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SPECPRORule86_CaseDigest
Republic of the Philippines 1/13/1993 SR 108 32,566 eggs February 3, 1993
SUPREME COURT 1/20/1993 SR 109 21,485 eggs February 10, 1993
Manila 1/22/1993 SR 110 7,213 eggs February 12, 1993
SECOND DIVISION 1/28/1993 SR 111 14,495 eggs February 18, 1993
G.R. No. 158086 February 14, 2008 1/30/1993 SR 112 15,346 eggs February 20, 1993
ASJ CORPORATION and ANTONIO SAN JUAN, petitioners, 2/3/1993 SR 113 7
10,24[5] eggs February 24, 1993
vs. TOTAL 101,350 eggs
SPS. EFREN & MAURA EVANGELISTA, respondents. On February 3, 1993, respondent Efren went to the hatchery to pick up the chicks and by-products covered
DECISION by Setting Report No. 108, but San Juan refused to release the same due to respondents' failure to settle
QUISUMBING, J.: accrued service fees on several setting reports starting from Setting Report No. 90. Nevertheless, San Juan
For review on certiorari is the Decision1 dated April 30, 2003 of the Court of Appeals in CA-G.R. CV No. accepted from Efren 10,245 eggs covered by Setting Report No. 113 and P15,000.008 in cash as partial
56082, which had affirmed the Decision dated July 8, 1996 of the Regional Trial Court (RTC) of Malolos, payment for the accrued service fees.
Bulacan, Branch 9 in Civil Case No. 745-M-93. The Court of Appeals, after applying the doctrine of On February 10, 1993, Efren returned to the hatchery to pick up the chicks and by-products covered by
piercing the veil of corporate fiction, held petitioners ASJ Corporation (ASJ Corp.) and Antonio San Juan Setting Report No. 109, but San Juan again refused to release the same unless respondents fully settle their
solidarily liable to respondents Efren and Maura Evangelista for the unjustified retention of the chicks and accounts. In the afternoon of the same day, respondent Maura, with her son Anselmo,
egg by-products covered by Setting Report Nos. 108 to 113.3 tendered P15,000.009 to San Juan, and tried to claim the chicks and by-products. She explained that she
The pertinent facts, as found by the RTC and the Court of Appeals, are as follows: was unable to pay their balance because she was hospitalized for an undisclosed ailment. San Juan accepted
Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale business of the P15,000.00, but insisted on the full settlement of respondents' accounts before releasing the chicks and
buying broiler eggs, hatching them, and selling their hatchlings (chicks) and egg by-products in Bulacan by-products. Believing firmly that the total value of the eggs delivered was more than sufficient to cover
and Nueva Ecija. For the incubation and hatching of these eggs, respondents availed of the hatchery the outstanding balance, Maura promised to settle their accounts only upon proper accounting by San Juan.
services of ASJ Corp., a corporation duly registered in the name of San Juan and his family. San Juan disliked the idea and threatened to impound their vehicle and detain them at the hatchery
Sometime in 1991, respondents delivered to petitioners various quantities of eggs at an agreed service fee compound if they should come back unprepared to fully settle their accounts with him.
of 80 centavos per egg, whether successfully hatched or not. Each delivery was reflected in a "Setting On February 11, 1993, respondents directed their errand boy, Allan Blanco, to pick up the chicks and by-
Report" indicating the following: the number of eggs delivered; the date of setting or the date the eggs products covered by Setting Report No. 110 and also to ascertain if San Juan was still willing to settle
were delivered and laid out in the incubators; the date of candling or the date the eggs, through a lighting amicably their differences. Unfortunately, San Juan was firm in his refusal and reiterated his threats on
system, were inspected and determined if viable or capable of being hatched into chicks; and the date of respondents. Fearing San Juan's threats, respondents never went back to the hatchery.
hatching, which is also the date respondents would pick-up the chicks and by-products. Initially, the service The parties tried to settle amicably their differences before police authorities, but to no avail. Thus,
fees were paid upon release of the eggs and by-products to respondents. But as their business went along, respondents filed with the RTC an action for damages based on petitioners' retention of the chicks and by-
respondents' delays on their payments were tolerated by San Juan, who just carried over the balance, as products covered by Setting Report Nos. 108 to 113.
there may be, into the next delivery, out of keeping goodwill with respondents. On July 8, 1996, the RTC ruled in favor of respondents and made the following findings: (1) as of Setting
From January 13 to February 3, 1993, respondents had delivered to San Juan a total of 101,3[50] 5 eggs, Report No. 107, respondents owed petitioners P102,336.80;10 (2) petitioners withheld the release of the
detailed as follows: chicks and by-products covered by Setting Report Nos. 108-113;11 and (3) the retention of the chicks and
Date Set SR Number No. of eggs delivered Date hatched/ by-products was unjustified and accompanied by threats and intimidations on respondents. 12 The RTC
disregarded the corporate fiction of ASJ Corp.,13 and held it and San Juan solidarily liable to respondents
for P529,644.80 as actual damages, P100,000.00 as moral damages, P50,000.00 as attorney's fees, plus THAT RESPONDENTS FAILED TO RETURN TO THE PLANT TO GET THE CHICKS AND BY-
interests and costs of suit. The decretal portion of the decision reads: PRODUCTS COVERED BY SETTING REPORT NOS. 110, 111, 112 AND 113.
WHEREFORE, based on the evidence on record and the laws/jurisprudence applicable thereon, judgment IV.
is hereby rendered ordering the defendants to pay, jointly and severally, unto the plaintiffs the amounts THE HONORABLE COURT OF APPEALS ERRED IN HOLDING, AS DID THE COURT A QUO,
of P529,644.80, representing the value of the hatched chicks and by-products which the plaintiffs on the THAT THE PIERCING OF THE VEIL OF CORPORATE ENTITY IS JUSTIFIED, AND
average expected to derive under Setting Reports Nos. 108 to 113, inclusive, with legal interest thereon CONSEQUENTLY HOLDING PETITIONERS JOINTLY AND SEVERALLY LIABLE TO PAY
from the date of this judgment until the same shall have been fully paid, P100,000.00 as moral damages RESPONDENTS THE SUM OF P529,644.[80].
and P50,000.00 as attorney's fees, plus the costs of suit. V.
SO ORDERED. THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONERS HAVE
Both parties appealed to the Court of Appeals. Respondents prayed for an additional award of P76,139.00 VIOLATED THE PRINCIPLES ENUNCIATED IN ART. 19 OF THE NEW CIVIL CODE AND
as actual damages for the cost of other unreturned by-products and P1,727,687.52 as unrealized profits, CONSEQUENTLY IN AWARDING MORAL DAMAGES, EXEMPLARY DAMAGES AND
while petitioners prayed for the reversal of the trial court's entire decision. ATTORNEY'S FEES.
On April 30, 2003, the Court of Appeals denied both appeals for lack of merit and affirmed the trial court's VI.
decision, with the slight modification of including an award of exemplary damages of P10,000.00 in favor THE HONORABLE COURT OF APPEALS ERRED IN NOT AWARDING PETITIONERS'
of respondents. The Court of Appeals, applying the doctrine of piercing the veil of corporate fiction, COUNTERCLAIM.16
considered ASJ Corp. and San Juan as one entity, after finding that there was no bona fide intention to Plainly, the issues submitted for resolution are: First, did the Court of Appeals err when (a) it ruled that
treat the corporation as separate and distinct from San Juan and his wife Iluminada. The fallo of the Court petitioners withheld or failed to release the chicks and by-products covered by Setting Report Nos. 108
of Appeals' decision reads: and 109; (b) it admitted the testimony of Maura; (c) it did not find that it was respondents who failed to
WHEREFORE, in view of the foregoing, the Decision appealed from is hereby AFFIRMED, with the return to the hatchery to pick up the chicks and by-products covered by Setting Report Nos. 110 to 113;
slight modification that exemplary damages in the amount of P10,000.00 are awarded to plaintiffs. and (d) it pierced the veil of corporate fiction and held ASJ Corp. and Antonio San Juan as one
Costs against defendants. entity? Second, was it proper to hold petitioners solidarily liable to respondents for the payment
SO ORDERED. of P529,644.80 and other damages?
