to cancel his loan
application. He thereby abandoned his own claim for specific
performance. Therefore, the appellate court correctly affirmed
the rescission of the above-mentioned contracts. It also
correctly affirmed the payment of attorney's fees. While the
petitioner may not have acted in bad faith in filing his
complaint, still the payment of attorney's fees is warranted in
this case because of the environmental circumstances which
compelled the respondents to litigate for the protection of their
interests. (See Bert Osmena & Associates v. Court of Appeals,
120 SCRA 401 and Article 2208 (2) New Civil Code).
We, however, find the award of damages in the amount of
P4,376.00 unwarranted. In their motion for reconsideration, the
respondents explained how they arrived at this amount
Plaintiff obliged himself to pay P30.00 for everyday of delay
after the lapse of thirty days from the execution of the
document of March 17, 1963 (Exh. 1-Defendants). Thirty days
from March 17, 1963 would be April 18, which will mark the
beginning of the counting of the days of delays. From April 18,
1963 to July 9, 1963, the number of days of delay was 82
days. Plaintiff requested that this be reduced to 70 days and
defendants agreed. At P30.00 per day of delay the amount in
70 days will be P2,100.00. The rental as provided for in the
same exhibit 1 for defendants was P50.00 per month. From
March 1, 1963 to June 20, 1963, 4 months elapsed. At P50.00
per month the rental would be P200.00. Plaintiff got or utilized
adobe stones belonging to defendant which he found in the
premises when he and his parents transferred to the lot in
question in March 1963 the value of which was P76.00. Adding
this to the P2,100.00 which is the amount to be paid for the
delay in making payments and the P200.00 for 4 months
rental, the total will be P2,376.00. The agreed purchase price
was Pl4,000.00 but Pl2,000.00 was the amount of loan the
Social Security System was then willing to give to plaintiff so
that there will be a shortage of P2,000.00 more to complete the
payment of the purchase price. This shortage of P2,000.00
was added to the P2,376.00 and the sum will be P4,376.00.
Hence, in the agreement of July 9, 1963, this amount of
P4,376.00 was to be paid within 45 days from the date thereof
and the P12,000.00 which was the loan then approved by the
Social Security System was to be paid to defendants on the
day of the execution of the said agreement.
It is evident from the motion that the amount of P4,376.00
awarded by the appellate court as damages is mainly based on
"P30.00 per day of delay" penalty clause embodied in the
agreement marked Exhibit "1". Enforcement of the clause on
daily penalties now would result in excessive damages
considering that the agreement was entered into way back in
1963. Moreover, the P2,000.00 represents part of the purchase
price of the sale which was already rescinded.
Under Article 1191 of the Civil Code, "the injured party may
choose between the fulfillment and rescission of the obligation,
with the payment of damages in either case. He may also seek
rescission, even after he has chosen fulfillment, if the latter
should become impossible ... ." The law, however, does not
authorize the injured party to rescind the obligation and at the
same time seek its partial fulfillment under the guise of
recovering damages.
The appellate court, therefore, erred in including both the
penalty clause and the part of the purchase price in the
computation of damages. There is no question that the
petitioner must pay damages for the use of the house and lot
until he vacates the premises. The petitioner and his family
have lived in the respondents' house all these years without
paying either the price he obligated himself to pay or the
monthly rentals he agreed to pay as early as 1963. At the very
least, the petitioner should pay P50.00 monthly rentals with
legal interest from March, 1963.
WHEREFORE, the decision appealed from is MODIFIED in
that the award of damages in the amount of P4,376.00 is set
aside. The petitioner is ordered to vacate the disputed property
and to pay FIFTY PESOS (P50.00) as monthly rentals with
interest at the legal rate from March, 1963 up to the time he
and his successors-in-interest vacate the property in question.
In all other respects, the decision is AFFIRMED.
SO ORDERED.
Lambert v Fox
This is an action brought to recover a penalty prescribed on a
contract as punishment for the breach thereof.
Early in 1911 the firm known as John R. Edgar & Co., engaged
in the retail book and stationery business, found itself in such
condition financially that its creditors, including the plaintiff and
the defendant, together with many others, agreed to take over
the business, incorporate it and accept stock therein in
payment of their respective credits. This was done, the plaintiff
and the defendant becoming the two largest stockholders in
the new corporation called John R. Edgar & Co., Incorporated.
A few days after the incorporation was completed plaintiff and
defendant entered into the following agreement:
Whereas the undersigned are, respectively, owners of large
amounts of stock in John R. Edgar and Co, Inc; and,
Whereas it is recognized that the success of said corporation
depends, now and for at least one year next following, in the
larger stockholders retaining their respective interests in the
business of said corporation:
Therefore, the undersigned mutually and reciprocally agree not
to sell, transfer, or otherwise dispose of any part of their
present holdings of stock in said John R. Edgar & Co. Inc., till
after one year from the date hereof.
Either party violating this agreement shall pay to the other the
sum of one thousand (P1,000) pesos as liquidated damages,
unless previous consent in writing to such sale, transfer, or
other disposition be obtained.
Notwithstanding this contract the defendant Fox on October
19, 1911, sold his stock in the said corporation to E. C.
McCullough of the firm of E. C. McCullough & Co. of Manila, a
strong competitor of the said John R. Edgar & Co., Inc.
This sale was made by the defendant against the protest of the
plaintiff and with the warning that he would be held liable under
the contract hereinabove set forth and in accordance with its
terms. In fact, the defendant Foz offered to sell his shares of
stock to the plaintiff for the same sum that McCullough was
paying them less P1,000, the penalty specified in the contract.
The learned trial court decided the case in favor of the
defendant upon the ground that the intention of the parties as it
appeared from the contract in question was to the effect that
the agreement should be good and continue only until the
corporation reached a sound financial basis, and that that
event having occurred some time before the expiration of the
year mentioned in the contract, the purpose for which the
contract was made and had been fulfilled and the defendant
accordingly discharged of his obligation thereunder. The
complaint was dismissed upon the merits.
It is argued here that the court erred in its construction of the
contract. We are of the opinion that the contention is sound.
The intention of parties to a contract must be determined, in
the first instance, from the words of the contract itself. It is to
be presumed that persons mean what they say when they
speak plain English. Interpretation and construction should by
the instruments last resorted to by a court in determining what
the parties agreed to. Where the language used by the parties
is plain, then construction and interpretation are unnecessary
and, if used, result in making a contract for the parties.
(Lizarraga Hermanos vs. Yap Tico, 24 Phil. Rep., 504.)
In the case cited the court said with reference to the
construction and interpretation of statutes: "As for us, we do
not construe or interpret this law. It does not need it. We apply
it. By applying the law, we conserve both provisions for the
benefit of litigants. The first and fundamental duty of courts, in
our judgment, is to apply the law. Construction and
interpretation come only after it has been demonstrated that
application is impossible or inadequate without them. They are
the very last functions which a court should exercise. The
majority of the law need no interpretation or construction. They
require only application, and if there were more application and
less construction, there would be more stability in the law, and
more people would know what the law is."
What we said in that case is equally applicable to contracts
between persons. In the case at bar the parties expressly
stipulated that the contract should last one year. No reason is
shown for saying that it shall last only nine months. Whatever
the object was in specifying the year, it was their agreement
that the contract should last a year and it was their judgment
and conviction that their purposes would not be subversed in
any less time. What reason can give for refusing to follow the
plain words of the men who made the contract? We see none.
The appellee urges that the plaintiff cannot recover for the
reason that he did not prove damages, and cites numerous
American authorities to the effect that because stipulations for
liquidated damages are generally in excess of actual damages
and so work a hardship upon the party in default, courts are
strongly inclined to treat all such agreements as imposing a
penalty and to allow a recovery for actual damages only. He
also cites authorities holding that a penalty, as such, will not be
enforced and that the party suing, in spite of the penalty
assigned, will be put to his proof to demonstrate the damages
actually suffered by reason of defendants wrongful act or
omission.
In this jurisdiction penalties provided in contracts of this
character are enforced . It is the rule that parties who are
competent to contract may make such agreements within the
limitations of the law and public policy as they desire, and that
the courts will enforce them according to their terms. (Civil
Code, articles 1152, 1153, 1154, and 1155; Fornow vs.
Hoffmeister, 6 Phil. Rep., 33; Palacios vs. Municipality of
Cavite, 12 Phil. Rep., 140; Gsell vs. Koch, 16 Phil. Rep., 1.)
The only case recognized by the Civil Code in which the court
is authorized to intervene for the purpose of reducing a penalty
stipulated in the contract is when the principal obligation has
been partly or irregularly fulfilled and the court can see that the
person demanding the penalty has received the benefit of such
or irregular performance. In such case the court is authorized
to reduce the penalty to the extent of the benefits received by
the party enforcing the penalty.
In this jurisdiction, there is no difference between a penalty and
liquidated damages, so far as legal results are concerned.
Whatever differences exists between them as a matter of
language, they are treated the same legally. In either case the
party to whom payment is to be made is entitled to recover the
sum stipulated without the necessity of proving damages.
Indeed one of the primary purposes in fixing a penalty or in
liquidating damages, is to avoid such necessity.
It is also urged by the appelle in this case that the stipulation in
the contract suspending the power to sell the stock referred to
therein is an illegal stipulation, is in restraint of trade and,
therefore, offends public policy. We do not so regard it. The
suspension of the power to sell has a beneficial purpose,
results in the protection of the corporation as well as of the
individual parties to the contract, and is reasonable as to the
length of time of the suspension. We do not here undertake to
discuss the limitations to the power to suspend the right of
alienation of stock, limiting ourselves to the statement that the
suspension in this particular case is legal and valid.
The judgment is reversed, the case remanded with instructions
to enter a judgment in favor of the plaintiff and against the
defendant for P1,000, with interest; without costs in this
instance.
Jison v CA
This is a petition for review under Rule 45 of the Rules of Court
of the 27 April 1995 decision of the Court of Appeals (CA) in
CA-G.R. CV No. 32860[1] which reversed the decision of
Branch 24 of the Regional Trial Court (RTC) of Iloilo City in
Civil Case No. 16373.[2] The latter dismissed the complaint of
private respondent Monina Jison (hereafter MONINA) for
recognition as an illegitimate child of petitioner Francisco Jison
(hereafter FRANCISCO).
