G.R. No.
L-15179 September 30, 1960 Plaintiff now argues that the filing of said cases constituted judicial demands which
TEODORA AMAR, for herself and as administratix of the Estate of the late Juan
Ocaso,​ plaintiff-appellant,
vs.
JESUS ODIAMAN,​ defendant-appellee.
Conrado O. Honrado and Rito A. Binas for appellant.
Ciriaco Abella for appellee.
BARRERA, ​J.:
This is an action filed by plaintiff-appellant on November 24, 1958 in the Court of First
Instance of Capiz to recover a piece of land situated in barrio Majanlud, Sapian, Capiz,
alleged to have been seized in April, 1948 by the defendant-appellee Jesus Odiaman and
others, by means of deceit, fraud and strategem and under false pretenses, and damages
in the sum of P190.00 yearly, as products of the land since 1948, plus P800.00 for
attorney's fees and other incident expenses.
Upon motion of the defendant to dismiss the complaint on the ground that plaintiff's
cause of action is already barred by the statute of limitations, for the reason that the
complaint was filed after the expiration of 10 years from the date the cause of action
accrued in April, 1948, the court dismissed said complaint in an order of this tenor:
From the context of the complaint, it is clear that the cause of action herein accrued in
April, 1948. The 10-year period from our date of accrual, therefore, expired after April,
1958. There is no allegation in the tending to show that the running of said 10-year
period has been interrupted. The within cause, having accrued before the new Civil Code
took effect, the question whether the said cause has prescribed or not should be
answered from the Code of Civil Procedure, Act No. 190, which provides that "actions to
enforce written contracts or to recover real property prescribe after ten years" (Osorio ​vs.
Tan Jongko, et al., 98 Phil., 35, 51 Off. Gaz., 6221).
Therefore, this case is hereby dismissed without special pronouncement as to costs.
So ordered.
After a motion for reconsideration was denied, plaintiff filed an amend complaint alleging
the same facts as those alleged in the original complaint, but adding the following
allegations:
3. That on September 8, 1948, plaintiff filed against the defendant Jesus Odiaman and
others, a case of Forcible Entry in the Justice of the Peace Court of Sapian, Capiz, in
which the defendants appealed to this Court and was registered as Civil Case No. V-484
of the Court of First Instance of Capiz. That said case was dismissed on July 17, 1951,
upon plaintiff's own motion. That on May 29, 1952, the herein plaintiff filed a case
registered as No. V-755 of the Court of First Instance of Capiz, 38 3 against the
defendant Jesus Odiaman, Florencio Obo, and Generoso Obo for ownership and for
damages over the same parcel of land, but the complaint was dismissed on September
13, 1957, without prejudice of refiling the same. This case is a refiling of that dismissed
case No. V-755 and the complaint is a reproduction of the same.
The court, treating said motion to amend the complaint as a second motion for
reconsideration, denied the same of January 13, 1959, in an order which, in part, reads:
Plaintiff now offers to amend her complaint by including therein allegations to the effect
that on September 18, 1948, she filed with the JP court of Sapian, Capiz, a forcible entry
and detainer case, which she won in said JP court but which was dismissed on appeal by
the CFI of Capiz on July 17, 1951 upon plaintiff's own motion; and that on May 29, 1952
said plaintiff filed another case with the CFI of Capiz involving the same cause and the
same parties, but said case was likewise dismissed on September 13, 1957, about
without prejudice.
interrupted the running of the extinctive prescription period.
It is evident that the period of prescription started to run when the law applicable to the
question was Act No. 190 which, in section 40 and 43, provide that actions to enforce
written contracts or to recover real property prescribe after ten years, and that the
running of said period is not interrupted either by extra-judicial demand (Osorio ​vs. Tan
Jongko, et al., 98 Phil., 55; 51 Off. Gaz., 6221) or by the presentation of judicial action
(Peralta ​vs.​ Alipio, 97 Phil., 719).
In view of the foregoing, plaintiff's motion of December 29, 1958, which is treated as
second motion for reconsideration, is hereby denied, and the order of this Court
dismissing the within complaint stands.
So ordered.
Hence, this appeal.
Plaintiff-appellant, in assailing the lower court's action in dismissing her complaint, argues
that the filing of the two cases involving the same property (one for ejectment, Civil Case
No. R-7 of the Justice of the Peace Court of Sapian, dismissed while on appeal, upon her
motion on July 17, 1951; and another for recovery, Civil Case No. V-755, which was also
dismissed, without prejudice, on September 13, 1957) interrupted the running of the
prescriptive period of her cause of action. In support of her contention, she cites Articles
1943, 1945 and 1946 of the old Civil Code. But these refer to interruption of possession
in relation to acquisitive prescription. The dismissal of the action here is because of the
extinctive prescription of action, and the pertinent Article, if at all, is Article 1973 of the
old Civil Code. However, this article has been repealed by Section 50 of Act 190 as held
by this Court in ​Pelaez vs. Abreu (26 Phil., 3q 3 415). The cases cited by appellant (In re
Estate of Mijares, 13 Phil., 63, and Lichauco ​vs. Soriano, 35 Phil., 203) are inapplicable
because in both cases, the causes of action arose in 1889 and 1890, respectively, long
before the enactment of Act 190, effective October 1, 1901.​1awphîl.nèt
It is disputed that herein plaintiff's cause of action accrued in April, 1948, when
defendant and 3 others unlawfully deprived her of the possession of the property in
question.
Article 1116 of the new Civil Code, provides:
ART. 1116. ​Prescription already running before the effectivity of this Code shall be
governed by laws previously in force; but if since the time this Code took effect the entire
period herein required for prescription should elapse the present Code shall be applicably,
even through by the former laws a longer period might be required. ​(Emphasis supplied.)
Since the prescriptive period in the case before us had already run (in April, 1948) prior
to the effectively of the new Civil Code (on August 30, 1950), and as the prescriptive
period provided in the new Civil Code has not yet elapsed since its effectively, then Art.
No. 190, 1 ​the law in force in 1948, is the one applicable to the present case. Section 40
of said Act, states:
SEC. 40. ​Period of Prescription as to Real Estate​. — An action for recovery of title to, or
possession of, real property, or an interest therein, can only be brought within ten years
after the cause of such action accrues. (Emphasis supplied.)
Interpreting this provision, we held in the case of ​Peralta et al. vs. Alipio (​ 97 Phil., 719),
that "the statute of limitations contained in the old Code of Civil Procedure (Act No. 190)
contains no specific or express provision on the suspension or interruption of the running
period of prescription by the institution of an action." Earlier, in two other cases, those of
Oriental Commercial Co., Inc. vs. Jureidini, Inc., et al​. (71 Phil., 25) and ​Conspecto vs.
Fruto ​(31 Phil., 144), this Court declared that the filing of an action within the
prescription period, if the plaintiff desist in its prosecution or is dismissed, does not
suspend the running of the statute of limitations and takes no time out of the period of
prescription under Act 190. The parties are left in exactly the same position as through
no action had been commenced at all.​ 2
In the light of the foregoing, we hold that the filing of the aforementioned Civil Case No.
V-484 in the Court of First Instance of Capiz in 1948, which was dismissed upon plaintiff's
motion in 1951, and of Civil Case No. V-775 in the same court in 1952, which was
dismissed without prejudice in 1957, did not interrupt the running of the 10-year
prescriptive period provided in the aforesaid Section 40 of Act No. 190 for the bringing of
the present action. As already stated, herein plaintiff's cause of action accrued in April,
1948. The present action was instituted only in November, 1948, or 7 months after the
period for bringing the same had elapsed. It is, undoubtedly, barred by the Statute of
Limitations. The lower court, therefore, correctly dismissed it.
WHEREFORE, the order appealed from is hereby affirmed, with costs against the
plaintiff-appellant. So ordered.
Paras, C.J., Bengzon, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera,
Paredes, and Dizon, JJ., concur.
G.R. No. 106646 June 30, 1993
JAIME LEDESMA, ​petitioner,
vs.
COURT OF APPEALS and RIZAL COMMERCIAL BANKING CORPORATION,
respondents.
Ledesma, Saludo & Associates for petitioner.
Meer, Meer & Meer Law Office for private respondent.
REGALADO, ​J.:
Petitioner has filed a motion for reconsideration of the Court's resolution of March 24,
1993 which denied his petition for review on ​certiorari ​for failure to sufficiently show that
respondent Court of Appeals had committed any reversible error in its questioned
judgment.
On August 21, 1980, private respondent Rizal Commercial Banking Corporation filed Case
No. 38287 in the then Court of First Instance of Rizal against petitioner to enforce the
terms of Trust Receipt Agreement No. 7389 executed by them on April 1, 1974 but which
petitioner had failed to comply with. As summons could not be served on the latter, said
case was dismissed without prejudice on March 3, 1981. On December 2, 1988, private
respondent bank instituted Civil Case No. 88-2572 in the Regional Trial Court of Makati,
Metro Manila, Branch 133, against petitioner on the same cause of action and subject
matter.
Petitioner's motion to dismiss on the ground of prescription was denied and judgment
was rendered in favor of private respondent by the court ​a quo ​ordering petitioner to pay
private respondent P168,00.00 with interest thereon of 12% per annum ​from December
2, 1988 until full payment of the obligation, P16,800.00 as attorney's fees, and costs of
suit. Said judgment was affirmed by respondent Court in CA-G.R. CV No. 29406 in its
decision promulgated on January 7, 1992,​1 and petitioner's motion for reconsideration
thereof was denied in a resolution dated August 6, 1992.​2
Petitioner's petition for review on ​certiorari ​of the said judgment was denied in our
aforesaid resolution, hence its present motion for reconsideration, dated May 5, 1993.
Contending that the second action filed by private respondent bank had already
prescribed, petitioner invokes the rulings in ​Vda. de Nator, et al. vs. Court of Industrial
Relations, et al.​ 3​ and ​Fulton Insurance Co. vs. Manila Railroad Co., et al.4​ and invites us
"to give a second look at the apparently conflicting or divergent jurisprudence."
Article 1155 of the Civil. Code provides that the prescription of an action, involving in the
present case the 10-year prescriptive period for filing an action on a written contract
under Article 1144(1) of the Code, is interrupted by (a) the filing of an action, (b) a
written extrajudicial demand by the creditor, and (c) a written acknowledgment of the
debt by the debtor. The effects of the last two instances have already been decided by
this Court, the rationale wherein should necessarily apply to the first.
The matter of the interruption of the prescriptive period by reason of a written
extrajudicial demand by the creditor was decided in ​Overseas Bank of Manila vs.
Geraldez, et al.5​​ in this wise:
. . . The interruption of the prescriptive period by written extrajudicial demand means
that the said period would commence anew from the receipt of the demand. That is the
correct meaning of interruption as distinguished from mere suspension or tolling of the
prescriptive period.
xxx xxx xxx
A written extrajudicial demand wipes out the period that has already elapsed and starts
anew the prescriptive period. . . .
xxx xxx xxx
That same view as to the meaning of interruption was adopted in Florendo vs. Organo, 90
Phil 483, 488, where it was ruled that the interruption of the ten-year prescriptive period
through a judicial demand means that "the full period of prescription commenced to run
anew upon the cessation of the suspension." When prescription is interrupted by a
judicial demand, the full time for the prescription must be reckoned from the cessation of
the interruption. . . .
The interruption of the prescriptive period by reason of a written acknowledgment of the
debt by the debtor was dealt with in ​Philippine National Railways vs. National Labor
Relations Commission, et al.,​6​ thus:
Article 1155 of the Civil Code provides that the "prescription of actions is interrupted"
inter alia​, "when there is any written acknowledgment of the debt by the debtor." This
simply means that the period of prescription, when interrupted by such a written
acknowledgment, begins to run anew; and whatever time of limitation might have
already elapsed from the accrual of the cause of action is thereby negated and rendered
inefficacious. . . .
xxx xxx xxx
. . . The effect of the interruption spoken of in Article 1155 is to renew the obligation, to
make prescription run again from the date of the interruption . . .
Based on the aforecited cases, Article 1155 has twice been interpreted to mean that upon
the cessation of the suspension of the prescriptive period, the full period of prescription
commences to run anew. Petitioner, on the other hand, insists that in case of the filing of
an action, the prescriptive period is merely tolled and continues to run again, with only
the balance of the remaining period available for the filing of another action. This
postulation of petitioner, if we are to adopt it, would result in an absurdity wherein Article
1155 would be interpreted in two different ways, ​i.e.​, the prescriptive period is
interrupted in case of an extrajudicial demand and a written acknowledgment of a debt,
but it is merely tolled where an action is filed in court.
In ​Vda. de Nator,​ it was held that:
. . . The filing of the case with the CFI arrested the period of prescription (Art. 1155
NCC), and the interruption of said period lasted until the time that the dismissal for lack
of jurisdiction became final. "When prescription is interrupted by a judicial demand, the
full time for the prescription must be reckoned from the cessation of the interruption". . .
. The whole period during which the case had been pending cannot be counted for
arriving at the prescriptive period. In other words, the running of the period of
prescription in this particular case was interrupted on August 6, 1953, when the case in
the CFI was filed and began to run again on August 30, 1958, when the same Court had
dismissed the case. As the complaint was filed with the CIR on December 5, 1958, the
action has not yet prescribed.
This case obviously appears to have made conflicting statements since it proceeds upon a
certain premise but arrives at a different conclusion. Hence, we cannot agree that the
statements therein sufficiently support the thesis of petitioner.
The case of ​Fulton Insurance Company is not clear either on the matter of the
interruption of the prescriptive period where an action is filed in court. It was there held
that:
There are two school(s) of thought as to the legal effect of the cessation of the
interruption by an intervening action upon the period of prescription. There is the view
expressed and perhaps, not without reasons, that the full period of prescription should
start to run anew, reckoned from the date of the cessation of the interruption. The
contrary view is, that the cessation of the interruption merely tolls the running of the
remaining period of prescription, deducting from the full period thereof the time that has
already elapsed prior to the filing of the intervening action. Nevertheless, all discussion
on this point is academic; considered in the light of either view, We find that the second
action is not barred.
In the aforesaid case, the defendant therein moved for the dismissal of the second case
alleging that the filing of the first case neither tolled nor interrupted the running of the
prescriptive period. This Court ruled that the filing of the first action interrupted the
running of the period, and then declared that at any rate, the second action was filed
within the balance of the period remaining. It concluded that the issue of whether the
filing of the action merely tolled or it actually interrupted the running of the prescriptive
period was moot and academic because, in either case, the second action was still filed
within the prescriptive period. Consequently, the ​Fulton ​case cannot ​also sustain the
thesis of petitioner.
On the foregoing considerations, we are convinced and so hold that the correct
interpretations of Article 1155 of the Civil Code are reflected in and furnished by the
doctrinal pronouncements in ​Overseas Bank of Manila a ​ nd ​Philippine National Railways
Company,​ not only because they are later in point of time but because the issue is
squarely resolved in a decisive and logical manner therein. Petitioner's submission would
result in a bifurcated interpretation of Article 1155, aside from the irrational conclusion
that a judicial action itself cannot produce the same result on the prescriptive period as a
mere extrajudicial demand or an acknowledgment of the debt.
Accordingly, petitioner having failed to adduce any cogent reason or substantial argument
to warrant a reconsideration of our resolution of March 24, 1993, the present motion is
hereby DENIED with FINALITY.
SO ORDERED.
Narvasa, C.J., and Nocon, JJ. concur.
Padilla, J., is on leave.