Hence, the instant petition, assigning the following errors: In our view, there are two sets of issues that the petitioners have raised.
I. The first set is factual. Petitioners seek to establish a set of facts contrary to the factual findings of the trial
THE HONORABLE COURT OF APPEALS GRIEVOUSLY ERRED IN HOLDING, AS DID THE and appellate courts. However, as well established in our jurisprudence, only errors of law are reviewable
COURT A QUO, THAT PETITIONERS WITHHELD/OR FAILED TO RELEASE THE CHICKS AND by this Court in a petition for review under Rule 45.17 The trial court, having had the opportunity to
BY-PRODUCTS COVERED BY SETTING REPORT NOS. 108 AND 109. personally observe and analyze the demeanor of the witnesses while testifying, is in a better position to
II. pass judgment on their credibility.18 More importantly, factual findings of the trial court, when amply
THE HONORABLE COURT OF APPEALS ERRED IN ADMITTING THE HEARSAY TESTIMONY supported by evidence on record and affirmed by the appellate court, are binding upon this Court and will
OF MAURA EVANGELISTA SUPPORTIVE OF ITS FINDINGS THAT PETITIONERS not be disturbed on appeal.19 While there are exceptional circumstances20 when these findings may be set
WITHHELD/OR FAILED TO RELEASE THE CHICKS AND BY-PRODUCTS COVERED BY aside, none of them is present in this case.
SETTING REPORT NOS. 108 AND 109. Based on the records, as well as the parties' own admissions, the following facts were uncontroverted: (1)
III. As of Setting Report No. 107, respondents were indebted to petitioners for P102,336.80 as accrued service
THE HONORABLE COURT OF APPEALS, AS DID THE COURT A QUO, ERRED IN NOT FINDING fees for Setting Report Nos. 90 to 107;21 (2) Petitioners, based on San Juan's own admission,22 did not
release the chicks and by-products covered by Setting Report Nos. 108 and 109 for failure of respondents as their payment the value of the chicks and by-products they expect to derive because it is necessary that
to fully settle their previous accounts; and (3) Due to San Juan's threats, respondents never returned to the all the debts be for the same kind, generally of a monetary character. Needless to say, there was no valid
hatchery to pick up those covered by Setting Report Nos. 110 to 113. application of payment in this case.
Furthermore, although no hard and fast rule can be accurately laid down under which the juridical Furthermore, it was respondents who violated the very essence of reciprocity in contracts, consequently
personality of a corporate entity may be disregarded, the following probative factors of identity justify the giving rise to petitioners' right of retention. This case is clearly one among the species of non-performance
application of the doctrine of piercing the veil of corporate fiction in this case: (1) San Juan and his wife of a reciprocal obligation. Reciprocal obligations are those which arise from the same cause, wherein each
own the bulk of shares of ASJ Corp.; (2) The lot where the hatchery plant is located is owned by the San party is a debtor and a creditor of the other, such that the performance of one is conditioned upon the
Juan spouses; (3) ASJ Corp. had no other properties or assets, except for the hatchery plant and the lot simultaneous fulfillment of the other.28 From the moment one of the parties fulfills his obligation, delay
where it is located; (4) San Juan is in complete control of the corporation; (5) There is no bona fide by the other party begins.29
intention to treat ASJ Corp. as a different entity from San Juan; and (6) The corporate fiction of ASJ Corp. Since respondents are guilty of delay in the performance of their obligations, they are liable to pay
was used by San Juan to insulate himself from the legitimate claims of respondents, defeat public petitioners actual damages of P183,416.80, computed as follows: From respondents' outstanding balance
convenience, justify wrong, defend crime, and evade a corporation's subsidiary liability for of P102,336.80, as of Setting Report No. 107, we add the corresponding services fees of P81,080.0030 for
damages.25 These findings, being purely one of fact,26 should be respected. We need not assess and Setting Report Nos. 108 to 113 which had remain unpaid.
evaluate the evidence all over again where the findings of both courts on these matters coincide. Nonetheless, San Juan's subsequent acts of threatening respondents should not remain among those treated
On the second set of issues, petitioners contend that the retention was justified and did not constitute an with impunity. Under Article 1931 of the Civil Code, an act constitutes an abuse of right if the following
abuse of rights since it was respondents who failed to comply with their obligation. Respondents, for their elements are present: (a) the existence of a legal right or duty; (b) which is exercised in bad faith; and (c)
part, aver that all the elements on abuse of rights were present. They further state that despite their offer to for the sole intent of prejudicing or injuring another. 32 Here, while petitioners had the right to withhold
partially satisfy the accrued service fees, and the fact that the value of the chicks and by-products was delivery, the high-handed and oppressive acts of petitioners, as aptly found by the two courts below, had
more than sufficient to cover their unpaid obligations, petitioners still chose to withhold the delivery. no legal leg to stand on. We need not weigh the corresponding pieces of evidence all over again because
The crux of the controversy, in our considered view, is simple enough. Was petitioners' retention of the factual findings of the trial court, when adopted and confirmed by the appellate court, are binding and
chicks and by-products on account of respondents' failure to pay the corresponding service fees conclusive and will not be disturbed on appeal.33
unjustified? While the trial and appellate courts had the same decisions on the matter, suffice it to say that Since it was established that respondents suffered some pecuniary loss anchored on petitioners' abuse of
a modification is proper. Worth stressing, petitioners' act of withholding the chicks and by-products is rights, although the exact amount of actual damages cannot be ascertained, temperate damages are
entirely different from petitioners' unjustifiable acts of threatening respondents. The retention had legal recoverable. In arriving at a reasonable level of temperate damages of P408,852.10, which is equivalent
basis; the threats had none. to the value of the chicks and by-products, which respondents, on the average, are expected to derive, this
To begin with, petitioners' obligation to deliver the chicks and by-products corresponds to three dates: the Court was guided by the following factors: (a) award of temperate damages will cover only Setting Report
date of hatching, the delivery/pick-up date and the date of respondents' payment. On several setting Nos. 109 to 113 since the threats started only on February 10 and 11, 1993, which are the pick-up dates
reports, respondents made delays on their payments, but petitioners tolerated such delay. When for Setting Report Nos. 109 and 110; the rates of (b)41% and (c) 17%, representing the average rates of
respondents' accounts accumulated because of their successive failure to pay on several setting reports, conversion of broiler eggs into hatched chicks and egg by-products as tabulated by the trial court based on
petitioners opted to demand the full settlement of respondents' accounts as a condition precedent to the available statistical data which was unrebutted by petitioners; (d)68,784 eggs,34 or the total number of
delivery. However, respondents were unable to fully settle their accounts. broiler eggs under Setting Report Nos. 109 to 113; and (e) P14.00 and (f)P1.20, or the then unit market
Respondents' offer to partially satisfy their accounts is not enough to extinguish their obligation. Under price of the chicks and by-products, respectively.
Article 1248 of the Civil Code, the creditor cannot be compelled to accept partial payments from the Thus, the temperate damages of P408,852.10 is computed as follows:
debtor, unless there is an express stipulation to that effect. More so, respondents cannot substitute or apply [b X (d X e) + c X (d X f)] = Temperate Damages
41% X (68,784 eggs X P14) = P394,820.16 Franco L. Loyola and Sabas Cacananta for petitioner.
17% X (68,784 eggs X P1.20) = P 14,031.94 The Solicitor General for respondents.