In issue is whether or not public respondent Court of Appeals
committed reversible error, which, in this instance, necessitates
an inquiry into the facts. While as a general rule, factual issues
are not within the province of this Court, nevertheless, in light
of the conflicting findings of facts of the trial court and the Court
of Appeals, this case falls under an exception to this rule.[3]
In her complaint[4] filed with the RTC on 13 March 1985,
MONINA alleged that FRANCISCO had been married to a
certain Lilia Lopez Jison since 1940. At the end of 1945 or the
start of 1946, however, FRANCISCO impregnated Esperanza
F. Amolar (who was then employed as the nanny of
FRANCISCO's daughter, Lourdes). As a result, MONINA was
born on 6 August 1946, in Dingle, Iloilo, and since childhood,
had enjoyed the continuous, implied recognition as an
illegitimate child of FRANCISCO by his acts and that of his
family. MONINA further alleged that FRANCISCO gave her
support and spent for her education, such that she obtained a
Master's degree, became a certified public accountant (CPA)
and eventually, a Central Bank examiner. In view of
FRANCISCO's refusal to expressly recognize her, MONINA
prayed for a judicial declaration of her illegitimate status and
that FRANCISCO support and treat her as such.
In his answer,[5] FRANCISCO alleged that he could not have
had sexual relations with Esperanza Amolar during the period
specified in the complaint as she had ceased to be in his
employ as early as 1944, and did not know of her whereabouts
since then; further, he never recognized MONINA, expressly or
impliedly, as his illegitimate child. As affirmative and special
defenses, FRANCISCO contended that MONINA had no right
or cause of action against him and that her action was barred
by estoppel, laches and/or prescription. He thus prayed for
dismissal of the complaint and an award of damages due to
the malicious filing of the complaint.
After MONINA filed her reply,[6] pre-trial was conducted where
the parties stipulated on the following issues:
1. Did Francisco Jison have any sexual relation[s] with
Esperanza Am[o]lar about the end of 1945 or the start of 1946?
2. Is Monina Jison the recognized illegitimate daughter of
Francisco Jison by the latters own acts and those of his family?
3. Is Monina Jison barred from instituting or prosecuting the
present action by estoppel, laches and/or prescription?
4. Damages.[7]
At trial on the merits, MONINA presented a total of eleven (11)
witnesses, namely: herself, Ruben Castellanes, Sr., Adela
Casabuena, Arsenio Duatin, Zafiro Ledesma, Danthea Lopez,
Romeo Bilbao, Rudy Tingson, Alfredo Baylosis, Dominador
Zavariz and Lope Amolar.
Ruben Castellanes, Sr., a 63-year old resident of Iloilo City,
testified that he had worked for FRANCISCO for a total of six
(6) years at Nelly Garden, FRANCISCO's Iloilo residence.
Towards the end of the Japanese occupation, FRANCISCOs
wife suffered a miscarriage or abortion, thereby depriving
FRANCISCO of consortium; thereafter, FRANCISCOs wife
managed a nightclub on the ground floor of Nelly Garden
which operated daily from 6:00 p.m. till 3:00 a.m. of the
following day, thereby allowing FRANCISCO free access to
MONINAs mother, Esperanza Amolar, who was nicknamed
Pansay.
Adela Casabuena, a 61-year old farmer, testified that she
served as the yaya (nanny) of Lourdes from July 1946 up to
February 1947. Although Pansay had left Nelly Garden two (2)
weeks before Adela started working for the Jisons, Pansay
returned sometime in September 1946, or about one month
after she gave birth to MONINA, to ask FRANCISCO for
support. As a result, Pansay and Lilia Jison, FRANCISCO's
wife, quarreled in the living room, and in the course thereof,
Pansay claimed that FRANCISCO was the father of her baby.
To which, Lilia replied: I did not tell you to make that baby so it
is your fault. During the quarrel which lasted from 10:30 till
11:00 a.m., FRANCISCO was supposedly inside the house
listening.
Arsenio Duatin, a 77-year old retired laborer, testified that from
1947 until 1977, he worked as FRANCISCOs houseboy at the
latters house on 12th Street, Capitol Subdivision, Bacolod City.
Arsenio met MONINA in 1967, when Felipe Lagarto, the
bookkeeper at Nelly Garden, informed Arsenio that MONINA,
FRANCISCOs daughter, would arrive at Bacolod City with a
letter of introduction from Lagarto.
Initially, Arsenio identified seven (7) black-and-white
photographs (Exhs. X-5 to X-11) of MONINA,[8] and as he paid
for the telephone bills, he likewise identified six (6) telephone
cards (Exhs. G to L). Arsenio then declared that when MONINA
arrived in Bacolod City, she introduced herself to him as
FRANCISCOs daughter. She stayed at FRANCISCOs house,
but when the latter and his wife would come over, Arsenio
would conceal the presence of MONINA because Mrs. Jison
did not like to see her face. Once, Arsenio hid MONINA in the
house of FRANCISCOs sister, Mrs. Luisa Jison Alano, in Silay
City; another time, at the residence of FRANCISCOs cousin,
Mrs. Concha Lopez Cuaycong. Finally, Arsenio declared that
the last time he saw MONINA was when she left for Manila,
after having finished her schooling at La Salle College in
Bacolod City.
On re-direct and upon questions by the court, Arsenio
disclosed that it was FRANCISCO who instructed that
MONINA be hidden whenever FRANCISCO and his wife were
around; that although FRANCISCO and MONINA saw each
other at the Bacolod house only once, they called each other
through long distance; and that MONINA addressed
FRANCISCO as Daddy during their lone meeting at the
Bacolod house and were affectionate to each other. Arsenio
likewise declared that MONINA stayed at FRANCISCO's
Bacolod house twice: first for a month, then for about a week
the second time. On both occasions, however, FRANCISCO
and his wife were abroad. Finally, Arsenio recalled that
FRANCISCO likewise bade Arsenio to treat MONINA like his
(FRANCISCOs) other daughters.
The testimony of Zafiro Ledesma, a 74-year old banker and
former mayor of Iloilo City, initially touched on how he and his
wife were related to FRANCISCO, FRANCISCO's wife and
MONINA. Zafiro first identified Exhibit R, a diagram of the
family trees of the Jison and Lopez families, which showed that
former Vice-President Fernando Lopez was the first cousin of
FRANCISCOs wife, then told the court that the family of Vice-
President Lopez treated MONINA very well because she is
considered a relative xxx by reputation, by actual perception.
Zafiro likewise identified Exhibits X-13 to X-18, photographs
taken at the 14 April 1985 birthday celebration of Mrs.
Fernando Lopez, which showed MONINA with the former Vice-
President and other members of the Lopez family.
Zafiro further testified that while MONINA lived with Mrs.
Cuaycong, the latter paid for some of MONINAs school needs
and even asked MONINA to work in a hospital owned by Mrs.
Cuaycong; and that another first cousin of FRANCISCOs wife,
a certain Remedios Lopez Franco, likewise helped MONINA
with her studies and problems, and even attended MONINAs
graduation in 1978 when she obtained a masteral degree in
Business Administration, as evidenced by another photograph
(Exh. X-12). Moreover, upon Remedios recommendation,
MONINA was employed as a secretary at Merchant Financing
Company, which was managed by a certain Danthea Lopez,
the wife of another first cousin of FRANCISCOs wife, and
among whose directors were Zafiro himself, his wife and
Dantheas husband. In closing, Zafiro identified MONINAs
Social Security Record (Exh. W), which was signed by
Danthea as employer and where MONINA designated
Remedios as the beneficiary.
Danthea Lopez, a 58-year old housekeeper, declared that
FRANCISCO was the first cousin of her husband, Eusebio D.
Lopez; and that she came to know MONINA in the latter part of
1965 when Remedios Franco recommended MONINA for
employment at Merchant Financing Co., which Danthea
managed at that time. Remedios introduced MONINA to
Danthea as being reputedly the daughter of Mr. Frank Jison;
and on several occasions thereafter, Remedios made Danthea
and the latters husband understand that MONINA was
reputedly the daughter of [FRANCISCO]. While MONINA
worked at Merchant Financing, Danthea knew that MONINA
lived with Remedios; however, in the latter part of 1966, as
Remedios left for Manila and MONINA was still studying at San
Agustin University, Danthea and her husband invited MONINA
to live with them. During MONINAs 6-month stay with them,
she was not charged for board and lodging and was treated as
a relative, not a mere employee, all owing to what Remedios
had said regarding MONINAs filiation. As Danthea understood,
MONINA resigned from Merchant Financing as she was called
by Mrs. Cuaycong, a first cousin of Dantheas husband who
lived in Bacolod City.
Romeo Bilbao, a 43-year old seaman, testified that he had
worked for FRANCISCO from 1969 up to 1980 at Nelly Garden
in various capacities: as a procurement officer, hacienda
overseer and, later, as hacienda administrator. Sometime in
May, 1971, Romeo saw and heard MONINA ask her Daddy
(meaning FRANCISCO) for the money he promised to give
her, but FRANCISCO answered that he did not have the
money to give, then told MONINA to go see Mr. Jose Cruz in
Bacolod City. Then in the middle of September that year,
FRANCISCO told Romeo to pick up Mr. Cruz at the Iloilo pier
and bring him to the office of Atty. Benjamin Tirol. At said office,
Atty. Tirol, Mr. Cruz and MONINA entered a room while Romeo
waited outside. When they came out, Atty. Tirol had papers for
MONINA to sign, but she refused. Atty. Tirol said that a check
would be released to MONINA if she signed the papers, so
MONINA acceded, although Atty. Tirol intended not to give
MONINA a copy of the document she signed. Thereafter, Mr.
Cruz gave MONINA a check (Exh. Q), then MONINA grabbed
a copy of the document she signed and ran outside. Romeo
then brought Mr. Cruz to Nelly Garden. As to his motive for
testifying, Romeo stated that he wanted to help MONINA be
recognized as FRANCISCOS daughter.
Rudy Tingson, a 45-year old antique dealer, testified that in
1963-1964, he was employed by FRANCISCOs wife at the
Baguio Military Institute in Baguio City; then in 1965, Rudy
worked at FRANCISCOs office at Nelly Garden recording
hacienda expenses, typing vouchers and office papers, and, at
times, acting as paymaster for the haciendas. From the nature
of his work, Rudy knew the persons receiving money from
FRANCISCOs office, and clearly remembered that in 1965, as
part of his job, Rudy gave MONINA her allowance from
FRANCISCO four (4) times, upon instructions of a certain Mr.