G.R. No. L-27117 July 30, 1969
PHILIPPINE NATIONAL BANK,​ petitioner,
vs.
THE COURT OF APPEALS, LINA VELMONTE, RODOLFO CORNEJO and FELICISIMO
Y. GUEVARRA,​respondents.
Conrado E. Medina, Julio M. Locsin, Benjamin V. Coruño and Antonio P. Ruiz for
petitioner.
Miguel R. Cornejo for respondents.
CONCEPCION, ​J.:
Plaintiff Philippine National Bank seeks the review on certiorari of a decision of the Court
of Appeals reversing that of the Court of First Instance of Manila.
The main facts are not in dispute. On June 2, 1953, judgment was rendered in Civil Case
No. 24254 of the Municipal Court of Manila, entitled "Philippine National Bank vs. Lina
Velmonte, Rodolfo Cornejo, and Felicisimo Y. Guevarra," sentencing these defendants to
pay, jointly and severally, to the plaintiff the sum of P1,001.02, with 9% annual interest
thereon from June 3, 1953, plus 10% of the amount due as attorney's fees and the costs.
On January 28, 1964, plaintiff instituted Civil Case No. 117899, of said court, against the
same defendants, for the revival of the aforementioned judgment, upon the ground that
the same had not been satisfied, except for the sum of P150, paid by defendant Cornejo,
on July 20, 1956; that this payment interrupted the period of prescription of said
judgment; and that the amount due thereunder as of January 15, 1964, was P1,833.39,
with the stipulated interest of 9% on P800, from January 16, 1964, plus attorney's fees
and the costs. A decision having been rendered by the Municipal Court dismissing the
complaint, plaintiff appealed to the Court of First Instance of Manila which in due course,
rendered judgment for the plaintiff. On appeal, taken by the defendants, this judgment of
the court of first instance was reversed by the Court of Appeals, upon the ground of
prescription of action. Hence, this petition for review.
The case hinges on whether or not the payment allegedly made by defendant Cornejo, on
July 20, 1956, in partial satisfaction of the judgment of the Municipal Court in said Case
No. 24254, tolls the running of the statute of limitations for the revival of said judgment.
In this connection, "(t)he prescription of actions is interrupted" — pursuant to Article
1155 of our Civil Code — either "when they are filed before the court," or (2) "where
there is a ​written e ​ xtrajudicial demand by the creditors," or (3) "when there is any
written acknowledgment of the debt ​by the debtor.​ " In the case at bar, no action was
filed in court within 10 years from June 17, 1953, when the decision of the Municipal
Court. presumably became final and executory. Neither has there been any written
extrajudicial demand by plaintiff for the payment of said judgment. Plaintiff maintains
that, in the present case, there has been a ​written ​acknowledgment of the debt by the
debtor, in view of the partial payment of P150, allegedly made by defendant Cornejo, on
July 20, 1956. It should be noted, however, that, although a payment implies an
acknowledgment of debt, it is not necessarily a ​written ​acknowledgment thereof. In this
connection, the following observations made in the annotation to the Civil Code of the
Philippines by Tolentino​ 1 ​are in point:
Part ​payment of a debt, therefore, ​cannot i​ nterrupt the period of prescription. A partial
payment before the period has elapsed is undoubtedly an ​implied ​acknowledgment of the
debt. ​This has been recognized under the old Civil Code.​ It has been so held in Louisiana.
But ​our present Civil Code requires that the acknowledgment, in order to interrupt
prescription, must be written, unlike the old Civil Code which did not require a writing;
hence, the legal impossibility of considering payment as an acknowledgment sufficient to
interrupt prescription.​ 2​​ 1äwphï1.ñët
Indeed, in ​PNB v. Osete​,​ 3 we
​
said:
With respect to the alleged partial payments, it is worthy of notice that, Art. 1973 of the
Civil Code of Spain provided;
The prescription of actions is interrupted by the commencement of a suit for their
enforcement, by an extra-judicial demand by the creditor, and by any act of
acknowledgment of the debt by the debtor.
Under this article, a partial payment could, as an 'act of acknowledgment of the debt,'
interrupt the prescriptive period. Said provision was amended, however, by Article 1155
of the Civil Code of the Philippines, to read:
The prescription of actions is interrupted when they are filed before the court, when there
is a written extra-judicial demand by the creditors, and when there is any ​written
acknowledgment of the debt by the debtor.
Under this provision, ​not ​all acts of acknowledgment of a debt interrupt prescription. To
produce such effect, the acknowledgment must be 'written', so that payment, if not
coupled with a communication signed by the payor, would not interrupt the running of
the period of prescription.
Moreover, the lower court expressed the view that said 'Art. 1155 of the New Civil Code
refers to the tolling of the period of prescription of the ​action to collect​, not to the action
to enforce' — or revive — a 'judgment'. Understandably, either an 'extrajudicial demand'
by the creditor or an 'acknowledgment of the debt' may interrupt the prescription of the
action to collect, ​not based upon a judgment, since the demand indicates that the
creditor has not slept on his rights and removes the basis of the statute of limitation of
actions — but, was vigilant in the enforcement thereof, whereas an acknowledgment by
the debtor provides a tangible evidence of the existence and validity of the debt. Who
would, however, make an extrajudicial demand, for the payment of a judgment, when
the same may be enforced by a writ of execution? And, how could an acknowledgment or
partial payment affect the rights of a creditor, when the same are based, no longer upon
his contract with the debtor or upon law, but upon no less ​than a judicial decree​, which is
final and executory?​1äwphï1.ñët
It may not be amiss to note, also, that the payment by defendant Cornejo was sought to
be established with a photostatic copy of a receipt issued, not of the debtor, but ​by the
creditor​, namely plaintiff herein.
Plaintiff insists that its theory is supported by Article 1151 of our Civil Code, which
provides that:
... The time for the prescription of actions which have for their object the enforcement of
obligations to pay principal with interest or annuity runs from the last payment of the
annuity or of the interest.
This provision is inapplicable to the case at bar. It refers to the "enforcement of
obligations to pay principal with interest or annuity" where payment thereof is due ​at
stipulated intervals,​ in which case, the prescriptive period begins to run from the "last
payment of the annuity or of the interest." The sum of P150 paid by Cornejo, on July 20,
1956, was not meant to be in satisfaction of any "annuity or interest". Upon the other
hand, an action to revive a judgment prescribes from the time that the same has become
final. Then, again, the interpretation advocated by plaintiff would render Article 1151
inconsistent with the last part of Article 1155 and defeat the evident purpose of the
framers of our Civil Code, in modifying the rule incorporated into Article 1973 of the
Spanish Civil Code. It is a well-settled principle of statutory construction that the
provisions of the same Code should be so interpreted as to harmonize, instead of creating
a conflict between said provisions, and that in the event of an irreconcilable
inconsistency, the later provision should prevail over the earlier one.
WHEREFORE, the decision of the Court of Appeals should be, as it is hereby affirmed,
with costs against the plaintiff. It is so ordered.
Reyes, J.B.L., Dizon, Makalintal, Sanchez, Castro, Fernando, Capistrano, Teehankee and
Barredo, JJ., concur.
Zaldivar, J., took no part.
 [G.R. No. 141638. July 17, 2000]
SPS. PATERNO ESCUDERO, ​et al. vs.​ CA, ​et al.
FIRST DIVISION
Gentlemen:
Quoted hereunder, for your information, is a resolution of this Court dated​ ​JUL 17 2000.
G.R. No. 141638 (​Spouses Escudero, et al. vs. Court of Appeals, Regional Trial Court,
Branch 54, Lapu-Lapu City and People of the Philippines.)​
Petitioners are the accused in Criminal Case No. 012432-L for the crime of Estafa
punishable under paragraph 1, Article 316 of the Revised Penal Code before Regional
Trial Court, Branch 54, Lapu-Lapu City. After the prosecution rested its case, the accused
filed a motion to dismiss on the ground that the crime charged had already prescribed.
The alleged second deed of sale (Exh. C), which the prosecution believes to have
constituted the crime of estafa, was allegedly executed on June 30, 1983 and duly
registered with the Register of Deeds on August 1, 1983. The complaint was filed with the
prosecutor on November 6, 1992 and the Information was filed on March 22, 1983. The
petitioners (accused therein) that under Article 90 of the Revised Penal Code, crimes
punishable by ​arresto mayor prescribed in five years. Here, since the case was instituted
nine (9) years after the discovery of the crime, the crime has already prescribed.
The prosecution opposed the motion stressing that the prescriptive period in this case is
to be determined on the basis of the fine imposable. Considering that the fine is more
than six thousand pesos (P6,000.00), prescription, according to Article 90 in relation to
Article 26 of the Revised Penal Code, is fifteen (15) years. Thus, the crime charged has
not yet prescribed.
In an Order dated 15 March 1999, the Regional Trial Court, acting upon the motion,
dismissed the case. However, upon motion for reconsideration filed by the prosecution,
the trial court in an order dated 30 April 1999 set aside its previous order of dismissal
and set the case for trial for the presentation of the evidence for the defense. The
accused filed a motion for reconsideration of the Order dated 30 April 1999. The trial
court denied the motion. Not satisfied, the accused filed a petition for ​certiorari under
Rule 65 with the Court of Appeals.
On January 20, 2000, the Court of Appeals rendered a decision denying the petition and
affirming the ruling of the trial court that prescription of the crime had not set in. Hence,
the accused is now before this Court through a petition for review on ​certiorari under Rule
45.
The legal issues presented before this Court are the following:
1. Whether or not the crime of Estafa under Paragraph 1, Article 316 of
the Revised Penal Code has already prescribed.
2. Whether or not the dismissal by the Regional Trial Court constituted
double jeopardy?
We hold in the negative on both issues.
ON THE FIRST ISSUE:
In essence, the issue of prescription of the crime hinges on the correct interpretation of
Article 90 in relation to Article 26 of the Revised Penal Code. If the proper prescriptive
period for the crime of Estafa under paragraph 1, Article 316 of the Revised Penal Code is
five years from the discovery of the crime as argued by the petitioners, the crime has
already prescribed. On the contrary, if the prescriptive period is fifteen (15) years as
ruled by the trial court and affirmed by the Court of Appeals, then the crime charged has
not yet prescribed.
To support their claim that the crime has prescribed, the petitioners advanced three
arguments:
One, the amount of the imposable fine is still indeterminate as the
basis merely of the prosecution for such determination is the allegation
in the information but the determination of the fine would still depend
on the evidence of the amount of damage which lies on the discretion
of the judge.
Two, the classification of fine under Article 26 RPC as afflictive,
correctional or light penalty is applicable only if the fine is imposed as
single or as an alternative penalty. However, the same provision is
silent when the fine is imposed as a compound penalty, such as in the
case at bar. Petitioners submit there is no basis for applying the
classification of fine as it is only true if the fine is imposed as single or
alternative penalty. Article 90 RPC is not applicable since the
classification of fine is the function of Article 26 RPC. Article 90 merely
provides for the prescription of the crime and not classification.
Three, the highest penalty mentioned in the last paragraph of Article
90 could mean no other than the "graver of the penalties."
Imprisonment is graver since it involves deprivation of one's personal
liberty in contrast with fine which may be dispensed with where the
accused is insolvent except if the judgment itself provides for
subsidiary imprisonment for failure to pay fine but even then said
imprisonment could not exceed the limitations imposed by law.​1
Petition, pp. 5-6;​Rollo,​ pp. 12-13.
The contentions are without merit.
This Court notes that the penalty for Article 316 (2)​2 Revised Penal Code, Art. 316
provides, thus:
ART. 316. Other forms of swindling. - The penalty of arresto mayor in its minimum and
medium periods and fine of not less than the value of the damage caused and not more
than three times such value, shall be imposed upon:
xxx
2. Any person who, knowing that real property is emcumbered, shall dispose of the same,
although such encumbrance be not recorded.
x x x of the Revised Penal Code is the compound penalty of both imprisonment ​and fine.
Corollarily, the last paragraph of Article 90​3 Revised Penal Code, Art. 90 last paragraph
(as amended by R.A.. No. 4661 [1996]) provides, thus:
When the penalty fixed by law is compound one, the highest penalty shall be made the
basis of the application of the rules contained in the first, second and third paragraph of
this article. of the Revised Penal Code provides the rule to be applied in compound
penalties. Accordingly, in determining the prescriptive period of a crime punishable by
both imprisonment and fine, whichever penalty is the higher should be the basis in
computing the period of prosecution. The reason for this is that when the penalty of
imprisonment and fine is imposed in the compound, as contradistinguished from a single
or an alternative penalty, neither penalty is subordinate to the other. In which case, the
higher penalty based on the classification under the Revised Penal Code should be the
basis for computing the prescription period of the crime. Article 26 provides the
classification, while article 90 indicates when such classification should be applied.
In ​People v. Crisostomo​,​4 5 SCRA 1048, 1053 (1962). we held that the Revised Penal
Code contains no provision which states that a fine when imposed in conjunction with an
imprisonment is subordinate to the main penalty. In conjunction with imprisonment, a
fine is as much a principal penalty as the imprisonment. Neither is subordinate to the
other. On the contrary, in the instant case, the fine is higher than the imprisonment
because it is afflictive in view of the amount involved and, as stated heretofore, it is the
basis for computation to determine the prescriptive period. We conclude, therefore, that
where the Revised Penal Code provides a penalty consisting of imprisonment ​and ​fine,
whichever penalty is the higher, should be the basis in computing the period of
prescription.
Under Article 25 of the Revised Penal Code, the penalty of ​arresto mayor is a correctional
penalty. Under Article 26 of the Revised Penal Code, Fine is considered an afflictive
penalty if it exceeds six thousand pesos (P6,000.00). The value of the damage caused is
nine thousand six hundred ninety-nine pesos) 9,695.00) which represents the
consideration of the prior sale. Considering that the fine imposable is the higher penalty,
it shall be the basis for computing the prescriptive period of the crime. Thus, the proper
prescriptive period for the crime charges is fifteen (15) years.
The alleged Estafa was allegedly committed by the accused-petitioners on 30 June 1983.
The deed of sale was recorded with the Register of Deeds on August 1, 1983. The
criminal case was instituted on November 6, 1992 upon the filing of the complaint with
the prosecutor.​5 See Rules of Court, Section 1, last paragraph, Rule 110; In Francisco v.
Court of Appeals , 122 SCRA 483, this Court has ruled to the effect that the filing of a
complaint with the fiscal's office also interrupts the period of prescription of the offenses
charged. From August 1, 1983 to November 6, 1992, only nine years had elapsed. Since
the case was filed within the fifteen-year prescriptive period, the crime charged has not
prescribed. Hence, the Court of Appeals committed no reversible error.
ON THE SECOND ISSUE:
Petitioners argue that when the case was dismissed, the order of the trial court to revive
the case upon reconsideration such action amounted to double jeopardy. In arguing this
point, the petitioners rely on Section 6, Rule 117 of the Rules of Court which provides,
thus:
Order sustaining the motion to quash not a bar to another prosecution;
exception. An order sustaining the motion to quash is not a bar to
another prosecution for the same offense unless the motion was based
on the grounds specified in Section 3, Subsection (f) and (h) of this
rule.
The petitioners further contend that the grounds mentioned as bar to another prosecution
are that: first, the criminal action or liability has been extinguished; and, second, the
accused has been previously convicted or in jeopardy. Moreover, they stress that the rule
on waiver to objection which are grounds of a motion to quash does not apply when
prescription becomes a defense and extinguishes criminal liability.​6 Citing Magat ​v.
People, 210 SCRA 21,32 (1991). The petitioners then conclude that the dismissal of a
case, even assuming ​arguendo,​ it is erroneous, constitutes an acquittal which bars any
review or appeal or another jeopardy.
We are not persuaded.
The rule on double jeopardy has a settled meaning in this jurisdiction. It means that
when a person is charged with an offense and the case is terminated either by acquittal
or conviction or in any other manner without the consent of the accused, the latter
cannot again be charged with the same or identical offense.​7 Melo v. People, 85 Phil.
766, 768 (1950). The purpose is to set the effects of the first prosecution forever at rest,
assuring the accused that he shall not thereafter be subjected to the danger and anxiety
of a second charge against him for the same offense.​8 Caes ​v. Intermediate Appelleate
Court, 179 SCRA 54, 59-60 (1989).
It must be noted that an acquittal is different from a dismissal notwithstanding the fact
that there may be instances when an order of dismissal of a criminal case amounts to an
acquittal.​9 In People ​v. ​Salico, 84 Phil. 722, 732 (1949). In this case We explained that
the only case in which the word dismissal is commonly but not correctly used, instead of
the proper term of acquittal, is when, after the prosecution has presented all its evidence,
the defendant moves for the dismissal and the court dismisses the case on the ground
that the evidence fails to show beyond reasonable doubt that the defendant is guilty; for
is such case, the dismissal is in reality an acquittal because the case is decided on the
merits. However, in the case at bar, the dismissal is not an acquittal because is was not
based on the merits of the case but on the ground that the crime charged has already
prescribed. Acquittal is always based on the merits, that is, the defendant is acquitted
because the evidence does not show defendant's guilt beyond reasonable doubt; but
dismissal does not decide the case on the merits or that the defendants is not guilty of
the offense charged.​10​ ​Ibid.
In the case at bar, the dismissal did not constitute a first jeopardy within the purview of
the rule against double jeopardy because of two reasons: first, the dismissal was upon
motion of, and, hence, with the consent of the accused; and second, the order of
dismissal was based on an erroneous finding of prescription of the crime and not on the
merits of the case.
It should be stressed that the Motion to Dismiss was filed by petitioners. The dismissal
and/or termination of the Estafa case being with their voluntary and express consent,
double jeopardy has not, therefore, attached.​11 People ​v.​ Gines, 197 SCRA 481 (1991);
Que ​v. ​Cosico, 177 SCRA 410 (1989); People ​v. Jardin, 124 SCRA 167 (1983); People ​v.
Pilpa, 79 SCRA 81 (1977); and People ​v. Cuervo, 104 SCRA 312 (1981). There are only
two instances when double jeopardy attaches even if the dismissal of a criminal case was
with the express consent of the accused or upon his motion. These are (i) insufficiency of
evidence and (ii) denial of the right to a speedy trial.​12 People ​v. ​Ban, 239 SCRA 48, 55
(1994); People ​v. Quizada, 160 SCRA 516 (1988). None of these exceptions is obtaining
in the instant case.
The cases cited by the petitioners supporting the argument that an erroneous acquittal
bars any review or appeal or another jeopardy are all premised on the fact that the
erroneous judgment of acquittal by the trial court was issued on the merit of the case.
The motion to dismiss filed by the petitioners was based on the ground of prescription
and not on the alleged insufficiency of the evidence against them. The trial court, then,
did not dwell on the merits of the case when it issued its Order dated 15 March 1999.
Even the trial court in reconsidering its previous order emphasized in its Order dated 30
April 1999 that the motion to dismiss dated January 8, 1999 was filed by the accused and
that the (trial) Court did-not resolve on the merits but on the alleged prescription of the
instant case.
In the case at bar, the order of dismissal was not yet final and executory when the
motion for reconsideration was filed by the prosecution. The doctrine of double jeopardy
does not attach until the period for appeal has expired. The matter relative to the time
when jeopardy attaches is largely statutory and Section 7 of Rule 20 of the Rules of
Court, in express and plain language, fixes such time at the expiration of fifteen days.​13
People ​v. Tamayo, G.R. No. L-2233, April 25, 1950. Thus, when the trial court took
cognizance of that motion it still had jurisdiction to do so and the action thereon was a
continuation of the case, not an appeal thereof or a new trial. In sum, there is no double
jeopardy because neither the proceeding in the trial court had terminated with finality at
the time when the motion for reconsideration was filed so as to give rise to a first
jeopardy nor was there a second jeopardy in the form of an appeal or a new trial. But
most significantly, the order of dismissal was not based on the merits of the case.
WHEREFORE​, the petition is DENIED. Let this case be REMANDED to the Regional Trial
Court, Branch 54, Lapu-Lapu City, for the presentation of the evidence for the defense.
G.R. No. 97995 January 21, 1993
PHILIPPINE NATIONAL BANK, ​petitioner,
vs.
COURT OF APPEALS AND B.P. MATA AND CO., INC., ​respondents.
Roland A. Niedo for petitioner.
Benjamin C. Santos Law Office for respondent.
ROMERO, ​J.:
Rarely is this Court confronted with a case calling for the delineation in broad strokes of
the distinctions between such closely allied concepts as the quasi-contract called "​solutio
indebiti"​ under the venerable Spanish Civil Code and the species of implied trust
denominated "constructive trusts," commonly regarded as of Anglo-American origin. Such
a case is the one presented to us now which has highlighted more of the affinity and less
of the dissimilarity between the two concepts as to lead the legal scholar into the error of
interchanging the two. Presented below are the factual circumstances that brought into
juxtaposition the twin institutions of the Civil Law quasi-contract and the Anglo-American
trust.
Private Respondent B.P. Mata & Co. Inc. (Mata), is a private corporation engaged in
providing goods and services to shipping companies. Since 1966, it has acted as a
manning or crewing agent for several foreign firms, one of which is Star Kist Foods, Inc.,
USA (Star Kist). As part of their agreement, Mata makes advances for the crew's medical
expenses, National Seaman's Board fees, Seaman's Welfare fund, and standby fees and
for the crew's basic personal needs. Subsequently, Mata sends monthly billings to its
foreign principal Star Kist, which in turn reimburses Mata by sending a telegraphic
transfer through banks for credit to the latter's account.
Against this background, on February 21, 1975, Security Pacific National Bank (SEPAC) of
Los Angeles which had an agency arrangement with Philippine National Bank (PNB),
transmitted a cable message to the International Department of PNB to pay the amount
of US$14,000 to Mata by crediting the latter's account with the Insular Bank of Asia and
America (IBAA), per order of Star Kist. Upon receipt of this cabled message on February
24, 1975, PNB's International Department noticed an error and sent a service message to
SEPAC Bank. The latter replied with instructions that the amount of US$14,000 should
only be for US$1,400.
On the basis of the cable message dated February 24, 1975 Cashier's Check No. 269522
in the amount of US$1,400 (P9,772.95) representing reimbursement from Star Kist, was
issued by the Star Kist for the account of Mata on February 25, 1975 through the Insular
Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another payment
through Cashier's Check No. 270271 in the amount of US$14,000 (P97,878.60)
purporting to be another transmittal of reimbursement from Star Kist, private
respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for refund of
US$14,000 (P97,878.60) after it discovered its error in effecting the second payment.
On February 4, 1982, PNB filed a civil case for collection and refund of US$14,000 against
Mata arguing that based on a constructive trust under Article 1456 of the Civil Code, it
has a right to recover the said amount it erroneously credited to respondent Mata.​1
After trial, the Regional Trial Court of Manila rendered judgment dismissing the complaint
ruling that the instant case falls squarely under Article 2154 on ​solutio indebiti ​and not
under Article 1456 on constructive trust. The lower court ruled out constructive trust,
applying strictly the technical definition of a trust as "a right of property, real or personal,
held by one party for the benefit of another; that there is a fiduciary relation between a
trustee and a ​cestui que trust a ​ s regards certain property, real, personal, money or
choses in action."​2
In affirming the lower court, the appellate court added in its opinion that under Article
2154 on ​solutio indebiti​, the person who makes the payment is the one who commits the
mistake ​vis-a-vis the recipient who is unaware of such a mistake.​3 Consequently,
recipient is duty bound to return the amount paid by mistake. But the appellate court
concluded that petitioner's demand for the return of US$14,000 cannot prosper because
its cause of action had already prescribed under Article 1145, paragraph 2 of the Civil
Code which states:
The following actions must be commenced within six years:
xxx xxx xxx
(2) Upon a quasi-contract.
This is because petitioner's complaint was filed only on February 4, 1982, almost seven
years after March 11, 1975 when petitioner mistakenly made payment to private
respondent.
Hence, the instant petition for ​certiorari ​proceeding seeking to annul the decision of the
appellate court on the basis that Mata's obligation to return US$14,000 is governed, in
the alternative, by either Article 1456 on constructive trust or Article 2154 of the Civil
Code on quasi-contract.​4
Article 1456 of the Civil Code provides:
If property is acquired through mistake or fraud, the person obtaining it is, by force of
law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.
On the other hand, Article 2154 states:
If something is received when there is no right to demand it, and it was unduly delivered
through mistake, the obligation to return it arises.
Petitioner naturally opts for an interpretation under constructive trust as its action filed
on February 4, 1982 can still prosper, as it is well within the prescriptive period of ten
(10) years as provided by Article 1144, paragraph 2 of the Civil Code.​5
If it is to be construed as a case of payment by mistake or ​solutio indebiti​, then the
prescriptive period for quasi-contracts of six years applies, as provided by Article 1145.
As pointed out by the appellate court, petitioner's cause of action thereunder shall have
prescribed, having been brought almost seven years after the cause of action accrued.
However, even assuming that the instant case constitutes a constructive trust and
prescription has not set in, the present action has already been barred by laches.
To recall, trusts are either express or implied. While express trusts are created by the
intention of the trustor or of the parties, implied trusts come into being by operation of
law.​6 Implied trusts are those which, without being expressed, are deducible from the
nature of the transaction as matters of intent or which are superinduced on the
transaction by operation of law as matters of equity, independently of the particular
intention of the parties.​7
In turn, implied trusts are subdivided into resulting and constructive trusts.​8 A resulting
trust is a trust raised by implication of law and presumed always to have been
contemplated by the parties, the intention of which is found in the nature of the
transaction, but not expressed in the deed or instrument of conveyance.​9 Examples of
resulting trusts are found in Articles 1448 to 1455 of the Civil Code.​10 On the other hand,
a constructive trust is one not created by words either expressly or impliedly, but by
construction of equity in order to satisfy the demands of justice. An example of a
constructive trust is Article 1456 quoted above.​11
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense 12
​ for
in a typical trust, confidence is reposed in one person who is named a trustee for the
benefit of another who is called the ​cestui que trust,​ respecting property which is held by
the trustee for the benefit of the ​cestui que trust.​ 13
​ A constructive trust, unlike an express
trust, does not emanate from, or generate a fiduciary relation. While in an express trust,
a beneficiary and a trustee are linked by confidential or fiduciary relations, in a
constructive trust, there is neither a promise nor any fiduciary relation to speak of and
the so-called trustee neither accepts any trust nor intends holding the property for the
beneficiary.​14
In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no
intent of holding the same for a supposed beneficiary or ​cestui que trust​, namely PNB.
But under Article 1456, the law construes a trust, namely a constructive trust, for the
benefit of the person from whom the property comes, in this case PNB, for reasons of
justice and equity.
At this juncture, a historical note on the codal provisions on trust and quasi-contracts is
in order.
Originally, under the Spanish Civil Code, there were only two kinds of quasi contracts:
negotiorum gestio ​and ​solutio indebiti.​ But the Code Commission, mindful of the position
of the eminent Spanish jurist, Manresa, that "the number of quasi contracts may be
indefinite," added Section 3 entitled "Other Quasi-Contracts."​15
Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the succeeding
article provides that: "The provisions for quasi-contracts in this Chapter do not exclude
other quasi-contracts which may come within the purview of the preceding article."​16
Indubitably, the Civil Code does not confine itself exclusively to the quasi-contracts
enumerated from Articles 2144 to 2175 but is open to the possibility that, absent a
pre-existing relationship, there being neither crime nor quasi-delict, a quasi-contractual
relation may be forced upon the parties to avoid a case of unjust enrichment.​17 There
being no express consent, in the sense of a meeting of minds between the parties, there
is no contract to speak of. However, in view of the peculiar circumstances or factual
environment, consent is presumed to the end that a recipient of benefits or favors
resulting from lawful, voluntary and unilateral acts of another may not be unjustly
enriched at the expense of another.
Undoubtedly, the instant case fulfills the indispensable requisites of ​solutio indebiti ​as
defined in Article 2154 that something (in this case money) has been received when
there was no right to demand it and (2) the same was unduly delivered through mistake.
There is a presumption that there was a mistake in the payment "if something which ​had
never been due or had already been paid was delivered; but he from whom the return is
claimed may prove that the delivery was made out of liberality or for any other just
cause."​18
In the case at bar, a payment in the corrected amount of US$1,400 through Cashier's
Check No. 269522 had already been made by PNB for the account of Mata on February
25, 1975. Strangely, however, fourteen days later, PNB effected another payment
through Cashier's Check No. 270271 in the amount of US$14,000, this time purporting to
be another transmittal of reimbursement from Star Kist, private respondent's foreign
principal.
While the principle of undue enrichment or ​solutio indebiti,​ is not new, having been
incorporated in the subject on quasi-contracts in Title XVI of Book IV of the Spanish Civil
Code entitled "Obligations incurred without contract,"​19​the chapter on Trusts is fairly
recent, having been introduced by the Code Commission in 1949. Although the concept of
trusts is nowhere to be found in the Spanish Civil Code, the framers of our present Civil
Code incorporated implied trusts, which includes constructive trusts, on top of
quasi-contracts, both of which embody the principle of equity above strict legalism.​20
In analyzing the law on trusts, it would be instructive to refer to Anglo-American
jurisprudence on the subject. Under American Law, a court of equity does not consider a
constructive trustee for all purposes as though he were in reality a trustee; although it
will force him to return the property, it will not impose upon him the numerous fiduciary
obligations ordinarily demanded from a trustee of an express trust.​21 It must be borne in
mind that in an express trust, the trustee has active duties of management while in a
constructive trust, the duty is merely to surrender the property.
Still applying American case law, quasi-contractual obligations give rise to a personal
liability ordinarily enforceable by an action at law, while constructive trusts are
enforceable by a proceeding in equity to compel the defendant to surrender specific
property. To be sure, the distinction is more procedural than substantive.​22
Further reflection on these concepts reveals that a constructive "trust" is as much a
misnomer as a "quasi-contract," so far removed are they from trusts and contracts
proper, respectively. In the case of a constructive trust, as in the case of quasi-contract,
a relationship is "forced" by operation of law upon the parties, not because of any
intention on their part but in order to prevent unjust enrichment, thus giving rise to
certain obligations not within the contemplation of the parties.​23
Although we are not quite in accord with the opinion that "the trusts known to American
and English equity jurisprudence are derived from the fidei commissa ​of the Roman
Law,"​24 it is safe to state that their roots are firmly grounded on such Civil Law principles
are expressed in the Latin maxim, "Nemo cum alterius detrimento locupletari potest," 25 ​
particularly the concept of constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail of an action to
enforce a constructive trust or the quasi-contract of ​solutio indebiti,​ it has been deprived
of a choice, for prescription has effectively blocked quasi-contract as an alternative,
leaving only constructive trust as the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in semantics by
holding that in Article 1456 the recipient commits the mistake while in Article 2154, the
recipient commits no mistake. 26 ​ On the other hand, private respondent, invoking the
appellate court's reasoning, would impress upon us that under Article 1456, there can be
no mutual mistake. Consequently, private respondent contends that the case at bar is
one of ​solutio indebiti​ and not a constructive trust.
We agree with petitioner's stand that under Article 1456, the law does not make any
distinction since mutual mistake is a possibility on either side — on the side of either the
grantor or the grantee.​27 Thus, it was error to conclude that in a constructive trust, only
the person obtaining the property commits a mistake. This is because it is also possible
that a grantor, like PNB in the case at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it
erroneously paid private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that under Article 1144, petitioner
is well within the prescriptive period for the enforcement of a constructive or implied
trust, we rule that petitioner's claim cannot prosper since it is already barred by laches. It
is a well-settled rule now that an action to enforce an implied trust, whether resulting or
constructive, may be barred not only by prescription but also by laches.​28
While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay.​29 It is amazing that it took petitioner almost seven years before it
discovered that it had erroneously paid private respondent. Petitioner would attribute its
mistake to the heavy volume of international transactions handled by the Cable and
Remittance Division of the International Department of PNB. Such specious reasoning is
not persuasive. It is unbelievable for a bank, and a government bank at that, which
regularly publishes its balanced financial statements annually or more frequently, by the
quarter, to notice its error only seven years later. As a universal bank with worldwide
operations, PNB cannot afford to commit such costly mistakes. Moreover, as between
parties where negligence is imputable to one and not to the other, the former must
perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of
its own negligence.
WHEREFORE, the decision of the Court of Appeals dismissing petitioner's claim against
private respondent is AFFIRMED.
Costs against petitioner.
SO ORDERED.
Bidin, Davide, Jr. and Melo, JJ., concur.​
Gutierrez, Jr., J., concurs in the result.​
 FIRST DIVISION
[G.R. No. L-13328-29. September 29, 1961.]
GONZALO MERCADO, ET AL., ​Petitioners​, v. RAMON LIRA and JUANA C. DE LIRA,
Respondents​.
[G.R. No. L-13358 September 29, 1961]
NITA LIRA, ​Petitioner​, v. GONZALO MERCADO, ET AL., ​Respondents.​
Juan Nabong for ​Petitioner​.
Mariano H. de Joya and Maximo A. Savellano, Jr. for ​Respondents.​
SYLLABUS
1. DAMAGES; MORAL DAMAGES; DEATH OF PASSENGER; AMOUNT RECOVERABLE;
HEIRS ENTITLED TO MORAL DAMAGES. — Damages in excess of P3,000.00 may be
awarded for the death of a passenger, and in addition, the heirs may demand moral
damages commensurate with the mental anguish suffered by them.
2. ID.; ID.; PASSENGERS INJURED NOT ENTITLED TO MORAL DAMAGES. — A passenger
who suffered physical injuries because of the carrier’s negligence (culpa contractual)
cannot be considered in the descriptive expression "analogous cases used in Act 2119"
for which the new Civil Code authorizes indemnification for moral damages in favor of the
injured party.
3. ID.; ID.; BREACH OF CONTRACT OF TRANSPORTATION; WHEN MORAL DAMAGES
RECOVERABLE. — Moral damages are not recoverable in damage actions predicated on a
breach of the contract of transportation except when there is evidence of fraud, malice or
bad faith on the part of the carrier.
DECISION
PAREDES, ​J.​:
Gonzalo Mercado and others were the owners and operators of the Laguna Transportation
Company. In the afternoon of April 21, 1951, while its passenger bus No. 39 was making
the trip from Batangas to Manila on the concrete highway at barrio Tulo, Calamba,
Laguna, the left front tire of the bus blew out and sent it swerving gradually toward the
left side of the road, over the shoulder and into a ravine some 270 meters away. From
the wreckage, the bodies of the passengers, several dead, others injured, were
recovered, and among the fatalities was Ramon Lira, Jr. (24), son of Mr. and Mrs. Ramon
Lira, Sr. and injured Nita Lira. Two cases for recovery of damages were commenced
against the owners and operators in the Court of First Instance of Batangas: No. 104
(now G.R. Nos. L-13328-29, in this Court) by the parents of deceased Ramon Lira, Jr.
and No. 107-C now G. R. No. L-13358, in this Court by Nita Lira. After a joint trial,
Defendants​, Mercado and others were sentenced to pay the following sums: In Civil Case
No. 104:​chanrob1es virtual 1aw library
For the death of Ramon Lira, Jr. including
funeral and church expenses P10,000.00
For loss of earning capacity of Ramon Lira, Jr.
for ten (10) years at P1,800.00 per annum 18,000.00
Moral damages for mental anguish 4,000.00
For expenses of litigation and attorney’s fees 4,000.00
TOTAL P36,000.00
In Civil Case No. 107:​chanrob1es virtual 1aw library
For hospitalization and medical treatment of Nita Lira P970.20
For the impairment of earning capacity 1,000.00
Moral damages for her physical and mental suffering 2,000.00
For expenses of litigation and attorney’s fees 1,000.00
TOTAL P4,970.20
Defendants appealed in both cases and plaintiff Nita Lira appealed in No. 107, (being
cases C.A. G.R. No. 15422 and C.A. G.R. No. 15423-R). The Court of Appeals rendered
judgment as follows:​jgc:chanrobles.com.ph
"As far as the other items are concerned, we find them to be reasonable and fully
supported by the evidence.
Wherefore, the judgment appealed from is hereby modified by reducing the amount
awarded for the death of Ramon Lira, Jr. including funeral and church services from
P10,000.00 to P5,062.50; reducing the amount awarded for loss of earning capacity from
P18,000.00 to P12,000.00 and increasing the amount awarded to plaintiff-appellant Nita
Lira for moral damages from P2,000.00 to P5,000.00. In Civil Case No. 104 (CA. G.R. No.
15422-R), therefore, defendant should pay a total of P25,032.56; and in civil case No.
107 (CA. G.R. No. 15422-R), they should pay a total of P7,970.20. In all other respects
the said judgment is affirmed, without pronouncement as to costs this instance."​cralaw
virtua1aw library
On December 19, 1957, and in pursuance of a motion for reconsideration, the Court of
Appeals issued the following resolution:​jgc:chanrobles.com.ph
"In view of the foregoing considerations, the judgment heretofore rendered is hereby
modified by eliminating therefrom the award of P5,000.00 by way of moral damages to
plaintiff Nita Lira in case CA-G.R. No. 15422-R, maintaining said judgment in all other
respects."​cralaw virtua1aw library
In other words, in the case CA-G.R. No. 15422-R, involving the death of Ramon Lira, Jr.,
the Court of Appeals granted moral damages, and in the case of CA-G.R. No. 15422-R,
involving physical injuries caused upon Nita Lira, moral damages of P5,000.00 awarded
her, were eliminated.
Hence, a petition for ​certiorari to review the decision of the Court of Appeals was filed by
Gonzalo Mercado, Et Al., ​Petitioners,​ against Ramon Lira, Et Al., (G.R. No. L-13328-29),
and another similar petition was filed by Nita Lira, petitioner v. Gonzalo Mercado, Et Al.,
respondents (G.R. No. L-13358).
Counsel for the Mercados, defined their position as follows:​jgc:chanrobles.com.ph
"Article 2206 of the Civil Code fires the amount of damages for death at only P3,000.00.
The heirs of the deceased may also claim for moral damages, although awarding it is not
obligatory like the damages for loss of earning capacity. Paragraph 3 of Art. 2206 states
that the heirs may demand for moral damages for mental anguish by reason of the death
of the deceased. The amount of moral damages, therefore, should be made only nominal
if the heirs have already been compensated very substantially for the death of the
deceased, which in this case has been set by the Court of Appeals at P5,052.50 and loss
of earning at P12,000.00 and the attorney’s fees at P4,000.00 which already amount to
P21,052.50. We respectfully submit, therefore, that even if granting that the respondents
are entitled to moral damages, yet the same should not be fixed in such an amount as to
kill the entire business of the respondents who are public service operators, by the
enormous amounts they have to pay on account of the negligence of one driver. In this
case, we respectfully submit that the amount of P500.00 is a reasonable moral damage
considering that the other damages already awarded are excessive. In the same way that
the attorney’s fees should also be reduced to only P1,500.00."​cralaw virtua1aw library
and ended with a prayer that "the decision of the Court of Appeals be modified so that
the respondents should pay only the sum of P500.00 as moral damages and P1,500.00
for attorney’s fees."​cralaw virtua1aw library
The pertinent provisions of the new Civil Code state: —
"Art. 1764. — Damages in cases comprised in this Section shall be awarded in accordance
with Title XVIII of this Book, concerning Damages. Article 2206 shall also apply to the
death of a passenger caused by the breach of contract by a common carrier.
Art. 2206. — The amount of damages for death caused by a crime or quasi delict shall be
at least three thousand pesos, even though there may have been mitigating
circumstances. In addition: . . .
(3) The spouses, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death of the
deceased."​cralaw virtua1aw library
It is thus seen that Article 2206 of the new Civil Code expressly provides that the amount
of damages for death shall be "at least three thousand pesos, even though there may
have been mitigating circumstances." In other words, the amount of damages to be
awarded for the death of a passenger may be more than P3,000.00. It is argued that the
award for moral damages for mental anguish caused by the death of a passenger is not
obligatory, and that the amount should only be nominal if the heirs have already been
compensated substantially for the death of the deceased. Article 2206 states further that
"In addition" to the amount of at least P3,000.00 to be awarded for the death of a
passenger, the spouse, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages as a consequence of the death of their deceased
kin, which simply means that once the above-mentioned heirs of the deceased claim
compensation for moral damages and are able to prove that they are entitled to such
award, it becomes the duty of the court to award moral damages to the claimant in an
amount commensurate with the mental anguish suffered by them. In the Civil Code,
nominal damages are treated separately from moral damages. Any amount that should
be awarded as nominal damages, should not be confused or interlinked with moral
damages which, by itself, is a distinct class of damages. Of course, the amount of moral
damages to be awarded, should be such as may be reasonable and just under the
circumstances in a given case. Petitioners’ claim that as the other damages awarded to
said respondents are already excessive, the award for moral damages should be reduced
to P500.00. But the Court of Appeals found the other damages not to be excessive, and
as far as this factual finding is concerned, We are not authorized to rule otherwise.
Moreover, petitioners never assailed in their motion for reconsideration of the decision of
the Court of Appeals, dated July 11, 1957, as well as in their instant petition for
certiorari​, the reasonableness of the amount of the other damages awarded to herein
respondents. In fact, the petition limits the issues only to the reasonableness of the
P4,000.00 awarded by the Court of Appeals as moral damages and the other amount of
P4,000.00 as attorney’s fees. Considering the mental anguish and sorrow that must
accompany and overwhelm the parents upon the tragic death of a son, and considering
the nature and extent of the services rendered by counsel for respondents and other
circumstances of the case, We believe the awards given by the Court of Appeals to
respondents in the sum of P4,000.00 as moral damages for the death of Ramon Lira, Jr.
and the amount of P4,000.00 for attorney’s fees and other expenses of litigation, fair and
reasonable (par. 11, Art. 2208, N.C.C.) .
With respect to G.R. No. L-13358, it is alleged that the respondent Court of Appeals erred
in its resolution dated December 19, 1957, in not awarding moral damages to petitioner
Nita Lira for physical injuries and mental suffering sustained by her, resulting from breach
of the special contract of carriage caused by the negligence of the respondents,
contending that her case is analogous to cases of "quasi delicts causing physical injuries"
for which the new Civil Code authorizes indemnification for moral damages in favor of the
injured party (par. 2, Art. 2219 N.C.C.) .
Petitioner contends that in the case of Cachero v. Manila Yellow Taxicab Co., G.R. No.
L-5721, May 23, 1957; (54 Off. Gaz. No. 26, p. 6599), this Court had not expressly
declared or impliedly stated that the award of moral damages to a passenger who has
sustained physical injuries is not an "analogous case." And Cachero in said case, did not
invoke the analogous applicability of said provision of law, (par. 2, Art. 2219) to his case.
Much space was allotted by petitioner in her brief, in support of her theme, stating that
the issue raised by her was of first impression. Since the submission of her brief on
February 21, 1958, however, several cases have reached this court raising the same
question, among them is the case of Paz Fores v. Irene Miranda, G.R. No. L-12163, March
4, 1959 — the facts of which are identical to those of the present one. This Court,
speaking through Mr. Justice J.B.L. Reyes, said —
". . . Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled (Cachero v. Manila Yellow Taxicab Co. Inc., G.R. No.
L-8721, May 23, 1957; Necesito, Et. Al. v. Paras, G.R. No. L-10605-10606, June 30,
1958), that moral damages are not recoverable in damage actions predicated on a breach
of the contract of transportation, in view of Articles 2219 and 2220 of the new Civil Code,
which provide as follows:​chanrob1es virtual 1aw library
‘ART. 2219. Moral damages may be recovered in the following and analogous
cases:​chanrob1es virtual 1aw library
(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries;
x x x on the defendant carrier a presumption of liability upon mere proof of injury to the
‘ART. 2220. Willful injury to property may be a legal ground for awarding moral damages
if the court should find that, under the circumstances, such damages are justly due. The
same rule applies to breaches of contract where the defendant acted fraudulently or in
bad faith.’
By contrasting the provisions of these two articles it immediately becomes apparent
that:​chanrob1es virtual 1aw library
(a) In cases of breach of contract (including one of transportation) proof of bad faith
or fraud (dolus), i.e., wanton, or deliberately injurious conduct, is essential to justify an
award of moral damages; and
(b) That a breach of contract can not be considered included in the descriptive term
‘analogous cases’ used in Art. 2219; not only because Art. 2220 specifically provides for
the damages that are caused by contractual breach, but because the definition of
quasi-delict in Art. 2176 of the Code expressly excludes the cases where there is a
‘pre-existing contractual relation between the parties.’
‘ART. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.’
The exception to the basic rule of damages now under consideration is a mishap resulting
in the death of a passenger, in which case Art. 1764 makes the common carrier expressly
subject to the Rule of Art. 2206, that entitles the spouse, descendants and ascendants of
the deceased passenger to ‘demand moral damages for mental anguish by reason of the
death of the deceased’ (Necesito v. Paras, G.R. No. L-10605, Resolution on motion to
reconsider, Sept. 11, 1958). But the exceptional rule of Art. 1764 makes it all the more
evident that where the injured passenger does not die, moral damages are not
recoverable unless it is proved that the carrier was guilty of malice or bad faith. We think
it is clear that the mere carelessness of the carrier’s driver does not per se constitute or
justify an inference of malice or bad faith on the part of the carrier; and in the case at bar
there is no other evidence of such malice to support the award of moral damages by the
Court of Appeals. To award moral damages for breach of contract, therefore, without
proof of bad faith or malice on the part of the defendant, as required by Act 2220, would
be to violate the clear provisions of the law, and constitute unwarranted judicial
legislation.
The Court of Appeals has invoked our rulings in Castro v. Acro Taxicab Co., G.R. No.
L-49155, Dec. 14, 1948 and Layda v. Court of Appeals, G.R. No. L-4487, Jan. 29, 1952,
but these doctrines were predicted upon our former law of damages, before judicial
discretion in fixing them became limited by the express provisions of the new Civil Code
(previously quoted). Hence, the aforesaid rulings are now inapplicable.
Upon the other hand, the advantageous position of a party suing a carrier for breach of
the contract of transportation explains, to some extent, the limitations imposed by the
new Code on the amount of the recovery. The action for the breach of contract imposes
passenger; the latter is relieved from the duty to establish the fault of the carrier or of his
employees; and the burden is placed on the carrier to prove that it was due to an
unforeseen event or to force majeure (Cangco v. Manila Railroad Co., 38 Phil., 768, 777).
Moreover, the carrier, unlike in suits for quasi-delict, may not escape liability by proving
that it has exercised due diligence in the selection and supervision of its employees (Art.
1759, new Civ. Code; Cangco v. Manila Railroad Co., supra; Prado v. Manila Elec. Co., 51
Phil., 900).
The difference in conditions, defenses and proof, as well as the codal concept of
quasi-delict as essentially extra-contractual negligence, compel us to differentiate
between actions ex contractu, and actions quasi ex delicto, and prevent us from viewing
the action for breach of contract as simultaneously embodying an action on tort. Neither
can this action be taken as one to enforce on employer’s liability under Art. 103 of the
Revised Penal Code, since the responsibility is not alleged to be subsidiary, nor is there
on record any averment or proof that the driver of appellant was insolvent. In fact, he is
not even made a party to the suit.
It is also suggested that a carrier’s violation of its engagement to safely transport the
passenger involves a breach of the passenger’s confidence, and therefore should be
regarded as a breach of contract in bad faith, justifying recovery of moral damages under
Art. 2220. This theory is untenable, for under it the carrier would always be deemed in
bad faith, in every case its obligation to the passenger is infringed, and it would be never
accountable for simple negligence; while under the law (Art. 1756), the presumption is
that common carriers acted negligently (and not maliciously), and Art. 1762 speaks of
negligence of the common carrier.
x x x
‘ART. 1756. In case of death of or injuries to passengers, common carriers are presumed
to have been at fault or to have acted negligently, unless they prove that they observed
extraordinary diligence as prescribed in articles 1733 and 1755.’
‘ART. 1762. The contributory negligence of the passenger does not bar recovery of
damages for his death or injuries, if the proximate cause thereof is the negligence of the
common carrier, but the amount of damages shall be equitably reduced.’

The distinction between fraud, bad faith or malice (in the sense of deliberate or wanton
wrongdoing) and negligence (as mere carelessness) is too fundamental in our law to be
ignored (Arts, 1170-1172); their consequences being clearly differentiated by the Code.

‘ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who
acted in good faith is liable shall be those that are the natural and probable consequences
of the breach of the obligation, and which the parties have foreseen or could have
reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for
all damages which may be reasonably attributed to the non-performance of the
obligation.’

It is to be presumed, in the absence of statutory provision to the contrary, that this

difference was in the mind of the law-makers when in Art. 2220 they limited recovery of
moral damages to breaches of contract in bad faith. It is true that negligence may be
occasionally so gross as to amount to malice; but that fact must be shown in evidence,
and a carrier’s bad faith is not to be lightly inferred from a mere finding that the contract
was breached through negligence of the carrier’s employees."​cralaw virtua1aw library

(See also Tamayo v. Aquino, L-12634 & L-12720, May 29, 1959; (56 O.G. #36, p. 5617);
Cariaga v. L.T. Bus, L-11037, Dec. 29, 1960; Versoza v. Baytan, L-14092, Apr. 29, 1960;
Rex Taxicab Inc. v. Bautista, L-15392, Sept. 30, 1960).

We gleaned, therefore, from the above mentioned decisions, (1) that the case of a
passenger of a carrier who suffered physical injuries "because of the carrier’s negligence
(culpa contractual), cannot be considered in the descriptive expression ‘analogous cases’,
used in Art. 2219" ; and (2) that in cases of breach of contract (including one of
transportation) proof of bad faith or fraud (dolus) i.e., wanton or deliberate injurious
conduct is essential to justify an award of moral damages. There being no evidence of
fraud, malice or bad faith, contemplated by law, on the part of the respondents, because
the cause of the accident was merely the bursting of a tire while the bus was over
speeding, the cause of petitioner Nita Lira should fail, as far as moral damages is
concerned. Moral damages was, therefore, correctly eliminated by the Court of Appeals.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the decision of the Court of Appeals in

G.R. Nos. L-13328-29 and L-13358 (Court of Appeals resolution dated December 19,
1957), hereby is affirmed, without costs in this instance.