[P394,820.16 + P14,031.94] = P408,852.10
ABAD SANTOS, J.:
At bottom, we agree that petitioners' conduct flouts the norms of civil society and justifies the award of
This is a petition to review the decision of the Sandiganbayan in Criminal Case No. 873.
moral and exemplary damages. As enshrined in civil law jurisprudence: Honeste vivere, non alterum
Hilario Jaravata was accused of violating Section 3(b) of Republic Act No. 3019, as amended, said to have
laedere et jus suum cuique tribuere. To live virtuously, not to injure others and to give everyone his
been committed in the following manner:
due.35 Since exemplary damages are awarded, attorney's fees are also proper. Article 2208 of the Civil
That on or about the period from April 30, 1979 to May 25, 1979, in the Municipality of Tubao, Province
Code provides that:
of La Union, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused,
In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be
being then the Assistant Principal of the Leones Tubao, La Union Barangay High School and with the use
recovered, except:
of his influence as such public official and taking advantage of his moral and official ascendancy over his
(1) When exemplary damages are awarded;
classroom teachers, with deliberate intent did then and there wilfully, unlawfully and feloniously made
demand and actually received payments from other classroom teachers, ROMEO DACAYANAN,
WHEREFORE, the petition is PARTLY GRANTED. The Decision dated April 30, 2003 of the Court of
DOMINGO LOPEZ, MARCELA BAUTISTA, and FRANCISCO DULAY various sums of money,
Appeals in CA-G.R. CV No. 56082 is hereby MODIFIED as follows:
namely: P118.00, P100.00, P50.00 and P70.00 out of their salary differentials, in consideration of accused
a. Respondents are ORDERED to pay petitioners P183,416.80 as actual damages, with interest of 6%
having officially intervened in the release of the salary differentials of the six classroom teachers, to the
from the date of filing of the complaint until fully paid, plus legal interest of 12% from the finality of this
prejudice and damage of the said classroom teachers, in the total amount of THREE HUNDRED THIRTY
decision until fully paid.
EIGHT (P338.00) PESOS, Philippine Currency. (Decision, p.1-2.)
b. The award of actual damages of P529,644.80 in favor of respondents is hereby REDUCED
After trial, the Sandiganbayan rendered the following judgment:
to P408,852.10, with legal interest of 12% from the date of finality of this judgment until fully paid.
WHEREFORE, accused is hereby found guilty beyond reasonable doubt for Violation of Section 3(b),
c. The award of moral damages, exemplary damages and attorney's fees
Republic Act No. 3019, as amended, and he is hereby sentenced to suffer an indeterminate imprisonment
of P100,000.00, P10,000.00, P50,000.00, respectively, in favor of respondents is hereby AFFIRMED.
ranging from ONE (1) YEAR, is minimum, to FOUR (4) YEARS, as maximum, to further suffer perpetual
d. All other claims are hereby DENIED.
special disqualification from public office and to pay the costs.
No pronouncement as to costs.
No pronouncement as to the civil liability it appearing that the money given to the accused was already
refunded by him. (Id. pp, 16-17.)
The petition raises factual and legal issues but for obvious reasons Our decision shall deal with the legal
issue only.
The Sandiganbayan states in its decision the following:
A perusal of the conflicting versions of the prosecution and the defense shows that there is no dispute that
[complainants] Ramos, Lloren, Lopez, Dacayanan, Dulay and Bautista are classroom teachers of the
Leones Barangay High School with accused as their assistant principal and [Conrado Baltazar as the
G.R. No. L-56170 January 31, 1984
administrator; that on January 5, 1979, accused informed the classroom teachers of the approval of the
HILARIO JARAVATA petitioner,
release of their salary differentials for 1978 and to facilitate its payment accused and the classroom teachers
agreed that accused follow-up the papers in Manila with the obligation on the part of the classroom teachers
THE HON. SANDIGANBAYAN and THE PEOPLE OF THE PHILIPPINES, respondents.
to reimburse the accused of his expenses; that accused incurred expenses in the total amount of P220.00 complainants. It should be noted that the arrangement was "to facilitate its [salary differential] payment
and there being six classroom teachers, he divided said amount by six or at the rate of P36.00 each; that accused and the classroom teachers agreed that accused follow-up the papers in Manila with the obligation
the classroom teachers actually received their salary differentials and pursuant to said agreement, they, on the part of the classroom teachers to reimburse the accused of his expenses.
with the exception of Lloren and Ramos, gave the accused varying amounts but as Baltazar did not approve In Our opinion, Sec. 3(b) of R.A. No. 3019, refers to a public officer whose official intervention is required
it, he ordered the accused to return the money given to him by Lopez, Dacayanan, Dulay and Bautista, and by law in a contract or transaction.
accused complied (Pp. 7-8.) There is no law which invests the petitioner with the power to intervene in the payment of the salary
The decision also recites that "the evidence is overwhelming to show that accused received more than the differentials of the complainants or anyone for that matter. Far from exercising any power, the petitioner
rightful contribution of P36.00 from four classroom teachers, namely: Lopez, Dulay, Dacayanan and played the humble role of a supplicant whose mission was to expedite payment of the salary differentials.
Bautista. Lopez categorically declared that he gave the accused P100.00 (TSN, p. 5, August 21, 1980 In his official capacity as assistant principal he is not required by law to intervene in the payment of the
hearing) after he received his salary differential or an excess of P64.00. So with Dulay, that he gave P70.00 salary differentials. Accordingly, he cannot be said to have violated the law afore-cited although he exerted
to the accused (TSN, p. 16, supra) or an excess of P34.00; Dacayanan, that he gave to the accused P118.00 efforts to facilitate the payment of the salary differentials.
(TSN, p. 26, supra) or an excess of P82.00, and Bautista, that he gave to the accused P50.00 (TSN, p. 38, WHEREFORE, the petition is hereby granted and the judgment of the Sandiganbayan convicting the
supra) or an excess of P14.00. In short, the total amount received by the accused in excess of the share of petitioner is set aside. Costs de oficio.
the classroom teachers in the reimbursement of his expenses is P194.00. " (P. 9.) SO ORDERED.
Republic Act No. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act provides, inter Fernando, C.J., Teehankee, Makasiar, Aquino, Concepcion, Jr., Guerrero, De Castro, Melencio-Herrera,
alia the following: Plana, Escolin, Relova and Gutierrez, Jr., JJ., concur.
Sec. 3. Corrupt practices of public officers. — In addition to acts or omissions of public officers already
penalized by existing law, the following shall constitute corrupt practices of any public officer and are —————————————-
hereby declared to be unlawful:
xxx xxx xxx Republic of the Philippines
(b) Directly or indirectly requesting or receiving any gift, present, share, percentage, or benefit, for himself SUPREME COURT
or for any other person in connection with any contract or transaction between the Government and any Manila
other party, wherein the public officer in his official capacity has to intervene under the law. EN BANC
xxx xxx xxx G.R. No. L-6913 November 21, 1913
The legal issue is whether or not, under the facts stated, petitioner Jaravata violated the above-quoted THE ROMAN CATHOLIC BISHOP OF JARO, plaintiff-appellee,
provision of the statute. vs.
A simple reading of the provision has to yield a negative answer. GREGORIO DE LA PEÑA, administrator of the estate of Father Agustin de la Peña, defendant-
There is no question that Jaravata at the time material to the case was a "public officer" as defined by appellant.
Section 2 of R.A. No. 3019, i.e. "elective and appointive officials and employees, permanent or temporary, J. Lopez Vito, for appellant.
whether in the classified or unclassified or exempt service receiving compensation, even normal from the Arroyo and Horrilleno, for appellee.
government." It may also be said that any amount which Jaravata received in excess of P36.00 from each
of the complainants was in the concept of a gift or benefit. The pivotal question, however, is whether MORELAND, J.:
Jaravata, an assistant principal of a high school in the boondocks of Tubao, La Union, "in his official This is an appeal by the defendant from a judgment of the Court of First Instance of Iloilo, awarding to the
capacity has to intervene under the law" in the payment of the salary differentials for 1978 of the plaintiff the sum of P6,641, with interest at the legal rate from the beginning of the action.