Lagarto to give MONINA P15.00 a month. Rudy likewise
recalled that he first met MONINA in 1965, and that she would
go to Nelly Garden whenever FRANCISCOs wife was not
around. On some of these occasions, MONINA would speak
with and address FRANCISCO as Daddy, without objection
from FRANCISCO. In fact, in 1965, Rudy saw FRANCISCO
give MONINA money thrice. Rudy further declared that in April
1965, FRANCISCOs office paid P250.00 to Funeraria Bernal
for the funeral expenses of MONINAs mother. Finally, as to
Rudy's motives for testifying, he told the court that he simply
wanted to help bring out the truth and nothing but the truth, and
that MONINAs filiation was common knowledge among the
people in the office at Nelly Garden.
On re-direct, Rudy declared that the moneys given by
FRANCISCOs office to MONINA were not reflected in the
books of the office, but were kept in a separate book, as Mr.
Lagarto explained that FRANCISCOs wife and children should
not know [of] this. Rudy further revealed that as to the garden
meetings between FRANCISCO and MONINA, Rudy saw
MONINA kiss FRANCISCO on the cheek both upon arriving
and before leaving, and FRANCISCOs reaction upon seeing
her was to smile and say in the Visayan dialect: Kamusta ka
iha? (How are you, daughter?); and that MONINA was free to
go inside the house as the household staff knew of her filiation,
and that, sometimes, MONINA would join them for lunch.
Alfredo Baylosis, a 62-year old retired accountant, testified that
he worked for FRANCISCO at Central Santos-Lopez in Iloilo
from 1951 up to 1961, then at Nelly Garden from 1961 until
1972. Alfredo first served FRANCISCO as a bookkeeper, then
when Mr. Lagarto died in 1967 or 1969, Alfredo replaced Mr.
Lagarto as office manager.
Alfredo knew MONINA since 1961 as she used to go to Nelly
Garden to claim her P15.00 monthly allowance given upon
FRANCISCOs standing order. Alfredo further declared that
MONINAs filiation was pretty well-known in the office; that he
had seen MONINA and FRANCISCO go from the main building
to the office, with FRANCISCOs arm on MONINAs shoulder;
and that the office paid for the burial expenses of Pansay, but
this was not recorded in the books in order to hide it from
FRANCISCOs wife. Alfredo also disclosed that the
disbursements for MONINAs allowance started in 1961 and
were recorded in a separate cash book. In 1967, the
allowances ceased when MONINA stopped schooling and was
employed in Bacolod City with Miller, Cruz & Co., which served
as FRANCISCOs accountant-auditor. Once, when Alfredo went
to the offices of Miller, Cruz & Co. to see the manager, Mr.
Atienza, and arrange for the preparation of FRANCISCOs
income tax return, Alfredo chanced upon MONINA. When
Alfredo asked her how she came to work there, she answered
that her Daddy, FRANCISCO, recommended her, a fact
confirmed by Mr. Atienza. Alfredo then claimed that Mr. Jose
Cruz, a partner at Miller, Cruz & Co., was the most trusted man
of FRANCISCO.
Dominador Savariz, a 55-year old caretaker, testified that he
worked as FRANCISCOs houseboy at Nelly Garden from
November 1953 up to 1965. One morning in April 1954,
MONINA and her mother Pansay went to Nelly Garden and
spoke with FRANCISCO for about an hour, during which time,
Dominador was vacuuming the carpet about six (6) to seven
(7) meters away. Due to the noise of the vacuum cleaner,
FRANCISCO and MONINA spoke in loud voices, thus
Dominador overheard their conversation. As FRANCISCO
asked Pansay why they came, Pansay answered that they
came to ask for the sustenance of his child MONINA.
FRANCISCO then touched MONINA's head and asked: How
are you Hija?, to which MONINA answered: Good morning,
Daddy. After FRANCISCO told Pansay and MONINA to wait,
he pulled something from his wallet and said to Pansay: I am
giving this for the child.
In May 1954, Dominador saw MONINA at Mr. Lagartos office
where Dominador was to get the days expenses, while
MONINA was claiming her allowance from Mr. Diasnes. The
next month, Dominador saw MONINA at Nelly Garden and
heard in the office that MONINA was there to get her allowance
from her Daddy. In December 1960, Dominador saw MONINA
at Nelly Garden, in the room of Don Vicente (father of
FRANCISCOs wife), where she asked for a Christmas gift and
she was calling Don Vicente, Lolo (grandfather). At that time,
FRANCISCO and his wife were not around. Then sometime in
1961, when Dominador went to Mr. Lagartos office to get the
marketing expenses, Dominador saw MONINA once more
claiming her allowance.
Dominador further testified that in February 1966, after he had
stopped working for FRANCISCO, Dominador was at Mrs.
Francos residence as she recommended him for employment
with her sister, Mrs. Concha Cuaycong. There, he saw
MONINA, who was then about 15 years old, together with Mrs.
Francos daughter and son. Mrs. Franco pointed at MONINA
and asked Dominador if he knew who MONINA was.
Dominador answered that MONINA was FRANCISCOs
daughter with Pansay, and then Mrs. Franco remarked that
MONINA was staying with her (Mrs. Franco) and that she was
sending MONINA to school at the University of San Agustin.
Lope Amolar, a 50-year old resident of Dingle, Iloilo, and the
younger brother of Esperanza Amolar (Pansay), testified that
he worked for FRANCISCO as a houseboy from March to
November 1945 at Nelly Garden. Thereafter, FRANCISCO
sent Lope to work at Elena Apartments in Manila. By
November 1945, Pansay was also working at Elena
Apartments, where she revealed to Lope that FRANCISCO
impregnated her. Lope then confronted FRANCISCO, who told
Lope dont get hurt and dont cause any trouble, because I am
willing to support your Inday Pansay and my child. Three (3)
days after this confrontation, Lope asked for and received
permission from FRANCISCO to resign because he (Lope)
was hurt.
On 21 October 1986, MONINA herself took the witness stand.
At that time, she was 40 years old and a Central Bank
Examiner. She affirmed that as evidenced by certifications from
the Office of the Local Civil Registrar (Exhs. E and F) and
baptismal certificates (Exhs. C and D), she was born on 6
August 1946 in Barangay Tabugon, Dingle, Iloilo, to Esperanza
Amolar (who passed away on 20 April 1965) and FRANCISCO.
[9] MONINA first studied at Sagrado where she stayed as a
boarder. While at Sagrado from 1952 until 1955 (up to Grade
4), her father, FRANCISCO, paid for her tuition fees and other
school expenses. She either received the money from
FRANCISCO or from Mr. Lagarto, or saw FRANCISCO give
money to her mother, or Mr. Lagarto would pay Sagrado
directly. After Sagrado, MONINA studied in different schools,
[10] but FRANCISCO continuously answered for her schooling.
For her college education, MONINA enrolled at the University
of Iloilo, but she later dropped due to an accident which
required a week's hospitalization. Although FRANCISCO paid
for part of the hospitalization expenses, her mother shouldered
most of them. In 1963, she enrolled at the University of San
Agustin, where she stayed with Mrs. Franco who paid for
MONINA's tuition fees. However, expenses for books, school
supplies, uniforms and the like were shouldered by
FRANCISCO. At the start of each semester, MONINA would
show FRANCISCO that she was enrolled, then he would ask
her to canvass prices, then give her the money she needed.
After finishing two (2) semesters at University of San Agustin,
as evidenced by her transcript of records (Exh. Z showing that
FRANCISCO was listed as Parent/Guardian [Exh. Z-1]), she
transferred to De Paul College, just in front of Mrs. Francos
house, and studied there for a year. Thereafter, MONINA
enrolled at Western Institute of Technology (WIT), where she
obtained a bachelors degree in Commerce in April 1967.
During her senior year, she stayed with Eusebio and Danthea
Lopez at Hotel Kahirup, owned by said couple. She passed the
CPA board exams in 1974, and took up an M.B.A. at De La
Salle University as evidenced by her transcript (Exh. AA),
wherein FRANCISCO was likewise listed as Guardian (Exhs.
AA-1 and AA-2).
MONINA enumerated the different members of the household
staff at Nelly Garden, to wit: Luz, the household cook; the
houseboys Silvestre and Doming; the housemaid Natang; the
yaya of the adopted triplets, Deling; the yaya of Lolo Vicente,
Adelina; and others. MONINA likewise enumerated the
members of the office staff (Messrs. Baylosis, Lagarto,
Tingson, Diasnes, Jalandoni, Supertisioso, Doroy, and others),
and identified them from a photograph marked as Exhibit X-2.
She then corroborated the prior testimony regarding her
employment at Merchant Financing Co., and her having lived
at Hotel Kahirup and at Mrs. Cuaycongs residence in Bacolod
City, while working at the hospital owned by Mrs. Cuaycong.
MONINA further testified that in March 1968, she went to
Manila and met FRANCISCO at Elena Apartments at the
corner of Romero and Salas Streets, Ermita. She told
FRANCISCO that she was going for a vacation in Baguio City
with Mrs. Francos mother, with whom she stayed up to June
1968. Upon her return from Baguio City, MONINA told
FRANCISCO that she wanted to work, so the latter arranged
for her employment at Miller & Cruz in Bacolod City. MONINA
went to Bacolod City, was interviewed by Mr. Jose Cruz, a
partner at Miller & Cruz, who told her she would start working
first week of September, sans examination. She resigned from
Miller & Cruz in 1971 and lived with Mrs. Cuaycong at her
Forbes Park residence in Makati. MONINA went to see
FRANCISCO, told him that she resigned and asked him for
money to go to Spain, but FRANCISCO refused as she could
not speak Spanish and would not be able find a job. The two
quarreled and FRANCISCO ordered a helper to send MONINA
out of the house. In the process, MONINA broke many glasses
at the pantry and cut her hand, after which, FRANCISCO
hugged her, gave her medicine, calmed her down, asked her to
return to Bacolod City and promised that he would give her the
money.
MONINA returned to Bacolod City by plane, using a Filipinas
Orient Airways plane ticket (Exh. M) which FRANCISCO gave.