Bengzon, ​C.J.,​ Padilla, Labrador, Concepcion, and Reyes, J.B.L., ​JJ.​, concur.

Bautista Angelo and De Leon, ​JJ.​, did not take part.

 EN BANC
G.R. No. L-13438 November 20, 1918
FRANCISCO GUTIERREZ REPIDE,​ plaintiff-appellant,
vs.
IVAR O. AFZELIUS and his wife, PATROCINIO R. AFZELIUS,​ defendants-appellees.
Ramon Fernandez for appellant.
T. L. McGirr for appellees.
MALCOLM, ​J.:
The subject of Specific Performance, with reference to its common law and civil law
status, it to be considered on this appeal. The particular action is for the specific
performance of a contract for the sale and purchase of real estate.
The plaintiff is the owner of a certain parcel of realty consisting of 2,695.24 square
meters, situated in the city of Manila, and fully described in the complaint. About the
month of December, 1916, the defendants made a proposition to the plaintiff for the
purchase of this property. After negotiating for some time, it was agreed that the
defendants would pay plaintiff the sum of P10,000 for the land, P2,000 of which was to
be handed over upon the signing of the deed, and the balance of P8,000, paid in monthly
installments of P150. The property was to be mortgaged to the plaintiff to secure the
payment of this balance of P8,000. The plaintiff proceeded to have survey made of the
land and to prepare the deed and mortgage. Expenses to the amount of P83.93 were
incurred for these purposes. The deed was ready about December 28, 1916, when the
defendants were notified to appear and sign the same. They failed to do this, and
instead, the defendant, Patrocinio R. Afzelius, wrote a letter to plaintiff, as follows:
MANILA, ​January 3, 1917.
MR. FRANCISCO GUTIERREZ,
Manila.
MY DEAR SIR: It is with regret that I inform you that it is now absolutely impossible for
us to effect the purchase of the property at Juan Luna Street, as it was our desire to do.
The reason for this is that the business has failed, in which we had invested all the money
we had and from which he hope to obtain sure gains and to get the P2,000 which we
were to give you in advance for the purchase of said property, and consequently, we
have lost our savings and our hope of being able to purchase the property for the time
being.
Before closing, I request you to pardon us for the troubles we have caused you, for, in
truth, we acted in good faith, but, as you will readily realize, without having the P2,000 in
our hands, it will be impossible for us to effect the purchase.
Reiterating my request that you pardon us for all the trouble, I am
Very truly yours.
(Sgd.) PATROCINIO R. AFZELIUS.
In addition to the letter above quoted, Afzelius testified on the trial that although he and
his wife had available the sum of P2,000 to pay the first installment on the purchase price
of the land, yet it belonged in part to his wife's sister, and that, as she subsequently
needed the money for something else, they had to return it to her, and in order to give
excuses to the plaintiff, his wife wrote this letter to the plaintiff.
Plaintiff was, and still is, willing to execute the deed in accordance with the terms agreed
upon with the defendants. Accordingly, plaintiff, in his action in the Court of First Instance
of the city of Manila, asked judgment against the defendants condemning them to sign
the deed and mortgage to the land in question, and to pay the purchase price stipulated,
with costs. The defendants filed a general denial, alleging that the plaintiff has not
sustained damages of any kind or character, and praying that the case be dismissed at
the cost of the plaintiff. The trial court, after finding the facts as herein stated, made
application thereto of the law of Specific Performance. After stating the general principles
of this branch of the law, the court deduced therefrom that the remedy by specific
performance is one the granting or denying of which rests in the exercise of sound
judicial discretion. The court said:
Whether or not the defendants are able to perform the contract is a matter of defense,
and there is no special defense on that subject in the answer; but it appears from the
evidence that the defendants have not the funds available for the cash payment on the
contract, and apparently the performance of the contract in the terms agreed between
the plaintiff and defendants would be impracticable; the court would not be able to
enforce a decree for specific performance, and such a decree might operate as a great
hardship upon the defendants; therefore, the court is of the opinion that it would be
useless, unjust and inequitable to render judgment herein for specific
performance.​lawphil.net
The judgment then was in favor of the defendants, dismissing the plaintiff's complaint,
without prejudice to any other remedy which the plaintiff might have, and without any
finding as to the costs.
The plaintiff and appellant bases his argument on articles 1254, 1258, 1278, 1450, and
1279 of the Civil Code. The provisions of the five articles first cited and others that could
be mentioned merely tend to corroborate what is self-evident, namely, the existence of a
valid contract between the parties. Indisputably, there has been an offer and an
acceptance, and all that remained to effectuate the contract was the execution of the
deed and the mortgage.
The article of the Civil code chiefly relied upon by appellant, No. 1279, would seem to
settle favorably the first branch of the prayer of the complaint, asking that the
defendants be required to sign the deed and mortgage to the land in question. This article
of the Civil Code appears to have been prepared to meet exactly such a situation, to the
end that the contracting parties can reciprocally compel the observance of the necessary
formalities.
Other portions of the Civil Code not called to our attention by the appellant, notably
articles 1096, 1098, 1124 and 1451, recognize what is denominated in the common law
as Specific Performance. Article 1451 provides that, "A promise to sell or buy, when there
is an agreement as to the thing and the price, entitles the contracting parties reciprocally
to demand the fulfillment of the contract." But the article in recognition of a negative
result also provides, "whenever the promise to purchase and sell cannot be fulfilled, the
provisions relative to obligations and contracts, contained in this book, shall be applicable
in the respective cases to the vendor and the vendee." Turning to these provisions
relating to obligations and contracts, we find article 1096 making a distinction between a
specific thing to be delivered and an indeterminate or generic thing; article 1098
providing that a person is obligated to do a certain thing according to the tenor of the
obligation; and finally, article 1124 in absolute approval of contractual mutually decreeing
that "the person prejudiced may choose between exacting the fulfillment of the obligation
or its resolution with indemnity for damages and payment of interest in either cases."
As to whether the vendor can compel the vendee to perform, which is the point before
the court, the jurisprudence of the supreme court of Spain and the commentaries of
Manresa do not in the least attempt to distinguish between one or the other party, the
vendor or the vendee, but constantly and without exception use the word
"reciprocamente." the following decisions of the supreme court of Spain interpretative of
these articles can be noted: April 17, 1897; October 10, 1904; February 4, 1905.
The vendee is entitled to specific performance essentially as a matter of course. Philippine plaintiff will rest content if for no other reason than for the protection of his financial
cases have so held. (Irureta Goyena ​vs. Tambunting [1902], 1 Phil., 490; Thunga Chui interests.
vs. Que Bentec [1903], 2 Phil., 561; Couto Soriano ​vs. Cortes [1907, 8 Phil., 459; Dievas Judgment shall be reversed, and an order shall issue, condemning the defendants to sign
vs. Co Chongco [1910], 16 Phil., 447.) If the doctrine of mutuality of remedy is to apply, the deed and mortgage to the land in question and to pay the first installment of the
the vendor should likewise be entitled to similar relief. Philippine jurisprudence, however, purchase price as stipulated.
has never as yet been afforded an opportunity to so hold. The nearest approach to the The appellant shall recover costs of both instances. The Code of Civil Procedure in its
idea has been, with reference to merchandise, in a decision to the effect that if the Chapter XXI entitled "Costs in the Several Courts" states in section 487 that "Costs shall
purchaser refuses without lawful reason to accept delivery when tendered by the seller in ordinarily be allowed to the prevailing party as a matter of course . . . . " Philippine law
conformity with the contract of sale, the seller may elect to enforce compliance or to is, in this respect, identical with the general rule, which is that "On reversal, . . . the costs
rescind. (Matute ​vs.​ Cheong Boo [1918], 37 Phil., 372.) will generally go to the prevailing party, that is, to the appellant." (7 R. C. L., 801, citing
Thus far, in this opinion we have discussed the question of whether the vendor as well as cases.) No special reasons exist in this case for modifying the general rule. So ordered.
the vendee is entitled to the specific performance of the contract for the sale of land, Johnson, Street, Avanceña and Fisher, JJ., concur.
from the standpoint of the civil law. Now, of course, specific performance of contracts is,
under this name, an equitable remedy. As such, since there exist no courts of equity and
no equity jurisprudence in this jurisdiction, the authority arising from the common law is
not of binding force in the Philippines. Nevertheless, as the civil law and the common law
seem to arrive at the same goal on this subject, we should at least notice as persuasive
authority the jurisprudence of the United States and Great Britain.
The American and English cases that relate to specific performance by the vendor are
with a few exceptions all one way. In the language of Chief Justice Marshall, "The right of
a vendor to come into a court of equity to enforce a specific performance is
unquestionable." (Cathcart ​vs. Robinson [1831], 5 Pet., 264.) The rule in nearly all
jurisdictions is that specific performance may be had at the suit of the vendor of land, the
vendee being decreed to accept the deed and pay the purchase price. (Freeman ​vs.
Paulson [1909], 107 Minn., 64; Migatz ​vs. Stieglitz [1905], 166 Ind., 362; Robinson ​vs.
Appleton [1888], 124 Ill., 276; Hodges ​vs. Kowing [1889], 58 Conn., 12; Curtis Land &
Loan Co. ​vs. Interior Land Co. [1908], 137 Wis., 341; The Maryland Clay Co. ​vs. Simpers
[1903], 96 Md., 1; Old Colony R. Corp. ​vs. Evans [1856], 6 Gray, 25; Raymond ​vs. San
Gabriel rec. Co. [1893], 53 Fed., 883; 36 Cyc., 565.) The reasoning supporting the
authorities is that the performance of contracts must and should be mutual. The contract
is ordinarily bilateral. So should the respective rights of the parties be. Nor does an action
to recover damages for breach of contract ordinarily afford a complete and adequate
remedy. The equitable doctrine is not applied where it will be productive of great
hardship.
Here we have presented a good and valid contract, bilateral in character, and free from
all taint of fraud. The stability of commercial transactions requires that the rights of the
seller be protected just as effectively as the rights of the buyer. If this plaintiff had
refused to comply with the contract, specific performance of the obligation could have
been asked by the defendants. Just as surely should the plaintiff who has lived up to his
bargain and who has been put to expense to do so, be permitted to coerce the defendant
into going through with the contract.
The excuse of the defendants is that they do not now have the money to pay the first
installment. In other words, they plead impossibility of performance. The rule of equity
jurisprudence in such a case is that mere pecuniary inability to fulfill an engagement does
not discharge the obligation of the contract, not does it constitute any defense to a
decree for specific performance. (Hopper ​vs. Hopper [1863], 16 N. J. Eq., 147.) Now, the
courts will not make an order obviously nugatory. But the courts should lend their
assistance to the plaintiff to compel the defendants to fulfill their obligation. Besides
requiring the defendants to sign the contract and the mortgage, the judgment of the
court can be aided by execution on the property of the defendants. If, then, it is found
that it is impossible for the defendants to live up to their agreement, naturally the

FIRST DIVISION
G.R. No. 110295 October 18, 1993
COCA-COLA BOTTLERS PHILIPPINES, INC., vs. THE HONORABLE COURT OF
APPEALS (Fifth Division) and MS. LYDIA GERONIMO, ​Respondents​.
Angara, Abello, Concepcion, Regala & Cruz Law Offices for petitioner.Alejandro
M. Villamil for private respondent.
DAVIDE, JR., ​J.:​
This case concerns the proprietress of a school canteen which had to close down
as a consequence of the big drop in its sales of soft drinks triggered by the
discovery of foreign substances in certain beverages sold by it. The interesting
issue posed is whether the subsequent action for damages by the proprietress
against the soft drinks manufacturer should be treated as one for breach of
implied warranty against hidden defects or merchantability, as claimed by the
manufacturer, the petitioner herein which must therefore be filed within six
months from the delivery of the thing sold pursuant to Article 1571 of the Civil
Code, or one for ​quasi-delict,​ as held by the public respondent, which can be
filed within four years pursuant to Article 1146 of the same Code.On 7 May
1990, Lydia L. Geronimo, the herein private respondent, filed a complaint for
damages against petitioner with the Regional Trial Court (RTC) of Dagupan City.
1
The case was docketed as Civil Case No. D-9629. She alleges in her complaint
that she was the proprietress of Kindergarten Wonderland Canteen docketed as
located in Dagupan City, an enterprise engaged in the sale of soft drinks
(including Coke and Sprite) and other goods to the students of Kindergarten
Wonderland and to the public; on or about 12 August 1989, some parents of the
students complained to her that the Coke and Sprite soft drinks sold by her
contained fiber-like matter and other foreign substances or particles; he then
went over her stock of softdrinks and discovered the presence of some fiber-like
substances in the contents of some unopened Coke bottles and a plastic matter
in the contents of an unopened Sprite bottle; she brought the said bottles to the
Regional Health Office of the Department of Health at San Fernando, La Union,
for examination; subsequently, she received a letter from the Department of
Health informing her that the samples she submitted "are adulterated;" as a
consequence of the discovery of the foreign substances in the beverages, her
sales of soft drinks severely plummeted from the usual 10 cases per day to as
low as 2 to 3 cases per day resulting in losses of from P200.00 to P300.00 per
day, and not long after that she had to lose shop on 12 December 1989; she
became jobless and destitute; she demanded from the petitioner the payment of
damages but was rebuffed by it. She prayed for judgment ordering the
petitioner to pay her P5,000.00 as actual damages, P72,000.00 as compensatory
damages, P500,000.00 as moral damages, P10,000.00 as exemplary damages,
the amount equal to 30% of the damages awarded as attorney's fees, and the
costs. 2​The petitioner moved to dismiss 3 the complaint on the grounds of failure
to exhaust administrative remedies and prescription. Anent the latter ground,
the petitioner argued that since the complaint is for breach of warranty under
Article 1561 of the said Code. In her Comment 4 thereto, private respondent
alleged that the complaint is one for damages which does not involve an
administrative action and that her cause of action is based on an injury to
plaintiff's right which can be brought within four years pursuant to Article 1146
of the Civil Code; hence, the complaint was seasonably filed. Subsequent related
pleadings were thereafter filed by the parties. 5​In its Order of 23 January 1991, 6
the trial court granted the motion to dismiss. It ruled that the doctrine of
exhaustion of administrative remedies does not apply as the existing
administrative remedy is not adequate. It also stated that the complaint is
based on a contract, and not on ​quasi-delict​, as there exists pre-existing
contractual relation between the parties; thus, on the basis of Article 1571, in
relation to Article 1562, the complaint should have been filed within six months
from the delivery of the thing sold.Her motion for the reconsideration of the
order having been denied by the trial court in its Order of 17 April 1991, 7 the
private respondent came to this Court via a petition for review on ​certiorari
which we referred to the public respondent "for proper determination and
disposition." 8 The public respondent docketed the case as CA-G.R. SP No.
25391.In a decision promulgated on 28 January 1992, 9 the public respondent
annulled the questioned orders of the RTC and directed it to conduct further
proceedings in Civil Case No. D-9629. In holding for the private respondent, it
ruled that:
Petitioner's complaint being one for quasi-delict, and not for breach of warranty
as respondent contends, the applicable prescriptive period is four years.It
should be stressed that the allegations in the complaint plainly show that it is
an action or damages arising from respondent's act of "recklessly and
negligently manufacturing adulterated food items intended to be sold or public
consumption" (p. 25, ​rollo) ​ . It is truism in legal procedure that what determines
the nature of an action are the facts alleged in the complaint and those averred
as a defense in the defendant's answer (I Moran 126; Calo v. Roldan, 76 Phil.
445; Alger Electric, Inc. v. CA, 135 SCRA 340).
Secondly, despite the literal wording of Article 2176 of the Civil code, the
existence of contractual relations between the parties does not absolutely
preclude an action by one against the other for quasi-delict ​arising from
negligence in the performance of a contract.
In ​Singson v.​ ​ Court of Appeals​ (23 SCRA 1117), the Supreme Court ruled:
It has been repeatedly held: that the existence of a contract between the parties
does not bar the commission of a tort by the one against the other and the
consequent recovery of damages therefor
. . . . Thus in Air France vs. Carrascoso, . . . (it was held that) although the
relation between a passenger and a carrier is "contractual both in origin and in
nature the act that breaks the contract may also be a tort.
Significantly, in American jurisprudence, from which Our law on Sales was
taken, the authorities are one in saying that he availability of an action or
breach of warranty does not bar an action for torts in a sale of defective goods.
10​
Its motion for the reconsideration of the decision having been denied by the public
respondent in its Resolution of 14 May 1993, 11 the petitioner took his recourse under
Rule 45 of the Revised Rules of Court. It alleges in its petition that:
I.THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND REVERSIBLE ERROR
IN RULING THAT ARTICLE 2176, THE GENERAL PROVISION ON ​QUASI-DELICTS​, IS
APPLICABLE IN THIS CASE WHEN THE ALLEGATIONS OF THE COMPLAINT CLEARLY
SHOW THAT PRIVATE RESPONDENT'S CAUSE OF ACTION IS BASEDON BREACH OF A
SELLER'S IMPLIED WARRANTIES UNDER OUR LAW ON SALES.
II.
CORROLARILY, THE HONORABLE COURT OF APPEALS COMMITTED A GRAVE AND
REVERSIBLE ERROR IN OVERRULING PETITIONER'S ARGUMENT THAT PRIVATE
RESPONDENT'S CAUSE OF ACTION HAD PRESCRIBED UNDER ARTICLE 1571 OF THE comparatively recent case. Thus, in ​Air France vs.​ Carrascoso​, 19 ​ involving an airplane
CIVIL CODE. 12
​ passenger who, despite hi first-class ticket, had been illegally ousted from his first-class
accommodation and compelled to take a seat in the tourist compartment, was held
The petitioner insists that a cursory reading of the complaint will reveal that the primary entitled to recover damages from the air-carrier, upon the ground of tort on the latter's
legal basis for private respondent's cause of action is not Article 2176 of the Civil Code on part, for, although the relation between the passenger and a carrier is "contractual both
quasi-delict - for the complaint does not ascribe any tortious or wrongful conduct on its in origin and nature . . . the act that breaks the contract may also be a tort.
part - but Articles 1561 and 1562 thereof on breach of a seller's implied warranties under Otherwise put, liability for ​quasi-delict may still exist despite the presence of contractual
the law on sales. It contends the existence of a contractual relation between the parties relations.​ 20​chanrobles virtual law library
(arising from the contract of sale) bars the application of the law on quasi-delicts ​and that Under American law, the liabilities of a manufacturer or seller of injury-causing products
since private respondent's cause of action arose from the breach of implied warranties, may be based on negligence, 21 ​ breach of warranty, 22 ​ tort, 23 or other grounds such as
the complaint should have been filed within six months room delivery of the soft drinks fraud, deceit, or misrepresentation. 24 ​ ​Quasi-delict​, as defined in Article 2176 of the Civil
pursuant to Article 171 of the Civil Code.In her Comment the private respondent argues Code, (which is known in Spanish legal treaties as ​culpa aquiliana, culpa
that in case of breach of the seller's implied warranties, the vendee may, under Article extra-contractual or cuasi-delitos​) 25 ​ is homologous but not identical to tort under the
1567 of the Civil Code, elect between withdrawing from the contract or demanding a common law, 26 which includes not only negligence, but also intentional criminal acts,
proportionate reduction of the price, with damages in either case. She asserts that Civil such as assault and battery, false imprisonment and deceit.​ 27
Case No. D-9629 is neither an action for rescission nor for proportionate reduction of the It must be made clear that our affirmance of the decision of the public respondent should
price, but for damages arising from a ​quasi-delict and that the public respondent was by no means be understood as suggesting that the private respondent's claims for moral
correct in ruling that the existence of a contract did not preclude the action for damages have sufficient factual and legal basis.IN VIEW OF ALL THE FOREGOING, the
quasi-delict.​ As to the issue of prescription, the private respondent insists that since her instant petition is hereby DENIED for lack of merit, with costs against the petitioner.SO
cause of action is based on quasi-delict,​ the prescriptive period therefore is four (4) years ORDERED.
in accordance with Article 1144 of the Civil Code and thus the filing of the complaint was Cruz, Bellosillo and Quiason, JJ., concur.
well within the said period. Griño-Aquino, J., is on leave.
We find no merit in the petition. The public respondent's conclusion that the cause of
action in Civil Case No. D-9629 is found on ​quasi-delict and that, therefore, pursuant to
Article 1146 of the Civil Code, it prescribes in four (4) years is supported by the
allegations in the complaint, more particularly paragraph 12 thereof, which makes
reference to the reckless and negligent manufacture of "adulterated food items intended
to be sold for public consumption."The vendee's remedies against a vendor with respect
to the warranties against hidden defects of or encumbrances upon the thing sold are not
limited to those prescribed in Article 1567 of the Civil Code which provides:
Art. 1567. In the case of Articles 1561, 1562, 1564, 1565 and 1566, the vendee
may elect between withdrawing from the contract and demanding a proportionate
reduction of the price, with damages either
case.​ 13
The vendee may also ask for the annulment of the contract upon proof of error or fraud,
in which case the ordinary rule on obligations shall be applicable. 14 ​ Under the law on
obligations, responsibility arising from fraud is demandable in all obligations and any
waiver of an action for future fraud is void. Responsibility arising from negligence is also
demandable in any obligation, but such liability may be regulated by the courts,
according to the circumstances. 15 ​ Those guilty of fraud, negligence, or delay in the
performance of their obligations and those who in any manner contravene the tenor
thereof are liable for damages. ​16
The vendor could likewise be liable for quasi-delict under Article 2176 of the Civil Code,
and an action based thereon may be brought by the vendee. While it may be true that
the pre-existing contract between the parties may, as a general rule, bar the applicability
of the law on quasi-delict,​ the liability may itself be deemed to arise from quasi-delict,​
i.e., the acts which breaks the contract may also be a​quasi-delict​. Thus, in ​Singson vs​.
Bank of the Philippine Islands,​ 17​
​ this Court stated:
We have repeatedly held, however, that the existence of a contract between the parties
does not bar the commission of a tort by the one against the other and the consequent
recovery of damages therefor. 18​ ​ Indeed, this view has been, in effect, reiterated in a

EN BANC
G.R. No. L-26737 July 31, 1969
LAURA CORPUS, and the minors RICARDO, TERESITA and CORAZON, all
surnamed MARCIA and represented by their mother LAURA CORPUS,
plaintiffs-appellants,
vs.
FELARDO PAJE and THE VICTORY LINER TRANSPORTATION CO., INC.,
defendants-appellees.
Crispin D. Baizas and Associates for plaintiffs-appellants.
Flores, Macapagal, Ocampo and Balbastro for defendants-appellees.
CAPISTRANO, ​J.:
This is a direct appeal on questions of law from an order of the Court of First Instance of
Rizal dismissing the complaint in Civil Case No. 6880 of that court.
On December 23, 1956, a passenger bus of the Victory Liner Transportation Co., Inc.,
driven by Felardo Paje, collided within the municipality of Lubao, Pampanga, with a jeep
driven by Clemente Marcia, resulting in the latter's death and in physical injuries to two
other persons.
An information for homicide and double serious physical injuries through reckless
imprudence was filed against Felardo Paje in the Court First Instance of Pampanga. The
heirs of Clemente Marcia reserved their right to institute a separate civil action for
damages. On November 7, 1960, the accused, Felardo Paje, was found guilty and
convicted of the crime charged in the information. Said defendant appealed the judgment
of conviction to the Court of Appeals. On November 21, 1961, while defendant's appeal
was pending decision in the Court of Appeals, Clemente Marcia's heirs, namely, his
widow, Laura Corpus, and their minor children, instituted in the Court of First Instance of
Rizal a separate civil action (Civil Case No. 6880) for damages based upon the criminal
act of reckless imprudence against Felardo Paje and the Victory Liner Transportation Co.,
Inc., defendants, praying that said defendants be ordered to pay jointly and severally the
amounts of damages claimed by the plaintiffs. On November 9, 1962, the Court of
Appeals promulgated its decision in the appeal of Felardo Paje reversing the appealed
judgment and acquitting the appellant after finding that the reckless imprudence charged
against him did not exist, and that the collision was a case of pure accident.
On December 29, 1962, the defendants filed in the civil action a motion to dismiss on the
ground that the action was barred by the acquittal by the Court of Appeals of the
defendant Felardo Paje in the criminal action. The motion was denied.
At the pre-trial of the civil case, the defendants asked the court to rule on their special
defense that plaintiffs' cause of action based upon a quasi-delict had prescribed
considering that the complaint was brought four years and eleven months after the
collision and that according to Article 1144 of the Civil Code an action based upon a
quasi-delict must be instituted within four years. The lower court, in its order of May 31,
1966, dismissed the complaint on the ground that plaintiffs' action was based upon a
quasi-delict and that it had prescribed. The plaintiffs appealed direct to this Court on
questions of law from the order dismissing the complaint.
Plaintiffs-appellants contend that the lower court erred in dismissing the complaint. The
contention is unmeritorious in view of the following considerations.
(1) The acquittal of the defendant Felardo Paje by the Court of Appeals in the criminal
action on the ground that the reckless imprudence or criminal negligence charged against
him did not exist and that the collision was a case of pure accident, was a bar to the civil
action for damages for the death of Clemente Marcia, which action was based upon the
same criminal negligence of which the defendant Felardo Paje was acquitted in the
criminal action. In the celebrated case of ​Chantangco vs. Abaroa​, which was an appeal
from the Philippine Supreme Court to the United States Supreme Court, 218 U.S. 476; 54
L. Ed. 1116; 40 Phil. 1056, Mr. Justice Lurton, speaking for the Supreme Court of the
United States, said:
It is true that one of the plaintiffs in the present case reserved whatever right he may
have had to bring a civil action. This was obviously of no avail, inasmuch as there
resulted a judgment for the defendant, and the plain inference from the foregoing is that
a verdict of acquittal must carry with it exemption from civil responsibility.
Criminal negligence, that is, reckless imprudence, is not one of the three crimes
mentioned in Article 33 of the Civil Code which authorizes the institution of an
independent civil action, that is, of an entirely separate and distinct civil action for
damages, which shall proceed independently of the criminal prosecution and shall be
proved only by a preponderance of evidence. Said article mentions only the crimes of
defamation, fraud (estafa) and physical injuries. Although in the case of ​Dyogi, et al. vs.
Yatco, et al., G.R. No. L-9623, January 22, 1957, this Court held that the term "physical
injuries" used in article 33 of the Civil Code includes homicide, 1 ​it is to be borne in mind
that the charge against Felardo Paje was for reckless imprudence resulting in homicide,
and not for homicide and physical injuries. In the case of ​People vs. Buan,​ G.R. No.
L-25366, March 29, 1968, Mr. Justice J.B.L. Reyes, speaking for the Supreme Court, said
that the "offense of criminal negligence under article 365 of the Revised Penal Code lies
in the execution of an imprudent or negligent act that, if intentionally done, would be
punishable as a felony. The law penalizes thus the negligent or careless act, not the
result thereof. The gravity of the consequence is only taken into account to determine the
penalty; it does not qualify the substance of the offense." It is, therefore, clear that the
charge against Felardo Paje was not for homicide but for reckless imprudence, that is,
criminal negligence resulting in homicide (death of Clemente Marcia) and double physical
injuries suffered by two other persons. As reckless imprudence or criminal negligence is
not one of the three crimes mentioned in Article 33 of the Civil Code, there is no
independent civil action for damages that may be instituted in connection with said
offense. Hence, homicide through reckless imprudence or criminal negligence comes
under the general rule that the acquittal of the defendant in the criminal action is a bar to
his civil liability based upon the same criminal act notwithstanding that the injured party
reserved 2 ​his right to institute a separate civil action (Chantangco vs. Abaroa, ​supra)​ . In
the language of the Rules of Court (Rule 111, Sec. 3) the extinction of the criminal action
by acquittal of the defendant on the ground that the criminal act charged against him did
not exist, necessarily extinguished also the civil action for damages based upon the same
act.
(2) Assuming, ​arguendo​, that the civil action for damages for the death of Clemente
Marcia was based upon a quasi-delict, 3 ​the trial court's finding that on that basis the
action had prescribed is correct. An action upon a quasi-delict must be instituted within
four (4) years (Article 1146, Civil Code). The four-year prescriptive period began to run
from the day the quasi-delict was committed, or from December 23, 1956, and the
running of the said period was not interrupted by the institution of the criminal action for
reckless imprudence. (Paulan vs. Sarabia, G.R. No. L-10542, July 31, 1958.)
PREMISES CONSIDERED, the order appealed from is affirmed, with special
pronouncement as to costs.
Concepcion, C.J., Castro, Fernando and Barredo, JJ., concur.
Dizon, Makalintal, Sanchez and Teehankee, JJ., concur in the result.
Reyes, J.B.L., and Zaldivar, JJ., took no part.
EN BANC
G.R. No. 3148 March 5, 1907
ENRIQUE MARIA BARRETTO,​ plaintiff-appellee,
vs.
THE MUNICIPAL BOARD OF MANILA,​ defendant-appellant.
Modesto Reyes for appellant.
A. V. Herrero for appellee.
PER CURIAM:
This is a written exception of the appellee wherein exception is entered against the final
decision of this court together with appellee's petition for a rehearing of this cause. After
review of the grounds upon which this last petition is based we find:
Against the first ground: That the conditions under which the donor made the donation
are not precedent. Such conditions are: (​a​) No to erect any building on the lot donated;
(​b)​ no to use the said lot for any other purpose than in beautifying the city, ​to which end
he imposed ​upon the municipality the ​obligation o ​ f acquiring the lots adjoining the lot
donated in sufficient number to form, together with the lot donated, a public plaza with
gardens and streets. (Complain IV, p. 2, bill of exceptions.)
In the two conditions (​a​) and (​b​) were precedent the delivery of the lot would have been
delayed and retarded ​until s ​ uch times as the donee had complied with such conditions,
which conditions are certainly negative and not consistent with a failure to perform or
comply with the same; and it would not have been possible to have complied with such
conditions without the delivery of the lot having first been made the donor and the donee
put in possession of the same, and without perfecting and consummating the gift or
donation. In contracts containing a condition precedent, no right or action is given or
acquired until such condition is complied with; before the compliance with the condition is
accomplished there exists nothing but the hope of acquiring such right, and this
notwithstanding that the donor delivered to the donee the land donated. That two
conditions are, therefore, "​resolutorias.​ "
Against the second ground: It is not proven that the two conditions (​a​) and (​b​) have not
been complied with; it has not been proven that the donee erected any building on the lot
donated or that the lot has been used for any other object. The ​compliance with the
obligation to acquire the adjoining lots in sufficient numbers to form or make a public
plaza can be considered even less. This is a burden or obligation rather than a condition
precedent and it is indefinite in that the number of lots to be acquired are not
determined, nor what lots, that is to say, in what location said lots are to be or in what
direction they shall run in forming, with the lot donated, the public plaza; nor could the
value of such lots be determined so that the donee might judge whether such donation or
gift was as act of liberality or a reciprocal contract, and this is burdensome enough, it
being an obligation or promise to accomplish a thing or more value in itself than the value
of the thing donated, all of which is not convenient to comply with by reason of being
burdensome and orenous, and more convenient and practicable, ​when the time arrives​,
to rescind and cancel the said donation. It is evident that such obligation could only be
considered a condition or obligation in a ​resolutoria s
​ ense of the donation or gift when not
complied with in its place and time.
The supreme court of Spain in a judgment of January 7, 1861, hands down a decision
entirely applicable to the donation, the subject-matter in question herein, made on June
16, 1885, and establishes this doctrine of jurisprudence: "That when a conditional
donation is made, imposing in addition thereto a burden on the donee, this should not be
taken into consideration as a condition but as a mere obligation, the nonfulfillment of
which can not be taken advantage of by the person interested in the inefficacy of said
donation."
Against the third and fourth grounds: The donor, appellee herein, with respect to the
donation of the subject-matter herein, claims that he is in the exercise of two rights, one
to compel the donee to comply with the conditions imposed in the donation or gift, and
the other the right to revoke or rescind that donation; and the court in its decision has no
t denied to the appellee the option of exercising either one or the other of the two rights,
and the court understood perfectly well that the actor (donor) chose that option, that is,
for the revocation of the donation and the recovery of the thing donated, and this having
been so understood by the court, it was not proper to impose upon the actor (donor) the
burden of obligation of selecting by said donor. The court is completely in error wherein
it, in decision, has deprived the actor (donor) of the right of option and has imposed upon
him the exercise of one of the alternative rights which are given to him by law.
What the actor (donor) has done is to elect his right in the revocation of the donation,
basing this revocation on the failure to comply with the conditions imposed; and in the
decision of the court it is stated that there were no fit terms in law to value or consider
this cause of action, that is to say, if there was or was not a failure to comply with the
conditions imposed in the donation, inasmuch as the only thing appearing in the record of
the case was from what time the donee had not comply with the same, if within a year,
within ten or within twenty; and, when the debtor (obligated party) has no fixed time
within which he should comply with an obligations, it is not possible to determine the
moment he becomes delinquent, and in failing to comply with an obligation becoming
liable therefor by reason of the nonexecution of the obligation not complied with, in such
case, without being arbitrary, and such finding can be arrived at only when it is known
from what time the obligation has not been complied with and from what date the
creditor has the right of action. It was necessary, in all events, according to law, to have
expressed a precise period or time from which the fact of failure to comply with the
obligation could have been made known and from which an action could have been made
effective. Therefore, while no expressed in the decision of the court it is implied that the
actor (donor) worked without being with right of action, because in obligations calling for
the fulfillment of certain things, although the action is borne from the date of the contract
yet is not effective until the falling due of the obligation, and, where there is no
stipulations as to the majority of an obligation, the courts will then fix such maturity or
time; in other words, there are no fit terms or conditions expressed whereby it can be
found or seen that such obligation has not been complied with or form what time an
obligation of an indefinite term and having no maturity has not been fulfilled or complied
with.
The court is also an error in granting a thing not prayed for by the defendant, inasmuch
as the court has not given a time or period within which the obligations or conditions as
imposed by the plaintiff can now be complied with and this against the claims of plaintiff.
What the court has done is put the things in a state or condition whereby the parties
could say what they can not say at this time — one thing is that the condition have not
been complied with, the other, that the conditions have been complied with — a thing,
one or the other can not be determined but form a given moment, that is from the falling
due of the obligation to perform a given act. If the defendant has alleged that he has
complied with the conditions imposed, it is because that, throughout the litigations or
case, he has shown that he understood that there were no more than two conditions
imposed, which in reality is true, without taking into consideration the obligation
imposed, in accordance with the terms and conditions of the offer of the donor, but with
respect to which, whatever may be its true nature, it can not be argued that the obligated
party being at this time still with the power and right to comply within an indefinite time
with said condition, during the time that judicial remedy is not had providing for the
improvidence or omission of the parties or mutual trust or confidence, or the defense of
the one to the other. Judgment or relief can not be had revoking or taking away a
condition or a right without it having first been evidence or proven that an obligation has
not been complied with, and it is impossible, in any way or manner, to establish or find in
a judgment, when it is simply known from what time the obligation should be complied
with, but not known within what time or when such obligation should be complied with in
full accomplishment of the same.
And it is not rigorously or absolutely certain that law 6 of title 4 of the fifth ​Partida,​ the
only law applicable to this case, grants an alternative or optional right, taking into
consideration the decision of the supreme court of Spain of October 12, 1858, which
says: "A donation can not be revoked for the person or because the donee be delinquent
in the compliance of the accepted obligations, if the donor ​does not compel the
compliance of the same judicially.​ " So the phrase of the law, "and in case of
noncompliance or in case of bad performance of the same, he can be compelled to do
that which he agreed or promised to do, or cancel and rescind the donation made," does
not authorize that one or another thing be done, but that both should be done. According
to the terms of the said decision: "He should have demanded the compliance therewith,
and that the only in case of denial to so do, should proceed with the cancellation of the
donation, ​in accordance with the provision o ​ f law 6 of the same title and ​Partida​." (Title
4, ​Partida 5
​ .) In accordance with this decision the complaint should have been drawn in
the sense of asking that the donee be compelled to comply with the obligation to
purchase the adjoining lots in sufficient number to form a public plaza, and, in the event
of the donee not doing so, that the donation be rescind and canceled.
By this is seen the manifest necessity of a term or period within which the donee should
comply with such a burden some, vague, indeterminate, and indefinite obligation.
Against the fifth and sixth grounds: From the fact that the court has not declared the
donation null or rescinded by reason of the nonexistence of a public instrument, it, the
court, has not infringed or violated article 633 of the Civil Code, for the reason that he
Civil Code with respect to the form ​of this donation could not prevail or govern a similar
act carried out and executed in June, 1885, not having been in force and effect at that
time but after; that is to say, from and after October, 1889.
Law 9, title 4 of the fifth ​Partida​, is the law applicable to the form of the donation, which
law exacts and requires a ​letter ​(​carta)​ or ​holding ​or ​knowledge ​of a higher court, that is
to say, written ​document a ​ nd the ​exhibition of a public instrument ​for proper judicial
approbation when the thing donated has for its value more than 500 ​maravedises (​ old
Spanish coins) in gold; and there is not the least proof in this record that the land
donated was worth more than 500 ​maravidesis ​in gold, or this sums equivalent in money
of the country, an equivalent which would be determined judicially in accordance with the
many decisions of the supreme court of Spain.
If it is expressed with all precision in the Civil Code as to the necessity of a public
instrument for certain donation referred to in the former legislation, in order to judge the
donation, the subject-matter herein, " it can not be affirmed with certainty," says
Manresa, "that a public instrument would be required as necessary, except for the
purpose of effecting the inscription or registry in the office of the registrar of properties.
There is no doubt," he continues, that the ​Partidas ​ required and exacted a letter
(instrument) for these donations (those donations exceeding in value more than 500
maravedises in god); but it is not very clear as to whether this word alluded or referred
only to the written form or particularly to the public document or instrument." (5
Manresa, 100.) Nor can the authorities Laserna and Montalban, Sanchez Roman, and
others accept the opinion of others authorities who interpret the word ​carta ​(letter) to
mean a public instrument, when, according to law 1 of title 18 of the third ​Partida​, ​carta
(letter) is, in generic conception, that which is defined in said law as ​a public instrument​,
and that which is a public instrument, and the sort or kind is not of any of the classes or
species included or intended under that law.
That which is certain is that the exhibition of the public instrument or judicial approbation
or approval was necessary for that class of donations. More than that, according to the
decision of the supreme court of Spain, of October 14, 1884, "law 9, title 4 of the fifth
Partida is not violated or infringed if it does not appear that the sum donated exceed that
of 500 ​maravedises in gold, which said law permits a donation without the necessity of
exhibiting a public instrument before a court and for not having verified the price or value
of the wheat donated at the time or period of the contract, which value, as is the case
with all merchandise, is subject to alteration and change according to quality and the
needs of exigencies of the market." And it must be taken into consideration in this
decision that the party who interposed an abrogation of annulment under the direction
and advice of a very reputable attorney, did not allege the absence of a public instrument
(the donation having been made and consummated by means of a private document) but
alleged only the necessity of the judicial approval or approbation, "the only thing that
appears clear in the law," according to Manresa.
Against the law ground relative to the acceptance, the facts are evident in the record. We
can not conceive how the appellee could have made the delivery of the land, and, as he
pretends and alleges, the delivery of the titles of the property, or how the thing donated
came to be in the possession of the donee for the large space or period of time as is
alleged and set forth in the same complaint, if there had been no acceptance and
notification of the acceptance and mutual consent and understanding between the donor
and donee. It is not logical to infer in these premises that the donation was never
accomplished, but, to the contrary, that the donation and ownership of thing donated was
transmitted and transferred, and this, the thing donated possessed by the donee under a
title of ownership and it is his, the donees, at the present time beyond all dispute the
only thing disputable being the compliance of one obligation imposed in the donation in a
resolutorio ​manner, the only point to be considered in this decision.
Therefore, we find, after taking into consideration the protest and exception against the
decision herein, and the petition praying for a rehearing, that there are no grounds or
sufficient reason for the granting of this petition. The petitions is denied with the costs
against the petitioner.
Arellano, C.J., Torres, Mapa, Johnson, Carson, Willard and Tracey, JJ., concur.