It is established in this case that the plaintiff is the trustee of a charitable bequest made for the construction or less negligent by depositing the money in his personal account than he would have been if he had
of a leper hospital and that father Agustin de la Peña was the duly authorized representative of the plaintiff deposited it in a separate account as trustee. We regard such discussion as substantially fruitless, inasmuch
to receive the legacy. The defendant is the administrator of the estate of Father De la Peña. as the precise question is not one of negligence. There was no law prohibiting him from depositing it as
In the year 1898 the books Father De la Peña, as trustee, showed that he had on hand as such trustee the he did and there was no law which changed his responsibility be reason of the deposit. While it may be
sum of P6,641, collected by him for the charitable purposes aforesaid. In the same year he deposited in his true that one who is under obligation to do or give a thing is in duty bound, when he sees events
personal account P19,000 in the Hongkong and Shanghai Bank at Iloilo. Shortly thereafter and during the approaching the results of which will be dangerous to his trust, to take all reasonable means and measures
war of the revolution, Father De la Peña was arrested by the military authorities as a political prisoner, and to escape or, if unavoidable, to temper the effects of those events, we do not feel constrained to hold that,
while thus detained made an order on said bank in favor of the United States Army officer under whose in choosing between two means equally legal, he is culpably negligent in selecting one whereas he would
charge he then was for the sum thus deposited in said bank. The arrest of Father De la Peña and the not have been if he had selected the other.
confiscation of the funds in the bank were the result of the claim of the military authorities that he was an The court, therefore, finds and declares that the money which is the subject matter of this action was
insurgent and that the funds thus deposited had been collected by him for revolutionary purposes. The deposited by Father De la Peña in the Hongkong and Shanghai Banking Corporation of Iloilo; that said
money was taken from the bank by the military authorities by virtue of such order, was confiscated and money was forcibly taken from the bank by the armed forces of the United States during the war of the
turned over to the Government. insurrection; and that said Father De la Peña was not responsible for its loss.
While there is considerable dispute in the case over the question whether the P6,641 of trust funds was The judgment is therefore reversed, and it is decreed that the plaintiff shall take nothing by his complaint.
included in the P19,000 deposited as aforesaid, nevertheless, a careful examination of the case leads us to Arellano, C.J., Torres and Carson, JJ., concur.
the conclusion that said trust funds were a part of the funds deposited and which were removed and
confiscated by the military authorities of the United States. Separate Opinions
That branch of the law known in England and America as the law of trusts had no exact counterpart in the TRENT, J., dissenting:
Roman law and has none under the Spanish law. In this jurisdiction, therefore, Father De la Peña's liability I dissent. Technically speaking, whether Father De la Peña was a trustee or an agent of the plaintiff his
is determined by those portions of the Civil Code which relate to obligations. (Book 4, Title 1.) books showed that in 1898 he had in his possession as trustee or agent the sum of P6,641 belonging to the
Although the Civil Code states that "a person obliged to give something is also bound to preserve it with plaintiff as the head of the church. This money was then clothed with all the immunities and protection
the diligence pertaining to a good father of a family" (art. 1094), it also provides, following the principle with which the law seeks to invest trust funds. But when De la Peña mixed this trust fund with his own
of the Roman law, major casus est, cui humana infirmitas resistere non potest, that "no one shall be liable and deposited the whole in the bank to hispersonal account or credit, he by this act stamped on the said
for events which could not be foreseen, or which having been foreseen were inevitable, with the exception fund his own private marks and unclothed it of all the protection it had. If this money had been deposited
of the cases expressly mentioned in the law or those in which the obligation so declares." (Art. 1105.) in the name of De la Peña as trustee or agent of the plaintiff, I think that it may be presumed that the
By placing the money in the bank and mixing it with his personal funds De la Peña did not thereby assume military authorities would not have confiscated it for the reason that they were looking for insurgent funds
an obligation different from that under which he would have lain if such deposit had not been made, nor only. Again, the plaintiff had no reason to suppose that De la Peña would attempt to strip the fund of its
did he thereby make himself liable to repay the money at all hazards. If the had been forcibly taken from identity, nor had he said or done anything which tended to relieve De la Peña from the legal reponsibility
his pocket or from his house by the military forces of one of the combatants during a state of war, it is which pertains to the care and custody of trust funds.
clear that under the provisions of the Civil Code he would have been exempt from responsibility. The fact The Supreme Court of the United States in the United State vs. Thomas (82 U. S., 337), at page 343, said:
that he placed the trust fund in the bank in his personal account does not add to his responsibility. Such "Trustees are only bound to exercise the same care and solicitude with regard to the trust property which
deposit did not make him a debtor who must respond at all hazards. they would exercise with regard to their own. Equity will not exact more of them. They are not liable for
We do not enter into a discussion for the purpose of determining whether he acted more or less negligently a loss by theft without their fault. But this exemption ceases when they mix the trust-money with their
by depositing the money in the bank than he would if he had left it in his home; or whether he was more own, whereby it loses its identity, and they become mere debtors."
If this proposition is sound and is applicable to cases arising in this jurisdiction, and I entertain no doubt No appearance for appellee.
on this point, the liability of the estate of De la Peña cannot be doubted. But this court in the majority
opinion says: "The fact that he (Agustin de la Peña) placed the trust fund in the bank in his personal account STREET, J.:
does not add to his responsibility. Such deposit did not make him a debtor who must respond at all This is a suit for the recovery of a sum of money claimed as a balance due to the plaintiff on a promissory
hazards. . . . There was no law prohibiting him from depositing it as he did, and there was no law which note. From a judgment in favor of the plaintiff for the sum of P8461, as principal, with interest thereon at
changed his responsibility, by reason of the deposit." the rate of 8 per cent per annum from the 10th day of July, 1916, until paid, and for the further sum of
I assume that the court in using the language which appears in the latter part of the above quotation meant P2,115.25, as a stipulated attorney's fee, the defendant has appealed.
to say that there was no statutory law regulating the question. Questions of this character are not usually The note in question represents the purchase price of an automobile truck which the plaintiff sold to the
governed by statutory law. The law is to be found in the very nature of the trust itself, and, as a general defendant at the time the note was executed. As security for the payment of said indebtedness, the plaintiff
rule, the courts say what facts are necessary to hold the trustee as a debtor. took a chattel mortgage on the truck; and after the note had matured this chattel mortgage was foreclosed.
If De la Peña, after depositing the trust fund in his personal account, had used this money for speculative At the foreclosure sale the plaintiff himself became the purchaser for the sum of P539, which amount was
purposes, such as the buying and selling of sugar or other products of the country, thereby becoming a credited upon the indebtedness.
debtor, there would have been no doubt as to the liability of his estate. Whether he used this money for Of the questions raised by the defense only two in our opinion require serious consideration. The first has
that purpose the record is silent, but it will be noted that a considerable length of time intervened from the reference to irregularities in the foreclosure of the chattel mortgage; the second to the validity of the
time of the deposit until the funds were confiscated by the military authorities. In fact the record shows agreement for 25 per cent as an attorney's fee for collection.
that De la Peña deposited on June 27, 1898, P5,259, on June 28 of that year P3,280, and on August 5 of We find that the requirements of section 14 of Act No. 1508 (the Chattel Mortgage of Law) were not
the same year P6,000. The record also shows that these funds were withdrawn and again deposited all observed in the sale of the truck. The irregularity consists in the fact the truck was brought by Bachrach
together on the 29th of May, 1900, this last deposit amounting to P18,970. These facts strongly indicate from Albay (which was the place of residence of the mortgagor) to the city of Manila and here sold by the
that De la Peña had as a matter of fact been using the money in violation of the trust imposed in sheriff of the city at the instance of the plaintiff. There is no evidence that the mortgagor consented to the
him. lawph!1.net removal of the truck to Manila or to the sale that was effected in the city; and it must therefore be held that
If the doctrine announced in the majority opinion be followed in cases hereafter arising in this jurisdiction the sale was improperly accomplished. The statute requires that the mortgage chattel shall be sold in the
trust funds will be placed in precarious condition. The position of the trustee will cease to be one of trust. municipality where the mortgagor resides, or where the property is situated; and the latter expression has
reference to the place where the thing is being kept for use by the mortgagor, not any place where the
——————————————- mortgagee may choose to carry it when he takes it out of the custody of the mortgagor. It is admitted that
notice of the same was not posted anywhere in the municipality of Albay, as required in the section cited;
Republic of the Philippines and of course publication there would have of little or no value when the sale was to be made in Manila.