She called Mr. Cruz, then Atty. Tirol, as instructed by Mr. Cruz.
These calls were evidenced by PLDT long distance toll cards
(Exhs. G to L), with annotations at the back reading: charged
and paid under the name of Frank L. Jison and were signed by
Arsenio Duatin (Exhs. G-1 to L-1). PLDT issued a certification
as to the veracity of the contents of the toll cards (Exh. BB).
Likewise introduced in evidence was a letter of introduction
prepared by Mr. Cruz addressed to Atty. Tirol, on MONINA's
behalf (Exh. N).
MONINA also declared that Atty. Tirol then told her that she
would have to go to Iloilo and sign a certain affidavit, before Mr.
Cruz would turn over the money promised by FRANCISCO.
She went to Atty. Tirols office in Iloilo, but after going over the
draft of the affidavit, refused to sign it as it stated that she was
not FRANCISCOs daughter. She explained that all she had
agreed with FRANCISCO was that he would pay for her fare to
go abroad, and that since she was a little girl, she knew about
her illegitimacy. She started crying, begged Atty. Tirol to
change the affidavit, to which Atty. Tirol responded that he was
also a father and did not want this to happen to his children as
they could not be blamed for being brought into the world. She
then wrote a letter (Exh. O) to FRANCISCO and sent it to the
latters Forbes Park residence (Bauhinia Place) by JRS courier
service (Exhs. O-5 to O-7). MONINA subsequently met
FRANCISCO in Bacolod City where they discussed the
affidavit which she refused to sign. FRANCISCO told her that
the affidavit was for his wife, that in case she heard about
MONINA going abroad, the affidavit would keep her peace.
MONINA then narrated that the first time she went to Atty.
Tirols office, she was accompanied by one Atty. Fernando
Divinagracia, who advised her that the affidavit (Exh. P)[11]
would boomerang against FRANCISCO as it is contrary to law.
MONINA returned to Bacolod City, then met with Atty. Tirol
once more to reiterate her plea, but Atty. Tirol did not relent.
Thus, on the morning of 20 or 21 September 1971, she signed
the affidavit as she was jobless and needed the money to
support herself and finish her studies. In exchange for signing
the document, MONINA received a Bank of Asia check for
P15,000.00 (Exh. Q), which was less than the P25,000.00
which FRANCISCO allegedly promised to give. As Atty. Tirol
seemed hesitant to give her a copy of the affidavit after
notarizing it, MONINA merely grabbed a copy and immediately
left.
MONINA then prepared to travel abroad, for which purpose,
she procured letters of introduction (Exhs. S and T) from a
cousin, Mike Alano (son of FRANCISCOs elder sister Luisa);
and an uncle, Emilio Jison (FRANCISCOs elder brother),
addressed to another cousin, Beth Jison (Emilios daughter), for
Beth to assist MONINA. Exhibit S contained a statement (Exh.
S-1) expressly recognizing that MONINA was FRANCISCOs
daughter. Ultimately though, MONINA decided not to go
abroad, opting instead to spend the proceeds of the
P15,000.00 check for her CPA review, board exam and
graduate studies. After finishing her graduate studies, she
again planned to travel abroad, for which reason, she obtained
a letter of introduction from former Vice President Fernando
Lopez addressed to then United States Consul Vernon
McAnnich (Exh. V).
As to other acts tending to show her filiation, MONINA related
that on one occasion, as FRANCISCOs wife was going to
arrive at the latters Bacolod City residence, FRANCISCO
called Arsenio Duatin and instructed Arsenio to hide MONINA.
Thus, MONINA stayed with Mrs. Luisa Jison for the duration of
the stay of FRANCISCOs wife. MONINA also claimed that she
knew Vice President Fernando Lopez and his wife, Mariquit,
even before starting to go to school. Thus, MONINA asked for
a recommendation letter (Exh. U) from Mrs. Mariquit Lopez for
possible employment with Mrs. Rosario Lopez Cooper, another
second cousin of FRANCISCO. In Exhibit U, Mrs. Lopez
expressly recognized MONINA as FRANCISCOs daughter. As
additional proof of her close relationship with the family of Vice
President Lopez, MONINA identified photographs taken at a
birthday celebration on 14 April 1985.
MONINA finally claimed that she knew the three (3) children of
FRANCISCO by wife, namely, Lourdes, Francisco, Jr. (Junior)
and Elena, but MONINA had met only Lourdes and Junior.
MONINA's testimony dealt lengthily on her dealings with Junior
and the two (2) occasions when she met with Lourdes. The last
time MONINA saw FRANCISCO was in March 1979, when she
sought his blessings to get married.
In his defense, FRANCISCO offered his deposition taken
before then Judge Romeo Callejo of the Regional Trial Court of
Manila, Branch 48. As additional witnesses, FRANCISCO
presented Nonito Jalandoni, Teodoro Zulla, Iigo Supertisioso,
Lourdes Ledesma, Jose Cruz and Dolores Argenal.
FRANCISCO declared that Pansays employment ceased as of
October, 1944, and that while employed by him, Pansay would
sleep with the other female helpers on the first floor of his
residence, while he, his wife and daughter slept in a room on
the second floor. At that time, his household staff was
composed of three (3) female workers and two (2) male
workers. After Pansay left in October 1944, she never
communicated with him again, neither did he know of her
whereabouts. FRANCISCO staunchly denied having had
sexual relations with Pansay and disavowed any knowledge
about MONINAs birth. In the same vein, he denied having paid
for MONINAs tuition fees, in person or otherwise, and asserted
that he never knew that Mr. Lagarto paid for these fees.
Moreover, FRANCISCO could not believe that Lagarto would
pay for these fees despite absence of instructions or approval
from FRANCISCO. He likewise categorically denied that he
told anyone, be it Danthea Lopez, Zafiro Ledesma, Concha
Cuaycong or Remedios Franco, that MONINA was his
daughter.
FRANCISCO also disclosed that upon his return from the
United States in 1971, he fired Alfredo Baylosis upon
discovering that Alfredo had taken advantage of his position
during the formers absence. FRANCISCO likewise fired Rudy
Tingson and Romeo Bilbao, but did not give the reasons
therefor.
Finally, FRANCISCO denied knowledge of MONINAs long
distance calls from his Bacolod residence; nevertheless, when
he subsequently discovered this, he fired certain people in his
office for their failure to report this anomaly. As regards the
caretaker of his Bacolod residence, FRANCISCO explained
that since MONINA lived at Mrs. Cuaycongs residence, the
caretaker thought that he could allow people who lived at the
Cuaycong residence to use the facilities at his (FRANCISCOs)
house.
Nonito Jalandoni, bookkeeper and paymaster at Nellys Garden
from 1963 up to 1974, then from 1980 up to 1986, the assistant
overseer of Hacienda Lopez, testified that he did not know
MONINA; that he learned of her only in June 1988, when he
was informed by FRANCISCO that MONINA had sued him;
and that he never saw MONINA at Nellys Garden, neither did
he know of any instructions for anyone at Nellys Garden to
give money to MONINA.
Teodoro Zulla, FRANCISCOs bookkeeper and paymaster from
1951 up to 1986, testified that FRANCISCO dismissed Alfredo
Baylosis due to certain unspecified discrepancies; and that he
never saw MONINA receive funds from either Mr. Lagarto or
Mr. Baylosis. Upon questions from the trial court, however,
Teodoro admitted that he prepared vouchers for only one of
FRANCISCOs haciendas, and not vouchers pertaining to the
latters personal expenses.
Iigo Supertisioso testified that he worked for FRANCISCO at
Nellys Garden from 1964 up to 1984 as a field inspector,
paymaster, cashier and, eventually, officer-in-charge (OIC). He
confirmed Alfredo Baylosis dismissal due to these unspecified
irregularities, then denied that FRANCISCO ever ordered that
MONINA be given her allowance. Likewise, Iigo never heard
FRANCISCO mention that MONINA was his (FRANCISCOs)
daughter.
Lourdes Ledesma, FRANCISCOs daughter, testified that she
saw (but did not know) MONINA at the Our Lady of Mercy
Hospital, on the occasion of the birth of Lourdes first son,
Mark. Over lunch one day, Lourdes aunt casually introduced
Lourdes and MONINA to each other, but they were referred to
only by their first names. Then sometime in 1983 or 1984,
MONINA allegedly went to Lourdes house in Sta. Clara
Subdivision requesting for a letter of introduction or referral as
MONINA was then job-hunting. However, Lourdes did not
comply with the request.
Jose Cruz, a partner at Miller, Cruz & Co., testified that
MONINA worked at Miller & Cruz from 1968 up to 1971,
however, he did not personally interview her before she was
accepted for employment. Moreover, MONINA underwent the
usual screening procedure before being hired. Jose recalled
that one of the accountants, a certain Mr. Atienza, reported that
MONINA claimed to be FRANCISCOs daughter. Jose then told
Mr. Atienza to speak with MONINA and see if he (Mr. Atienza)
could stop her from spreading this rumor. Mr. Atienza reported
that he spoke with MONINA, who told him that she planned to
leave for the United States and needed P20,000.00 for that
purpose, and in exchange, she would sign a document
disclaiming filiation with FRANCISCO. Thus, Jose instructed
Mr. Atienza to request that MONINA meet with Jose, and at
that meeting, MONINA confirmed Mr. Atienzas report. Jose
then informed Atty. Tirol, FRANCISCOs personal lawyer, about
the matter.
Atty. Tirol told Jose to send MONINA and her lawyer to his
(Atty. Tirols) office in Iloilo. Jose then wrote out a letter of
introduction for MONINA addressed to Atty. Tirol. Jose relayed
Atty. Tirols message to MONINA through Mr. Atienza, then
later, Atty. Tirol told Jose to go to Iloilo with a check for
P15,000.00. Jose complied, and at Atty. Tirols office, Jose saw
MONINA, Atty. Tirol and his secretary reading some
documents. MONINA then expressed her willingness to sign
the document, sans revisions. Jose alleged that he drew the
P15,000.00 from his personal funds, subject to reimbursement
from and due to an understanding with FRANCISCO.