SECOND DIVISION
[G.R. No. L-122. May 11, 1946.]
LU CHU SING and Lu TIAN CHIONG, ​Plaintiffs-Appellants,​ v. LU TIONG GUI (alias
LU TIONG KEE), ​Defendant-Appellee.​
P. J. Sevilla and Eliseo Caunca, for ​Appellants.​
Antonio Gonzales for ​Appellee​.
SYLLABUS
1. OBLIGATIONS; SOURCES OF. — Obligations are created by law, by contract, by
quasi-contract, and by unlawful acts or omissions or by those in which any kind of fault or
negligence occurs.
2. ID., CIVIL OBLIGATIONS ARISING FROM CRIMES, BY WHAT GOVERNED; SEPARATE
CIVIL ACTION FOR DAMAGES. — Civil obligations arising from crimes are governed by
the provisions of the Penal Code. Article 1092 of the Civil Code.) Article 100 of the
Revised Penal Code provides that every person criminal action arising from the same
offense may be instituted separately. (Section 1 [b], Rule 107.) The Civil action for
damages arising from a felony may be brought before the criminal action for said felony,
but in case the letter is instituted the former shall be stayed, pending final judgment in
the criminal action. (Alba v. Acuna and Frial, 53 Phil., 380.)
3. CRIMINAL LAW; INCRIMINATORY MACHINATION UNDER ARTICLE 363 OF THE
REVISED PENAL CODE; SCOPE AND APPLICATION. — Article 363 of the Revised Penal
Code, which penalizes any person who by any act not constituting perjury shall directly
incriminate or impute to an innocent person the commission of a crime, does not apply to
false accusations but to acts tending directly to cause false accusations, such as
"planting" evidence and the like. (People v. Rivera, 59 Phil., 236.)
4. ID.; FALSE ACCUSATION; LIABILITY FOR LIBEL OR PERJURY. — Under the Revised
Penal Code, one who falsely accuses another of a crime may be held liable either for libel
or for perjury, depending upon the manner or form in which the act is committed.
5. ID.; LIBEL; CIVIL ACTION FOR LIBEL. — The repeal of the old Libel Law (Act No. 277)
did not abolish the civil action for libel In the first place, there is the general provision of
article 100 of the Revised Penal Code that every person criminally liable for a felony is
also civilly liable, and article 104 of the sa Code further provides that the civil liability
includes (1) restitution, (2) reparation of the damage caused, and (3) indemnification for
consequential damages. In the second place, article 355 of the same Code provides that
besides the criminal action for libel the offended party may bring a civil action. Article 360
further provides that "the criminal action and the civil action for damages in cases of
written defamations, as provided in this chapter, may be filed simultaneously or
separately with the Court of First Instance of the province wherein the libel was
published, displayed or exhibited, regardless of the place where the same was written,
printed or composed."​cralaw virtua1aw library
6. ID.; ID.; PRIVILEGED COMMUNICATION; NECESSITY TO PROVE MALICE. —
Defendant’s contention that the charge filed by him in the City Fiscal’s Office was a
privileged communication, is not a proper ground for the dismissal of the civil action for
libel. In the first place, it is a matter of defense. In the second place the fact that a
communication is privileged does not mean that it is not actionable; the privileged
character simply does away with the presumption of malice, which the plaintiff has to
prove in such a case. (See article 354, Revised Penal Code.)
7. ID.; ID.; PUNITIVE OR EXEMPLARY DAMAGES NOT RECOVERABLE AFTER REPEAL OF
ACT No. 277. — The liability for punitive or exemplary damages recoverable in a civil
action for libel under section 11 of Act No. 277 was purely statutory; it was an obligation
created by law. Hence after the repeal of that law such damages can no longer be
recovered.
8. ID.; ID.; DAMAGES ON ACCOUNT OF INJURY TO FEELINGS AND REPUTATION,
RECOVERABLE UNDER ARTICLE 104 OF REVISED PENAL CODE. — The liability for
damages on account of injury to feelings and reputation in a civil action for libel is an
obligation ex delicto, such damages being compensatory of the injury inflicted by the
wrongful act of defamation. They are recoverable under article 104 of the Revised Penal
Code, which provides that the civil liability arising from the commission of a felony
includes reparation of the damage caused and indemnification for consequential
damages. .
9. ID.; ID.; RIGHT TO DAMAGES FOR INJURY NOT ABRIDGED BY STATUTE OR LOST BY
DIFFICULTY OF DETERMINING AMOUNT; CLASSES OF COMPENSATORY DAMAGES. — The
right to recover damages of all persons who have suffered injury by reason of the
wrongful and unprivileged of a libel or slander can neither be abridged by statute nor lost
by reason of difficulty in determining the amount the should be awarded. There are two
general classes of compensatory damages allowable for defamation: (1) general
damages, or those which the law presumes to be the natural, proximate, and necessary
result of the publication, and (2) special, or those which, although a natural and probable
consequences thereof, are not assumed to be necessary or inevitable, and must be
shown by allegation and proof. The general damages presumed from the publication of
libelous matter, while not susceptible of being accurately measured, are generally more
substantial and real than those designated as actual, and measured accurately by the
donor standard.
10. ID; ID; RIGHT OF FATHER TO RECOVER DAMAGES FOR LIBEL TO SON. — Even
assuming that the defendant had libeled the son, it could not be held that the father may
recover damages on that amount. In the eyes the law sin of the son is not imputable to
the father. The son, who is of legal age, is sui juris with a personality separate and
distinct from that of the father. Their rights and obligations are not merged. The name
and reputation of one are not those of the other. An invasion of the right of the son is not
an invasion of the right of the father.
DECISION
 OZAETA, ​J.​:
This is an appeal from an order of the Court of First Instance of Manila dismissing
plaintiffs complaint, upon motion of the defendant, on the ground that the facts therein
alleged did not constitute a cause of action.
The material allegations of the complaint may be briefly stated as follows: The plaintiff Lu
Chu Sing is the father of his co-plaintiff, Lu Tian Chiong. In April 1945 Lu Tian Chiong
entered the service of the defendant as a cook. On May 29, 1945, the defendant’s home
at 1160-F Magdalena Street, Trozo, Manila, was robbed. The defendant imputed to the
plaintiff Lu Tian Chiong complicity in that robbery and for that reason Lu Tian Chiong was
charged with said offense and the corresponding complaint was filed in the city Fiscal’s
Office by the defendant against said plaintiff Lu Tian, for which the latter was arrested
and detained in the police station of Menisci for five days and was only released after
posting a cash bond in the amount of P2,000." After the city fiscal had conducted the
corresponding investigation the criminal charged was dropped for lack of evidence. The
imputation that the plaintiff Tian Chiong had some connection with the robbery above
mentioned "affected the integrity and honesty of the plaintiff and caused damages to
him, for whenever he applies for any position in any Chinese establishment here in
Manila, he is always rejected, inasmuch as he is considered as undesirable element, or a
person of bad character because of the complaint above referred to, notwithstanding the
fact that the Chinese community in the Philippines knows that Lu Tian Chiong’s father,
the other plaintiff, Lu Chu Sing, was, before the war, a businessman of good reputation,"
owning several industrial and mercantile establishments in Manila. The defendant,
knowing that the plaintiff Lu Tian Chiong had" nothing to do with the robbery above
mentioned, maliciously filed the criminal charge against the said plaintiff in the City
Fiscal’s Office, for the sole purpose of soiling the good names of the plaintiffs, and
particularly ruining and destroying completely the good reputation and credit of the
plaintiff Lu Chu Sing as a businessman and, consequently, the latter has suffered
damages in the amount of not less than P20,000; and besides, the plaintiffs were forced
to hire the service of an attorney who defended the plaintiff Lu Tian Chiong in the City
Fiscal s Office, for which services the plaintiff had paid the sum of P1,000." The prayer
was that the court declare the criminal charge filed by the defendant in the City Fiscal’s
Office against the plaintiff Lu Tian Chiong to be malicious, "and consequently it ruined
and destroyed the good reputation and credit of the plaintiff Lu Chu Sing, for which he
suffered damages," and that the defendant be adjudged "to pay the plaintiffs the sum of
P21,000 as such damages, or any amount that this Honorable Court may determine, and
to pay the costs of this suit."​cralaw virtua1aw library
Defendant’s contention, which the lower court declared to be well founded, is that
plaintiff’s action is predicated upon an allegation of determination or libel, but that since
the repeal of Act No. 277 by article 367 of the Revised Penal Code no more civil action for
defendant or libel lies; and that even supposing for a moment that civil responsibility still
exists in cases of defamation and label, this action could not prosper because the
complaint filed by the defendant against the plaintiff Lu Tian Chiong in the City Fiscal’s
Office partook of the nature of a privileged communication.
The plaintiffs on the other hand maintain that their action is not based on libel or
defamation but on malicious prosecutions.
The questions to determine are (1) the nature of the obligation which the plaintiffs seek
to enforce against the defendant and (2) whether the plaintiffs may recover upon such
obligation under the allegations of the complaint.
1. Obligations are created by law, by contract, by quasi-contract, and by unlawful acts or
omissions or by those in which any kind of fault or negligence occurs. (Article 1089, Civil
Code.) The obligation which the plaintiffs herein seek to enforce is apparently one created
by or arising from unlawful act — an obligation ex delicto.
Civil obligations arising from crimes are governed by the provisions of the Penal Code.
(Article 1092, Civil Code.) Article 100 of the Revised Penal Code provides that every
person criminally liable for a felony is also civilly liable. Civil and criminal actions arising
from the same offense may be instituted separately. (Section 1[b], Rule 107.) The civil
action for damages arising from a felony may be brought before the criminal action for
said felony, but in case the latter is instituted the former shall be stayed, pending final
judgment in the criminal action. (Alba v. Acuna and Frial 53 Phil., 380.)
What is the felony alleged to have been committed by the defendant against the plaintiffs
by reason of which the latter seek to enforce civil liability against the former? According
to the plaintiffs malicious prosecution or false accusation; according to the defendant and
the lower court it is defamation or libel.
Let us first consider plaintiffs’ contention. Articles 326 and 327 of the Penal Code, which
respectively defined and penalized the crime of false accusation, were not re-enacted in
the Revised Penal Code but, since the old Penal Code has been repealed, they must be
deemed to have been abrogated.
Article 363 of the Revised Penal Code, which penalizes any person who by any act not
constituting perjury shall directly incriminate or impute to an innocent person the
commission of a crime, does not apply to false accusations but to acts tending directly to
cause false accusations, such as "planting" evidence and the like. (People v. Rivera 59
Phil., 236.) In the case last cited (page 242) this court said:​jgc:chanrobles.com.ph
"It is to be noted that article 326 of the old Penal Code contains the pension that the
accuser could be prosecuted only on the order of the court, when the court was convinced
upon the trial of the principal cause that there was sufficient basis for a charge of false
accusation. Article 363 of the Revised Penal Code contains no such safeguard. If we
extended said article by interpretation to administrative and Judicial proceedings, it is
apparent that we would open the door to a flood of prosecutions in cases where the
defendants were acquitted. There is no reason to believe that the legislature intended
such a result."​cralaw virtua1aw library
Under the Revised Penal Code one who falsely accuses another of a crime may be held
liable either for, libel or for perjury, depending upon the manner or form in which the act
is committed. (See concurring opinion of Justice Dias in People v. Rivera, supra.)
Plaintiffs’ legal theory of their case is therefore untenable.
The facts alleged by the plaintiffs against the defendant fall within the purview of article
353 of the Revised Penal Code which defines defamacion (incorrectly translated as libel to
be "a public and malicious imputation of a crime, or of a vice or defect, real or imaginary,
or any act, omission, condition, status, or circumstance tending to cause the dishonor,
discredit, or contempt of a natural or juridical person, or to blacken the memory of one
who is dead." Article 355 punishes libel with imprisonment or a fine, or both, "in addition
to the civil action which may be brought by the offended party." Article 358 penalizes oral
defamation or slander.
It is not clear from the complaint in this case whether the alleged false imputation or
charge of robbery made by the defendant against the plaintiff Lu Tian Chiong was written
or oral. The allegation in paragraph 8 of the complaint to the effect that the defendant,
knowing that the plaintiff Lu Tian Chiong had nothing to do with the robbery, "maliciously
filed the criminal charge against the said plaintiff in the City Fiscal’s Office, for the sole
purpose of soiling the good names of the plaintiffs," is not sufficiently specific to enlighten
us on that point, for a complaint may be presented to the City Fiscal’s Office either
verbally or in writing. Usually the complainant simply gives to the employee in the City
Fiscal’s Office in charge of preparing the charge slips the data required for an
investigation.
2. Assuming, as counsel for the defendant and the trial court did, that the allegedly false
imputation or charge against the plaintiff Lu Tian Chiong was written and therefore
constituted a libel, the question is then presented as to whether the plaintiffs may
recover damages from the defendant upon the facts alleged in the complaint. Before
scrutinizing the facts let us examine the law.
The defendant’s contention, which the lower court simply declared well founded, is that
the civil action for libel or defamation has been completely abrogated. As authority for
such contention counsel cites the decision of the Court of Appeals in Topacio v. The
Tribune Publishing Co. (40 Off. Gaz., 12th Supp., 21), and the decision of the Supreme
Court in Ruiz v. Topacio (70 Phil., 368). To avoid an erroneous impression w e declare
that defendant’s contention is not entirely correct. The repeal of the old Libel Law (Act
No. 277) did not abolish the civil action for libel. In the first place, there is the general
provision of article 100 of the Revised Penal Code that every person criminally liable for a
felony is also civilly liable and article 104 of the same Code further provides that the civil
liability includes (1) restitution, (2) reparation of the damage caused, and (3)
indemnification for consequential damages. In the second place, article 365 of the same
Code provides that besides the criminal action for libel the offended party may bring a
civil action. Article 360 further provides that "the criminal action and the civil action for
damages in cases of written defamations, as provided in this chapter, may be filed
simultaneously or separately with the Court of First Instance of the province wherein the
libel was published, displayed or exhibited, regardless of the place where the same was
written, printed or composed."​cralaw virtua1aw library
Defendant’s contention that the charge filed by him in the City Fiscal’s Office was a
privileged communication, is not a proper ground for the dismissal of the complaint. In
the first place, it is a matter of defense. In the second place, the fact that a
communication is privileged does not mean that it is not actionable; the privileged
character simply does away with the presumption of malice, which the plaintiff has to
prove in such a case. (See article 354, Revised Penal Code.)
Under the provisions of section 11 of the old Libel Law (Act No. 277) the offended party
was entitled to recover in a civil action "not only the actual pecuniary damages sustained
by him but also damages for injury to his feelings and reputation, and in addition such
punitive damages as the court may think will be a just punishment to the libeler and an
example to others." The Revised Penal Code, however, is silent in regard to the kind and
nature of the damage recoverable in a civil action for libel. That being the case, may a
libeled person recover from the libeler damages for injury to his feelings and reputation
and punitive or exemplary damages, in addition to the actual pecuniary damages
sustained by him? Two commentators on the Revised Penal Code, Justice Albert and
Judge Guevara, differ on that question. Justice Albert in his commentary (pages 845,
846) apparently assumes that the law in this respect has not been changed, for he says
under the heading "Civil Liability" that "the person so libeled is entitled to recover in such
civil action not only the actual pecuniary damages, but also damages for injury to his
feelings and reputation, and in addition such punitive damages as the court may think will
be a just punishment to the libeler and an example to others." Judge Guevara, however,
notes that the Revised Penal Code is silent in regard to the kind and nature of the
damages recoverable in a civil action for libel, and says: "This being the case, the
inference is that only actual or pecuniary damage may be recovered in a civil action on a
written defamation." (Guevara on the Revised Penal Code, 3d ed., 780.) A division of the
former Court of Appeals composed of Presiding Justice Paras and Justices Hontiveros,
Imperial, and Albert rendered the opinion in the case of Topacio v. The Tribune Publishing
Co. (40 Off. Gaz., 12th Supp., 21), that with the repeal of the old Libel Law and
particularly of section 11 thereof only the actual pecuniary damages may now be
recovered in a civil action for libel. This Supreme Court has not yet had occasion to pass
upon that question. Contrary to the assertion of counsel for the present appellee this
court did not decide that question, as it was not involved, in the case of Ruiz v. Topacio
(70 Phil., 368).
The liability for punitive or exemplary damages recoverable in a civil action for libel under
section 11 of Act No. 277 was purely statutory; it was an obligation created by law.
Hence after the repeal of that law such damages can no longer be recovered.
But the liability for damages on account of injury to feelings and reputation in a civil
action for libel is an obligation ex delicto, such damages being compensatory of the injury
inflicted by the wrongful act of defamation. They are recoverable under article 104 of the
Revised Penal Code, which provides that the civil liability arising from the commission of a
felony includes reparation of the damage caused and indemnification for consequential
damages.
It has been held that the right to recover damages of all persons who have suffered
injury by reason of the wrongful and unprivileged publication of a libel or slander can
neither be abridged by statute nor lost by reason of difficulty in determining the amount
that should be awarded. (33 Am. Jur., Libel and Slander, section 199, p. 188, citing:
Hanson v. Krehbiel, 68 Kan., 670; 64 L. R. A., 790; Park v. Detroit Free Press Co., 72
Mich., 560; 1 L. R. A., 599; Osborn v. Leach, 135 N. C., 628; 66 L. R. A., 648; Byers v.
Meridian Printing Co., 84 Ohio St., 408-38 L. R. A. [N. S. ], 913; Kimball vs Post Pub.
Co., 199 Mass., 248; 19 L. R. A [N.S. ], 862; and Paxton v. Woodward, 31 Mont., 195;78
Pac., 215.) "There are two general classes of compensatory damages allowable for
defamation: (1) general damages, or those which the law presumes to be the natural,
proximate, and necessary result of the publication, and (2) special damages, or those
which, although a natural and probable consequence thereof, are not assumed to be
necessary or inevitable, and must be shown by allegation and proof. It has been said that
the general damages presumed from the publication of libelous matter, while not
susceptible of being accurately measured, are generally more substantial and real than
those designated as actual, and measured accurately by the dollar standard." (Id.,
section 200, p. 189.)

We shall now proceed to examine the facts alleged concerning the damages claimed by
the plaintiffs:​chanrob1es virtual 1aw library

A. As to the plaintiff Lu Chu Sing. He claims to have suffered damages in the amount of
not less than P20,000 because the defendant had knowingly, falsely, and maliciously filed
a charge for robbery in the City Fiscal’s Office against his son, the plaintiff Lu Tian
Chiong, "for the sole purpose of soiling the good names of the plaintiffs, and particularly
ruining and destroying completely the good reputation and credit of the plaintiff Lu Chu
Sing as a businessman." Even assuming that the defendant had libeled the son, it could
not be held that the father may recover damages on that account. In the eyes of the law
the sin of the son is not imputable to the father. The son, who is of legal age, is sui juris
with a personality separate and distinct from that of the father. Their rights and
obligations are not merged. The name and reputation of one are not those of the other.
An invasion of the right of the son is not invasion of the right of the father.

In so far, therefore, as the plaintiff Lu Chu Sing, the father, and his claim of P20,000
damages are concerned, we are clearly of the opinion that the complaint does not state
facts sufficient to constitute a cause of action.

B. As to the plaintiff Lu Tian Chiong. The allegations of the complaint as to him show that
he was defamed by the defendant, who, it is alleged, knowingly, falsely, and maliciously
charged him with complicity or participation in the crime of robbery; that because of such
false and malicious imputation, whenever he applies for any position in any Chinese
establishment in Manila he is always rejected as an undesirable element or a person of
bad character. The complaint, however, does not allege any specific amount of damages
for such injury to his own reputation. His counsel were apparently laboring under the
erroneous assumption that the reputation of the son was inseparable from that of the
father and that the damages suffered by the latter were necessarily suffered also by the
former. Hence their joint action.

It results from all the foregoing that the complaint may and should be amended (a) by
excluding therefrom Lu Chu Sing as party plaintiff, (b) by alleging specifically whether the
defamation complained of by the plaintiff Lu Tian Chiong was libel or slander, i. e.,
whether it was written or oral, and (c) by alleging a specific amount of damages claimed
by him for injury to his reputation. The lower court should have allowed the plaintiff Lu
Tian Chiong to amend his complaint under section 3 of Rule 8, instead of dismissing it.

Wherefore, the order of dismissal is reversed and the case is ordered remanded to the
court of origin for further proceedings in conformity with this opinion, without any finding
as to costs in this instance.

De Joya, Hilado and Bengzon, ​JJ.,​ concur.

 FIRST DIVISION
[G.R. No. L-46179. January 31, 1978.]
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA,
NAPOLEON VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA,
PACITA VIRATA, and EVANGELINA VIRATA, ​Petitioners​, v. VICTORIO OCHOA,
MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, ​Respondents​.
Remulla, Estrella & Associates, for ​Petitioners.​
Exequil C. Masangkay for ​Respondents.​
SYNOPSIS
A criminal action for reckless imprudence was filed against a driver of a jeepney. Before
the criminal case could be decided, the heirs of the victim manifested that they were
filing and they so did file a separate civil action for damages against the owner and the
driver of the jeepney based on quasi-delict. The driver was subsequently acquitted of the
crime charge. The defendants in the civil case then moved to dismiss the same, which
motion the trial court granted.
The principal issue before the Supreme Court is whether the heirs of the victim can
prosecute an action for damages based on quasi-delict against the driver and owner.
The Supreme Court held that the acquittal of the driver of the crime charged is not a bar
to the prosecution of a civil case for damages based on quasi-delict.
Order of dismissal set aside and case remanded to the lower court for further
proceedings.
SYLLABUS
1. ACTIONS; CULPA AQUILIANA; AGGRIEVED PARTY MAY FILE SEPARATE ACTION
BASED ON CULPA AQUILIANA. — In negligence cases the aggrieved parties may choose
between an action under the Revised Penal Code or for quasi-delict under Article 2176 of
the Civil Code of the Philippines. What is prohibited by Article 2177 of the Civil Code is to
recover twice for the same negligent act.
2. ID.; ID.; ACQUITTAL OF ACCUSED NOT A BAR TO PROSECUTION FOR DAMAGES
BASED ON QUASI-DELICT. — The acquittal of the accused of the crime of homicide
through reckless imprudence is not a bar to the prosecution of a civil case for damages
based on quasi-delict. The source of obligation sought to be enforced in the civil action is
quasi-delict, not an act or omission punishable by law. Under Article 1157 of the Civil
Code of the Philippines, quasi-delict and an act or omission punishable by law are two
different sources of obligation. Moreover, to prevail in the action for damages, plaintiff
have only be establish its cause of action by preponderance of evidence.
DECISION
FERNANDEZ, ​J.​:
This is an appeal by ​certiorari​, from the order of the Court of First Instance of Cavite,
Branch V, in Civil Case No. B-134 granting the motion of the defendants to dismiss the
complaint on the ground that there is another action pending between the same parties
for the same cause 1
The record shows that on September 24, 1975 one Arsenio Virata died as a result of
having been bumped while walking along Taft Avenue, Pasay City by a passenger jeepney
driven by Maximo Borilla and registered in the name of Victorio Ochoa; that Borilla is the
employee driver of Ochoa; that for the death of Arsenio Virata, a criminal action for
homicide through reckless imprudence was instituted on September 25, 1975 against
Maximo Borilla in the Court of First Instance of Rizal at Pasay City, docketed as Criminal
Case No. 3162-P of said court; that at the hearing of the said criminal case on December
12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to face a
separate civil action for damages against the driver on his criminal liability; that on
February 19, 1976 Atty. Julio Francisco filed a motion in said criminal case to withdraw
the reservation to file a separate civil action; that thereafter, the private prosecutor
actively participated in the trial and presented evidence on the damages; that on June
29, 1976 the heirs of Arsenio Virata again reserved their right to institute in separate civil
action; that on July 29, 1977 the heirs of Arsenio Virata, petitioners herein, commenced
Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for damages
based on quasi-delict against the driver Maximo Borilla and the registered owner of the
jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private respondents
herein, filed a motion to dismiss on the ground that there is another action, Criminal Case
No. 3162-P, pending between the same parties for the same cause; that on September 8,
1976 the Court of First Instance of Rizal at Pasay City rendered in decision in Criminal
Case No. 3612-P acquitting the accused, Maximo Borilla, on the ground that he caused an
injury by mere accident; and that on January 31, 1977, the Court of First Instance of
Cavite at Bacoor granted the motion to dismiss Civil Case No. B-134 for damages 2
The principal issue is whether or not the petitioners, heirs of the deceased Arsenio Virata,
can prosecute an action for damages based on quasi-delict against Maximo Borilla and
Victorio Ochoa, driver and owner, respectively of the passenger jeepney that bumped
Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may choose between an action
under the Revised Penal Code or for quasi-delict under Article 2176 of the Civil Code of
the Philippines. What is prohibited by Article 2177 of the Civil Code of the Philippines is to
recover twice for the same negligent act.​chanrobles law library : red
The Supreme Court has held that:​jgc:chanrobles.com.ph
"According to the Code Commission: ‘The foregoing provision (Article 2177) though at
first sight startling, is not so novel or extraordinary when we consider the exact nature of
criminal and civil negligence. The former is a violation of the criminal law, while the latter WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No.
is a ‘culpa aquiliana’ or quasi-delict, of ancient origin, having always had its own B-134 is reinstated and remanded to the lower court for further proceedings, with costs
foundation and individuality, separate from criminal negligence. Such distinction between against the private respondents.
criminal negligence and ‘culpa extra-contractual’ or ‘quasi-delito’ has been sustained by
decision of the Supreme Court of Spain and maintained as clear, sound and perfectly SO ORDERED.
tenable by Maura, an outstanding Spanish jurist. Therefore, under the proposed Article
2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt Teehankee (​Chairman​), Makasiar, Muñoz Palma and Guerrero, ​JJ.,​ concur.
or not, shall not be a bar to a subsequent civil action, not for civil liability arising from
criminal negligence, but for damages due to a quasi-delict or ‘culpa aquiliana’. But said
article forestalls a double recovery." (Report of the Code Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence,
the same argument of Justice Bocobo about construction that upholds ‘the spirit that
giveth life’ rather than that which is literal that killeth the intent of the lawmaker should
be observed in applying the same. And considering that the preliminary chapter on
human relations of the new Civil Code definitely establishes the separability and
independence of liability in a civil action for acts criminal in character (under Articles 29
to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised
Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3(c), Rule 111,
contemplate also the same separability, it is ‘more congruent with the spirit of law, equity
and justice, and more in harmony with modern progress’, to borrow the felicitous
relevant language in Rakes v. Atlantic Gulf and Pacific Co., 7 Phil. 359, to hold, as We do
hold, that Article 2176, where it refers to ‘fault or negligence,’ covers not only acts ‘not
punishable by law’ but also acts criminal in character, whether intentional and voluntary
or negligent. Consequently, a separate civil action lies against the offender in a criminal
act, whether or not he is criminally prosecuted and found guilty or acquitted, provided
that the offended party is not allowed, if he is actually charged also criminally, to recover
damages on both scores, and would be entitled in such eventuality only to the bigger
award of the two, assuming the awards made in the two cases vary. In other words, the
extinction of civil liability referred to in Par (e) of Section 3, Rule 111, refers exclusively
to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil
liability for the same act considered as a quasi-delict only and not as a crime is not
extinguished even by a declaration in the criminal case that the criminal act charged has
not happened or has not been committed by the accused. Briefly stated, We here hold, in
reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which
may be punishable by law. 3

The petitioners are not seeking to recover twice for the same negligent act. Before
Criminal Case No. 3162-P was decided, they manifested in said criminal case that they
were filing a separate civil action for damages against the owner and driver of the
passenger jeepney based on quasi-delict. This acquittal of the driver, Maximo Borilla, of
the crime charged in Criminal Case No. 3162-P is not a bar to the prosecution of Civil
Case No. B-134 for damages based on quasi-delict. The source of the obligation sought to
be enforced in Civil Case No. B-134 is quasi-delict, not an act or omission punishable by
law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and an act or
omission punishable by law are two different sources of obligation.

Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134,
they have only to establish their cause of action by preponderance of the evidence.
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-26264 December 26, 1969
PASTOR L. DE GUZMAN,​ plaintiff-appellant,
vs.
J.M. TUASON & CO., INC., ET AL.,​ defendants-appellees.
F. M. Ejercito for plaintiff-appellant.
Sison and San Juan for defendant-appellee J. M. Tuason & Co., Inc.
Araneta, Mendoza and Papa for defendant-appellee Gregorio Araneta, Inc.
REYES, J.B.L., ​J.:
Appeal from an order of dismissal of a complaint for lack of cause of action, upon a
preliminary hearing of the defendants' affirmative defenses.​1
The complaint, filed on 29 March 1963 in the Court of First Instance of Rizal, Quezon City
Branch (docketed as Civil Case No. Q-7172), alleged, among other things, that the
plaintiff, Pastor L. de Guzman (herein appellant), was the lawyer representing the
plaintiffs, called "Deudors", in Civil Cases Nos. Q-135, Q-139, Q-177 and Q-186 of the
same court; that the herein defendants-appellees, J.M. Tuason & Co., Inc., and Gregorio
Araneta, Inc., were the defendants in the said civil cases; that the parties, assisted by
their lawyers, eventually entered into a compromise agreement for the final settlement of
the said civil cases; that among the provisions of the said compromise agreement, which
was approved by the court, are the following:
C. The sum of P250,000.00 representing the value of the lands reserved for the
residence of Gov. Alejo Santos, Atty. Pastor L. de Guzman and Capt. C. Cruz (12,200.00
sq. ms.) as hereinafter provided in clause II, shall be deducted from the amount that may
be due the DEUDORS, except Misericordia. But it shall be understood that the certificate
of title to the lands reserved for the above persons shall be issued (1) soon after the
delivery to the OWNERS [this designation refers to the herein appellees] of the lots
marked 'refund' in Annex "C" shall have been effected and (2) the subdivision plan
approved by the National Planning Commission and the Bureau of Lands;
xxx xxx xxx
ELEVENTH. — That the OWNERS HEREBY agree to reserve for the DEUDORS, consistent
with the subdivision plan that may finally be approved, the following lots measuring in all
TWELVE THOUSAND (12,000.00) SQUARE METERS which the DEUDORS shall purchase
for the sum of P25,000.00:
For the residence of Gov. Alejo Santos 5,000.00 sq. m.
For the residence of Pastor L. de Guzman 4,000.00 sq. m.
For the residence of Capt. C. Cruz 3,000.00 sq. m.
—-----—————
12,000.00 sq. m.
The complaint further averred that, despite demands made by plaintiff, the defendants
have refused to convey the lot of 4,000 square meters to him. Plaintiff prayed for
judgment requiring the defendants to execute a deed of conveyance for the lot.
The defendants set up the affirmative defense that the plaintiff had no cause of action
against them because the Compromise Agreement referred to in the complaint had been
declared rescinded by the Supreme Court in the cases of Deudor, et. al. vs. J. M. Tuason
& Co., Inc., et. al., L-13768, 31 May 1961 (2 SCRA 129); J. M. Tuason & Co., Inc. vs.
Sanvictores, L-16836, 30 January 1962 (4 SCRA 123), and other cases.
On motion of the defendants for a preliminary hearing on their affirmative defense, the
court ​a quo​ held one and then issued the appealed order dismissing the suit.
Plaintiff-appellant contends that it is not true that the Compromise Agreement was
declared rescinded by the Supreme Court because it merely affirmed the orders of the
trial court but that nowhere in the dispositive portion of the orders, or of the decisions of
the Supreme Court affirming the same, is there a declaration rescinding the Compromise
Agreement; that although there was a paragraph in the order which was quoted in the
Supreme Court decision and which reads:
. . . The equitable, if not the legal solution of the problem is the setting aside of the
compromise agreement of 16 March 1953, in so far as it remains unimplemented or
executory. The failure to deliver and the continued mushrooming of houses in the area,
despite the compromise, justify the release of J. M. Tuason & Co., Inc. and Gregorio
Araneta, Inc., from further obligations under the agreement of 16 March 1953.
this paragraph is merely an exposition of some of the reasons for the issuance of the
orders, as the Supreme Court stated affirming them,​2 but that an exposition is different
from a disposition.
We do not find it necessary to inquire at this stage whether or not the compromise
entered into by appellees Tuason and the Deudors was rescinded. It is enough to observe
that the complaint does not state a cause of action, because it fails to allege that the
conditions precedent to the effectivity of the defendants' obligation under the compromise
agreement, to deliver to the plaintiff a lot of 4,000 square meters, have been complied
with. The conditions were "that the certificate of title to the lands reserved for the above
persons (one of them the herein plaintiff-appellant) shall be issued (1) soon ​after the
delivery to the OWNERS of the lots marked 'refund' in Annex 'C' shall have been effected
and (2) the ​subdivision plan approved by the National Planning Commission and the
Bureau of Lands" (Emphasis supplied). Pursuant to the very terms of the compromise,
therefore, the obligation of the defendants to deliver the lot claimed was not a pure
obligation that is immediately demandable, but depended on the compliance with the two
conjunctive conditions stated in the agreement (See Articles Nos. 1179 & 1181, Civil
Code; Wise & Co. vs. Kelly, 37 Phil. 696; Phil. National Bank vs. Phil. Trust Co., 68 Phil.
48). Hence, unless it is alleged in the complaint that these conditions were or have been
complied with, and the plaintiff's complaint in the present case does not so allege, the
complaint would state no cause of action against the defendants.
If the cause of action of the plaintiff depends upon a condition precedent, the complaint
must allege the fulfillment of the condition or a legal excuse for its non-fulfillment.
Omission of such allegation will make the complaint insufficient. (1 Moran 216-217, citing
Gov't of P.I. vs. Inchausti & Co., 24 Phil. 315, 318)
The failure to allege the compliance of the conditions precedent dispenses with the
resolution of whether or not the obligation of the defendants to deliver the lot to the
plaintiff is a pour autrui s​ tipulation because its classification, one way or the other, will
not eliminate the conditions precedent which have first to be fulfilled before the obligation
to deliver the lot is demandable. Furthermore, even as stipulation pour autrui​, the same
could not be enforceable, unless it is first shown that the beneficiary of such stipulation
had notified his acceptance thereof in due time to the corresponding obligor.​3 Article 1311
of the Civil Code of the Philippines, in its second paragraph, prescribes that —
If a contract should contain some stipulation in favor of a third person, he may demand
its fulfillment provided he communicated his acceptance to the obligor before its
revocation
xxx xxx xxx
And, in this connection, this Court held in the case of Deudor vs. Tuason & Co., Inc.,
promulgated on 30 May 1961 (2 SCRA 129), that the Deudors had been legally given by
the Court four (4) months, from 28 February 1957, to deliver the lands referred to in
clause 8, section (d), of the Compromise Agreement (cas. cit., page 135); that said
Deudors failed to do so; and that —
. . . ​the period of four (4) months,​ given to the Deudors, in said decision, for the delivery
of the land of 30 "quinones" — t​ o which their right to collect P614,925.74 was subject as
a suspensive condition ​constituted a resolutory period. When the same expired with said
suspensive condition still unfulfilled, ​appellant's right​to comply with it was ​extinguished,​
and ​the conditional obligation of the ​appellees to pay said sum ​was terminated (Article
1193, Civil Code of the Philippines) (Cas. cit, page 162: emphasis supplied)
In other words, at the expiration of the four months aforesaid on July, 1957, the Deudors
(and consequently, all persons holding under them) lost all further right to enforce the
basic Compromise Agreement, and this loss amounts to a revocation of the uncomplied
portions of said compromise for the purposes of Article 1311 of the Civil Code. It is for
these reasons that in various later decisions this Court viewed such compromise as
rescinded, i.e., prospectively terminated, ​ex nunc​.
There being no showing in the complaint that the two conditions precedent to appellant's
alleged right have been complied with, or that plaintiff-appellant notified the appellees in
due time of his adherence to the clause stipulated by the parties in his favor (which is a
third condition precedent in this case), the complaint was correctly dismissed for lack of a
cause of action.
WHEREFORE, the order of dismissal appealed from is affirmed. Costs against appellant.
Concepcion, C.J., Dizon, Zaldivar, Sanchez, Castro, Fernando, Teehankee and Barredo,
JJ.,​ concur.
Makalintal, J.,​ took no part.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 200602 December 11, 2013
ACE FOODS, INC.,​ Petitioner,
vs.
MICRO PACIFIC TECHNOLOGIES CO., LTD.​1​,​ Respondent.
DECISION
PERLAS-BERNABE, ​J.:
Assailed in this petition for review on ​certiorari2​​ are the Decision​3 dated October 21, 2011
and Resolution​4 dated February 8, 2012 of the Court of Appeals (CA) in CA-G.R. CV No.
89426 which reversed and set aside the Decision​5 dated February 28, 2007 of the
Regional Trial Court of Makati, Branch 148 (RTC) in Civil Case No. 02-1248, holding
petitioner ACE Foods, Inc. (ACE Foods) liable to respondent Micro Pacific Technologies
Co., Ltd. (MTCL) for the payment of Cisco Routers and Frame Relay Products (subject
products) amounting to ₱646,464.00 pursuant to a perfected contract of sale.
The Facts
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer
goods in wholesale and retail bases,​6 while MTCL is one engaged in the supply of
computer hardware and equipment.​7
On September 26, 2001, MTCL sent a letter-proposal​8 for the delivery and sale of the
subject products to be installed at various offices of ACE Foods. Aside from the
itemization of the products offered for sale, the said proposal further provides for the
following terms, ​viz.​:​9
TERMS : Thirty (30) days upon delivery
VALIDITY : Prices are based on current dollar rate and subject to changes without prior
notice.
DELIVERY : Immediate delivery for items on stock, otherwise thirty (30) to forty-five
days upon receipt of [Purchase Order]
WARRANTY : One (1) year on parts and services. Accessories not included in warranty.
On October 29, 2001, ACE Foods accepted MTCL’s proposal and accordingly issued
Purchase Order No. 100023​10 (Purchase Order) for the subject products amounting to
₱646,464.00 (purchase price). Thereafter, or on March 4, 2002, MTCL delivered the said
products to ACE Foods as reflected in Invoice No. 7733 11 ​ (Invoice Receipt). The fine print
of the invoice states, ​inter alia​, that "[t]itle to sold property is reserved in MICROPACIFIC
TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above and
payment of the price"​12​(title reservation stipulation). After delivery, the subject products
were then installed and configured in ACE Foods’s premises. MTCL’s demands against
ACE Foods to pay the purchase price, however, remained unheeded.​13 Instead of paying
the purchase price, ACE Foods sent MTCL a Letter​14 dated September 19, 2002, stating
that it "ha[s] been returning the [subject products] to [MTCL] thru [its] sales
representative Mr. Mark Anteola who has agreed to pull out the said [products] but had
failed to do so up to now."
Eventually, or on October 16, 2002, ACE Foods lodged a Complaint​15 against MTCL before
the RTC, praying that the latter pull out from its premises the subject products since
MTCL breached its "after delivery services" obligations to it, particularly, to: (​a)​ install
and configure the subject products; (​b​) submit a cost benefit study to justify the
purchase of the subject products; and (​c)​ train ACE Foods’s technicians on how to use
and maintain the subject products. 16 ​ ACE Foods likewise claimed that the subject
products MTCL delivered are defective and not working.​17
For its part, MTCL, in its Answer with Counterclaim,​18 maintained that it had duly
complied with its obligations to ACE Foods and that the subject products were in good
working condition when they were delivered, installed and configured in ACE Foods’s
premises. Thereafter, MTCL even conducted a training course for ACE Foods’s
representatives/employees; MTCL, however, alleged that there was actually no
agreement as to the purported "after delivery services." Further, MTCL posited that ACE
Foods refused and failed to pay the purchase price for the subject products despite the
latter’s use of the same for a period of nine (9) months. As such, MTCL prayed that ACE
Foods be compelled to pay the purchase price, as well as damages related to the
transaction.​19
The RTC Ruling
On February 28, 2007, the RTC rendered a Decision, 20 ​ directing MTCL to remove the
subject products from ACE Foods’s premises and pay actual damages and attorney fees in
the amounts of ₱200,000.00 and ₱100,000.00, respectively.​21
At the outset, it observed that the agreement between ACE Foods and MTCL is in the
nature of a contract to sell. Its conclusion was based on the fine print of the Invoice
Receipt which expressly indicated that "title to sold property is reserved in MICROPACIFIC
TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above and
payment of the price," noting further that in a contract to sell, the prospective seller
explicitly reserves the transfer of title to the prospective buyer, and said transfer is
conditioned upon the full payment of the purchase price.​22 Thus, notwithstanding the
execution of the Purchase Order and the delivery and installation of the subject products
at the offices of ACE Foods, by express stipulation stated in the Invoice Receipt issued by
MTCL and signed by ACE Foods, ​i.e., t​ he title reservation stipulation, it is still the former
who holds title to the products until full payment of the purchase price therefor. In this
relation, it noted that the full payment of the price is a positive suspensive condition, the
non-payment of which prevents the obligation to sell on the part of the seller/vendor
from materializing at all.​23 Since title remained with MTCL, the RTC therefore directed it
to withdraw the subject products from ACE Foods’s premises. Also, in view of the
foregoing, the RTC found it unnecessary to delve into the allegations of breach since the
non-happening of the aforesaid suspensive condition ​ipso jure p ​ revented the obligation to
sell from arising.​24
Dissatisfied, MTCL elevated the matter on appeal.​25
The CA Ruling
In a Decision​26 dated October 21, 2011, the CA reversed and set aside the RTC’s ruling,
ordering ACE Foods to pay MTCL the amount of ₱646,464.00, plus legal interest at the
rate of 6% per annum to be computed from April 4, 2002, and attorney’s fees amounting
to ₱50,000.00.​27
It found that the agreement between the parties is in the nature of a contract of sale,
observing that the said contract had been perfected from the time ACE Foods sent the
Purchase Order to MTCL which, in turn, delivered the subject products covered by the
Invoice Receipt and subsequently installed and configured them in ACE Foods’s
premises.​28 Thus, considering that MTCL had already complied with its obligation, ACE
Foods’s corresponding obligation arose and was then duty bound to pay the agreed
purchase price within thirty (30) days from March 5, 2002.​29 In this light, the CA
concluded that it was erroneous for ACE Foods not to pay the purchase price therefor,
despite its receipt of the subject products, because its refusal to pay disregards the very
essence of reciprocity in a contract of sale.​30 The CA also dismissed ACE Foods’s claim
regarding MTCL’s failure to perform its "after delivery services" obligations since the
letter-proposal, Purchase Order and Invoice Receipt do not reflect any agreement to that
effect.​31
Aggrieved, ACE Foods moved for reconsideration which was, however, denied in a
Resolution 32​
​ dated February 8, 2012, hence, this petition.
The Issue Before the Court
The essential issue in this case is whether ACE Foods should pay MTCL the purchase price
for the subject products.
The Court’s Ruling
The petition lacks merit.
A contract is what the law defines it to be, taking into consideration its essential
elements, and not what the contracting parties call it.​33 The real nature of a contract may
be determined from the express terms of the written agreement and from the
contemporaneous and subsequent acts of the contracting parties. However, in the
construction or interpretation of an instrument, ​the intention of the parties is
primordial and is to be pursued​. The denomination or title given by the parties in their
contract is not conclusive of the nature of its contents.​34
The very essence of a contract of sale is ​the transfer of ownership in exchange for a
price paid or promised​. 35 ​ This may be gleaned from Article 1458 of the Civil Code
which defines a contract of sale as follows:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to
transfer the ownership and to deliver a determinate thing, and the other ​to pay therefor
a price certain in money or its equivalent​.
A contract of sale may be absolute or conditional. (Emphasis supplied)
Corollary thereto, a contract of sale is classified as a ​consensual contract​, which means
that the sale is perfected by mere consent. No particular form is required for its validity.
Upon perfection of the contract, the parties may reciprocally demand performance, ​i.e.​,
the vendee may compel transfer of ownership of the object of the sale, and the vendor
may require the vendee to pay the thing sold.​36
In contrast, a ​contract to sell ​is defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the property despite delivery thereof to
the prospective buyer, binds himself to sell the property exclusively to the prospective
buyer upon fulfillment of the condition agreed upon, ​i.e., ​the full payment of the purchase
price. A contract to sell may not even be considered as a ​conditional contract of sale
where the seller may likewise reserve title to the property subject of the sale until the
fulfillment of a suspensive condition, because in a conditional contract of sale, the first
element of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur.​37
In this case, the Court concurs with the CA that the parties have agreed to a contract of
sale and not to a contract to sell as adjudged by the RTC. Bearing in mind its consensual
nature, a contract of sale had been perfected at the precise moment ACE Foods, as
evinced by its act of sending MTCL the Purchase Order, accepted the latter’s proposal to
sell the subject products in consideration of the purchase price of ₱646,464.00. From that
point in time, the reciprocal obligations of the parties – ​i.e.​, on the one hand, of MTCL to
deliver the said products to ACE Foods, and, on the other hand, of ACE Foods to pay the
purchase price therefor within thirty (30) days from delivery – already arose and
consequently may be demanded. Article 1475 of the Civil Code makes this clear:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.
At this juncture, the Court must dispel the notion that the stipulation anent MTCL’s
reservation of ownership of the subject products as reflected in the Invoice Receipt, ​i.e.​,
the title reservation stipulation, changed the complexion of the transaction from a
contract of sale into a contract to sell. Records are bereft of any showing that the said
stipulation novated the contract of sale between the parties which, to repeat, already
existed at the precise moment ACE Foods accepted MTCL’s proposal. To be sure,
novation, in its broad concept, may either be extinctive or modificatory. It is extinctive
when an old obligation is terminated by the creation of a new obligation that takes the
place of the former; it is merely modificatory when the old obligation subsists to the
extent it remains compatible with the amendatory agreement. In either case, however,
novation is never presumed, and the ​animus novandi,​ whether totally or partially, must
appear by express agreement of the parties, or by their acts that are too clear and
unequivocal to be mistaken.​38
In the present case, it has not been shown that the title reservation stipulation appearing
in the Invoice Receipt had been included or had subsequently modified or superseded the
original agreement of the parties. The fact that the Invoice Receipt was signed by a
representative of ACE Foods does not, by and of itself, prove ​animus novandi ​since: (​a​) it
was not shown that the signatory was authorized by ACE Foods (the actual party to the
transaction) to novate the original agreement; (​b)​ the signature only proves that the
Invoice Receipt was received by a representative of ACE Foods to show the fact of
delivery; and (​c​) as matter of judicial notice, invoices are generally issued at the
consummation stage of the contract and not its perfection, and have been even treated
as documents which are not actionable ​per se​, although they may prove sufficient
delivery. 39
​ Thus, absent any clear indication that the title reservation stipulation was
actually agreed upon, the Court must deem the same to be a mere unilateral imposition
on the part of MTCL which has no effect on the nature of the parties’ original agreement
as a contract of sale. Perforce, the obligations arising thereto, among others, ACE Foods’s
obligation ​to pay the purchase price ​as well as ​to accept the delivery of the
goods​,40​
​ remain enforceable and subsisting.​1âwphi1
As a final point, it may not be amiss to state that the return of the subject products
pursuant to a rescissory action​41 is neither warranted by ACE Foods’s claims of breach –
either with respect to MTCL’s breach of its purported "after delivery services" obligations
or the defective condition of the products - since such claims were not adequately proven
in this case. The rule is clear: each party must prove his own affirmative allegation; one
who asserts the affirmative of the issue has the burden of presenting at the trial such
amount of evidence required by law to obtain a favorable judgment, which in civil cases,
is by preponderance of evidence. 42 ​ This, however, ACE Foods failed to observe as
regards its allegations of breach. Hence, the same cannot be sustained.
WHEREFORE, ​the petition is ​DENIED. ​Accordingly, the Decision dated October 21, 2011
and Resolution dated February 8, 2012 of the Court of Appeals in CA-G.R. CV No. 89426
are hereby ​AFFIRMED.
SO ORDERED.
 FIRST DIVISION
[G.R. No. 112127. July 17, 1995.]
CENTRAL PHILIPPINE UNIVERSITY, ​Petitioner,​ v. COURT OF APPEALS,
REMEDIOS FRANCO, FRANCISCO N. LOPEZ, CECILIA P. VDA. DE LOPEZ, REDAN
LOPEZ AND REMARENE LOPEZ, ​Respondents​.
Juanito M. Acanto for ​Petitioner​.
Santos B. Aguadera for ​Private Respondents.​
SYLLABUS
1. CIVIL LAW; PROPERTY; MODES OF ACQUIRING OWNERSHIP; DONATION;
CONSIDERED ONEROUS WHEN EXECUTED FOR A VALUABLE CONSIDERATION WHICH IS
CONSIDERED THE EQUIVALENT OF THE DONATION. — A clear perusal of the condition
set forth in the deed of donation executed by Don Ramon Lopez, Sr., gives us no
alternative but to conclude that his donation was onerous, one executed for a valuable
consideration which is considered the equivalent of the donation itself, e.g., when a
donation imposes a burden equivalent to the value of the donation. A gift of land to the
City of Manila requiring the latter to erect schools, construct a children’s playground and
open streets on the land was considered an onerous donation. Similarly, where Don
Ramon Lopez donated the subject parcel of land to petitioner but imposed an obligation
upon the latter to establish a medical college thereon, the donation must be for an
onerous consideration.
2. ID.; ID.; ID.; ID.; MAY BE REVOKED FOR NON-FULFILLMENT OR
NON-COMPLIANCE OF THE CONDITIONS SET FORTH THEREIN; CASE AT BAR. — Under
Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as well as
the extinguishment or loss of those already acquired, shall depend upon the happening of
the event which constitutes the condition. Thus, when a person donates land to another
on the condition that the latter would build upon the land a school, the condition imposed
was not a condition precedent or a suspensive condition but a resolutory one. It is not
correct to say that the schoolhouse had to be constructed before the donation became
effective, that is, before the donee could become the owner of the land, otherwise, it
would be invading the property rights of the donor. The donation had to be valid before
the fulfillment of the condition. If there was no fulfillment or compliance with the
condition, such as what obtains in the instant case, the donation may now be revoked
and all rights which the donee may have acquired under it
3. ID.; ID.; ID.; ID.; DONEE’S ACCEPTANCE AND ACKNOWLEDGMENT OF ITS
OBLIGATION PROVIDED IN THE DEED, SUFFICIENT TO PREVENT THE STATUTE OF
LIMITATION FROM BARRING THE ACTION OF DONOR UPON THE ORIGINAL CONTRACT.
— The claim of petitioner that prescription bars the instant action of private respondents
is unavailing. The condition imposed by the donor, i.e., the building of a medical school
upon the land donated, depended upon the exclusive will of the donee as to when this
condition shall be fulfilled. When petitioner accepted the donation, it bound itself to
comply with the condition thereof. Since the time within which the condition should be
fulfilled depended upon the exclusive will of the petitioner, it has been held that its
absolute acceptance and the acknowledgment of its obligation provided in the deed of
donation were sufficient to prevent the statute of limitations from barring the action of
private respondents upon the original contract which was the deed of donation.
4. ID.; ID.; ID.; ID.; IN CASE OF REVOCATION, A CAUSE OF ACTION ARISES
WHEN THAT WHICH SHOULD HAVE BEEN DONE IS NOT DONE, OR THAT WHICH SHOULD
NOT HAVE BEEN DONE IS DONE. — The time from which the cause of action accrued for
the revocation of the donation and recovery of the property donated cannot be
specifically determined in the instant case. A cause of action arises when that which
should have been done is not done, or that which should not have been done is done. In
cases where there is no special provision for such computation, recourse must be had to
the rule that the period must be counted from the day on which the corresponding action
could have been instituted. It is the legal possibility of bringing the action which
determines the starting point for the computation of the period. In this case, the starting
point begins with the expiration of a reasonable period and opportunity for petitioner to
fulfill what has been charged upon it by the donor.
5. ID.; ID.; ID.; ID.; GENERALLY, WHEN THE OBLIGATION DOES NOT FIX A
PERIOD BUT FROM ITS NATURE AND CIRCUMSTANCES IT CAN BE INFERRED THAT A
PERIOD WAS INTENDED COURT MAY FIX THE PERIOD FOR COMPLIANCE — The period of
time for the establishment of a medical college and the necessary buildings and
improvements on the property cannot be quantified in a specific number of years because
of the presence of several factors and circumstances involved in the erection of an
educational institution, such as government laws and regulations pertaining to education,
building requirements and property restrictions which are beyond the control of the
donee. Thus, when the obligation does not fix a period but from its nature and
circumstances it can be inferred that a period was intended, the general rule provided in
Art. 1197 of the Civil Code applies, which provides that the courts may fix the duration
thereof because the fulfillment of the obligation itself cannot be demanded until after the
court has fixed the period for compliance therewith and such period has arrived.
6. ID.; ID.; ID.; ID.; WHEN OBLIGOR CANNOT COMPLY WITH WHAT IS
INCUMBENT UPON HIM, THE OBLIGEE MAY SEEK RESCISSION; EXCEPTION. — This
general rule however cannot be applied considering the different set of circumstances
existing in the instant case. More than a reasonable period of fifty (50) years has already
been allowed petitioner to avail of the opportunity to comply with the condition even if it
be burdensome, to make the donation in its favor forever valid. But, unfortunately, it
failed to do so. Hence, there is no more need to fix the duration of a term of the
obligation when such procedure would be a mere technicality and formality and would
serve no purpose than to delay or lead to an unnecessary and expensive multiplication of
suits. Moreover, under Art. 1191 of the Civil Code, when one of the obligors cannot
comply with what is incumbent upon him, the obligee may seek rescission and the court
shall decree the same unless there is just cause authorizing the fixing of a period. In the
absence of any just cause for the court to determine the period of the compliance, there
is no more obstacle for the court to decree the rescission claimed.
7. ID.; ID.; ID.; ID.; IN CASE OF GRATUITOUS DONATION DOUBTS SHOULD BE
RESOLVED IN FAVOR OF THE LEAST TRANSMISSION OF RIGHTS AND INTERESTS. —
Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts
referring to incidental circumstances of a gratuitous contract should be resolved in favor
of the least transmission of rights and interests. Records are clear and facts are
undisputed that since the execution of the deed of donation up to the time of filing of the
instant action, petitioner has failed to comply with its obligation as donee. Petitioner has
slept on its obligation for an unreasonable length of time. Hence, it is only just and
equitable now to declare the subject donation already ineffective and, for all purposes,
revoked so that petitioner as donee should now return the donated property to the heirs
of the donor, private respondents herein, by means of reconveyance.
DAVIDE, JR., J, dissenting opinion:​chanrob1es virtual 1aw library
1. CIVIL LAW; PROPERTY, MODES OF ACQUIRING OWNERSHIP; DONATION; IN
LAW OF DONATION, "CONDITIONS" REFERS TO OBLIGATION OR CHARGES IMPOSED BY
THE DONOR ON THE DONEE. — There is no conditional obligation to speak of in this case.
It seems that the "conditions" imposed by the donor and as the word is used in the law of
donations confused with "conditions" as used in the law of obligations. In his annotation
of Article 764 of the Civil Code on Donations, Arturo M. Tolentino, citing the well-known
civilists such as Castan, Perez Gonzalez and Alguer, and Colin & Capitant, states clearly
the context within which the term "conditions" is used in the law of donations, to wit: The
word "conditions" in this article does not refer to uncertain events on which the birth or
extinguishment of a juridical relation depends, but it is used in the vulgar sense of
obligations or charges imposed by the donor on the donee. It is used, not in its technical
or strict legal sense, but in its broadest sense. (​Italics supplied​) Clearly then, when the
law and the deed of donation speaks of "conditions" of a donation, what are referred to
are actually the obligations, charges or burdens imposed by the donor upon the donee
and which would characterize the donation as onerous. In the present case, the donation
is, quite obviously, onerous, but it is more properly called a "modal donation." A modal
donation is one in which the donor imposes a prestation upon the donee. The
establishment of the medical college as the condition of the donation in the present case
is one such prestation.
2. ID.; ID.; ID.; ID.; WHEN NO FIXED PERIOD IN WHICH THE CONDITION SHOULD
BE FULFILLED, IT IS THE DUTY OF THE COURT TO FIX A SUITABLE TIME FOR ITS
FULFILLMENT. — J. Davide, Jr., cannot subscribe to the view that the provisions of Article
1197 cannot be applied here. The conditions/obligations imposed by the donor herein are
subject to a period. I draw this conclusion/based on our previous ruling which, although
made almost 90 years ago, still finds application in the present case. In Barreto v. City of
Manila, we said that when the contract of donation, as the one involved therein, has no
fixed period in which the condition should be fulfilled, the provisions of what is now Article
1197 (then Article 1128) are applicable and it is the duty of the court to fix a suitable
time for its fulfillment. Indeed, from the nature and circumstances of the
conditions/obligations of the present donation, it can be inferred that a period was
contemplated by the donor. Don Ramon Lopez could not have intended his property to
remain idle for a long period of time when in fact, he specifically burdened the donee with
the obligation to set up a medical college therein and thus put his property to good use.
There is a need to fix the duration of the time within which the conditions imposed are to
be fulfilled.
3. ID.; ID.; ID.; ID.; MERE FACT THAT THERE IS NO TIME FIXED AS TO WHEN THE
CONDITION THEREOF ARE TO BE FULFILLED DOES NOT IPSO FACTO MEAN THAT THE
STATUTE OF LIMITATION WILL NOT APPLY. — There is misplaced reliance again on a
previous decision of this Court in Osmeña v. Rama. That case does not speak of a deed of
donation as erroneously quoted and cited by the majority opinion. It speaks of a contract
for a. sum of money where the debtor herself imposed a condition which will determine
when she will fulfill her obligation to pay the creditor, thus, making the fulfillment of her
obligation dependent upon her will. What we have here, however, is not a contract for a
sum of money but a donation where the donee has not imposed any conditions on the
fulfillment of its obligations. Although it is admitted that the fulfillment of the
conditions/obligations of the present donation may be dependent on the will of the donee
as to when it will comply therewith, this did not arise out of a condition which the donee
itself imposed. It is believed that the donee was not meant to and does not have absolute
control over the time within which it will perform its obligations. It must still do so within
a reasonable time. What that reasonable time is, under the circumstances, for the courts
to determine. Thus, the mere fact that there is no time fixed as to when the conditions of
the donation are to be fulfilled does not ipso facto mean that the statute of limitations will
not apply anymore and the action to revoke the donation becomes imprescriptible.
4. ID.; ID.; ID.; ID.; ACTION TO REVOKE THEREOF PRESCRIBES IN FOUR (4)
YEARS. — More recently, in De Luna v. Abrigo, this Court reiterated the ruling in Parks
and said that: It is true that under Article 764 of the New Civil Code, actions for the
revocation of a donation must be brought within four (4) years from the non-compliance
of the conditions of the donation. However, it is Our opinion that said article does not
apply to onerous donations in view of the specific provision of Article 733 providing that
onerous donations are governed by the rules on contracts. In the light of the above, the
rules on contracts and the general rules on prescription and not the rules on donations
are applicable in the case at bar. The law applied in both cases is Article 1144(1). It
refers to the prescription of an action upon a written contract, which is what the deed of
an onerous donation is. The prescriptive period is ten years from the time the cause of
action accrues, and that is, from the expiration of the time within which the donee must
comply with the conditions/obligations of the donation. As to when this exactly is remains
to be determined, and that is for the courts to do as reposed upon them by Article 1197.
DECISION
BELLOSILLO, ​J.:​
CENTRAL PHILIPPINE UNIVERSITY filed this petition for review on ​certiorari of the
decision of the Court of Appeals which reversed that of the Regional trial Court of Iloilo
City directing petitioner to reconvey to private respondents the property donated to it by
their predecessor-in-interest.
Sometime in 1939, the late Don Ramon Lopez, Sr., who was then a member of the Board
of Trustees of the Central Philippine College (now Central Philippine University [CPU]),
executed a deed of donation in favor of the latter of a parcel of land identified as Lot No.
3174-B-1 of the subdivision plan Psd-1144, then a portion of Lot No. 3174-B, for which
Transfer Certificate of Title No. T-3910-A was issued in the name of the donee CPU with
the following annotations copied from the deed of donation.
1. The land described shall be utilized by the CPU exclusively for the establishment
and use of a medical college with all its buildings as part of the curriculum:​chanrob1es
virtual 1aw library
2. The said college shall not sell, transfer or convey to any third party nor in any
way encumber said land;
3. The said land shall be called "RAMON LOPEZ CAMPUS", and the said college shall
be under obligation to erect a cornerstones bearing that name. Any net income from the
land or any of its parks shall be put in a fund to be known as the "RAMON LOPEZ CAMPUS
FUND" to be used for improvements of said campus and erection of a building thereon." 1
On 31 May 1989, privates respondents, who are the heirs of Don Ramon Lopez, Sr., filed
an action for annulment of donation, reconveyance and damages against CPU alleging
that since 1939 up to the time the action was filed the latter had not complied with the
conditions of the donation. Private respondents also argued that petitioner had in fact
negotiated with the National Housing Authority (NHA) to exchange the donated property
with another land owned by the latter.
In its answer petitioner alleged that the right of private respondents to file the action had
prescribe; that it did not violate any of the conditions in the deed of donation because it
never used the donated properly for any other purpose than that for which it was
intended; and, that it did not sell, transfer or convey it to any third party.
On 31 May 11991, the trial court held that petitioner failed to comply with the conditions
of the donation and declared it null and void. The court a qua further directed petitioner
to execute a deed of reconveyance of the property in favor of the heirs of the donor,
namely, private respondents herein.
Petitioner appealed to the Court of Appeals which on 18 June 1993 ruled that the ruled
that the annotations at the back of petitioner’s certificate of title were resolutory
conditions breach of which should terminate the rights of the done thus making the
donation revocable.
The appellate court also found that while the first condition mandated petitioner to utilize
the donated property for the establishment of a medical school, the donor did not fix a
period within which the condition must be fulfilled, hence, until a period was fixed for the
fulfillment of the condition, petitioner could not be considered as having failed to comply
with its part of the bargain. Thus, the appellate court rendered its decision reversing the
appealed decision and remanding the case to the court of origin for the determination of
the time within which petitioner should comply with the firs t condition annotated in the
certificate of title.
Petitioner now alleged that the court of Appeals erred: (a) in holding that the quoted
annotations in the certificate of title of petitioner are onerous obligations and resolutory
conditions of the donation which must be fulfilled non-compliance of which would render
the donation revocable; (b) in holding that the issue of prescription does not deserve
"disquisition;" and, (c) in remanding the case to the trial court for the fixing of the period
within which petitioner would establish a medical college. 2
We find it difficult to sustain the petition. A clear perusal of the conditions set forth in the
deed of donation executed by Don Ramon Lopez, Sr., gives us no alternative but to
conclude that this donation was onerous, one executed for a valuable consideration which
is considered the equivalent of the donation itself, e.g., when a donation imposes a
burden equivalent to the value of the donation. A gift of land to the City of Manila
requiring the latter to erect schools, construct a children’s playground and open streets
on the land was considered an onerous donation. 3 Similarly, where Don Ramon Lopez
donated the subject parcel of land to petitioner but imposed an obligation upon the latter
to establish a medical college thereon, the donation must be for an onerous
considerations.
Under Art. 1181 of the Civil Code, on conditional obligations, the acquisition of rights, as
well as the extinguishment or loss of those already acquired, shall depend upon the
happening of the event which constitutes the condition. Thus, when a person donates
land to another on the condition that the latter would build upon the land a school, the
condition imposed was not a condition precedent or a suspensive condition but a
resolutory one. 4 It is not correct to say that the schoolhouse had to be constructed
before the donation became effective, that is, before the donee could become the owner
of the land, otherwise, it would be invading the property rights of the donor. The
donation had to be valid before the fulfillment of the condition. 5 If there was no
fulfillment or compliance with the condition, such as what obtains in the instant case, the
donation may now be revoked and all rights which the donee may have acquired under it
shall be deemed lost and extinguished.
The claim of petitioner that prescription bars the instant action of private respondents is
unavailing. The condition imposed by the donor, i.e., the building of a medical school
upon the land donated, depended upon the exclusive will of the donee as to when this
condition shall fulfilled. When petitioner accepted the donation, it bound itself to comply
with the condition thereof. Since the time within which the condition should be fulfilled
depended upon the exclusive will of the petitioner, it has been held that its absolute
acceptance and the acknowledgement of its obligation provided in the deed of donation
were sufficient to prevent the statute of limitations from barring the action of private
respondents upon the original contract which was the deed of donation. 6
Moreover, the time from which the cause of action accrued for the revocation of the
donation and recovery of the property donated cannot be specifically determined in the
instant case. A cause of action arises when that which should have been done is not
done, or that which should not have been done is done. 7 In cases where there is no
special provision for such computation, recourse must be had to the rule that the period
must be counted from the day on which the corresponding action could have been
instituted. It is the legal possibility of bringing the action which determines the starting
point for the computation of the period. In this case, the starting point begins with the
expiration of a reasonable period and opportunity for petitioner to fulfill what has been
charged upon it by the donor.
The period of time for the establishment of a medical college and the necessary buildings
and improvements on the property cannot be quantified in a specific number of years
because of the presence of several factors and circumstances involved in the erection of
an educations institution, such as government laws and regulations pertaining to
government laws and regulations pertaining to education, building requirements and
property restrictions which are beyond the control of the
donee.​chanrobles.com:cralaw:red