SUPREME COURT The effect of this irregularity was, in our opinion, to make the plaintiff liable to the defendant for the full
Manila value of the truck at the time the plaintiff thus carried it off to be sold; and of course the burden is on the
EN BANC defendant to prove the amount of the damage to which he was thus subjected. With reference to the
G.R. No. L-13660 November 13, 1918 condition of the truck when it was sold, we find the following statement in the testimony of Bachrach:
E. M. BACHRACH, plaintiff-appellee, Q. What was the condition of the truck at the time it was sold? — At the time of the sale, everything that
vs. wasn't actually built on the truck was removed; tires removed, generator, lamps, dynamo, everything that
VICENTE GOLINGCO, defendant-appellant. could be taken off with a monkeywrench was removed. It was in a criminal condition.
Ramon Diokno for appellant. Q. Was the body of the truck, or the chassis, and the motor on at the time you purchased it at the sheriff's
sale? — A. No.lawphil.net The law . . . recognizes the validity of such a stipulation, and it meets the justice of the case very frequently
Q. Had it been removed? — A. Yes. We had a telegram from the sheriff of Tabaco, saying that the day he for the debtor to pay for the collection rather than the creditor, . . . We do not mean to intimate that usury
was to load the truck for Manila, he had a protest from Golingco demanding the body, and I telegraphed might not be covered up by such a stipulation, that it might not be a disguise, or contrivance for the
the sheriff to deliver the body to Golingco, and send the truck. concealment of usury; but there is no such indication in this case. There is no evidence that it was not a
There is no evidence to contradict Bachrach's testimony on this point; and we are bound to credit him bona fide stipulation to cover the contingency of having to incur expense in collecting this debt. (National
when he states his conclusion that the value of the truck at the time it was sold was the amount he paid for bank of Athens vs. Danforth, 80 Ga., 55.)
it. In the absence of proof to the contrary this must also be taken to be its value at the time it was brought But the principle that it may be lawfully stipulated that the legal expense involved in the collection of a
away from Albay. It results that the defendant has failed to prove that he suffered any damage whatever debt shall be defrayed by the debtor does not imply that such stipulations must be enforced in accordance
by the irregular manner in which the sale was conducted. with their terms, no matter how injurious or oppressive they may be. The lawful purpose to be
This brings us to the question of the amount of the attorney's fee allowed by the trial court. It is provided accomplished by such a stipulation is to permit the creditor to receive the whole amount due him under
in the note given by the defendant for the purchase price of the truck that, in the event it becoming his contract without the deduction of the expenses caused by the delinquency of the debtor. It should not
necessary to employ counsel to enforce its collection, the maker is to pay an additional twenty-five per be permitted for him to convert such a stipulation into a source of speculative profit at the expense of the
cent "as fees for the attorney collecting the same." The trial court gave judgment for the full amount due debtor.
on the note and for an additional sum of P2,115.25, for attorney's fees. The appellant assigns this as error Contracts for attorney's services in this jurisdiction stand upon an entirely different footing from contracts
and argues that the agreement to pay an attorney's fee, in addition to the principal and stipulated interest, for the payment of compensation for any other services. By the express provision of section 29 of the Code
is void as usurious and as being grossly excessive. of Civil Procedure, an attorney is not entitled in the absence of express contract to recover more than a
We are of the opinion that it may lawfully be stipulated in favor of the creditor, whether the obligation be reasonable compensation for his services; and even where an express contract is made the court can ignore
evidenced by promissory note or otherwise, that in the event that it becomes necessary, by reason of the it and limit the recovery to reasonable compensation if the amount of the stipulated fee is found by the
delinquency of the debtor, to employ counsel to enforce payment of the obligation, a reasonable attorney's court to be unreasonable. This is a very different rule from that announced in section 1091 of the Civil
fee shall be paid by the debtor, in addition to the amount due for principal and interest. The legality of such Code with reference to the obligation of contract in general, where it is said that such obligation has the
a stipulation, when annexed to a negotiate instrument is expressly recognized by the Negotiable force of law between the contracting parties. Had the plaintiff herein made an express contract to pay his
Instruments Law ((Act No. 2031, sec. 2, par. E). Inasmuch as the statutory allowance for attorney's fees, attorney an uncontingent fee of P2,115.25, for the services to be rendered in reducing the note here in suit
as costs, is notoriously less than the amount which attorneys are entitled to receive from their clients, to judgment, it would not have been enforceable against him had he seen fit to oppose it, as such a fee is
unless such a stipulation is made and enforced, it follows that a creditor may be compelled to pay, out of obviously far greater than is necessary to remunerate the attorney for the work involved and is therefore
the money due him, a considerable sum as the necessary cost of enforcing payment by the delinquent unreasonable. In order to enable the court to ignore an express contract for an attorney's fees, it is not
debtor. necessary to show, as in other contracts, that it is contrary to morality or public policy (art. 1255, Civil
Such a stipulation is not void as usurious, even when added to a contract for the payment of the highest Code). It is enough that it is unreasonable or unconscionable.
rate of interest permissible. The purpose of such a stipulation is not to increase in any respect the benefits We are not unmindful of the fact that the question as to the propriety of the stipulation for attorney's fee
ultimately to accrue to the creditor. It is true that such a stipulation may be made for the purpose of does not here arise directly between the creditor in this note and the attorney into whose hands he might
concealing usury; but that is a matter of proof to be determined in each case upon the evidence. place the note for collection. The stipulation is contained in the contract between the creditor and his
We cite, with approval, the ruling of the supreme court of Georgia upon this question, as follows: debtor; and the attorney could not be held bound thereby. Nevertheless we think the same rule applies as
A contract to pay attorney's fees for collecting, in addition to principal and interest, is not, on its face, if the question had arisen directly between attorney and client. As the court has power to fix the fee as
usurious; nor does it become usurious by reducing the debt to judgment, and including in the judgment ten between the attorney and the client, it must necessarily have the right to say whether a stipulation, like
per cent for attorney's fees. this, inserted in a promissory note is valid. A different ruling, as may be readily seen, would make it
exceedingly easy to evade the usury laws. As stated at the beginning of this discussion, the lawful purpose the plaintiff against the defendant for the recovery of wages due and unpaid, gave judgment against the
to be accomplished by such stipulation is to permit the creditor to receive the amount due without the latter for the sum of $600 and the costs of suit, less the sum of $50, Mexican.