Dolores Argenal, a househelper at Nelly Garden from May
1944 up to May 1946, testified that she knew that Pansay was
Lourdes nanny; that Lourdes slept in her parents room; that
she had not seen FRANCISCO give special treatment to
Pansay; that there was no unusual relationship between
FRANCISCO and Pansay, and if there was any, Dolores would
have easily detected it since she slept in the same room as
Pansay. Dolores further declared that whenever FRANCISCOs
wife was out of town, Pansay would bring Lourdes downstairs
at nighttime, and that Pansay would not sleep in the room
where FRANCISCO slept. Finally, Dolores declared that
Pansay stopped working for FRANCISCO and his wife in
October, 1944.
The reception of evidence having been concluded, the parties
filed their respective memoranda.
It need be recalled that Judge Catalino Castaeda, Jr. presided
over trial up to 21 October 1986, thereby hearing only the
testimonies of MONINAs witnesses and about half of
MONINAs testimony on direct examination. Judge Norberto E.
Devera, Jr. heard the rest of MONINA's testimony and those of
FRANCISCOs witnesses.
In its decision of 12 November 1990[12] the trial court, through
Judge Devera, dismissed the complaint with costs against
MONINA. In the opening paragraph thereof, it observed:
This is a complaint for recognition of an illegitimate child
instituted by plaintiff Monina Jison against defendant Francisco
Jison. This complaint was filed on March 13, 1985 at the time
when plaintiff, reckoned from her death of birth, was already
thirty-nine years old. Noteworthy also is the fact that it was
instituted twenty years after the death of plaintiffs mother,
Esperanza Amolar. For the years between plaintiffs birth and
Esperanzas death, no action of any kind was instituted against
defendant either by plaintiff, her mother Esperanza or the
latters parents. Neither had plaintiff brought such an action
against defendant immediately upon her mothers death on
April 20, 1965, considering that she was then already nineteen
years old or, within a reasonable time thereafter. Twenty years
more had to supervene before this complaint was eventually
instituted.
The trial court then proceeded to discuss the four issues
stipulated at pre-trial, without, however, summarizing the
testimonies of the witnesses nor referring to the testimonies of
the witnesses other than those mentioned in the discussion of
the issues.
The trial court resolved the first issue in the negative, holding
that it was improbable for witness Lope Amolar to have noticed
that Pansay was pregnant upon seeing her at the Elena
Apartments in November 1945, since Pansay was then only in
her first month of pregnancy; that there was no positive
assertion that copulation did indeed take place between
Francisco and Esperanza; and that MONINAs attempt to show
opportunity on the part of FRANCISCO failed to consider that
there was also the opportunity for copulation between
Esperanza and one of the several domestic helpers admittedly
also residing at Nellys Garden at that time. The RTC also ruled
that the probative value of the birth and baptismal certificates
of MONINA paled in light of jurisprudence, especially when the
misspellings therein were considered.
The trial court likewise resolved the second issue in the
negative, finding that MONINAs evidence thereon may either
be one of three categories, namely: hearsay evidence,
incredulous evidence, or self-serving evidence." To the first
category belonged the testimonies of Adela Casabuena and
Alfredo Baylosis, whose knowledge of MONINAs filiation was
based, as to the former, on utterances of defendants wife Lilia
and Esperanza allegedly during the heat of their quarrel, while
as to the latter, Alfredo's conclusion was based from the
rumors going [around] that plaintiff is defendants daughter,
from his personal observation of plaintiffs facial appearance
which he compared with that of defendants and from the way
the two (plaintiff and defendant) acted and treated each other
on one occasion that he had then opportunity to closely
observe them together. To the second category belonged that
of Dominador Savariz, as:
At each precise time that Esperanza allegedly visited Nellys
Garden and allegedly on those occasions when defendants
wife, Lilia was in Manila, this witness was there and allegedly
heard pieces of conversation between defendant and
Esperanza related to the paternity of the latters child. xxx
The RTC then placed MONINAs testimony regarding the acts
of recognition accorded her by FRANCISCOs relatives under
the third category, since the latter were never presented as
witnesses, for which reason the trial court excluded the letters
from FRANCISCOs relatives (Exhs. S to V).
As to the third issue, the trial court held that MONINA was not
barred by prescription for it was of the perception that the
benefits of Article 268 accorded to legitimate children may be
availed of or extended to illegitimate children in the same
manner as the Family Code has so provided; or by laches,
which is [a] creation of equity applied only to bring equitable
results, and addressed to the sound discretion of the court
[and] the circumstances [here] would show that whether
plaintiff filed this case immediately upon the death of her
mother Esperanza in 1965 or twenty years thereafter in 1985,
xxx there seems to be no inequitable result to defendant as
related to the situation of plaintiff.
The RTC ruled, however, that MONINA was barred by estoppel
by deed because of the affidavit (Exh. P/Exh. 2) which she
signed when she was already twenty-five years, a professional
and under the able guidance of counsel.
Finally, the RTC denied FRANCISCOs claim for damages,
finding that MONINA did not file the complaint with malice, she
having been propelled by an honest belief, founded on
probable cause.
MONINA seasonably appealed to the Court of Appeals (CA-
G.R. CV No. 32860) and sought reversal of the trial courts
decision on the grounds that:
I. THE TRIAL COURT WAS ERRONEOUSLY PREDISPOSED
TO ADJUDGE THIS CASE AGAINST APPELLANT DUE TO
ITS MISPERCEPTION THAT APPELLANTS DELAY IN FILING
HER COMPLAINT WAS FATAL TO HER CASE.
II. THE TRIAL COURT ERRED IN ITS REJECTION OF THE
TESTIMONIES OF APPELLANTS WITNESSES AS TAILOR-
MADE, INADEQUATE AND INCREDIBLE.
III. THE TRIAL COURT ERRED IN ITS REJECTION OF THE
ADMISSIBILITY OF THE CERTIFIED COPIES OF PUBLIC
DOCUMENTS PRESENTED BY APPELLANT AS PART OF
HER EVIDENCE.
IV. THE TRIAL COURT ERRED IN ITS REQUIREMENT THAT
A WITNESS TO THE ACTUAL ACT OF COPULATION
BETWEEN THE APPELLEE AND APPELLANTS MOTHER
SHOULD HAVE POSITIVELY TESTIFIED TO SAID EFFECT.
V. THE TRIAL COURT ERRED IN REJECTING THE
ADMISSIBILITY OF THE DULY IDENTIFIED NOTES AND
LETTER OF THE RELATIVES OF THE APPELLEE AS
HEARSAY.
VI. THE TRIAL COURT ERRED IN CONCLUDING THAT
APPELLANTS AFFIDAVIT (EXH. P) SERVED AS A BAR
AGAINST HER CLAIM FOR RECOGNITION INSTEAD OF
REINFORCING SAID CLAIM.[13]
Expectedly, FRANCISCO refuted these alleged errors in his
Appellees Brief.[14]
In its decision of 27 April 1995,[15] the Court of Appeals initially
declared that as no vested or acquired rights were affected, the
instant case was governed by Article 175, in relation to Articles
172 and 173, of the Family Code.[16] While the Court of
Appeals rejected the certifications issued by the Local Civil
Registrar of Dingle, Iloilo (Exhs. E and F) as FRANCISCO did
not sign them, said court focused its discussion on the other
means by which illegitimate filiation could be proved, i.e., the
open and continuous possession of the status of an illegitimate
child or, by any other means allowed by the Rules of Court and
special laws, such as the baptismal certificate of the child, a
judicial admission, a family bible wherein the name of the child
is entered, common reputation respecting pedigree, admission
by silence, testimonies of witnesses xxx.[17] To the Court of
Appeals, the bottom line issue was whether or not MONINA
established her filiation as FRANCISCOs illegitimate daughter
by preponderance of evidence, as to which issue said court
found:
[N]ot just preponderant but overwhelming evidence on record
to prove that [MONINA] is the illegitimate daughter of
[FRANCISCO] and that she had continuously enjoyed such
status by direct acts of [FRANCISCO] and/or his relatives.
In so ruling, the Court of Appeals observed that the testimonies
of Lope Amolar, Adela Casabuena and Dominador Savariz
were already sufficient to establish MONINAs filiation:
As adverted to earlier, the trial court discredited Lope Amolars
testimony by saying that Lope could not have detected
Esperanzas pregnant state in November, 1945 since at that
point in time [sic] she was still in the initial stage of pregnancy.
Apparently, the trial court paid more emphasis on the date
mentioned by Lope Amolar than on the tenor and import of his
testimony. As xxx Lope xxx was asked about an incident that
transpired more than 41 years back, [u]nder the
circumstances, it is unreasonable to expect that Lope could still
be dead right on the specific month in 1945 that [he] met and
confronted his sister. At any rate, what is important is not the
month that they met but the essence of his testimony that his
sister pointed to their employer [FRANCISCO] as the one
responsible for her pregnancy, and that upon being confronted,
[FRANCISCO] assured him of support for Esperanza and their
child. It would appear then that in an attempt to find fault with
Lopes testimony, the trial court has fallen oblivious to the fact
that even [FRANCISCO], in his deposition, did not deny that he
was confronted by Lope about what he had done to
Esperanza, during which he unequivocally acknowledged
paternity by assuring Lope of support for both Esperanza and
their child.
The Court of Appelas further noted that Casabuena and
Savariz testified on something that they personally observed or
witnessed, which matters FRANCISCO did not deny or refute.
Finally, said court aptly held:
Taking into account all the foregoing uncontroverted
testimonies xxx let alone such circumstantial evidence as
[MONINAs] Birth Certificates xxx and Baptismal Certificates
which invariably bear the name of [FRANCISCO] as her father,
We cannot go along with the trial courts theory that [MONINAs]
illegitimate filiation has not been satisfactorily established.
Significantly, [MONINAs] testimony finds ample corroboration
from [FRANCISCOs] former employees, Arsenio Duatin, Rudy
Tingson and Alfredo Baylosis. xxx
Carefully evaluating appellants evidence on her enjoyment of
the status of an illegitimate daughter of [FRANCISCO] vis-a-vis
[FRANCISCOs] controversion thereof, We find more weight in
the former. The positive testimonies of [MONINA] and [her]
witnesses xxx all bearing on [FRANCISCOs] acts and/or
conduct indubitably showing that he had continuously
acknowledged [MONINA] as his illegitimate daughter have not
been succeessfully [sic] refuted. In fact, [FRANCISCO] himself,
in his deposition, only casually dismissed [MONINAs]
exhaustive and detailed testimony as untrue, and with respect
to those given by [MONINAs] witnesses, he merely explained
that he had fired [them] from their employment. Needless to
state, [FRANCISCOs] vague denial is grossly inadequate to
overcome the probative weight of [MONINAs] testimonial
evidence.