Thus, when the obligation does not fix a period but from its nature and circumstances it
can be inferred that a period was intended, the general rule provided in Art. 1197 of the
Civil Code applies, which provides that the courts may fix the duration thereof because
the fulfillment of the obligation itself cannot be demanded until after the court has fixed
the period for compliance therewith and such period has arrived. 8

This general rule however cannot be applied considering the different set of
circumstances existing in the instant case. More than a reasonable period of fifty (50)
years has already been allowed petitioner to avail of the opportunity to comply with the
condition even if it be burdensome, to make the donation in its favor forever valid. But,
unfortunately, it failed to do so. Hence, there is no more need to fix the duration of a
term of the obligation when such procedure would be a mere technicality and formality
and would serve no purpose that to delay or lead to an unnecessary and expensive
multiplication of suits. 9 Moreover, under Art. 1191 of the Civil Code, when one of the
obligors cannot comply with what is incumbent upon him, the obligee may seek rescission
and the court shall decree the same unless there is just cause authorizing the fixing of a
period. In the absence of any just cause for the court to determine the period of the
compliance, there is no more obstacle for the court to decree the rescission claimed.
Finally, since the questioned deed of donation herein is basically a gratuitous one, doubts
referring to incidental circumstances of a gratuitous contract should be resolved in favor
of the least transmission of rights and interest. 10 Records are clear and facts are
undisputed that since the execution of the deed of donation up to the time of filing of the
instant action, petitioner has failed t comply with its obligation for an unreasonable length
of time. Hence, it is only just and equitable now to declare the subject donation already
ineffective and, for all purposes, revoked so that petitioner as donee should now return
the donated property to the heirs of the donor, private respondents herein by means of
reconveyance.

WHEREFORE, the decision of the Regional Trial Court of Iloilo, Br. 34, of 31 May 1991 is
REINSTATED and AFFIRMED, and the decision of the Court of Appeals of 18 June 1993 is
accordingly MODIFIED. Consequently, petitioner is directed to reconvey to private
respondents Lot No. 3174-B-1 of the subdivision plan Psd-1144 covered by Transfer
Certificate of Title No. T-3910-A within thirty (30) days from the finality of this judgment.

Costs against petitioner.

SO ORDERED.

Quiason and Kapunan, ​JJ.,​ concur.

 Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 80645 August 3, 1993
MARCELINO GALANG, GUADALUPE GALANG, ​petitioners,
vs.
COURT OF APPEALS, RAMON R. BUENAVENTURA, ANGELES BUENAVENTURA,
CORAZON BUENAVENTURA, and MA. LUISA BUENAVENTURA, ​respondents.
Mariano V. Ampl, Jr. for petitioners.
Ramon R. Buenaventura for private-respondents.
ROMERO, ​J.:
This is a petition for review on ​certiorari o
​ f the decision​1 of the Court of Appeals affirming
in toto the judgment rendered by the then Court of First Instance in Civil Case No.
R-82-7186 (107585). The dispositive portion of the assailed decision reads as follows:
WHEREFORE, finding no reversible error in the judgment appealed from, the same is
hereby ​AFFIRMED IN TOTO ​without any pronouncement as to costs at this instance.​2
From the records, we find the following facts.
On July 16, 1976, Ramon Buenaventura on his own behalf and as attorney-in-fact of
Angeles, Corazon, Amparo, and Maria Luisa, all surnamed Buenaventura, sold to
Guadalupe Galang and Marcelino Galang two (2) parcels of land situated in Tagaytay City.
The agreement was embodied in a Deed of Sale which stated the following:
I, RAMON R. BUENAVENTURA, Filipino, of legal age, married, and residing at 2111 M.
Adriatico, Malate, Manila, in his own behalf and as attorney in fact of Angeles, Corazon,
Amparo and Maria Luisa, all surnamed Buenaventura as per the special powers of
attorney already registered and annotated at the back of the certificate of title, for and in
consideration of the sum of One Hundred Ninety Two Thousand Seven Hundred Ninety
Five (P192,795.00) Pesos, Philippine Currency, hereby SELL, TRANSFER AND CONVEY
UNTO MARCELINO GALANG and GUADALUPE GALANG, Filipino, of legal age, spouses and
residents of 72 4th St., New Manila, Quezon City those parcels of land situated at
Tagaytay City, inherited by us from our parents and our exclusive paraphernal property,
of which we are the absolute owners, our title thereto being evidenced by TCT No. T-3603
of Tagaytay City Register of Deeds, more particularly desccribed as follows:
xxx xxx xxx
Under the following terms:
(a) 25% of the purchase price upon signing of this instrument;
(b) 25% within three months, or upon removal of the "encargado" from the
premises, with the delivery of the owner's duplicate certificate of title;
(c) 50% balance within one (1) year from date hereof upon which the title will be
transferred to the buyers but 12% interest per annum will be charged after said one year
in the event full payment is not made.​3
Marcelino and Guadalupe Galang, herein petitioners ppaid to the sellers the first 25% of
the purchase ppprice as stated in the deed. Thereafter, they allegedly demanded from
private respondents failed to do so despite the willingness of petitioners to pay the
second 25% of the purchase price. Consequently, Marcelino and Guadalupe Galang filed
on March 18, 1977 a complaint for specific performance with damages where they alleged
among others, that:
5. The period fixed within the defendants should remove the "encargado' from the
premises and to deliver the owner's duplicate certificate of title had lapsed without the
defendants complying with their obligations thus preventing the plaintiffs from taking
ppossession of the property sold and from developing and improving the same.
6. On several occasions, the plaintiffs demanded from the defendants, both orally
and in writing, the removal of the latter's "encargado" from the premises sold and for
them to deliver the owner's duplicate certificate of title to the plaintiffs but said
defendants failed and refused and still fail and refuse to do so, the demands
notwithstanding.​4
Defendants, herein private respondents, denied the allegations and stated that the
contract did not state the true intention of the parties and that it was not their fault that
the "encargado" refused to leave. Furthermore, they filed on July 21, 1978, a third-party
complaint against the "encargado" for subrogation and reimbursement in case of an
adverse judgment against third-party plaintiff. Upon the "encargado's" motion, the
complaint was dismissed on the ground that it did not state a cause of action for the
ejectment of the tenant — the "encargado."
After trial, the lower court rendered a decision, the dispositive portion of which is hereby
quoted, to wit:
PREMISES CONSIDERED, the Court hereby orders the defendants to pay jointly and
severally, the plaintiffs P50,000.00 with interest at 12% per annum from July 16, 1976;
P5,000.00 by way of nominal damages; and P3,000.00 as attorney fees and the costs.​5
In rendering the decision, the trial court reasoned that:
There is no question that, because the defendants had not complied with their obligation
to remove the "encargado," the plaintiffs, as injured parties, may choose between the
fulfillment of the contract of sale and its rescission, in accordance and (sic) Article 1191
of the Civil Code. They chose enforcement of the contract which, however is legally
impossible. The lands sold to the plaintiff are agricultural, planted to coffee, among other
plants, not only by the "encargado" but also by his deceased parents. The law prohibits,
under pain of damages, fine and imprisonment, and landlord from dispossessing his
agricultural tenant without the court's approval and on grounds fixed by the law, not one
of which is shown to exist in respect defendants' "encargado." (Section 31 and 36, The
Agricultural Land Reform Code, RA 3844 as amended).
Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. (Article 1183, Civil
Code). Since the consummation of the sale between the parties is dependent upon the
ouster of an agricultural lessee, which cannot be done because it is against good custom,
public policy and the law, the sale is a nullity. . . .​6
Agreeing that the "encargado" was an agricultural tenant who could not be ejected
without cause, the Court of Appeals affirmed the decision.
Hence, this petition.
In their petition, Marcelino and Guadalupe Galang argued that respondent Court erred in
ordering; the rescission instead of specific performance of the contract of sale on the
ground that the ejectment of the "encargado" -tenant was a legally impossible condition
that prevented the fulfillment of the contract. Contrary to the reason advanced by the
Court of Appeals and the trial court, petitioners averred that the removal of the
"encargado" was not a condition precedent to the fulfillment of the contract as paragraph
two (2) thereof provides for an alternative period within which petitioners would have to
pay the second 25% of the purchase price and concomitantly, private respondents would
deliver the owner's duplicate certificate of title. Thus, whether or not the "encargado" was
removed, the amount would still be due and private respondents would still have to
deliver the duplicate title.
We are now confronted with the question: Was the removal of the "encargado" a
condition precedent to the fulfillment of the contract of sale such that finding that it was a
legally impossible condition would entitle the buyers to the rescission of the contract?
We answer in the negative.
The trial court and the Court of Appeals based their decision on Art. 1183 of the Civil
Code which provides, thus:
Art. 1183. Impossible conditions, those contrary to good customs or public policy
and those prohibited by law shall annul the obligation which depends upon them. . . .
Both courts declared the "encargado" a tenant. This being the case, it follows that he may
not be removed from the subject land without just cause, as provided by Presidential
Decree No. 1038. Since the Galangs, then plaintiffs demanded the removal of the
"encargado" which, being legally impossible, could not be met, the contract of sale was
rescinded by the courts.
We disagree with the conclusion arrived at by the respondent court. Reviewing the terms
of the Deed of Sale quoted earlier, it is clear that the parties had reached the stage of
perfection of the contract of sale, there being already "a meeting of the minds upon the
thing which is the object of the contract and upon the price,"​7 and on the basis of which
both parties had the personal right to reciprocally demand from the other the fulfillment
of their respective obligations. But contracts of sale may either be absolute or
conditional.​8 One form of conditional sales, is what is now popularly termed as a
"Contract to Sell," where ownership or title is retained until the fulfillment of a positive
condition, normally the payment of the purchase price in the manner agreed upon. The
breach of that condition can prevent the obligation to convey title from acquiring a
binding force.​9 Where the condition is imposed, instead, upon the perfection of the
contract, the failure of such condition would prevent such perfection. 10 ​ What we have
here is a contract to sell for it is the transfer of ownership, not the perfection of the
contract that was subjected to a condition. Ownership was not to vest in the buyers until
full payment of the purchase price and the transfer of the title to the buyers. Apart from
full payment of the purchase price, we find no other condition which would affect the
obligations of the parties, i.e., to pay, on the part of the buyer and to convey ownership,
on the part of the seller.
The alleged condition precedent, the removal of the "encargado," was simply an
alternative period for payment of the second 25% of the purchase price given by the
seller to the buyer. Assuming that the removal of the "encargado" could not be brought
about, the buyers, petitioners herein, could have nonetheless demanded the delivery of
the owner's duplicate certificate of title by paying the second 25% of the sale price within
three months. In this case, the filing of the complaint for specific performance of the
seller's obligation was the root of the errors committed first, by the trial court and later,
by the Court of Appeals. Both courts overlooked the obvious fact that only the time for
paying the second 25% of the purchase price was qualified and that the entire paragraph
reads: "25% within three months ​or upon removal of the "encargado" from the premises
. . ." and not simply 25% upon removal of the "encargado."
The case before us could have been resolved by the lower courts without ruling on
whether the "encargado" was a tenant or not. Granting that it was necessary to rule on
the legal status of the "encargado," we find that the courts had been quite precipitate in
holding that the "encargado" was a tenant. There was no sufficient evidence to support
that conclusion apart from the affidavits of the "encargado" and his neighbor. The
conclusion of the Court of Appeals regarding this matter rested on surmises. It held:
We discern no reversible error in the finding and conclusion of the trial court that the
unnamed "encargado" on the lands in question is actually a tenant or agricultural lessee.
The bases of this ineluctable conclusion are not hard to see. As succinctly pointed out by
the court ​a quo,​ the "encargado" is staying in his own existing house thereon, and
subject agricultural land is planted to coffee and other plants not only by the "encargado"
but also his deceased parents. Indeed, if the "encargado's" parents were not tenants or
agricultural lessees, the present "encargado" could not have continued occupying and
working thereon, without facing ejectment proceedings; considering that one of the
landowners, defendants-appellees here, is a lawyer himself. In fact, as can be gleaned
from the decision under scrutiny, defendants-appellees filed a third-party complaint
against the "encargado" but they did not pursue such a course of action because they did
not have a clearance from the then Ministry, now the Department of Agrarian Reform, to
proceed against such "encargado." Then, too, if the said "encargado" did not have the
status of a tenant or agricultural lessee entitled to protection under the agrarian reform
laws, he would not have been given the attention and importance as to be brought before
the court ​a quo t​ wice, just for a possible amicable settlement, and he would not have had
the firmness to reject an offer for him to continue working half the area under
controversy.
Equally supportive of the foregoing opinion are the following ratiocinations in Cruz v.
Court of Appeals, L-50350, May 15, 1984, 129 SCRA 222:
. . . it is also undisputed that respondent lives on a hut erected on the landholding. This
fully supports the appellate court's conclusion, since only tenants are entitled to a
homelot where he can build his house thereon as an incident to this right as a tenant.
xxx xxx xxx
Also, the Court is aware of the practice of landowners, by way of evading the provisions
of tenancy laws, to have their tenants sign contracts or agreements intended to
camouflage the real import of their relationship.
All things duly considered, let alone the better rule that all doubts ​vis-a-vis the status of a
tiller of the soil should be resolved in favor of tenancy relationship. We cannot help but
conclude here that the "encargado" on the landholding deeded out in the deed of sale
(Exhibit "A") is a tenant or agricultural lessees within the purview and under the mantle
of protection of the Code of Agrarian Reforms. 11 ​
To summarize, we hold that there was no basis for rescinding the contract because the
removal of the "encargado" was not a condition precedent to the contract of sale. Rather,
it was one of the alternative periods for the payment of the second installment given by
the seller himself to the buyers. Secondly, even granting that it was indeed a condition
precedent rendering necessary the determination of the legal status of the "encargado,"
the lower courts were rash in holding that the "encargado" was a tenant of the land in
question.
In view of the foregoing circumstances, we are convinced that specific performance by
the parties of their respective obligations is proper. Accordingly, petitioners Marcelino and
Guadalupe Galang are ordered to pay private respondents the second 25% of the
purchase price. Considering, however, the time that has lapsed since the parties entered
into the contract, payment of the full balance, that is, 75% of the purchase price,
P192,795.00 is in order. However, the 12% interest per annum that was stipulated in
paragraph 3 of the contract of sale should not be assessed against petitioners. On the
other hand, private respondents Ramon Buenaventura, Angeles Buenaventura, Corazon
Buenaventura, and Maria Luisa Buenaventura are obliged to deliver the owner's duplicate
certificate of title and to transfer the title to the land in question upon payment of the
purchase price by petitioners.
Under the Civil Code, private respondents are liable for damages to the injured party, the
petitioners in this case. However, in lieu of actual payment of damages, and considering
the fact that private respondents were in possession of the land during the entire period
that this case was pending, private respondents are no longer entitled to the interest
payments which would have been due from petitioners. 12 ​
WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the decision
of the Court of Appeals is REVERSED and SET ASIDE. Petitioners Marcelino and
Guadalupe Galang are hereby ordered to pay the full 75% balance of the purchase price
(P144,596.25) within thirty (30) days from notice, with interest upon default. Private
respondents Ramon Buenaventura, Corazon Buenaventura and Maria Luisa Buenaventura
are hereby ordered to transfer the title to petitioners upon full payment of the purchase
price.
SO ORDERED.
Feliciano, Bidin, Melo and Vitug, JJ., concur.
 Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-55138 September 28, 1984
ERNESTO V. RONQUILLO, ​petitioner,
vs.
HONORABLE COURT OF APPEALS AND ANTONIO P. SO, ​respondents.
Gloria A. Fortun for petitioner.
Roselino Reyes Isler for respondents.
CUEVAS, ​J.:
This is a petition to review the Resolution dated June 30, 1980 of the then Court of
Appeals (now the Intermediate Appellate Court) in CA-G.R. No. SP-10573, entitled
"Ernesto V. Ronquillo versus the Hon. Florellana Castro-Bartolome, etc." and the Order of
said court dated August 20, 1980, denying petitioner's motion for reconsideration of the
above resolution.
Petitioner Ernesto V. Ronquillo was one of four (4) defendants in Civil Case No. 33958 of
the then Court of First Instance of Rizal (now the Regional Trial Court), Branch XV filed by
private respondent Antonio P. So, on July 23, 1979, for the collection of the sum of
P17,498.98 plus attorney's fees and costs. The other defendants were Offshore
Catertrade Inc., Johnny Tan and Pilar Tan. The amount of P117,498.98 sought to be
collected represents the value of the checks issued by said defendants in payment for
foodstuffs delivered to and received by them. The said checks were dishonored by the
drawee bank.
On December 13, 1979, the lower court rendered its Decision ​1 based on the compromise
agreement submitted by the parties, the pertinent portion of which reads as follows:
1. Plaintiff agrees to reduce its total claim of P117,498-95 to only P11,000 .00 and
defendants agree to acknowledge the validity of such claim and further bind themselves
to initially pay out of the total indebtedness of P10,000.00 the amount of P55,000.00 on
or ​before December 24, 1979,​ the balance of P55,000.00, defendants ​individually and
jointly agree to pay within a period of six months from January 1980, or before June 30,
1980; (Emphasis supplied)
xxx xxx xxx
4. That both parties agree that failure on the part of either party to comply with the
foregoing terms and conditions, the innocent party will be entitled to an execution of the
decision based on this compromise agreement and the defaulting party agrees and hold
themselves to reimburse the innocent party for attorney's fees, execution fees and other
fees related with the execution.
xxx xxx xxx
On December 26, 1979, herein private respondent (then plaintiff filed a Motion for
Execution on the ground that defendants failed to make the initial payment of P55,000.00
on or before December 24, 1979 as provided in the Decision. Said motion for execution
was opposed by herein petitioner (as one of the defendants) contending that his inability
to make the payment was due to private respondent's own act of making himself scarce
and inaccessible on December 24, 1979. Petitioner then prayed that private respondent
be ordered to accept his payment in the amount of P13,750.00. ​2
During the hearing of the Motion for Execution and the Opposition thereto on January 16,
1980, petitioner, as one of the four defendants, tendered the amount of P13,750.00, as
his prorata share in the P55,000.00 initial payment. Another defendant, Pilar P. Tan,
offered to pay the same amount. Because private respondent refused to accept their
payments, demanding from them the full initial installment of P 55,000.00, petitioner and
Pilar Tan instead deposited the said amount with the Clerk of Court. The amount
deposited was subsequently withdrawn by private respondent. 3​
On the same day, January 16, 1980, the lower court ordered the issuance of a writ of
execution for the balance of the initial amount payable, against the other two defendants,
Offshore Catertrade Inc. and Johnny Tan 4​​ who did not pay their shares.
On January 22, 1980, private respondent moved for the reconsideration and/or
modification of the aforesaid Order of execution and prayed instead for the "execution of
the decision in its entirety against all defendants, jointly and severally." 5​ Petitioner
opposed the said motion arguing that under the decision of the lower court being
executed which has already become final, the liability of the four (4) defendants was not
expressly declared to be solidary, consequently each defendant is obliged to pay only his
own pro-rata or 1/4 of the amount due and payable.
On March 17, 1980, the lower court issued an Order reading as follows:
ORDER
Regardless of whatever the compromise agreement has intended the payment whether
jointly or individually, or jointly and severally, the fact is that only P27,500.00 has been
paid. There appears to be a non-payment in accordance with the compromise agreement
of the amount of P27,500.00 on or before December 24, 1979. The parties are reminded
that the payment is condition sine qua non to the lifting of the preliminary attachment
and the execution of an affidavit of desistance.
WHEREFORE, let writ of execution issue as prayed for
On March 17, 1980, petitioner moved for the reconsideration of the above order, and the
same was set for hearing on March 25,1980.
Meanwhile, or more specifically on March 19, 1980, a writ of execution was issued for the
satisfaction of the sum of P82,500.00 as against the properties of the defendants
(including petitioner), "singly or jointly hable." 6​
On March 20, 1980, Special Sheriff Eulogio C. Juanson of Rizal, issued a notice of sheriff's
sale, for the sale of certain furnitures and appliances found in petitioner's residence to
satisfy the sum of P82,500.00. The public sale was scheduled for April 2, 1980 at 10:00
a.m. ​7
Petitioner's motion for reconsideration of the Order of Execution dated March 17, 1980
which was set for hearing on March 25, 1980, was upon motion of private respondent
reset to April 2, 1980 at 8:30 a.m. Realizing the actual threat to property rights poised by
the re-setting of the hearing of s motion for reconsideration for April 2, 1980 at 8:30 a.m.
such that if his motion for reconsideration would be denied he would have no more time
to obtain a writ from the appellate court to stop the scheduled public sale of his personal
properties at 10:00 a.m. of the same day, April 2, 1980, petitioner filed on March 26,
1980 a petition for certiorari and prohibition with the then Court of Appeals (CA-G.R. No.
SP-10573), praying at the same time for the issuance of a restraining order to stop the
public sale. He raised the question of the validity of the order of execution, the writ of
execution and the notice of public sale of his properties to satisfy fully the entire unpaid
obligation payable by all of the four (4) defendants, when the lower court's decision
based on the compromise agreement did not specifically state the liability of the four (4)
defendants to be solidary.
On April 2, 1980, the lower court denied petitioner's motion for reconsideration but the
scheduled public sale in that same day did not proceed in view of the pendency of a
certiorari proceeding before the then Court of Appeals.
On June 30, 1980, the said court issued a Resolution, the pertinent portion of which reads
as follows:
This Court, however, finds the present petition to have been filed prematurely. The rule is
that before a petition for certiorari can be brought against an order of a lower court, all
remedies available in that court must first be exhausted. In the case at bar, herein
petitioner filed a petition without waiting for a resolution of the Court on the motion for
reconsideration, which could have been favorable to the petitioner. The fact that the
hearing of the motion for reconsideration had been reset on the same day the public sale
was to take place is of no moment since the motion for reconsideration of the Order of
March 17, 1980 having been seasonably filed, the scheduled public sale should be
suspended. Moreover, when the defendants, including herein petitioner, defaulted in their
obligation based on the compromise agreement, private respondent had become entitled
to move for an execution of the decision based on the said agreement.
WHEREFORE, the instant petition for certiorari and prohibition with preliminary injunction
is hereby denied due course. The restraining order issued in our resolution dated April 9,
1980 is hereby lifted without pronouncement as to costs.
SO ORDERED.
Petitioner moved to reconsider the aforesaid Resolution alleging that on April 2, 1980, the
lower court had already denied the motion referred to and consequently, the legal issues
being raised in the petition were already "ripe" for determination. 8​ The said motion was
however denied by the Court of Appeals in its Resolution dated August 20, 1980.
Hence, this petition for review, petitioner contending that the Court of Appeals erred in
(a) declaring as premature, and in denying due course to the petition to restrain
implementation of a writ of execution issued at variance with the final decision of the
lower court filed barely four (4) days before the scheduled public sale of the attached
movable properties;
(b) denying reconsideration of the Resolution of June 30, 1980, which declared as
premature the filing of the petition, although there is proof on record that as of April 2,
1980, the motion referred to was already denied by the lower court and there was no
more motion pending therein;
(c) failing to resolve the legal issues raised in the petition and in not declaring the
liabilities of the defendants, under the final decision of the lower court, to be only joint;
(d) not holding the lower court's order of execution dated March 17, 1980, the writ
of execution and the notice of sheriff's sale, executing the lower court's decision against
"all defendants, singly and jointly", to be at variance with the lower court's final decision
which did not provide for solidary obligation; and
(e) not declaring as invalid and unlawful the threatened execution, as against the
properties of petitioner who had paid his pro-rata share of the adjudged obligation, of the
total unpaid amount payable by his joint co-defendants.
The foregoing assigned errors maybe synthesized into the more important issues of —
1. Was the filing of a petition for certiorari before the then Court of Appeals against
the Order of Execution issued by the lower court, dated March 17, 1980, proper, despite
the pendency of a motion for reconsideration of the same questioned Order?
2. What is the nature of the liability of the defendants (including petitioner), was it
merely joint, or was it several or solidary?
In the case at bar, the records show that not only was a writ of execution issued but
petitioner's properties were already scheduled to be sold at public auction on April 2,
1980 at 10:00 a.m. The records likewise show that petitioner's motion for reconsideration
of the questioned Order of Execution was filed on March 17, 1980 and was set for hearing
on March 25, 1980 at 8:30 a.m., but upon motion of private respondent, the hearing was
reset to April 2, 1980 at 8:30 a.m., the very same clay when petitioner's properties were
to be sold at public auction. Needless to state that under the circumstances, petitioner
was faced with imminent danger of his properties being immediately sold the moment his
motion for reconsideration is denied. Plainly, urgency prompted recourse to the Court of
Appeals and the adequate and speedy remedy for petitioner under the situation was to
file a petition for certiorari with prayer for restraining order to stop the sale. For him to
wait until after the hearing of the motion for reconsideration on April 2, 1980 before
taking recourse to the appellate court may already be too late since without a restraining
order, the public sale can proceed at 10:00 that morning. In fact, the said motion was
already denied by the lower court in its order dated April 2, 1980 and were it not for the
pendency of the petition with the Court of Appeals and the restraining order issued
thereafter, the public sale scheduled that very same morning could have proceeded.
The other issue raised refers to the nature of the liability of petitioner, as one of the
defendants in Civil Case No. 33958, that is whether or not he is liable jointly or solidarily.
In this regard, Article 1207 and 1208 of the Civil Code provides —
Art. 1207. The concurrence 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 prestation. Then is a solidary liability
only when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity.
Art. 1208. If from the law,or the nature or the wording of the obligation 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 and debtors, the
credits or debts being considered distinct from one another, subject to the Rules of Court
governing the multiplicity of quits.
The decision of the lower court based on the parties' compromise agreement, provides:
1. Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and
defendants agree to acknowledge the validity of such claim and further bind themselves
to initially pay out of the total indebtedness of P110,000.00, the amount of P5,000.00 on
or before December 24, 1979, the balance of P55,000.00, defendants ​individually and
jointly agree to pay within a period of six months from January 1980 or before June 30,
1980. (Emphasis supply)
Clearly then, by the express term of the compromise agreement and the decision based
upon it, the defendants obligated themselves to pay their obligation "individually and
jointly".
The term "individually" has the same meaning as "collectively", "separately",
"distinctively", respectively or "severally". An agreement to be "​individually liable"​
undoubtedly creates a several obligation, ​14 and a "several obligation is one by which
one individual binds himself to perform the whole obligation. ​15
In the case of ​Parot vs. Gemora ​16 We therein ruled that "the phrase juntos or
separadamente ​or in the promissory note is an express statement making each of the
persons who signed it ​individually liable for the payment of the fun amount of the
obligation contained therein." Likewise in ​Un Pak Leung vs. Negorra ​17 We held that "in
the absence of a finding of facts that the defendants made themselves individually hable
for the debt incurred they are each liable only for one-half of said amount
The obligation in the case at bar being described as "individually and jointly", the same is
therefore enforceable against one of the numerous obligors.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the instant petition is hereby
DISMISSED. Cost against petitioner.
SO ORDERED.
Anent the first issue raised, suffice it to state that while as a general rule, a motion for
reconsideration should precede recourse to certiorari in order to give the trial court an
opportunity to correct the error that it may have committed, the said rule is not absolutes
9
and may be dispensed with in instances where the filing of a motion for reconsideration
would serve no useful purpose, such as when the motion for reconsideration would raise
the same point stated in the motion ​10 ​or where the error is patent for the order is void
11 or ​where the relief is extremely urgent, as in cases where execution had already been
ordered 1
​ 2​ where the issue raised is one purely of law. ​13
 EN BANC
[G.R. No. L-1208. January 30, 1947.]
BERNARDO VELASQUEZ, ​Petitioner,​ v. THE DIRECTOR OF PRISONS, ​Respondent.​
The petitioner in his own behalf.
Assistant Solicitor General Gianzon and Solicitor Carreon, for ​Respondent​.
SYLLABUS
1. HABEAS CORPUS; RETURN; ADMISSION BY FAILURE TO TRAVERSE. — The allegations
of a return not traversed in petitioner’s reply are deemed admitted.
2. ID.; WRIT OF, WHEN NOT TO BE ISSUED. — The writ of ​habeas corpus may not be
issued where the petitioner is restrained of his liberty by virtue of a judgment or order of
a court of record, whose jurisdiction is unquestioned.
3. CRIMINAL PROCEDURE; APPEAL; DELAY IN DISPOSAL OF; DESTRUCTION OF COURT
RECORDS; CASE AT BAR. — Petitioner is not in position to complain of unjustified delay
in the disposal of his appeal, because he desisted from such appeal, and even granting
that the withdrawal had not been acted upon, the delay is due to the publicly known
destruction of court papers, and partly to his failure to apply for the reconstruction of his
expediente, supposing, as he affirms, that his voluntary desistance did not finally end it.
Per PERFECTO, ​J.,​ dissenting:​chanrob1es virtual 1aw library
4. COURTS; PROCESSES; JUDICIAL; VALIDITY OF WHEN OBTAINED DURING JAPANESE
OCCUPATION. — Judicial processes obtained during and under the Japanese regime are
null and void by virtue of a proclamation issued by General Douglas MacArthur upon his
landing in Leyte.
5. CRIMINAL PROCEDURE; RECORDS, DESTROYED; RECONSTITUTION; INITIATIVE WITH
PROSECUTION. — In criminal cases it is the prosecution that should take the initiative in
reconstituting destroyed records.
6. ID.; SPEEDY TRIAL; MEANING AND SCOPE. — Speedy trial means early disposal of a
case, including prompt rendition of a final and executory decision or judgment.
DECISION
BENGZON, ​J.:​
Habeas corpus proceeding. Petitioner Bernardo Velasquez alleges he has been in prison
since June, 1944, pursuant to an order of the Zambales court of first instance, pending
the revision of his case by this Court, to which he had appealed in May, same year. He
asserts that his incarceration for more than two years and six months violates his
constitutional right to speedy trial, and that, as a consequence, the Government, in
failing to act with dispatch on the matter, lost its authority to detain him further.
Answering the petition, the Solicitor General, for respondent, explains: (1) the prisoner is
confined under a commitment order of the aforesaid court, dated May 8, 1944, in
accordance with its decision sentencing him, for murder, to life imprisonment and to pay
P2,000 as indemnity, with costs; (2) appeal from said decision was interposed, but on
July 13, 1944, defendant filed with this Court a motion withdrawing such appeal; and (3)
supposing that such appeal is still pending despite the withdrawal, petitioner has no
reason to protest because he has taken no steps to reconstitute the records of his case.
The Solicitor General submitted a copy of the judgment of conviction.
Petitioner filed a reply, but did not traverse the respondent’s main allegations, specially
that concerning the withdrawal of his appeal, which consequently must be deemed
admitted. (See Rule 102, section 13.) And we have no record of the proceedings against
petitioner in the Zambales court; it must have been destroyed together with many others
during the battle for the liberation of Manila.
Now then, inasmuch as petitioner is restrained of his liberty by virtue of a judgment or
order of a court of record, whose jurisdiction is unquestioned, the writ may not be issued,
because section 4 of Rule 102 expressly prohibits the issuance thereof, in the
circumstances.
Nor is petitioner in a position to complain of unjustified delay in the disposal of his
appeal, because he desisted from such appeal, and even granting that the withdrawal had
not been acted upon, the delay is due to the publicly known destruction of court papers,
as above stated, and partly to his failure to apply for the reconstruction of his expediente,
supposing, as he affirms, that his voluntary desistance did not finally end it.
However, it should be noted that the preceding remarks do not necessarily imply
unqualified endorsement of the petitioner’s underlying hypothesis, to wit, that
defendant’s right to speedy trial guaranteed by the Constitution extends to and governs
proceedings in the appellate courts. This is an angle which is unnecessary to explore for
the present, because conceding validity to his supposition and major premise, we find
here no such inexcusable violation of defendant’s privileges as to require vindication in
the form of a directive for his immediate release, as was authorized in Conde v. Rivera
and Unson (45 Phil., 650), and analogous decisions.
Wherefore, without prejudice to the reconstitution of the original record which the parties
may institute, the petition for the writ of ​habeas corpus​ is denied. No costs.
Moran, ​C.J.​, Paras, Feria, Pablo, Briones and Tuason, ​JJ.​, concur.
Separate Opinions
PERFECTO, ​J.​, dissenting:​chanrob1es virtual 1aw library
Upon the very facts alleged in respondent’s return, without considering petitioner’s
allegations, we are of opinion that petitioner is illegally deprived of his liberty and,
therefore, is entitled to be immediately released.