deduction of the expenses caused by the delinquency of the debtor. It must not be used as a cloak for an On August 27, 1902, Don Vicente Perez filed in the Court of First Instance of Laguna a complaint, which
exorbitant exaction. was amended on the 17th of January of this year, asking that the court determine the amount due the
We are therefore of the opinion that we are authorized to reduce the amount in question to a sum which plaintiff, at the customary rate of compensation for interpreting in these Islands, for services rendered in
will enable the plaintiff to pay a reasonable compensation to his attorney; and we think that P800 is the Tabacalera Company, and that, in view of the circumstances of the case, judgment be rendered in his
sufficient for this purpose. It is possible that, as a matter of fact, the plaintiff may have contracted with his favor for such sum. The complaint also asked that the defendant be condemned to the payment of damages
attorney for the performances of the services to be rendered him in this matter for a sum less than P800, in the sum of $3,200, gold, together with the costs of suit. In this complaint it was alleged that Don Eugenio
and had it been so made to appear, we would have reduced the amount recoverable, under this particular Pomar, as general agent of the Compañia General de Tabacos in the said province, verbally requested the
clause of the note, to the corresponding sum. No evidence having been adduced upon this point, however, plaintiff on the 8th of December, 1901, to act as interpreter between himself and the military authorities;
we are compelled to exercise our discretion and make use of our professional knowledge as to the that after the date mentioned the plaintiff continued to render such services up to and including May 31,
reasonable compensation to which an attorney would be entitled for the performance of such services as 1902; that he had accompanied the defendant, Pomar, during that time at conferences between the latter
those which the plaintiff in this case has had occasion to require from his counsel. and the colonel commanding the local garrison, and with various officers and doctors residing in the
Wherefore it is ordered that the plaintiff have and recover of the defendant the sum of P8,461, with interest capital, and at conferences with Captain Lemen in the town of Pilar, and with the major in command at the
thereon at the rate of 8 per centum per annum, from the tenth day of July, 1916, until paid, and for the town of Pagsanjan, concerning the shipment of goods from Manila, and with respect to Pagsanjan to this
further sum of P800 as attorney's fees, and for the statutory costs of both instances, exclusive of the city; that the plaintiff during this period held himself in readiness to render services whenever required;
statutory allowance for attorney's fees. So ordered. that on this account his private business, and especially a soap factory established in the capital, was
Torres, Johnson, Araullo, Malcolm and Fisher, JJ., concur. entirely abandoned; that to the end that such services might be punctually rendered, the agent, Pomar,
assured him that the Tabacalera Company always generously repaid services rendered it, and that he
————————————- therefore did not trouble himself about his inability to devote the necessary amount of time to his business,
the defendant going so far as to make him flattering promises of employment with the company, which he
Republic of the Philippines did not accept; that these statements were made in the absence of witnesses and that therefore his only
SUPREME COURT proof as to the same was Mr. Pomar's word as a gentleman; that the employees of the company did not
Manila understand English, and by reason of the plaintiff's mediation between the agent, and the military
EN BANC authorities large profits were obtained, as would appear from the account and letterpress books of the
G.R. No. L-1299 November 16, 1903 agency corresponding to those dates. In the amended complaint it was added that the defendant, on behalf
VICENTE PEREZ, plaintiff-appellee, of the company, offered to renumerate the plaintiff for the services rendered in the most advantageous
vs. manner in which such services are compensated, in view of the circumstances under which they were
EUGENIO POMAR, Agent of the Compañia General de Tabacos, defendant-appellant. requested; and that the plaintiff, by rendering the company such services, was obliged to abandon his own
Francisco Dominguez for appellant. business, the manufacture of soap, and thereby suffered damages in the sum of $3,200, United States
Ledesma, Sumulong and Quintos for appellee. currency.
The defendant, on the 25th of September, 1902, filed an answer asking for the dismissal of the complaint,
TORRES, J.: with costs to the plaintiff. In his answer the defendant denied the allegation in the first paragraph of the
In a decision dated February 9, 1903, the judge of the Sixth Judicial District, deciding a case brought by complaint, stating that it was wholly untrue that the company, and the defendant as its agent, had solicited
the services of the plaintiff as interpreter before the military authorities for the period stated, or for any the defendant upon his journeys to some of the towns in the Province of Laguna. It does not appear from
other period, or that the plaintiff had accompanied Pomar at the conferences mentioned, concerning the evidence, however, that the plaintiff was constantly at the disposal of the defendant during the period
shipments from Manila and exports from some of the towns of the province to this capital. He stated that of six months, or that he rendered services as such interpreter continuously and daily during that period of
he especially denied paragraphs 2 of the complaint, as it was absolutely untrue that the plaintiff had been time.
at the disposal of the defendant for the purpose of rendering such services; that he therefore had not been It does not appear that any written contract was entered into between the parties for the employment of the
obliged to abandon his occupation or his soap factory, and that the statement that an offer of employment plaintiff as interpreter, or that any other innominate contract was entered into; but whether the plaintiff's
with the company had been made to him was false. The defendant also denied that through the mediation services were solicited or whether they were offered to the defendant for his assistance, inasmuch as these
of the plaintiff the company and himself had obtained large profits. The statements in paragraphs 6, 7, 8, services were accepted and made use of by the latter, we must consider that there was a tacit and mutual
and 9 of the complaint were also denied. The defendant stated that, on account of the friendly relations consent as to the rendition of the services. This gives rise to the obligation upon the person benefited by
which sprang up between the plaintiff and himself, the former borrowed from him from time to time money the services to make compensation therefor, since the bilateral obligation to render services as interpreter,
amounting to $175 for the purposes of his business, and that he had also delivered to the plaintiff 36 arrobas on the one hand, and on the other to pay for the services rendered, is thereby incurred. (Arts. 1088, 1089,
of oil worth $106, and three packages of resin for use in coloring his soap; that the plaintiff accompanied and 1262 of the Civil Code). The supreme court of Spain in its decision of February 12, 1889, holds,
the defendant to Pagsanjan, Pilar, and other towns when the latter made business trips to them for the among other things, "that not only is there an express and tacit consent which produces real contract but
purpose of extending his business and mercantile relations therein; that on these excursions, as well as on there is also a presumptive consent which is the basis of quasi contracts, this giving rise to the multiple
private and official visits which he had to make, the plaintiff occasionally accompanied him through juridical relations which result in obligations for the delivery of a thing or the rendition of a service."
motives of friendship, and especially because of the free transportation given him, and not on behalf of the Notwithstanding the denial of that defendant, it is unquestionable that it was with his consent that the
company of which he was never interpreter and for which he rendered no services; that the plaintiff in plaintiff rendered him services as interpreter, thus aiding him at a time when, owing to the existence of an
these conferences acted as interpreter of his own free will, without being requested to do so by the insurrection in the province, the most disturbed conditions prevailed. It follows, hence, that there was
defendant and without any offer of payment or compensation; that therefore there existed no legal relation consent on the part of both in the rendition of such services as interpreter. Such service not being contrary
whatever between the company and the plaintiff, and that the defendant, when accepting the spontaneous, to law or to good custom, it was a perfectly licit object of contract, and such a contract must necessarily
voluntary and officious services of the plaintiff, did so in his private capacity and not as agent of the have existed between the parties, as alleged by the plaintiff. (Art. 1271, Civil Code.)
company, and that it was for this reason that he refused to enter into negotiations with the plaintiff, he The consideration for the contract is also evident, it being clear that a mutual benefit was derived in
being in no way indebted to the latter. The defendant concluded by saying that he answered in his consequence of the service rendered. It is to be supposed that the defendant accepted these services and
individual capacity. that the plaintiff in turn rendered them with the expectation that the benefit would be reciprocal. This
A complaint having been filed against the Compañia General de Tabacos and Don Eugenio Pomar, its shows the concurrence of the three elements necessary under article 1261 of the Civil Code to constitute
agent in the Province of Laguna, the latter, having been duly summoned, replied to the complaint, which a contract of lease of service, or other innominate contract, from which an obligation has arisen and whose
was subsequently amended, and stated that he made such reply in his individual capacity and not as agent fulfillment is now demanded.
of the company, with which the plaintiff had had no legal relations. The suit was instituted between the Article 1254 of the Civil Code provides that a contract exists the moment that one or more persons consent
plaintiff and Pomar, who, as such, accepted the issue and entered into the controversy without objection, to be bound, with respect to another or others, to deliver some thing or to render some service. Article
opposed the claim of the plaintiff, and concluded by asking that the complaint be dismissed, with the costs 1255 provides that the contracting parties may establish such covenants, terms, and conditions as they
to the plaintiff. Under these circumstances and construing the statutes liberally, we think it proper to decide deem convenient, provided they are not contrary to law, morals or public policy. Whether the service was
the case pending between both parties in accordance with law and the strict principles of justice. solicited or offered, the fact remains that Perez rendered to Pomar services as interpreter. As it does not
From the oral testimony introduced at the trial, it appears that the plaintiff, Perez, did on various occasions appear that he did this gratuitously, the duty is imposed upon the defendant, having accepted the benefit
render Don Eugenio Pomar services as interpreter of English; and that he obtained passes and accompanied of the service, to pay a just compensation therefor, by virtue of the innominate contract of facio ut
des implicitly established. Code; nor is it included within the provisions of section 335 of the Code of Civil Procedure, as this
The obligations arising from this contract are reciprocal, and, apart from the general provisions with innominate contract is not covered by that section. The contract of lease of services is not included in any
respect to contracts and obligations, the special provisions concerning contracts for lease of services are of the cases expressly designated by that section of the procedural law, as affirmed by the appellant. The
applicable by analogy. interpretation of the other articles of the Code alleged to have been infringed has also been stated fully in
In this special contract, as determined by article 1544 of the Civil Code, one of the parties undertakes to this opinion.