Even the affidavit (Exh 2) which [FRANCISCO] had foisted on
the trial court xxx does not hold sway in the face of [MONINAs]
logical explanation that she at first did agree to sign the
affidavit which contained untruthful statements. In fact, she
promptly complained to [FRANCISCO] who, however
explained to her that the affidavit was only for the consumption
of his spouse xxx. Further, the testimony of Jose Cruz
concerning the events that led to the execution of the affidavit
xxx could not have been true, for as pointed out by [MONINA],
she signed the affidavit xxx almost five months after she had
resigned from the Miller, Cruz & Co. xxx
At any rate, if [MONINA] were not his illegitimate daughter, it
would have been uncalled for, if not absurd, for [FRANCISCO]
or his lawyer to have secured [MONINAs] sworn statement xxx
On the contrary, in asking [MONINA] to sign the said affidavit at
the cost of P15,000, [FRANCISCO] clearly betrayed his
intention to conceal or suppress his paternity of [MONINA]. xxx
In fine, We hold that [MONINAs] filiation as [FRANCISCOs]
illegitimate daughter has been conclusively established by the
uncontroverted testimonies of Lope Amolar, Adela Casabuena
and Dominador Savariz to the effect that appellee himself had
admitted his paternity of the appellee, and also by the
testimonies of appellant, Arsenio Duatin, Romeo Bilbao, Rudy
Tingson and Alfredo Baylosis unerringly demonstrating that by
his own conduct or overt acts like sending appellant to school,
paying for her tuition fees, school uniforms, books, board and
lodging at the Colegio del Sagrado Corazon de Jesus,
defraying appellants hospitalization expenses, providing her
with [a] monthly allowance, paying for the funeral expenses of
appellants mother, acknowledging appellants paternal
greetings and calling appellant his Hija or child, instructing his
office personnel to give appellants monthly allowance,
recommending appellant for employment at the Miller, Cruz &
Co., allowing appellant to use his house in Bacolod and paying
for her long distance telephone calls, having appellant spend
her vacation in his apartment in Manila and also at his Forbes
residence, allowing appellant to use his surname in her
scholastic and other records (Exhs Z, AA, AA-1 to AA-5, W &
W-5), appellee had continuously recognized appellant as his
illegitimate daughter. Added to these are the acts of
[FRANCISCOs] relatives acknowledging or treating [MONINA]
as [FRANCISCOs] daughter (Exh U) or as their relative (Exhs
T & V). On this point, witness Zafiro Ledesma, former Mayor of
Iloilo City, whose spouse belongs to the Lopez clan just like
[FRANCISCO], testified that [MONINA] has been considered
by the Lopezes as a relative. He identified pictures of the
appellee in the company of the Lopezes (Exhs X-16 & X-17).
Another witness, Danthea H. Lopez, whose husband Eusebio
Lopez is appellees first cousin, testified that appellant was
introduced to her by appellees cousin, Remedios Lopez
Franco, as the daughter of appellee Francisco Jison, for which
reason, she took her in as [a] secretary in the Merchants
Financing Corporation of which she was the manager, and
further allowed her to stay with her family free of board and
lodging. Still on this aspect, Dominador Savariz declared that
sometime in February, 1966 appellees relative, Ms. Remedios
Lopez Franco pointed to appellant as the daughter of appellee
Francisco Jison.
Finally, the Certifications of the Local Civil Registrar of Dingle
(Exhs E and F) as well as [MONINAs] Baptismal Certificates
(Exhs C & D) which the trial ocurt admitted in evidence as part
of [MONINAs] testimony, may serve as circumstantial evidence
to further reinforce [MONINAs] claim that she is
[FRANCISCOs] illegitimate daughter by Esperanza Amolar.
True it is that a trial judges assessment of the credibility of
witnesses is accorded great respect on appeal. But the rule
admits of certain exceptions. One such exception is where the
judge who rendered the judgment was not the one who heard
the witnesses testify. [citations omitted] The other is where the
trial court had overlooked, misunderstood or misappreciated
some facts or circumstances of weight and substance which, if
properly considered, might affect the result of the case.
[citations omitted] In the present case, both exceptions obtain.
All of [MONINAs] witnesses xxx whose testimonies were not
given credence did not testify before the judge who rendered
the disputed judgment. xxx
The Court of Appeals then decreed:
WHEREFORE, premises considered, the judgment of the trial
court is SET ASIDE and another one is hereby entered for
appellant Monina Jison, declaring her as the illegitimate
daughter of appellee Francisco Jison, and entitled to all rights
and privileges granted by law.
Costs against appellee. SO ORDERED.
His motion for reconsideration having been denied by the
Court of Appeals in its resolution of 29 March 1996,[18]
FRANCISCO filed the instant petition. He urges us to reverse
the judgment of the Court of Appeals, alleging that said court
committed errors of law:
I. IN REVERSING THE DECISION OF THE TRIAL COURT
AND DECLARING PRIVATE RESPONDENT AS THE
ILLEGITIMATE CHILD OF PETITIONER, CONSIDERING
[THE] IMPOSSIBILITY OF SEXUAL CONTACT BETWEEN
THE PETITIONER AND THE PRIVATE RESPONDENT'S
MOTHER AT THE TIME CONCEPTION WAS SUPPOSED TO
HAVE OCCURRED.
II. IN REVERSING THE TRIAL COURTS FINDING
CONSIDERING THAT PRIVATE RESPONDENT'S
TESTIMONIAL EVIDENCE OF PATERNITY AND FILIATION IS
NOT CLEAR AND CONVINCING.
III. IN GIVING CREDENCE TO DOCUMENTARY EVIDENCE
PRESENTED BY THE PRIVATE RESPONDENT AS
EVIDENCE OF FILIATION CONSIDERING THAT THE SAME
ARE HEARSAY, SELF-SERVING AND CANNOT BIND THE
PETITIONER UNDER THE BASIC RULES OF EVIDENCE.
IV. IN INTERPRETING THE PRIVATE RESPONDENT'S
SWORN STATEMENT (EXH. P/EXH. 2) IN A MANNER NOT
IN CONSONANCE WITH THE RULINGS OF THE
HONORABLE SUPREME COURT.
V. IN NOT CONSIDERING THE LONG AND UNEXPLAINED
DELAY IN THE FILING OF THE PRESENT PATERNITY SUIT
AS EQUIVALENT TO LACHES.
As regards the first error, FRANCISCO insists that taking into
account the second paragraph of MONINAs complaint wherein
she claimed that he and Pansay had sexual relations by about
the end of 1945 or the start of 1946, it was physically
impossible for him and Pansay to have had sexual contact
which resulted in MONINAs birth, considering that:
The normal period of human pregnancy is nine (9) months. If
as claimed by private respondent in her complaint that her
mother was impregnated by FRANCISCO at the end of 1945
or the start of 1946, she would have been born sometime in
late September or early October and not August 6, 1946 xxx.
The instant case finds factual and legal parallels in Constantino
vs. Mendez,[19] thus: xxx
FRANCISCO further claims that his testimony that Pansay was
no longer employed by him at the time in question was
unrebutted, moreover, other men had access to Pansay during
the time of or even after her employment by him.
As to the second error, FRANCISCO submits that MONINAs
testimonial evidence is shaky, contradictory and unreliable, and
proceeds to attack the credibility of her witnesses by claiming,
in the main, that: (a) Lope Amolar could not have detected
Pansays pregnancy in November 1945 when they met since
she would have been only one (1) month pregnant then; (b)
Dominador Savariz did not in fact witness the meeting between
FRANCISCO, Pansay and MONINA; (c) Zafiro Ledesma had
an ulterior motive in testifying for MONINA as he owned a bank
in Iloilo which was then under Central Bank supervision and
MONINA was the Bank Examiner assigned to Iloilo; and (d)
Danthea Lopez was not related to him by blood and whatever
favorable treatment MONINA received from Danthea was due
to the formers employment at Merchants Financing Company
and additional services rendered at Kahirup Hotel; besides,
Danthea admitted that she had no personal knowledge as to
the issue of paternity and filiation of the contending parties,
hence Sections 39 and 40[20] of Rule 130 of the Rules of
Court did not come into play. FRANCISCO likewise re-echoes
the view of the trial court as regards the testimonies of Adela
Casabuena and Alfredo Baylosis.
FRANCISCO further asserts that MONINAs testimony that he
answered for her schooling was self-serving and
uncorroborated by any receipt or other documentary evidence;
and assuming he did, such should be interpreted as a
manifestation of kindness shown towards the family of a former
household helper.
Anent the treatment given by his relatives to MONINA as his
daughter, FRANCISCO points to the fact that Pansay was the
former laundrywoman of Mrs. Franco; MONINA resided with
the families of Eusebio Lopez and Concha Cuaycong because
she was in their employ at Kahirup Hotel and Our Lady of
Mercy Hospital, respectively; MONINA failed to present Mrs.
Franco, Eusebio Lopez and Mrs. Cuaycong; and MONINAs
employment at the accounting firm of Miller, Cruz & Co. was
attributable to her educational attainment, there being
absolutely no evidence to prove that FRANCISCO ever
facilitated her employment thereat. Hence, in light of Baluyot v.
Baluyot,[21] the quantum of evidence to prove paternity by
clear and convincing evidence, not merely a preponderance
thereof, was not met.
With respect to the third assigned error, FRANCISCO argues
that the Court of Appeals reliance on the certifications of the
Local Civil Registrar (Exhs. E and F) and Baptismal
Certificates (Exhs. C and D) as circumstantial evidence is
misplaced. First, their genuineness could not be ascertained as
the persons who issued them did not testify. Second, in light of
Reyes v. Court of Appeals,[22] the contents of the baptismal
certificates were hearsay, as the data was based only on what
was told to the priest who solemnized the baptism, who
likewise was not presented as a witness. Additionally, the
name of the father appearing therein was Franque Jison, which
was not FRANCISCOs name. Third, in both Exhibits E and F,
the names of the childs parents were listed as Frank Heson
and Esperanza Amador (not Amolar). FRANCISCO further
points out that in Exhibit F, the status of the child is listed as
legitimate, while the fathers occupation as laborer. Most
importantly, there was no showing that FRANCISCO signed
Exhibits E and F or that he was the one who reported the
childs birth to the Office of the Local Civil Registrar. As to
MONINAs educational records, FRANCISCO invokes Baas v.