Respondent alleges that petitioner is confined by virtue of a commitment issued on May
8, 1944, by the clerk of the Court of First Instance of Zambales in which it is stated that
petitioner had been convicted of murder and sentenced to ​reclusion perpetua;​ that
petitioner appealed from the said decision but on July 13, 1944, he filed a motion
withdrawing his appeal; that it does not appear that a record of petitioner’s appeal
obtains in the files of the Supreme Court or that petitioner has taken steps for the
reconstitution of the records of his case against the possibility that said records were
among those destroyed during the war.
tribunals could keep criminal cases pending for ten years and decades failing to render
final decision, whether because of laziness or lack of sense of duty or for fraudulent or
criminal neglect.
Petitioner complains with reason that he has been undergoing preventive imprisonment
since June 14, 1944, and that his right to an immediate and final disposal of his case has
been violated by long and painful delay.
We vote, therefore, that petitioner be immediately released from respondent’s custody.

Upon these allegations, petitioner appears to be deprived of his liberty by virtue of a Hilado, ​J.,​ concurs.
judicial process obtained during and under the Japanese regime in 1944, and, as we have
expressed in our opinion in the Co Kim Cham case (75 Phil., 113), said judicial process is
among those we declared null and void by virtue of a proclamation issued by General
Douglas MacArthur upon his landing in Leyte. Whether petitioner’s appeal is still pending
or has been withdrawn is immaterial in view of this conclusion.

Even without considering the nullifying effects of MacArthur’s proclamation, there is

ground to conclude that petitioner is a victim of unjustified and unjustifiable delay in the
administration of justice. If he has withdrawn his appeal on July 13, 1944, there is no
justification why such withdrawal should remain un-acted upon for two and a half years.
If it was not withdrawn, the delay in the disposal of the appeal is also unjustified and
unreasonable.

Respondent assumes that if the records of the appeal were destroyed during the war, it is
the petitioner who should be blamed for not moving for reconstitution. The position is
wrong. The initiative in criminal cases comes and should come from the prosecution. The
burden of pressing criminal cases rests on the prosecution’s shoulders. The accused is in
the defense. As in all conflicts, no one expects that the initiative should come from the
defense. The maxim that the best defense is offense is just a paradoxical logodaedaly. An
alleged defender who starts a conflict by offensive action, ceases to be a defender, to
become an aggressor.

The duty of prosecuting offenders is one of those imposed on all governments, to keep
social order. The position of the accused is only one of resistance. Whether static or
dynamic, it is always characterized by passivity in matters of initiative to push the case to
an end. The prosecution is duty bound not only to prosecute offenders but also to have
criminal cases disposed of as early as possible. It is against the nature of things to expect
the accused to push the case to an early termination. A law that runs against common
sense is bad law. If the case has not been reconstituted, it is the prosecution’s fault. The
accused should not be made to suffer for a neglect of the prosecution. The failure to
move for reconstitution shows a dereliction of official duty of the officers of the
government.

Under the Constitution, in all criminal prosecutions, the accused shall enjoy the right "to
have a speedy and public trial," (section 1 Article III) and "speedy trial" means early
disposal of a case, including prompt rendition of a final and executory decision or
judgment. The word "trial" as used by the Constitution includes hearing, reception of
evidence, and other processes, such as decision in the first instance, appeal, and final
and executory decision in last instance. To exclude the final decision is to make of the
constitutional guarantee a mocking nonsense. The guarantee will absolutely no purpose if

SECOND DIVISION
August 17, 2016
G.R. No. 207586
AFP RETIREMENT AND SEPARATION BENEFITS SYSTEM (AFPRSBS),​ Petitioner
vs.
EDUARDO SANVICTORES​, Respondent
DECISION
MENDOZA, ​J.:
Assailed in this Petition for Review on ​Certiorari is the November 28, 2012 Decision​1 and
the June 6, 2013 Resolution​2 of the Court of Appeals (​CA)​ in CA-G.R. SP No. 118427,
which affirmed the June 22, 2010 Decision​3​of the Office of the President (​OP​), upholding
the August 31, 2007 Decision​4 of the Housing and Land Use Regulatory Board-Board of
Commissioners (​HLURB Board​). The decision of the HLURB Board dismissed the appeal
filed by petitioner AFP Retirement and Separation Benefits System (​AFPRSBS)​ together
with Prime East Properties, Inc. (​PEPI)​ , questioning the order of rescission of the contract
of sale of the subject parcel of land.
The Antecedents
The records show that sometime in 1994, PEPI, formerly Antipolo Properties, Inc., offered
to Eduardo Sanvictores (Sanvictores) for sale on installment basis a parcel of land in
Village East Executive Homes, a subdivision project, designated as Lot 5, Block 64, Phase
II, covering an area of approximately 204 square meters, and situated in Tayuman,
Pantok, Binangonan, Rizal; that on April 20, 1994, Sanvictores paid the required down
payment of ₱81,949.04; that on June 9, 1994, a Contract to Sell​5 was executed by and
between PEPI and AFPRSBS, as the seller, and Sanvictores, as the buyer; that on
February 27, 1999, Sanvictores paid in full the purchase price of the subject property in
the amount of ₱534,378.79; that despite the full payment, PEPI and AFPRSBS failed to
execute the corresponding deed of absolute sale on the subject property and deliver the
corresponding title thereto; that on September 6, 2000, Sanvictores demanded from PEPI
the execution of the deed of sale and the delivery of the transfer certificate of title; that
PEPI claimed that the title of the subject property was still with the Philippine National
Bank (PNB) and could not be released due to the economic crisis; that despite several
follow-ups with PEPI, the latter did not communicate with Sanvictores for a period of four
(4) years; and that, thereafter, Sanvictores filed a complaint for rescission of the contract
to sell, refund of payment, damages, and attorney's fees against PEPI and AFPRSBS
before the HLRUB.
In its defense, PEPI argued, among others, that the complaint should be dismissed for
lack of cause of action; that it could not be faulted for the delay in the delivery of the title
due to ​force majeure;​ that it substantially complied with its obligations in good faith; and
that it was always transparent in dealing with the public.
For its part, AFPRSBS countered that it was not the owner and developer of Village East
Executive Homes but PEPI; that PEPI alone was the seller; and that Norma Espina
(Espina) was neither the treasurer nor the authorized representative of AFPRSBS, but the
Treasurer of PEPI.
The Decision of the HLURB Arbiter
On March 27, 2006, the HLURB Arbiter rendered a decision​6 in favor of Sanvictores, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered as
follows:
1. Declaring the Contract to Sell executed by and between the complainant
and the respondents covering the subject property as RESCINDED, and
2. Ordering the respondents to pay jointly and severally the complainant
the following sums:
a) The amount of FIVE HUNDRED THIRTY FOUR THOUSAND THREE
HUNDRED SEVENTI EIGHT PESOS & 79/100 (₱534,378.79) plus twelve
percent (12%) interest ​per annum to be computed from the date of the
filing of the complaint on September 20, 2001 until fully paid,
b) The amount of TEN THOUSAND PESOS (₱10,000.00) as moral damages,
c) The amount of TEN THOUSAND PESOS (₱10,000.00) as exemplary
damages,
d) The amount of TEN THOUSAND PESOS (₱10,000.00) as attorney's fees,
e) The costs of litigation, and
f) An administrative fine of TEN THOUSAND PESOS (₱10,000.00) payable
to this Office fifteen (15) days upon receipt of this decision, for violation of
Section 20 in relation to Section 38 of PD 957.
SO ORDERED.​7
The HLRUB Arbiter ruled that Sanvictores was entitled to the reliefs he prayed for in the
complaint and that the rescission of the contract to sell was just and proper because of
the unjustified refusal of the seller to execute the deed of absolute sale and to deliver the
title of the subject property despite the full payment of the purchase price. The seller's
unjustified refusal constituted a substantive breach of its legal and contractual obligation.
Decision of the HLURB Board
On August 31, 2007, acting on the appeal of PEPI and AFPRSBS, the HLURB Board
affirmed the decision of the HLURB Arbiter as it found no reversible error in the findings
of fact and conclusions of the HLURB Arbiter.
The respective motions for reconsideration of PEPI and AFPRSBS were denied by the
HLURB Board.​1âwphi1
The Decision of the Office of the President
PEPI and AFPRSBS filed separate appeals before the OP with AFPRSBS insisting that it
should not be held jointly and severally liable with PEPI for the refund, administrative fine
and the payment of the interest. On June 22, 2010, the OP upheld the decision of the
HLURB Board. It stated that in the contract to sell "PEPI and AFPRSBS were referred to
singly as the 'seller,' and there were no delineations whatsoever as to their rights and
obligations."​8 Hence, the OP concluded that their obligation to Sanvictores was joint and
several.
Motions for reconsideration were separately filed by PEPI and AFPRSBS, but both were
denied by the OP in its February 8, 2011 Resolution. 9​
AFPRSBS alone filed a petition for review before the CA.
The CA Decision
On November 28, 2012, the CA affirmed the decision of the OP. The CA echoed the view
of the OP that PEPI and AFPRSBS were indicated as the "Seller" in the subject contract,
without any delineation whatsoever as to the rights and obligations of the respective
parties. It wrote that PEPI and AFPRSBS came to the contracting table with the intention
to be bound jointly and severally. Hence, the CA concluded that the nature of the
obligation of PEPI and AFPRSBS under the subject contract was solidary pursuant to
Article 1207 of the Civil Code. 10
​ It sustained the award of moral and exemplary damages
but lowered the interest rate on the award of actual damages to 6% ​per annum​. Thus, it
disposed as follows:
WHEREFORE, in view of the foregoing, the Petition is hereby DENIED and
the Decision dated June 22, 2010 is AFFIRMED with modification that the
interest rate on the actual damages in the amount of FIVE HUNDRED
THIRTY FOUR THOUSAND THREE HUNDRED SEVENTY EIGHT PESOS &
79/100 (₱534,378.79), is REDUCED to six percent (6%) ​per annum​.
SO ORDERED. 11
​ that the person who signed the contract was not authorized; that AFPRSBS should be
The CA denied the motion for reconsideration filed by AFPRSBS in its June 6, 2013
Resolution.
Hence, this petition with the following
ASSIGNMENT OF ERRORS
The Honorable Court of Appeals committed grave abuse of
discretion and misconstrued the facts and misapplied the law
when:
I It held Petitioner AFPRSBS jointly and severally liable with PEPI
to the Respondent
II It held herein Petitioner AFPRSBS liable for moral and
exemplary damages, costs of litigation and attorney's fees.
III It held Petitioner AFPRSBS to pay administrative fine of ten
thousand pesos (Pl0,000.00) payable to HLURB for violation of
Section 20 in relation to Section 38 of P.D. 957.
Position of AFPRSBS In advocacy of its position, AFPRSBS argues that it was not the
owner/developer of the Village East Executive Homes subdivision, but PEPI; that all the
certificates of title of the lots in the said subdivision project were in the name and
possession of PEPI; that it was not the seller of the subject property, but PEPI; that
although it appeared in the contract to sell that AFPRSBS was a co-seller of the subject
lot, it was not signed by any of its authorized representative; that the contract to sell was
signed by Espina, the Treasurer and the authorized representative of PEPI; that because
it was not a party in the said contract, it could not be affected, favored or prejudiced
thereby; that under Article 1311 of the Civil Code, contracts take effect only between the
parties, their assigns and heirs; that it never dealt with Sanvictores with respect to the
sale of the subject subdivision lot; that its officers and employees never made any
representation to him relative to the subject lot; that the transaction and the
communications were exclusively held between Sanvictores and PEPI as evidenced by his
passbook and the letter of PEPI addressed to him, dated September 26, 2000; that the
failure to deliver the title to Sanvictores was due to the mortgage of the subject lot by
PEPI to PNB; that it was not a party or privy to the said mortgage; that the mortgage was
executed solely by PEPI to secure the loan it obtained from PNB as shown by the Loan
Agreement and the Real Estate Mortgage; that assuming that it would be adjudged liable
to Sanvictores on the basis of the said contract to sell, its liability would only be joint and
not in solidum with PEPI; that solidary liability could not be presumed; and that it could
not be liable for damages and administrative fine because it was not the owner or
developer of the subject parcel of land.
Counter-Position of Sanvictores
Sanvictores countered that both PEPI and AFPRSBS were referred to as the "seller" in the
contract to sell; that the signatures of their respective representatives, Espina and
Menandro Mena (Mena), appeared in the said contract; that AFPRSBS could not disclaim
liability by the mere expedient of denying that it was not a party to the transaction and
estopped in denying the authority of their representative because it gave the latter the
apparent authority to represent it in the subject transaction; that there was nothing on
the face of the notarized contract to sell that would arouse any suspicion that Espina and
Mena were not authorized by PEPI and AFPRSBS, respectively; that PEPI and AFPRSBS
were referred to in the entire contract as "Seller" and not "Sellers," denoting that they
were only one; that they came to the contracting table with the intention to be bound
jointly and severally; that there was no delineation whatsoever as to their rights and
obligations; that PEPI and AFPRSBS represented themselves as the "Seller" in the
contract to sell and they appeared to be partners; and that AFPRSBS should be liable for
moral and exemplary damages, costs of litigation and attorney's fees.
The Court's Ruling
The petition lacks merit.
In a wealth of cases, the Court has consistently ruled that factual findings and
conclusions of an adjudicative body, especially when affirmed on appeal and supported by
enough evidence, are entitled to great weight, full respect and even finality by this Court,
because administrative agencies or quasi-judicial bodies are clothed with special
knowledge and expertise on specific matters within their jurisdiction. In the absence of
any proof showing grave abuse of discretion, the appellate courts will not disturb their
factual findings and conclusions.
In the case at bench, the HLURB, the OP and the CA were one in ruling that AFPRSBS was
jointly and severally liable with PEPI to Sanvictores. The Court reviewed the records and
found their factual findings and conclusions to be in accordance with the evidentiary
records.
Indeed, there could be no other conclusion except that PEPI and AFPRSBS came to the
contracting table with the intention to be bound jointly and severally. AFPRSBS is
estopped from denying Mena's authority to represent it. It is quite obvious that AFPRSBS
clothed Mena with apparent authority to act on its behalf in the execution of the contract
to sell. There is estoppel when the principal has clothed the agent with indicia of authority
as to lead a reasonably prudent person to believe that the agent actually has such
authority. 15
​ "In an agency by estoppel or apparent authority, "the principal is bound by
the acts of his agent with the apparent authority which he knowingly permits the agent to
assume, or which he holds the agent out to the public as possessing." 16 ​ "A corporation
may be held in estoppel from denying as against innocent third persons the authority of
its officers or agents who have been clothed by it with ostensible or apparent authority."
17

In ​Spouses Berot v. Siapno,​ 12

​ the Court defined solidary obligation as one in which each WHEREFORE​ the petition is ​DENIED​.
of the debtors is liable for the entire obligation, and each of the creditors is entitled to
demand the satisfaction of the whole obligation from any or all of the debtors. On the SO ORDERED.
other hand, a joint obligation is one in which each debtor is liable only for a proportionate
part of the debt, and the creditor is entitled to demand only a proportionate part of the JOSE CATRAL mendoza
credit from each debtor. The well-entrenched rule is that solidary obligations cannot be
inferred lightly. They must be positively and clearly expressed. A liability is solidary "only Associate Justice
when the obligation expressly so states, when the law so provides or when the nature of
the obligation so requires." In this regard, Article 1207 of the Civil Code provides:

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 prestation. There is a solidary
liability only when the obligation expressly so states, or when the law or
the nature of the obligation requires solidarity.

As can be gleaned therefrom, Article 1207 does not presume solidary liability unless: 1]
the obligation expressly so states; or 2] the law or nature requires solidarity. ​13

Here, there is no doubt that the nature of the obligation of PEPI and AFPRSBS under the
subject contract to sell was solidary. In the said contract, PEPI and AFPRSBS were
expressly referred to as the "SELLER" while Sanvictores was referred to as the "BUYER."
Indeed, the contract to sell did not state "SELLERS" but "SELLER." This could only mean
that PEPI and AFPRSBS were considered as one seller in the contract. As correctly pointed
out by the administrative tribunals below and the CA, there was no delineation as to their
rights and obligations.

Also in the said contract, the signatories were Espina, representing PEPI; Mena,
representing AFPRSBS; and Sanvictores. Espina signed under PEPI as seller while Mena
signed under AFPRSBS also as seller. Furthermore, the signatures of Espina and Mena
were affixed again in the last portion of the Deed of Restrictions 14
​ under the word
"OWNER" with Espina signing for PEPI and Mena for AFPRSBS.

AFPRSBS repeatedly argues that the contract was not signed by any of its authorized
representative. It was resolute in its claim that Espina was not its treasurer or authorized
representative. Conveniently, however, it remained silent as to Mena. It never denied
that Mena was its representative.

Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 96405 June 26, 1996
BALDOMERO INCIONG, JR., ​petitioner,
vs.
COURT OF APPEALS and PHILIPPINE BANK OF COMMUNICATIONS, ​respondents.
ROMERO, ​J.:p
​
This is a petition for review on ​certiorari of the decision of the Court of Appeals affirming
that of the Regional Trial Court of Misamis Oriental, Branch 18,​1​which disposed of Civil
Case No. 10507 for collection of a sum of money and damages, as follows:
WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is adjudged solidarily liable and
ordered to pay to the plaintiff Philippine Bank of Communications, Cagayan de Oro City,
the amount of FIFTY THOUSAND PESOS (P50,000.00), with interest thereon from May 5,
1983 at 16% per annum until fully paid; and 6% per annum on the total amount due, as
liquidated damages or penalty from May 5, 1983 until fully paid; plus 10% of the total
amount due for expenses of litigation and attorney's fees; and to pay the costs.
The counterclaim, as well as the cross claim, are dismissed for lack of merit.
SO ORDERED.
Petitioner's liability resulted from the promissory note in the amount of P50,000.00 which
he signed with Rene C. Naybe and Gregorio D. Pantanosas on February 3, 1983, holding
themselves jointly and severally liable to private respondent Philippine Bank of
Communications, Cagayan de Oro City branch. The promissory note was due on May 5,
1983.
Said due date expired without the promissors having paid their obligation. Consequently,
on November 14, 1983 and on June 8, 1984, private respondent sent petitioner
telegrams demanding payment thereof.​2 On December 11, 1984 private respondent also
sent by registered mail a final letter of demand to Rene C. Naybe. Since both obligors did
not respond to the demands made, private respondent filed on January 24, 1986 a
complaint for collection of the sum of P50,000.00 against the three obligors.
On November 25, 1986, the complaint was dismissed for failure of the plaintiff to
prosecute the case. However, on January 9, 1987, the lower court reconsidered the
dismissal order and required the sheriff to serve the summonses. On January 27, 1987,
the lower court dismissed the case against defendant Pantanosas as prayed for by the
private respondent herein. Meanwhile, only the summons addressed to petitioner was
served as the sheriff learned that defendant Naybe had gone to Saudi Arabia.
In his answer, petitioner alleged that sometime in January 1983, he was approached by
his friend, Rudy Campos, who told him that he was a partner of Pio Tio, the branch
manager of private respondent in Cagayan de Oro City, in the falcata logs operation
business. Campos also intimated to him that Rene C. Naybe was interested in the
business and would contribute a chainsaw to the venture. He added that, although Naybe
had no money to buy the equipment, Pio Tio had assured Naybe of the approval of a loan
he would make with private respondent. Campos then persuaded petitioner to act as a
"co-maker" in the said loan. Petitioner allegedly acceded but with the understanding that
he would only be a co-maker for the loan of P50,000.00.
Petitioner alleged further that five (5) copies of a blank promissory note were brought to
him by Campos at his office. He affixed his signature thereto but in one copy, he
indicated that he bound himself only for the amount of P5,000.00. Thus, it was by
trickery, fraud and misrepresentation that he was made liable for the amount of
P50,000.00.
In the aforementioned decision of the lower court, it noted that the typewritten figure "--
50,000 --" clearly appears directly below the admitted signature of the petitioner in the
promissory note. 3​ Hence, the latter's uncorroborated testimony on his limited liability
cannot prevail over the presumed regularity and fairness of the transaction, under Sec. 5
(q) of Rule 131. The lower court added that it was "rather odd" for petitioner to have
indicated in a copy and not in the original, of the promissory note, his supposed
obligation in the amount of P5,000.00 only. Finally, the lower court held that, even
granting that said limited amount had actually been agreed upon, the same would have
been merely collateral between him and Naybe and, therefore, not binding upon the
private respondent as creditor-bank.
The lower court also noted that petitioner was a holder of a Bachelor of Laws degree and
a labor consultant who was supposed to take due care of his concerns, and that, on the
witness stand, Pio Tio denied having participated in the alleged business venture although
he knew for a fact that the falcata logs operation was encouraged by the bank for its
export potential.
Petitioner appealed the said decision to the Court of Appeals which, in its decision of
August 31, 1990, affirmed that of the lower court. His motion for reconsideration of the
said decision having been denied, he filed the instant petition for review on ​certiorari.​
On February 6, 1991, the Court denied the petition for failure of petitioner to comply with
the Rules of Court and paragraph 2 of Circular
No. 1-88, and to sufficiently show that respondent court had committed any reversible
error in its questioned decision.​4 His motion for the reconsideration of the denial of his
petition was likewise denied with finality in the Resolution of April 24, 1991.​5 Thereafter,
petitioner filed a motion for leave to file a second motion for reconsideration which, in the
Resolution of May 27, 1991, the Court denied. In the same Resolution, the Court ordered
the entry of judgment in this case.​6
Unfazed, petitioner filed a notion for leave to file a motion for clarification. In the latter
motion, he asserted that he had attached Registry Receipt No. 3268 to page 14 of the
petition in compliance with Circular No. 1-88. Thus, on August 7, 1991, the Court granted
his prayer that his petition be given due course and reinstated the same.​7
Nonetheless, we find the petition unmeritorious.
Annexed to the petition is a copy of an affidavit executed on May 3, 1988, or after the
rendition of the decision of the lower court, by Gregorio Pantanosas, Jr., an MTCC judge
and petitioner's co-maker in the promissory note. It supports petitioner's allegation that
they were induced to sign the promissory note on the belief that it was only for
P5,000.00, adding that it was Campos who caused the amount of the loan to be
increased to P50,000.00.
The affidavit is clearly intended to buttress petitioner's contention in the instant petition
that the Court of Appeals should have declared the promissory note null and void on the
following grounds: (a) the promissory note was signed in the office of Judge Pantanosas,
outside the premises of the bank; (b) the loan was incurred for the purpose of buying a
second-hand chainsaw which cost only P5,000.00; (c) even a new chainsaw would cost
only P27,500.00; (d) the loan was not approved by the board or credit committee which
was the practice, as it exceeded P5,000.00; (e) the loan had no collateral; (f) petitioner
and Judge Pantanosas were not present at the time the loan was released in
contravention of the bank practice, and (g) notices of default are sent simultaneously and
separately but no notice was validly sent to him.​8 Finally, petitioner contends that in
signing the promissory note, his consent was vitiated by fraud as, contrary to their
agreement that the loan was only for the amount of P5,000.00, the promissory note
stated the amount of P50,000.00.
The above-stated points are clearly factual. Petitioner is to be reminded of the basic rule
that this Court is not a trier of facts. Having lost the chance to fully ventilate his factual
claims below, petitioner may no longer be accorded the same opportunity in the absence
of grave abuse of discretion on the part of the court below. Had he presented Judge
Pantanosas affidavit before the lower court, it would have strengthened his claim that the
promissory note did not reflect the correct amount of the loan.
Nor is there merit in petitioner's assertion that since the promissory note "is not a public
deed with the formalities prescribed by law but . . . a mere commercial paper which does
not bear the signature of . . . attesting witnesses," parol evidence may "overcome" the
contents of the promissory note.​9​ The first paragraph of the parol evidence rule 10​
​ states:
When the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the parties and their
successors in interest, no evidence of such terms other than the contents of the written
agreement.
Clearly, the rule does not specify that the written agreement be a public document.
What is required is that the agreement be ​in writing as the rule is in fact founded on
"long experience that written evidence is so much more certain and accurate than that
which rests in fleeting memory only, that it would be unsafe, when parties have
expressed the terms of their contract in writing, to admit weaker evidence to control and
vary the stronger and to show that the
parties intended a different contract from that expressed in the writing signed by them."
11
Thus, for the parol evidence rule to apply, a written contract need not be in any
particular form, or be signed by both parties. 12
​ As a general rule, bills, notes and other
instruments of a similar nature are not subject to be varied or contradicted by parol or
extrinsic evidence. 13
​
By alleging fraud in his answer, 14​ petitioner was actually in the right direction towards
proving that he and his co-makers agreed to a loan of P5,000.00 only considering that,
where a parol contemporaneous agreement was the inducing and moving cause of the
written contract, it may be shown by parol evidence. 15 ​ However, fraud must be
established by clear and convincing evidence, mere preponderance of evidence, not even
being adequate. 16​
​ Petitioner's attempt to prove fraud must, therefore, fail as it was
evidenced only by his own uncorroborated and, expectedly, self-serving testimony.
Petitioner also argues that the dismissal of the complaint against Naybe, the principal
debtor, and against Pantanosas, his co-maker, constituted a release of his obligation,
especially because the dismissal of the case against Pantanosas was upon the motion of
private respondent itself. He cites as basis for his argument, Article 2080 of the Civil Code
which provides that:
The guarantors, even though they be solidary, are released from their obligation
whenever by some act of the creditor, they cannot be subrogated to the rights,
mortgages, and preferences of the latter.
It is to be noted, however, that petitioner signed the promissory note as a solidary
co-maker and not as a guarantor. This is patent even from the first sentence of the
promissory note which states as follows:
Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY
promise to pay to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City of
Cagayan de Oro, Philippines the sum of FIFTY THOUSAND ONLY (P50,000.00) Pesos,
Philippine Currency, together with interest . . . at the rate of SIXTEEN (16) per cent per
annum​ until fully paid.
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. ​1​7 on the
other hand, Article 2047 of the Civil Code states:
By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the
obligation of the principal debtor ​in case the latter should fail to do so​.
If a person binds himself solidarily with the principal debtor, the provisions of Section 4,
Chapter 3, Title I of this Book shall be observed. In such a case the contract is called a
suretyship. (Emphasis supplied.)
While a guarantor may bind himself solidarily with the principal debtor, the liability of a
guarantor is different from that of a solidary debtor. Thus, Tolentino explains:
A guarantor who binds himself ​in solidum with the principal debtor under the provisions
of the second paragraph does not become a solidary co-debtor to all intents and
purposes. There is a difference between a solidary co-debtor and a fiador in solidum
(surety). The latter, outside of the liability he assumes to pay the debt before the
property of the principal debtor has been exhausted, retains all the other rights, actions
and benefits which pertain to him by reason of the fiansa​; while a solidary co-debtor has
no other rights than those bestowed upon him in Section 4, Chapter 3, Title I, Book IV of
the Civil Code. 18
​

Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and several
obligations. Under Art. 1207 thereof, when there are two or more debtors in one and the
same obligation, the presumption is that the obligation is joint so that each of the debtors
is liable only for a proportionate part of the debt. 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. 19
​

Because the promissory note involved in this case expressly states that the three
signatories therein are jointly and severally liable,​ any one, some or all of them may be
proceeded against for the entire obligation. 20
​ The choice is left to the solidary creditor to
determine against whom he will enforce collection. 21 ​ Consequently, the dismissal of the
case against Judge Pontanosas may not be deemed as having discharged petitioner from
liability as well. As regards Naybe, suffice it to say that the court never acquired
jurisdiction over him. Petitioner, therefore, may only have recourse against his
co-makers, as provided by law.