render the other a service for a price certain. The tacit agreement and consent of both parties with respect For the reasons stated, we are of the opinion that judgment should be rendered against Don Eugenio Pomar
to the service rendered by the plaintiff, and the reciprocal benefits accruing to each, are the best evidence for the payment to the plaintiff of the sum of 200 Mexican pesos, from which will be deducted the sum of
of the fact that there was an implied contract sufficient to create a legal bond, from which arose enforceable 50 pesos is made as to the costs of this instance. The judgment below is accordingly affirmed in so far as
rights and obligations of a bilateral character.lawphi1.net it agrees with this opinion, and reversed in so far as it may be in conflict therewith. Judgment will be
In contracts the will of the contracting parties is law, this being a legal doctrine based upon the provisions entered accordingly twenty days after this decision is filed.
of articles 1254, 1258, 1262, 1278, 1281, 1282, and 1289 of the Civil Code. If it is a fact sufficiently Arellano, C.J., Willard, and Mapa, JJ., concur.
proven that the defendant, Pomar, on various occasions consented to accept an interpreter's services,
rendered in his behalf and not gratuitously, it is but just that he should pay a reasonable remuneration Separate Opinions
therefor, because it is a well-known principle of law that no one should be permitted to enrich himself to
the damage of another. MCDONOUGH, J., dissenting:
With respect to the value of the services rendered on different occasions, the most important of which was I dissent from the opinion of the majority. In my opinion there is no legal evidence in the case from which
the first, as it does not appear that any salary was fixed upon by the parties at the time the services were the court may conclude that the recovery should be 200 Mexican pesos. I am therefore in favor of affirming
accepted, it devolves upon the court to determine, upon the evidence presented, the value of such services, the judgment.
taking into consideration the few occasions on which they were rendered. The fact that no fixed or Cooper, J., concurs.
determined consideration for the rendition of the services was agreed upon does not necessarily involve a Johnson, J., did not sit in this case.
violation of the provisions of article 1544 of the Civil Code, because at the time of the agreement this
consideration was capable of being made certain. The discretionary power of the court, conferred upon it ————————————
by the law, is also supported by the decisions of the supreme court of Spain, among which may be cited
that of October 18, 1899, which holds as follows: "That as stated in the article of the Code cited, which Republic of the Philippines
follows the provisions of law 1, title 8, of the fifth partida, the contract for lease of services is one in which SUPREME COURT
one of the parties undertakes to make some thing or to render some service to the other for a certain price, Manila
the existence of such a price being understood, as this court has held not only when the price has been EN BANC
expressly agreed upon but also when it may be determined by the custom and frequent use of the place in G.R. No. L-13602 April 6, 1918
which such services were rendered." LEUNG BEN, plaintiff,
No exception was taken to the judgment below by the plaintiff on account of the rejection of his claim for vs.
damages. The decision upon this point is, furthermore, correct. P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First Instance of city of
Upon the supposition that the recovery of the plaintiff should not exceed 200 Mexican pesos, owing to the Manila,defendants.
inconsiderable number of times he acted as interpreter, it is evident that the contract thus implicitly entered Thos. D. Aitken and W. A. Armstrong for plaintiff.
into was not required to be in writing and that therefore it does not fall within article 1280 of the Civil Kincaid & Perkins for defendants.
STREET, J.: or implied?"
This is an application for a writ of certiorari, the purpose of which is to quash an attachment issued from We are of the opinion that the answer to the first question should be in the affirmative. Under section 514
the Court of First Instance of the City of Manila under circumstances hereinbelow stated. of the Code of Civil Procedure the Supreme Court has original jurisdiction by the writ of certiorari over
Upon December 12, 1917, an action was instituted in the Court of First Instance of the city of Manila by the proceedings of Courts of First Instance, wherever said courts have exceeded their jurisdiction and there
P. J. O'Brien to recover of Leung Ben the sum of P15,000 alleged to have been lost by the plaintiff to the is no plaint, speedy, and adequate remedy. In the same section, it is further declared that the proceedings
defendant in a series of gambling, banking and percentage games conducted ruing the two or three months in the Supreme Court in such cases hall be as prescribed for Courts of First Instance in section 217-221,
prior to the institution of the suit. In his verified complaint the plaintiff asked for an attachment, under inclusive, of said Code. This Supreme Court, so far as applicable, the provisions contained in those section
section 424, and 412 (1) of the Code of Civil Procedure, against the property of the defendant, on the to the same extent as if they had been reproduced verbatim immediately after section 514. Turning to
ground that the latter was about to depart from the Philippine islands with intent to defraud his creditors. section 217, we find that, in defining the conditions under which certiorari can be maintained in a Court
This attachment was issued; and acting under the authority thereof, the sheriff attached the sum of P15,000 of First Instance substantially the same language is used as is the same remedy can be maintained in the
which had been deposited by the defendant with the International Banking Corporation. Supreme Court of First Instance, substantially the same language is used as is found in section 514 relative
The defendant thereupon appeared by his attorney and moved the court to quash the attachment. Said to the conditions under which the same remedy can be maintained in the Supreme Court, namely, when
motion having dismissed in the Court of First Instance, the petitioner, Leung Ben, the defendant in that the inferior tribunal has exceeded its jurisdiction and there is no appeal, nor any plain, speedy and adequate
action, presented to this court, upon January 8, 1918 his petition for the writ of certiorari directed against remedy. In using these expressions the author of the Code of Civil Procedure merely adopted the language
P. J. O'Brien and the judges of the Court of First Instance of the city of Manila whose names are mentioned which, in American jurisdictions at least, had long ago reached the stage of stereotyped formula.
in the caption hereof. The prayer is that the Honorable James A. Ostrand, as the judge having cognizance In section 220 of the same Code, we have a provision relative to the final proceedings in certiorari, and
of the action in said court be required to certify the record to this court for review and that the order of herein it is stated that the court shall determine whether the inferior tribunal has regularly pursued its
attachment which had been issued should be revoked and discharged. with costs. Upon the filing of said authority it shall give judgment either affirming annulling, or modifying the proceedings below, as the law
petition in this court the usual order was entered requiring the defendants to show cause why the writ requires. The expression, has not regularly pursued its authority as here used, is suggestive, and we think
should not issue. The response of the defendants, in the nature of a demurrer, was filed upon January 21, it should be construed in connection with the other expressions have exceeded their jurisdiction, as used
1918; and the matter is now heard upon the pleadings thus presented. in section 514, and has exceeded their jurisdiction as used in section 217. Taking the three together, it
The provision of law under which this attachment was issued requires that there should be accuse of action results in our opinion that any irregular exercise of juridical power by a Court of First Instance, in excess
arising upon contract, express or implied. The contention of the petitioner is that the statutory action to of its lawful jurisdiction, is remediable by the writ of certiorari, provided there is no other plain, speedy,
recover money lost at gaming is that the statutory action to recover money lost at gaming is no such an and adequate remedy; and in order to make out a case for the granting of the writ it is not necessary that
action as is contemplated in this provision, and he therefore insists that the original complaint shows on the court should have acted in the matter without any jurisdiction whatever. Indeed the repeated use of
its face that the remedy of attachment is not available in aid thereof; that the Court of First Instance acted expression excess of jurisdiction shows that the lawmaker contemplated the situation where a court, having
in excess of its jurisdiction in granting the writ of attachment; that the petitioner has no plain, speedy, and jurisdiction should irregularly transcend its authority as well as the situation where the court is totally
adequate remedy by appeal or otherwise; and that consequently the writ of certiorari supplies the devoid of lawful power.