Baas[23] which recognized that school records are prepared
by school authorities, not by putative parents, thus incompetent
to prove paternity. And, as to the photographs presented by
MONINA, FRANCISCO cites Colorado v. Court of Appeals,[24]
and further asserts that MONINA did not present any of the
persons with whom she is seen in the pictures to testify
thereon; besides these persons were, at best, mere second
cousins of FRANCISCO. He likewise assails the various notes
and letters written by his relatives (Exhs. S to V) as they were
not identified by the authors. Finally, he stresses that MONINA
did not testify as to the telephone cards (Exhs. G to L) nor did
these reveal the circumstances surrounding the calls she made
from his residence.
Anent the fourth assigned error, FRANCISCO contends that
the Court of Appeals interpretation of MONINAs affidavit of 21
September 1971 ran counter to Dequito v. Llamas,[25] and
overlooked that at the time of execution, MONINA was more
than 25 years old and assisted by counsel.
As to the last assigned error, FRANCISCO bewails the Court of
Appeals failure to consider the long and unexplained delay in
the filing of the case.
In her comment, MONINA forcefully refuted FRANCISCOs
arguments, leading FRANCISCO to file his reply thereto.
On 20 November 1996, we gave due course to this petition
and required the parties to submit their respective memoranda,
which they subsequently did.
A painstaking review of the evidence and arguments fails to
support petitioner.
Before addressing the merits of the controversy, we first
dispose of preliminary matters relating to the applicable law
and the guiding principles in paternity suits. As to the former,
plainly, the Family Code of the Philippines (Executive Order
No. 209) governs the present controversy. As correctly cited by
the Court of Appeals, Uyguangco[26] served as a judicial
confirmation of Article 256 of the Family Code[27] regarding its
retroactive effect unless there be impairment of vested rights,
which does not hold true here, it appearing that neither the
putative parent nor the child has passed away and the former
having actually resisted the latters claim below.
Under Article 175 of the Family Code, illegitimate filiation, such
as MONINA's, may be established in the same way and on the
same evidence as that of legitimate children. Article 172
thereof provides the various forms of evidence by which
legitimate filiation is established, thus:
ART. 172. The filiation of legitimate children is established by
any of the following:
(1) The record of birth appearing in the civil register or a final
judgment; or
(2) An admission of legitimate filiation in a public document or a
private handwritten instrument signed by the parent concerned.
In the absence of the foregoing evidence, the legitimate filiation
shall be proved by:
(1) The open and continuous possession of the status of a
legitimate child; or
(2) Any other means allowed by the Rules of Court and special
laws.
This Article reproduces, with amendments, Articles 265, 266
and 267 of the Civil Code.
For the success of an action to establish illegitimate filiation
under the second paragraph, which MONINA relies upon given
that she has none of the evidence mentioned in the first
paragraph, a high standard of proof[28] is required.
Specifically, to prove open and continuous possession of the
status of an illegitimate child, there must be evidence of the
manifestation of the permanent intention of the supposed
father to consider the child as his, by continuous and clear
manifestations of parental affection and care, which cannot be
attributed to pure charity. Such acts must be of such a nature
that they reveal not only the conviction of paternity, but also the
apparent desire to have and treat the child as such in all
relations in society and in life, not accidentally, but
continuously.[29]
By continuous is meant uninterrupted and consistent, but does
not require any particular length of time.[30]
The foregoing standard of proof required to establish ones
filiation is founded on the principle that an order for recognition
and support may create an unwholesome atmosphere or may
be an irritant in the family or lives of the parties, so that it must
be issued only if paternity or filiation is established by clear and
convincing evidence.[31]
The foregoing discussion, however, must be situated within the
general rules on evidence, in light of the burden of proof in civil
cases, i.e., preponderance of evidence, and the shifting of the
burden of evidence in such cases. Simply put, he who alleges
the affirmative of the issue has the burden of proof, and upon
the plaintiff in a civil case, the burden of proof never parts.
However, in the course of trial in a civil case, once plaintiff
makes out a prima facie case in his favor, the duty or the
burden of evidence shifts to defendant to controvert plaintiffs
prima facie case, otherwise, a verdict must be returned in favor
of plaintiff. Moreover, in civil cases, the party having the burden
of proof must produce a preponderance of evidence thereon,
with plaintiff having to rely on the strength of his own evidence
and not upon the weakness of the defendants. The concept of
preponderance of evidence refers to evidence which is of
greater weight, or more convincing, that which is offered in
opposition to it; at bottom, it means probability of truth.[32]
With these in mind, we now proceed to resolve the merits of
the instant controversy.
FRANCISCOs arguments in support of his first assigned error
deserve scant consideration. While it has been observed that
unlawful intercourse will not be presumed merely from proof of
an opportunity for such indulgence,[33] this does not favor
FRANCISCO. Akin to the crime of rape where, in most
instances, the only witnesses to the felony are the participants
in the sexual act themselves, in deciding paternity suits, the
issue of whether sexual intercourse actually occurred inevitably
redounds to the victims or mothers word, as against the
accuseds or putative fathers protestations. In the instant case,
MONINAs mother could no longer testify as to the fact of
intercourse, as she had, unfortunately, passed away long
before the institution of the complaint for recognition. But this
did not mean that MONINA could no longer prove her filiation.
The fact of her birth and her parentage may be established by
evidence other than the testimony of her mother. The
paramount question then is whether MONINAs evidence is
coherent, logical and natural.[34]
The complaint stated that FRANCISCO had carnal knowledge
of Pansay by about the end of 1945. We agree with MONINA
that this was broad enough to cover the fourth quarter of said
year, hence her birth on 6 August 1946 could still be attributed
to sexual relations between FRANCISCO and MONINAs
mother. In any event, since it was established that her mother
was still in the employ of FRANCISCO at the time MONINA
was conceived as determined by the date of her birth, sexual
contact between FRANCISCO and MONINAs mother was not
at all impossible, especially in light of the overwhelming
evidence, as hereafter shown, that FRANCISCO fathered
MONINA, has recognized her as his daughter and that
MONINA has been enjoying the open and continuous
possession of the status as FRANCISCOs illegitimate
daughter.
We readily conclude that the testimonial evidence offered by
MONINA, woven by her narration of circumstances and events
that occurred through the years, concerning her relationship
with FRANCISCO, coupled with the testimonies of her
witnesses, overwhelmingly established the following facts:
1) FRANCISCO is MONINAs father and she was conceived at
the time when her mother was in the employ of the former;
2) FRANCISCO recognized MONINA as his child through his
overt acts and conduct which the Court of Appeals took pains
to enumerate, thus:
[L]ike sending appellant to school, paying for her tuition fees,
school uniforms, books, board and lodging at the Colegio del
Sagrado de Jesus, defraying appellants hospitalization
expenses, providing her with [a] monthly allowance, paying for
the funeral expenses of appellants mother, acknowledging
appellants paternal greetings and calling appellant his Hija or
child, instructing his office personnel to give appellants monthly
allowance, recommending appellant for employment at the
Miller, Cruz & Co., allowing appellant to use his house in
Bacolod and paying for her long distance telephone calls,
having appellant spend her vacation in his apartment in Manila
and also at his Forbes residence, allowing appellant to use his
surname in her scholastic and other records (Exhs Z, AA, AA-1
to AA-5, W & W-5)
3) Such recognition has been consistently shown and
manifested throughout the years publicly,[35] spontaneously,
continuously and in an uninterrupted manner.[36]
Accordingly, in light of the totality of the evidence on record,
the second assigned error must fail.
There is some merit, however, in the third assigned error
against the probative value of some of MONINAs documentary
evidence.
MONINAs reliance on the certification issued by the Local Civil
Registrar concerning her birth (Exhs. E and F) is clearly
misplaced. It is settled that a certificate of live birth purportedly
identifying the putative father is not competent evidence as to
the issue of paternity, when there is no showing that the
putative father had a hand in the preparation of said
certificates, and the Local Civil Registrar is devoid of authority
to record the paternity of an illegitimate child upon the
information of a third person.[37] Simply put, if the alleged
father did not intervene in the birth certificate, e.g., supplying
the information himself, the inscription of his name by the
mother or doctor or registrar is null and void; the mere
certificate by the registrar without the signature of the father is
not proof of voluntary acknowledgment on the latters part.[38]
In like manner, FRANCISCOs lack of participation in the
preparation of the baptismal certificates (Exhs. C and D) and
school records (Exhs. Z and AA) renders these documents
incompetent to prove paternity, the former being competent
merely to prove the administration of the sacrament of baptism
on the date so specified.[39] However, despite the
inadmissibility of the school records per se to prove paternity,
they may be admitted as part of MONINAs testimony to
corroborate her claim that FRANCISCO spent for her
education.
We likewise disagree with the ruling of the Court of Appeals
that the certificates issued by the Local Civil Registrar and the
baptismal certificates may be taken as circumstantial evidence
to prove MONINAs filiation. Since they are per se inadmissible
in evidence as proof of such filiation, they cannot be admitted
indirectly as circumstantial evidence to prove the same.
As to Exhibits S, T, U and V, the various notes and letters
written by FRANCISCOs relatives, namely Mike Alano, Emilio
Jison, Mariquit Lopez and Fernando Lopez, respectively,
allegedly attesting to MONINAs filiation, while their due
execution and authenticity are not in issue,[40] as MONINA
witnessed the authors signing the documents, nevertheless,
under Rule 130, Section 39, the contents of these documents
may not be admitted, there being no showing that the
declarants-authors were dead or unable to testify, neither was
the relationship between the declarants and MONINA shown
by evidence other than the documents in question.[41] As to
the admissibility of these documents under Rule 130, Section
40, however, this requires further elaboration.