WHEREFORE, the instant petition for review on ​certiorari is hereby DENIED and the
questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.

Regalado, Puno, Mendoza and Torres, Jr., JJ., concur.


THIRD DIVISION
G.R. No. 154852 October 21, 2004
MULTINATIONAL VILLAGE HOMEOWNERS ASSOCIATION, INC. and DANILO F.
CUNETA,​ petitioners,
vs.
ARA SECURITY & SURVEILLANCE AGENCY, INC., Represented by THERESA C.
MAMAED, President and General Manager,​ respondent.
DECISION
PANGANIBAN, ​J.:
Basic is the rule that a contract constitutes the law between the parties. The mere grant
to one party of the right to terminate the agreement because of the nonpayment of an
obligation established therein does not ipso facto give the other party the same right to
end the contract on the ground of allegedly unsatisfactory
service. Concededly, parties may validly stipulate the unilateral rescission of a contract.
The Case
Before us is a Petition for Review​1 under Rule 45 of the Rules of Court, challenging the
October 11, 2001 Decision​2 and the August 12, 2002 Resolution​3 of the Court of Appeals
(CA) in CA-GR CV No. 62431. The assailed Decision disposed as follows:
"IN VIEW OF ALL THE FOREGOING, the judgment appealed from is hereby AFFIRMED
with MODIFICATION to read as follows:
‘WHEREFORE, premises considered, judgment is hereby rendered in favor of the
[respondent] and as against the [petitioners], ordering the latter to pay the [respondent]
jointly and severally the following amounts:
1. ₱591,250.00, as actual damages;
2. ₱30,000.00, as attorney’s fees; and
3. Costs of the suit."​4
The assailed Resolution denied petitioners’ Motion for Reconsideration.
The Facts
The antecedents are summarized by the appellate court as follows:
"In the Complaint filed below, it is alleged that Ara Security and Surveillance, Inc.
[(‘Ara’)] was hired by Multinational Village Homeowners Association, Inc.
[(‘Multinational’)] to provide security services at the Multinational Village, Parañaque,
Metro Manila. Their agreement was embodied in a document, entitled Contract of Guards
Services dated May 30, 1994. The contract was to take effect for a period of one (1) year
from May 25, 1994 up to May 25, 1995 on a monthly fee of One Hundred Seven
Thousand Five Hundred (₱107,500.00) Pesos, payable every 15th and end of the month
without need of demand. Under the same contract, Ara will provide Multinational with
thirty (30) guards.
"Not long after, on August 29, 1994, Danilo F. Cuneta, President of Multinational, wrote
Ara a letter terminating the aforesaid contract effective 1900 hours of August 31, 1994,
having found the guards’ services to be unsatisfactory, for repeated violations of the
Security Guards Code of Ethics and Conduct, and total disregard of the General Order
causing loss of confidence in the ability of the security guards to comply with the terms of
the contract. Ara replied requesting Multinational to reconsider its position, which fell on
deaf ears. Thus, on September 13, 1994, Ara commenced the present suit for injunction
with preliminary injunction, preliminary mandatory injunction and temporary restraining
order with damages.
"On September 15, 1994, a temporary restraining order was issued enjoining
Multinational, their agents and all persons acting in their behalf from enforcing the letter
dated August 29, 1994 and [from] replacing the guards with another agency. The
injunctive relief was then set for hearing.
"Summons having been served properly, Multinational submitted an Answer together with
an opposition to the injunction claiming that it has the right to pre-terminate the contract
under paragraph 5 thereof stating:
"5. ​MODE OF PAYMENT​:
‘For and in consideration of the above services and during the effectivity of this Contract,
the CLIENT shall pay the SECURITY COMPANY the sum indicated in the hereto attached
cost analysis per month which consideration shall be paid every 15th and end of the
month without need of demand.
‘The CLIENT hereby agrees that it shall pay interest on accounts covered by billings
received by the CLIENT and unpaid for thirty (30) days or more at the rate of 24 per cent
per annum. This shall be without prejedice (sic) to the right of the SECURITY COMPANY
to terminate this contract immediately, for failure of CLIENT to pay the aforestated
consideration in accordance with its terms without notice.
‘The SECURITY COMPANY shall be entitled to an automatic adjustment of its stipulated
contract price in (sic) event that the minimum wage increase[s] (sic) or in favor of the
guards are promulgated by law, executive order, decree or wage order subsequent to the
execution of this contract. Said adjustments shall be equivalent to the amount of increase
in the minimum wage of the amount benefits promulgated or both as the case may be.
‘Billing shall be every fifteen (15) days. ​After three (3) months of satisfactory
performance, the parties may negotiate for the extension of this contract and
other matters that might be advantageous to both parties​."
"Meantime, after hearing the trial court denied the prayer for the issuance of a writ of
preliminary injunction on February 16, 1995.
"Finally, on December 14, 1998, the court ​a quo​ rendered its decision."​5
Ruling in favor of Ara, the trial court ordered Multinational to pay the following:
1. ₱701,137.50 as actual damages
2. ₱200,000.00 as exemplary damages
3. ₱50,000.00 as attorney’s fees
4. ₱20,000.00 as and for costs of suit and expenses of litigation
Unsatisfied, petitioners appealed to the CA.
Ruling of the Court of Appeals
The CA held that petitioners had breached their Contract when they pre-terminated it on
the basis of paragraph 5 thereof. According to the appellate court, the said provision did
not provide for a pre-termination option, but was "a mere superfluity with no clear
meaning."
Furthermore, the CA ruled that petitioners had no good and valid ground to pre-terminate
the Contract, because the documentary evidence​6 they had presented was hearsay and of
no probative value.​7
Consequently, the appellate court affirmed the lower court’s findings, but reduced the
award of actual damages to ₱591,250 representing payment for services rendered for five
and a half months at ₱107,500 per month. It also deleted the award of exemplary
damages, saying that respondent had failed to present evidence justifying the grant
thereof.​8
Hence, this Petition.​9
The Issues
In their Memorandum, petitioners raise the following issues for our consideration:
"1. Whether or not the lower erred in finding respondent’s position as the more
acceptable interpretation of the contract in question that the contract cannot be
terminated even after three months of unsatisfactory performance.
"2. Whether or not the lower court erred in ruling that petitioners failed to establish that
the termination of the contract was for legal cause.
"3. Whether or not the lower court erred in declaring that [petitioners] committed breach
of contract."​10
The issue is simply whether the pre-termination of the Contract was valid.
The Court’s Ruling
The Petition has no merit.
Main Issue:
Interpretation of Paragraph 5
The last portion of paragraph 5 of the Contract of Guard Services between petitioners and
respondent provides:
"Billing shall be every fifteen (15) days. After three (3) months of satisfactory
performance, the parties may negotiate for the extension of this contract and other
matters that might be advantageous to both parties."​11​ (Italics supplied)
Petitioners argue that the above stipulation in the Contract of Guard Services is a
resolutory condition. They allege that under this paragraph, the Contract can no longer
be enforced after the three-month period if the guards’ performance is unsatisfactory.​12
They further theorize that since respondent was given the option to end the Contract
upon their failure to pay in accordance with the specified terms, they are likewise entitled
to the option of terminating the agreement on the basis of allegedly unsatisfactory
performance.​13 They add that it would be unjust to compel respondent to continue with
this Contract despite the security guards’ ineptitude, which poses a danger to the lives
and properties of the home owners.​14
Petitioners’ contentions are not convincing. A reading of paragraph 5 yields the simple
and natural meaning that the parties may extend the Contract’s life upon mutual
agreement. The appellate court was correct in holding that the provision was a mere
superfluity. The parties need not provide that they may extend the Contract should they
mutually agree, because they may do so with or without this benign provision. Although
paragraph 5 mentions extensions, it is ominously and significantly silent on the matter of
pre-termination.
True, parties may validly provide for resolutory conditions and unilateral rescission in
their contract. However, paragraph 5 is not a resolutory condition, as it is not one that
constitutes "a future and uncertain event[,] upon the happening or fulfillment of which
rights which are already acquired by virtue of the obligation are extinguished or lost."​15
Under paragraph 5, the clause "satisfactory performance" is expressly and clearly a
consideration for extending the life of the Contract. However, in the same paragraph,
there is no mention of the effect of unsatisfactory performance.
In the absence of any stipulation or provision of law on the matter, petitioners cannot be
deemed to have the contractual right to pre-terminate the Contract unilaterally as of
August 31, 1994, on the ground of the allegedly unsatisfactory performance of the
security guards. Such interpretation is a direct contravention of paragraph 12, which
clearly states that the term of the Contract shall be one year:
"12. ​TERM OF CONTRACT​:
"This Contract shall take effect on ​May 25, 1994 and shall be for a period of One (1) Year
from said date. Thereafter, it shall be deemed renewed for the same period unless either
party notifies the other in writing not later than one (1) month before the expiry of its
intent not to renew.
 "x x x xxx xxx
"14. Either party may terminate this contract for legal cause by written notice given to
the other party not later than thirty (30) days prior to the expiry date."​16
The cases -- Pamintuan v. CA​17 and Viray v. Intermediate Appellate Court​18 -- cited by
petitioners to support the alleged existence of a resolutory condition are not applicable to
the present controversy. In the cited Decisions, the obligations under the lease Contracts
as well as the consequences of the lessees’ failure to comply with those obligations --
particularly, rescission and the landlord’s taking possession of the leased premises --
were clearly set forth in the law and in the Contracts, respectively. Thus, it was clearly
discernible in those cases that the failure to comply with the contractual obligations
constituted a resolutory condition.
The foregoing situation does not obtain in the present case. The consequence of
unsatisfactory performance is not specified in the Contract of Guard Services. There is no
stipulation permitting petitioners to terminate the Contract upon an unsatisfactory
performance of the security guards. Paragraph 5 cannot be deemed to be a resolutory
condition.
Danilo F. Cuneta cannot stand as competent evidence. The Letter-Complaints presented
in court were neither identified, nor were their contents affirmed, by their authors.
Therefore, insofar as they purport to prove that the security guards were remiss in their
duties, the Letter-Complaints are hearsay and inadmissible evidence.​21 In ​Desierto v.
Estrada,​ we held as follows:
"Evidence is called hearsay when its probative force depends, in whole or in part, on the
competency and credibility of some persons other than the witness by whom it is sought
to produce it. There are three reasons for excluding hearsay evidence: (1) absence of
cross examination; (2) absence of demeanor evidence, and (3) absence of the oath."
Finally, it is a settled principle of law that rescission will not be permitted for a slight or
casual breach of a contract, but only for such breaches as are so substantial and
fundamental as to defeat the object of the parties in entering into the agreement.​22
Petitioners failed to produce evidence of any substantial and fundamental breach that
would warrant the rescission of the Contract.
WHEREFORE, the Petition is ​DENIED and the assailed Decision ​AFFIRMED.​ Costs
against petitioners.

The contention of petitioners that the grant to respondent of the option to terminate SO ORDERED.
gives them the same right is a non sequitur. As they themselves argue, parties may
validly provide for unilateral rescission in a contract. Sandoval-Gutierrez, Corona, Carpio Morales,​ and ​Garcia, JJ.,​ concur.

Next, petitioners contend that the court a quo did not comply with Section 11 of Rule 130
of the Rules of Court, because it failed to give effect to paragraph 5. They further invoke
Section 12​19 of the same Rule, arguing that relative to the provision of the Contract on
the duration of its effectivity, which is one year, paragraph 5 is a particular provision.​20
They conclude that since the two provisions are inconsistent, paragraph 5 -- being the
particular provision -- should prevail.

Section 11 of Rule 130 of the Rules of Court states that "[i]n the construction of an
instrument where there are several provisions or particulars, such a construction is, if
possible, to be adopted as will give effect to all." Contrary to petitioners’ contention,
paragraph 5 is not inconsistent with paragraph 12. More important, the former does not
in any way deal with the termination of the Contract. Neither does it provide for a right to
rescind.

At this point, we stress that the right to rescind is implied in reciprocal obligations, as
provided for in Article 1191 of the Civil Code, which states:

"ART. 1191. 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.

"x x x xxx x x x."

Therefore, absent any provision providing for a right to rescind, the parties may
nevertheless rescind the contract should the other obligor fail to comply with its
obligations.

As correctly held by the CA in the instant case, petitioners failed to produce evidence of
the alleged breach of obligation by respondent. The investigation made by Petitioner
 because of the petitioner's failure to comply with the terms and conditions of their
Republic of the Philippines contract. The other applicable provisions are: Article 1714 . . . Article 1715 . . . Article
1727 . . . It is a basic principle in human relations, acknowledged in Article 19 of the Civil
SUPREME COURT Code, that "every person must, in the performance of his duties, act with justice, give
everyone his due, and observe honesty and good faith." This admonition is reiterated in
Manila Article 1159, which states that "obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith." The
FIRST DIVISION petitioner has ignored these exhortations and is therefore not entitled to the relief he
seeks.

3. ADMINISTRATIVE LAW; THE PHILIPPINE DOMESTIC CONSTRUCTION BOARD

HAS NO POWER TO ADJUDICATE A CASE FOR RESCISSION OF CONSTRUCTION
G.R. No. 96643. April 23, 1993. CONTRACT. — The wording of P.D. 1746 is clear. The adjudicatory powers of the
Philippine Domestic Construction Board are meant to apply only to public construction
ERNESTO DEIPARINE, JR., petitioner, contracts. Its power over private construction contracts is limited to the formulation and
recommendation of rules and procedures for the adjudication and settlement of disputes
vs. involving such (private) contracts. It therefore has no jurisdiction over cases like the one
at bar which remain cognizable by the regular courts of justice.
THE HON. COURT OF APPEALS, CESARIO CARUNGAY and ENGR. NICANOR TRINIDAD,
respondents. 4. LEGAL AND JUDICIAL ETHICS; COUNSEL WHO TRIES TO MISLEAD THE COURT
BY DELIBERATELY MISQUOTING THE LAW IS SUBJECT TO DISCIPLINE. — Counsel is
Gregorio B. Escasinas for petitioner.
obviously trying to mislead the Court. First, he purposely misquotes Section 6(b),
paragraph 3, substituting the word "the" for "public," . . . Second, he makes the wrong
Florido and Associates for respondents.
emphasis in paragraph 5, . . . For deliberately changing the language of the
above-quoted paragraph 3, Atty. Gregorio B. Escasinas has committed contempt of this
SYLLABUS
Court and shall be disciplined. As for paragraph 5, the correct stress should be on the
words "formulate and recommend," which is all the body can do, rather than on
1. CIVIL LAW; CONTRACTS; RESCISSION IS USED IN TWO DIFFERENT CONTEXTS
adjudication and settlement."
IN THE CIVIL CODE. — Deiparine seems to be confused over the right of rescission, which
is used in two different contexts in the Civil Code. Under the law on contracts, there are
DECISION
what are called "rescissible contracts" which are enumerated in Article 1381 . . . There is
also a right of rescission under the law on obligations as granted in Article 1191.
CRUZ, J p:

2. ID.; ID.; ARTICLES 19, 1159, 1191, 1714, 1715 AND 1727, CIVIL CODE ARE
This case involves not only the factual issue of breach of contract and the legal questions
APPLICABLE, WHILE ARTICLES 1381, 1385 AND 1725, SAME CODE ARE NOT, IN CASE OF
of jurisdiction and rescission. The basic inquiry is whether the building subject of this
BREACH OF CONSTRUCTION CONTRACT. — The petitioner challenges the application by
litigation is safe enough for its future occupants. The petitioner says it is, but the private
the lower court of Article 1191 of the Civil Code in rescinding the construction agreement.
respondents demur. They have been sustained by the trial court and the appellate court.
His position is that the applicable rules are Articles 1385 and 1725 of the Civil Code . . .
The petitioner says they have all erred.
Article 1385, upon which Deiparine relies, deals with the rescission of the contracts
enumerated above, which do not include the construction agreement in question . . . The
The spouses Cesario and Teresita Carungay entered into an agreement with Ernesto
construction contract falls squarely under the coverage of Article 1191 because it imposes
Deiparine, Jr. on August 13, 19B2, for the construction of a three-story dormitory in Cebu
upon Deiparine the obligation to build the structure and upon the Carungays the
City. 1 The Carungays agreed to pay P970,000.00, inclusive of contractor's fee, and
obligation to pay for the project upon its completion. Article 1191, unlike Article 1385, is
Deiparine bound himself to erect the building "in strict accordance to (sic) plans and
not predicated on economic prejudice to one of the parties but on breach of faith by one
specifications." Nicanor Trinidad, Jr., a civil engineer, was designated as the
of them that violates the reciprocity between them. The violation of reciprocity between
representative of the Carungay spouses, with powers of inspection and coordination with
Deiparine and the Carungay spouses, to wit, the breach caused by Deiparine's failure to
the contractor.
follow the stipulated plans and specifications, has given the Carungay spouses the right
to rescind or cancel the contract. Article 1725 cannot support the petitioner's position Deiparine started the construction on September 1, 1982. 2 On November 6, 1982,
either, for this contemplates a voluntary withdrawal by the owner without fault on the Trinidad sent him a document entitled General Conditions and Specifications which inter
part of the contractor, who is therefore entitled to indemnity, and even damages, for the alia prescribed 3,000 psi (pounds per square inch) as the minimum acceptable
work he has already commenced. There is no such voluntary withdrawal in the case at compressive strength of the building. 3
bar. On the contrary, the Carungays have been constrained to ask for judicial rescission
In the course of the construction, Trinidad reported to Cesario Carungay that Deiparine
had been deviating from the plans and specifications, thus impairing the strength and
safety of the building. On September 25, 1982, Carungay ordered Deiparine to first
secure approval from him before pouring cement. 4 This order was not heeded,
prompting Carungay to send Deiparine another memorandum complaining that the
"construction works are faulty and done haphazardly . . . mainly due to lax supervision
coupled with . . . inexperienced and unqualified staff." 5 This memorandum was also
ignored.
After several conferences, the parties agreed to conduct cylinder tests to ascertain if the
structure thus far built complied with safety standards. Carungay suggested core testing.
Deiparine was reluctant at first but in the end agreed. He even promised that if the tests
should show total failure, or if the failure should exceed 10%, he would shoulder all
expenses; otherwise, the tests should be for the account of Carungay.
The core testing was conducted by Geo-Testing International, a Manila-based firm, on
twenty-four core samples. On the basis of 3,000 psi, all the samples failed; on the basis
of 2,500 psi, only three samples passed; and on the basis of 2,000 psi, nineteen samples
failed. 6 This meant that the building was structurally defective.
In view of this finding, the spouses Carungay filed complaint with the Regional Trial Court
of Cebu for the rescission of the construction contract and for damages. Deiparine moved
to dismiss, alleging that the court had no jurisdiction over construction contracts, which
were now cognizable by the Philippine Construction Development Board pursuant to
Presidential Decree No. 1746. The motion was denied in an order dated April 12, 1984.
After trial on the merits, Judge Juanito A. Bernad rendered judgment: a) declaring the
construction agreement rescinded; b) condemning Deiparine to have forfeited his
expenses in the construction in the same of P244,253.70; c) ordering Deiparine to
reimburse to the spouses Carungay the sum of P15,104.33 for the core testing; d)
ordering Deiparine to demolish and remove all the existing structures and restore the
premises to their former condition before the construction began, being allowed at the
same time to take back with him all the construction materials belonging to him; and e)
ordering Deiparine to pay the Carungay spouses attorney's fees in the amount of
P10,000.00 as well as the costs of the suit. 7
On appeal, the decision was affirmed in toto by the respondent court on August 14, 1990.
8 His motion for reconsideration having been denied, petitioner Ernesto Deiparine, Jr. has
come to this Court to question once more the jurisdiction of the regular courts over the
case and the power of the trial court to grant rescission. He will lose again.
The challenge to the jurisdiction of the trial court is untenable.
P.D. 1746 created the Construction Industry Authority of the Philippines (CIAP) as the
umbrella organization which shall exercise jurisdiction and supervision over certain
administrative bodies acting as its implementing branches. The implementing body in this
case is the Philippine Domestic Construction Board (PDCB) and not the inexistent
Philippine Construction Development Board as maintained by Deiparine.
Among the functions of the PDCB under Section 6 of the decree are to:
xxx xxx xxx
3. Adjudicate and settle claims and implementation of public construction contracts
and for this purpose, formulate and adopt the necessary rules and regulations subject to
the approval of the President:
xxx xxx xxx
5. Formulate and recommend rules and procedures for the adjudication and
settlement of claims and disputes in the implementation of contracts in private
construction; (Emphasis supplied)
Deiparine argues that the Philippine Construction Development Board (that is, the
Philippine Domestic Construction Board) has exclusive jurisdiction to hear and try
disputes arising from domestic constructions. He invokes the above-mentioned functions
to prove his point.
His counsel is obviously trying to mislead the Court. First, he purposely misquotes Section
6(b), paragraph 3, substituting the word "the" for "public," thus:
3. Adjudicate and settle claims and disputes in the implementation of the
construction contracts and for this purpose, formulate and adopt the necessary rules and
regulations subject to the approval of the President; (Emphasis ours).
Second, he makes the wrong emphasis in paragraph 5, thus:
5. Formulate and recommend rules and procedures for the ADJUDICATION and
SETTLEMENT of CLAIMS and DISPUTES in the implementation of CONTRACTS in PRIVATE
CONSTRUCTIONS.
For deliberately changing the language of the abovequoted paragraph 3, Atty. Gregorio P.
Escasinas has committed contempt of this Court and shall be disciplined. As for paragraph
5, the correct stress should be on the words "formulate and recommend," which is all the
body can do, rather than on "adjudication and settlement."
The wording of P.D. 1746 is clear. The adjudicatory powers of the Philippine Domestic
Construction Board are meant to apply only to public construction contracts. Its power
over private construction contracts is limited to the formulation and recommendation of
rules and procedures for the adjudication and settlement of disputes involving such
(private) contracts. It therefore has no jurisdiction over cases like the one at bar which
remain cognizable by the regular courts of justice.
On the issue of rescission, Deiparine insists that the construction agreement does not
specify any compressive strength for the structure nor does it require that the same be
subjected to any kind of stress test. Therefore, since he did not breach any of his
covenants under the agreement, the court erred in rescinding the contract.
The record shows that Deiparine commenced the construction soon after the signing of
the contract, even before Trinidad had submitted the contract documents, including the
General Conditions and Specifications.
According to Eduardo Logarta, the petitioner's own project engineer, Deiparine actually
instructed him and some of the other workers to ignore the specific orders or instructions
of Carungay or Trinidad relative to the construction. 9 Most of these orders involved
safety measures such as: (1) the use of two concrete vibrators in the pouring of all
columns, beams and slabs; (2) making PVC pipes well-capped to prevent concrete from
setting inside them; (3) the use of 12-mm reinforcement bars instead of 10-mm bars; (4)
the use of mixed concrete reinforcements instead of hollow block reinforcements; and (5)
securing the approval of the owner or his representative before any concrete-pouring so
that it could be determined whether the cement mixture complied with safety standards.
Deiparine obviously wanted to avoid additional expenses which would reduce his profit.
Parenthetically, it is not disputed that Deiparine is not a civil engineer or an architect but
a master mariner and former ship captain; 10 that Pio Bonilla, a retainer of Deiparine
Construction, was not the supervising architect of the protect; 11 that the real supervisor
of the construction was Eduardo-Logarta, who was only a third year civil engineering
student at the time; 12 that his understudy was Eduardo Martinez, who had then not yet
passed the board examinations; 13 and that the supposed project engineer, Nilo
Paglinawan, was teaching full-time at the University of San Jose-Recoletos, and had in
fact entered the construction site only after November 4, 1982, although the construction
had already begun two months earlier. 14
It was after discovering that the specifications and the field memorandums were not
being followed by Deiparine that Carungay insisted on the stress tests.
There were actually two sets of specifications. The first "Specifications" are labeled as
such and are but a general summary of the materials to be used in the construction.
These were prepared by Trinidad prior to the execution of the contract for the purpose
only of complying with the document requirements of the loan application of Cesario
Carungay with the Development Bank of the Philippines. The other specifications, which
were also prepared by Trinidad, are entitled "General Conditions and Specifications" and
laid down in detail the requirements of the private respondent in the construction of his
building.
In his testimony, Deiparine declared that when the contract was signed on August 13,
1982, it was understood that the plans and specifications would be given to him by
Trinidad later. 15 Deiparine thus admitted that the plans and specifications referred to in
the construction agreement were not the first Specifications but the General Conditions
and Specifications submitted by Trinidad in November 1982. This second set of
specifications required a structural compressive strength of 3,000 psi. 16 It completely
belies Deiparine's contention that no compressive strength of the dormitory was required.
Deiparine further argues that by following the concrete mixture indicated in the first
specifications, that is, 1:2:4, the structure would still attain a compressive strength of
2,500 psi, which was acceptable for dormitories. According to him, the 3,000 psi
prescribed in the General Conditions and Specifications was recommended for roads, not
for buildings. In so arguing, he is interpreting the two specifications together but applying
only the first and rejecting the second.
Deiparine also avers that the contract does not also require any kind of test to be done
on the structure and that, test or no test, he has not violated the agreement.
Nevertheless, he subjected the building to a cylinder test just to convince Carungay that
the unfinished dormitory was structurally sound.
A cylinder test is done by taking samples from fresh concrete, placing them in a cylinder
mold and allowing them to harden for a maximum of 28 days, following which they are
subjected to compression to determine if the cement mixture to be poured conforms to
accepted standards in construction. 17 Carungay was not satisfied with the results of the
cylinder test because they were inconsistent and could easily be falsified by the simple
expedient of replacing the samples with a good mixture although a different mixture had
been used in the actual pouring. Consequently, Carungay requested core testing, a more
reliable procedure because the specimens obtained by extracting concrete from the
hardened existing structure would determine its actual strength. The core test is less
prone to manipulation than the cylinder test because the samples in the former are taken
from the building which is already standing. 18
Deiparine vehemently refused to go along with the core test, insisting that the results of
the cylinder test earlier made were conclusive enough to prove that the building was
structurally sound. What was the real reason for this refusal? After all, Carungay would
shoulder the expenses if the specimens passed the core test, unlike the cylinder test,
which was for the petitioner's account. The only logical explanation would be that
Deiparine was not sure that the core test would prove favorable to him.
We see no reason to disturb the factual finding of the courts below that Deiparine did not
deal with the Carungays in good faith. His breach of this duty constituted a substantial
violation of the contract correctible by judicial rescission.
The petitioner challenges the application by the lower court of Article 1191 of the Civil
Code in rescinding the construction agreement. His position is that the applicable rules
are Articles 1385 and 1725 of the Civil Code.
Article 1385 states:
Rescission creates the obligation to return the things which were the object of the
contract, together with their fruits, and the price with its interest; consequently, it can be
carried out only when he who demands rescission can return whatever he may be obliged
to restore.
Article 1725 provides that in a contract for a piece of work:
The owner may withdraw at will from the construction of the work, although it may have
been commenced, indemnifying the contractor for all the latter's expenses, work, and the
usefulness which the owner may obtain therefrom, and damages.
Deiparine seems to be confused over the right of rescission, which is used in two different
contexts in the Civil Code.
Under the law on contracts, there are what are called "rescissible contracts" which are
enumerated in Article 1381 thus:
(1) Those which are entered into by guardians whenever the wards who they
represent suffer lesion by more than one-fourth of the value of the things which are the
object thereof;
(2) Those agreed upon in representation of absentees, if the latter suffer the lesion
stated in the preceding number:
(3) Those undertaken in fraud of creditors when the later cannot in any other
manner collect the claims due them:
(4) Those which refer to things under litigation if they have been entered into by the
defendants without the knowledge and approval of the litigants or of competent judicial
authority;
(5) All other contracts specially declared by law to be subject to rescission.
Article 1385, upon which Deiparine relies, deals with the rescission of the contracts
enumerated above, which do not include the construction agreement in question.
There is also a right of rescission under the law on obligations as granted in Article 1191,
providing as follows:
"Art. 1191. 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. He may also seek rescission, even after he
has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the
fixing of a period.
This is understood to be without prejudice to the rights of third persons who have
acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.
This was the provision the trial court and the respondent court correctly applied because
it relates to contracts involving reciprocal obligations like the subject construction
contract. The construction contract fails squarely under the coverage of Article 1191
because it imposes upon Deiparine the obligation to build the structure and upon the
Carungays the obligation to pay for the project upon its completion.
Article 1191, unlike Article 1385, is not predicated on economic prejudice to one of the,
parties but on breach of faith by one of them that violates the reciprocity between them.
19 The violation of reciprocity between Deiparine and the Carungay spouses, to wit, the
breach caused by Deiparine's failure to follow the stipulated plans and specifications, has
given the Carungay spouses the right to rescind or cancel the contract.
Article 1725 cannot support the petitioner's position either, for this contemplates a
voluntary withdrawal by the owner without fault on the part of the contractor, who is
therefore entitled to indemnity, and even damages, for the work he has already
commenced. there is no such voluntary withdrawal in the case at bar. On the contrary,
the Carungays have been constrained to ask for judicial rescission because of the
petitioner's failure to comply with the terms and conditions of their contract.
The other applicable provisions are:
Article 1714. If the contractor agrees to produce the work from material furnished by
him, he shall deliver the thing produced to the employer and transfer dominion over the
thing. This contract shall be governed by the following articles as well as by the pertinent
provisions on warranty of title and against hidden defects and the payment of price in a
contract of sale.
Article 1715. The contractor shall execute the work in such a manner that it has the
qualities agreed upon and has no defects which destroy or lessen its value or fitness for
its ordinary or stipulated use. Should the work be not of such quality, the employer may
require that the contractor remove the defect or execute another work. If the contractor
fails or refuses to comply with this obligation, the employer may have the defect removed
or another work executed, at the contractor's cost.
Article 1727. The contractor is responsible for the work done by persons employed by
him.
While it is true that the stress test was not required in any of the contract documents,
conducting the test was the only manner by which the owner could determine if the
contractor had been faithfully complying with his presentations under their agreement.
Furthermore, both parties later agreed in writing that the core test should be conducted.
When the structure failed under this test the Carungay spouses were left with no other
recourse than to rescind their contract.
It is a basic principle in human relations, acknowledged in Article 19 of the Civil Code,
that "every person must, in the performance of his duties, act with justice, give everyone
his due, and observe honesty and good faith." This admonition is reiterated in Article
1159, which states that "obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith." The petitioner has
ignored these exhortations and is therefore not entitled to the relief he seeks.
WHEREFORE, the challenged decision is hereby AFFIRMED and the instant petition for
review is DENIED, with costs against the petitioner. For deliberately changing the
language of Section 6(b), paragraph 3, of P.D. No. 1746, Atty. Gregorio B. Escasinas is
hereby fined P1,000.00, with the warning that repetition of a similar offense will be dealt
with more severely. It is so ordered. Concur.
Griño-Aquino, Bellosillo and Quiason, JJ ., concur.