Rule 130, Section 40, provides:
Section 40. Family reputation or tradition regarding pedigree. --
The reputation or tradition existing in a family previous to the
controversy, in respect to the pedigree of any one of its
members, may be received in evidence if the witness testifying
thereon be also a member of the family, either by
consanguinity or affinity. Entries in family bibles or other family
books or charts, engravings on rings, family portraits and the
like, may be received as evidence of pedigree. (underscoring
supplied)
It is evident that this provision may be divided into two (2)
parts: the portion containing the first underscored clause which
pertains to testimonial evidence, under which the documents in
question may not be admitted as the authors thereof did not
take the witness stand; and the section containing the second
underscored phrase. What must then be ascertained is
whether Exhibits S to V, as private documents, fall within the
scope of the clause and the like as qualified by the preceding
phrase [e]ntries in family bibles or other family books or charts,
engravings on rights [and] family portraits.
We hold that the scope of the enumeration contained in the
second portion of this provision, in light of the rule of ejusdem
generis, is limited to objects which are commonly known as
family possessions, or those articles which represent, in effect,
a familys joint statement of its belief as to the pedigree of a
person.[42] These have been described as objects openly
exhibited and well known to the family,[43] or those which, if
preserved in a family, may be regarded as giving a family
tradition.[44] Other examples of these objects which are
regarded as reflective of a familys reputation or tradition
regarding pedigree are inscriptions on tombstones,[45]
monuments or coffin plates.[46]
Plainly then, Exhibits S to V, as private documents not
constituting "family possessions" as discussed above, may not
be admitted on the basis of Rule 130, Section 40. Neither may
these exhibits be admitted on the basis of Rule 130, Section 41
regarding common reputation,[47] it having been observed
that:
[T]he weight of authority appears to be in favor of the theory
that it is the general repute, the common reputation in the
family, and not the common reputation in community, that is a
material element of evidence going to establish pedigree. xxx
[Thus] matters of pedigree may be proved by reputation in the
family, and not by reputation in the neighborhood or vicinity,
except where the pedigree in question is marriage which may
be proved by common reputation in the community.[48]
Their inadmissibility notwithstanding, Exhibits S to V, inclusive,
may, in like manner as MONINA's school records, properly be
admitted as part of her testimony to strengthen her claim that,
indeed, relatives of FRANCISCO recognized her as his
daughter.
We now direct our attention to MONINAs 21 September 1971
affidavit (Exh. P/Exh. 2), subject of the fourth assigned error,
where she attests that FRANCISCO is not her father. MONINA
contends that she signed it under duress, i.e., she was jobless,
had no savings and needed the money to support herself and
finish her studies. Moreover, she signed Exhibit P upon the
advice of Atty. Divinagracia that filiation could not be waived
and that FRANCISCOs ploy would boomerang upon him. On
the other hand, FRANCISCO asserts that full credence should
be afforded Exhibit P as MONINA was already 25 years old at
the time of its execution and was advised by counsel; further,
being a notarized document, its genuineness and due
execution could not be questioned. He relies on the testimony
of Jose Cruz, a partner at the accounting firm of Miller & Cruz,
who declared that he intervened in the matter as MONINA was
spreading rumors about her filiation within the firm, which might
have had deleterious effects upon the relationship between the
firm and FRANCISCO.
On this issue, we find for MONINA and agree with the following
observations of the Court of Appeals:
Even the affidavit (Exh 2) which [FRANCISCO] had foisted on
the trial court xxx does not hold sway in the face of [MONINAs]
logical explanation that she at first did agree to sign the
affidavit which contained untruthful statements. In fact, she
promptly complained to [FRANCISCO] who, however
explained to her that the affidavit was only for the consumption
of his spouse xxx.
At any rate, if [MONINA] were not his illegitimate daughter, it
would have been uncalled for, if not absurd, for [FRANCISCO]
or his lawyer to have secured [MONINAs] sworn statement xxx
On the contrary, in asking [MONINA] to sign the said affidavit at
the cost of P15,000, [FRANCISCO] clearly betrayed his
intention to conceal or suppress his paternity of [MONINA]. xxx
Indeed, if MONINA were truly not FRANCISCOs illegitimate
daughter, it would have been unnecessary for him to have
gone to such great lengths in order that MONINA denounce
her filiation. For as clearly established before the trial court and
properly appreciated by the Court of Appeals, MONINA had
resigned from Miller & Cruz five (5) months prior to the
execution of the sworn statement in question, hence negating
FRANCISCOs theory of the need to quash rumors circulating
within Miller & Cruz regarding the identity of MONINAs father.
Hence, coupled with the assessment of the credibility of the
testimonial evidence of the parties discussed above, it is
evident that the standard to contradict a notarial document, i.e.,
clear and convincing evidence and more than merely
preponderant,[49] has been met by MONINA.
Plainly then, the burden of evidence fully shifted to
FRANCISCO.
Two (2) glaring points in FRANCISCOs defense beg to be
addressed: First, that his testimony was comprised of mere
denials, rife with bare, unsubstantiated responses such as That
is not true, I do not believe that, or None that I know. In
declining then to lend credence to FRANCISCOs testimony, we
resort to a guiding principle in adjudging the credibility of a
witness and the truthfulness of his statements, laid down as
early as 1921:
The experience of courts and the general observation of
humanity teach us that the natural limitations of our inventive
faculties are such that if a witness undertakes to fabricate and
deliver in court a false narrative containing numerous details,
he is almost certain to fall into fatal inconsistencies, to make
statements which can be readily refuted, or to expose in his
demeanor the falsity of his message.
For this reason it will be found that perjurers usually confine
themselves to the incidents immediately related to the principal
fact about which they testify, and when asked about collateral
facts by which their truthfulness could be tested, their answers
not infrequently take the stereotyped form of such expressions
as I dont know or I dont remember. xxx[50]
Second, the reasons for the dismissals of Tingson, Baylosis
and Savariz were unspecified or likewise unsubstantiated,
hence FRANCISCOs attempt to prove ill-motive on their part to
falsely testify in MONINAs favor may not succeed. As may be
gleaned, the only detail which FRANCISCO could furnish as to
the circumstances surrounding the dismissals of his former
employees was that Baylosis allegedly took advantage of his
position while FRANCISCO was in the United States. But aside
from this bare claim, FRANCISCOs account is barren, hence
unable to provide the basis for a finding of bias against
FRANCISCO on the part of his former employees.
As to FRANCISCOs other witnesses, nothing substantial could
be obtained either. Nonito Jalandoni avowed that he only came
to know of MONINA in June 1988;[51] that during his
employment at Nelly Garden from 1963 up to 1974, he did not
recall ever having seen MONINA there, neither did he know of
any instructions from FRANCISCO nor Mr. Lagarto
(FRANCISCOs office manager before passing away) regarding
the disbursement of MONINAs allowance.[52] Teodoro Zulla
corroborated Jalandonis testimony regarding not having seen
MONINA at Nelly Garden and MONINAs allowance; declared
that Alfredo Baylosis was dismissed due to discrepancies
discovered after an audit, without any further elaboration,
however; but admitted that he never prepared the vouchers
pertaining to FRANCISCOs personal expenses, merely those
intended for one of FRANCISCOs haciendas.[53] Then, Iigo
Superticioso confirmed that according to the report of a certain
Mr. Atienza, Baylosis was dismissed by Mr. Jison for
irregularities, while Superticioso was informed by FRANCISCO
that Tingson was dismissed for loss of confidence.
Superticioso likewise denied that MONINA received money
from FRANCISCOs office, neither was there a standing order
from FRANCISCO to release funds to her.[54]
It is at once obvious that the testimonies of these witnesses for
FRANCISCO are likewise insufficient to overcome MONINAs
evidence. The former merely consist of denials as regards the
latters having gone to Nelly Garden or having received her
allowance from FRANCISCOs office, which, being in the form
of negative testimony, necessarily stand infirm as against
positive testimony;[55] bare assertions as regards the
dismissal of Baylosis; ignorance of FRANCISCOs personal
expenses incapable of evincing that FRANCISCO did not
provide MONINA with an allowance; or hearsay evidence as
regards the cause for the dismissals of Baylosis and Tingson.
But what then serves as the coup de grce is that despite
Superticiosos claim that he did not know MONINA,[56] when
confronted with Exhibit H, a telephone toll ticket indicating that
on 18 May 1971, MONINA called a certain Eing at
FRANCISCOs office, Superticioso admitted that his nickname
was Iing and that there was no other person named Iing in
FRANCISCOs office.[57]
All told, MONINAs evidence hurdled the high standard of proof
required for the success of an action to establish ones
illegitimate filiation when relying upon the provisions regarding
open and continuous possession or any other means allowed
by the Rules of Court and special laws; moreover, MONINA
proved her filiation by more than mere preponderance of
evidence.
The last assigned error concerning laches likewise fails to
convince. The essential elements of laches are: (1) conduct on
the part of the defendant, or of one under whom he claims,
giving rise to the situation of which the complaint seeks a
remedy; (2) delay in asserting the complainants rights, the
complainant having had knowledge or notice of the defendants
conduct as having been afforded an opportunity to institute a
suit; (3) lack of knowledge or notice on the part of the
defendant that the complaint would assert the right in which he
bases his suit; and (4) injury or prejudice to the defendant in
the event relief is accorded to the complainant, or the suit is
not held barred.[58] The last element is the origin of the
doctrine that stale demands apply only where by reason of the
lapse of time it would be inequitable to allow a party to enforce
his legal rights.[59]
As FRANCISCO set up laches as an affirmative defense, it
was incumbent upon him to prove the existence of its
elements. However, he only succeeded in showing MONINAs
delay in asserting her claim, but miserably failed to prove the
last element. In any event, it must be stressed that laches is
based upon grounds of public policy which requires, for the
peace of society, the discouragement of stale claims, and is
principally a question of the inequity or unfairness of permitting
a right or claim to be enforced or asserted. There is no
absolute rule as to what constitutes laches; each case is to be
determined according to its particular circumstances. The
question of laches is addressed to the sound discretion of the
court, and since it is an equitable doctrine, its application is
controlled by equitable considerations. It cannot be worked to
defeat justice or to perpetuate fraud and injustice.[60] Since
the instant case involves paternity and filiation, even if
illegitimate, MONINA filed her action well within the period
granted her by a positive provision of law. A denial then of her
action on ground of laches would clearly be inequitable and
unjust.
WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
hereby DENIED and the challenged decision of the Court of
Appeals of 27 April 1995 in CA-G.R. CV No. 32860 is
AFFIRMED.
Costs against petitioner.
SO ORDERED.