appropriate remedy for his relief. It may be observed in this connection that the word jurisdiction as used in attachment cases, has reference
The case presents the two following questions of law, either of which, if decided unfavorably to the not only to the authority of the court to entertain the principal action but also to its authority to issue the
petitioner, will be fatal to his application: attachment, as dependent upon the existence of the statutory ground. (6 C. J., 89.) This distinction between
(1) Supposing that the Court of First Instance has granted an attachment for which there is no statutory jurisdiction to issue the attachment as an ancillary remedy incident to the principal litigation is of
authority, can this court entertain the present petition and grant the desired relief? importance; as a court's jurisdiction over the main action may be complete, and yet it may lack authority
(2) Is the statutory obligation to restore money won at gaming an obligation arising from "contract, express to grant an attachment as ancillary to such action. This distinction between jurisdiction over the ancillary
has been recognized by this court in connection with actions involving the appointment of a receiver. Thus by the attachment bond, and that he has a plain, speedy, and adequate remedy appeal. This suggestion
in Rocha & Co. vs. Crossfield and Figueras (6 Phil. Rep., 355), a receiver had been appointed without seems to be sufficiently answered in the case of Rocha & Co vs. Crossfield and Figueras (6 Phil. Rep.,
legal justification. It was held that the order making the appointment was beyond the jurisdiction of the 355), already referred to, and the earlier case there cited. The remedy by appeal is not sufficiently speedy
court; and though the court admittedly had jurisdiction of the main cause, the order was vacated by this to meet the exigencies of the case. An attachment is extremely violent, and its abuse may often result in
court upon application a writ of certiorari. (See Blanco vs. Ambler, 3 Phil. Rep., 358, Blanco vs. Ambler infliction of damage which could never be repaired by any pecuniary award at the final hearing. To
and McMicking 3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.) postpone the granting of the writ in such a case until the final hearing and to compel the petitioner to bring
By parity of reasoning it must follow that when a court issues a writ of attachment for which there is no the case here upon appeal merely in order to correct the action of the trial court in the matter of allowing
statutory authority, it is acting irregularly and in excess of its jurisdiction, in the sense necessary to justify the attachment would seem both unjust and unnecessary.
the Supreme Court in granting relief by the writ of certiorari. In applying this proposition it is of course Passing to the problem propounded in the second question it may be observed that, upon general
necessary to take account of the difference between a ground of attachment based on the nature of the principles,. recognize both the civil and common law, money lost in gaming and voluntarily paid by the
action and a ground of attachment based on the acts or the conditions of the defendant. Every complaint loser to the winner can not in the absence of statue, be recovered in a civil action. But Act No. 1757 of the
must show a cause of action some sort; and when the statue declares that the attachment may issue in an Philippine Commission, which defines and penalizes several forms of gambling, contains numerous
action arising upon contract, the express or implied, it announces a criterion which may be determined provisions recognizing the right to recover money lost in gambling or in the playing of certain games (secs.
from an inspection of the language of the complaint. The determination of this question is purely a matter 6, 7, 8, 9, 11). The original complaint in the action in the Court of First Instance is not clear as to the
of law. On the other hand, when the stature declares that an attachment may be issued when the defendant particular section of Act No. 1757 under which the action is brought, but it is alleged that the money was
is about to depart from the Islands, a criterion is announced which is wholly foreign to the cause of action; lost at gambling, banking, and percentage game in which the defendant was banker. It must therefore be
and the determination of it may involve a disputed question of fact which must be decided by the court. In assumed that the action is based upon the right of recovery given in Section 7 of said Act, which declares
making this determination, the court obviously acts within its powers; and it would be idle to suppose that that an action may be brought against the banker by any person losing money at a banking or percentage
the writ of certiorari would be available to reverse the action of a Court of First Instance in determining game.
the sufficiency of the proof on such a disputed point, and in granting or refusing the attachment Is this a cause arising upon contract, express or implied, as this term is used in section 412 of the Code of
accordingly. Civil Procedure? To begin the discussion, the English version of the Code of Civil Procedure is controlling
We should not be understood, in anything that has been said, as intending to infringe the doctrine (sec. 15, Admin. Code, ed. of 1917). Furthermore it is universally admitted to be proper in the
enunciated by this court in Herrera vs. Barretto and Joaquin (25 Phil. Rep., 245), when properly applied. interpretation of any statute, to consider its historical antecedents and its juris prudential sources. The Code
It was there held that we would not, upon application for a writ of certiorari, dissolve an interlocutory of Civil Procedure, as is well known, is an American contribution to Philippine legislation. It therefore
mandatory injunction that had been issued in a Court of First Instance as an incident in an action speaks the language of the common-law and for the most part reflects its ideas. When the draftsman of this
of mandamus. The issuance of an interlocutory injunction depends upon conditions essentially different Code used the expression contract, express or implied, he used a phrase that has been long current among
from those involved in the issuance of an attachment. The injunction is designed primarily for the writers on American and English law; and it is therefore appropriate to resort to that system of law to
prevention of irreparable injury and the use of the remedy is in a great measure dependent upon the exercise discover the appropriate to resort to that system of law to discover the meaning which the legislator
of discretion. Generally, it may be said that the exercise of the injunctive powers is inherent in judicial intended to convey by those meaning which the legislator intended to convey by those terms. We remark
authority; and ordinarily it would be impossible to distinguish between the jurisdiction of the court in the in passing that the expression contrato tracito, used in the official translation of the Code of Civil
main litigation and its jurisdiction to grant an interlocutory injunction, for the latter is involved in the Procedure as the Spanish equivalent of implied contract, does not appear to render the full sense of the
former. That the writ of certiorari can not be used to reverse an order denying a motion for a preliminary English expression.
injunction is of course not to cavil. (Somes vs. Crossfield and Molina, 8 Phil. Rep., 284.) The English contract law, so far as relates to simple contracts is planted upon two foundations, which are
But it will be said that the writ of certiorari is not available in this cae, because the petitioner is protected supplied by two very different conceptions of legal liability. These two conceptions are revealed in the
ideas respectively underlying (1) the common- law debt and (2) the assumptual promise. In the early and This a mistake. The idea of contractual duty embodied in the debt which was the first conception of
formative stages of the common-law the only simple contract of which the courts took account was contract liability revealed in the common law, has remained, although it was detained to be in a measure
the real contract or contract re, in which the contractual duty imposed by law arises upon the delivery of obscured by the more modern conception of obligation resulting from promise.
a chattle, as in the mutuum, commodatum, depositum, and the like; and the purely consensual agreements What has been said is intended to exhibit the fact that the duty to pay or deliver a sum certain of money or
of the Roman Law found no congenial place in the early common law system. an ascertainable quantity of ponderable or measurable chattles — which is indicated by them debt — has
In course of time the idea underlying the contract re was extended so as to include from one person to ever been recognized, in the common-law system, as a true contract, regardless, of the source of the duty
another under such circumstances as to constitute a justa cuas debendi. The obligation thereby created was or the manner in which it is create — whether derived from custom, statue or some consensual transaction
a debt. The constitutive element in this litigation is found in the fact that the debtor has received something depending upon the voluntary acts of the parties. the form of contract known as the debt is of the most
from the creditor, which he is bound by the obligation of law to return or pay for. From an early day this ancient lineage; and when reference is had to historical antecedents, the right of the debt to be classed as
element was denominated the quid pro quo, an ungainly phrase coined by Mediaeval Latinity. The quid a contract cannot be questioned. Indeed when the new form of engagement consisting of the parol promise
pro quo was primarily a materials or physical object, and its constituted the recompense or equivalent supported by a consideration first appeared, it was looked upon as an upstart and its right to be considered
acquired by the debtor. Upon the passage of the quid pro quo from one party to the other, the law imposed a true contract was questioned. It was long customary to refer to it exclusively as an assumpsit, agreement,
that real contractual duty peculiar to the debt. No one conversant with the early history of English law undertaking, or parol promise, in fact anything but a contract. Only in time did the new form of engagement
would ever conceive of the debt as an obligation created by promise. It is the legal duty to pay or deliver attain the dignity of being classed among true contract.
a sum certain of money or an ascertainable quantity of ponderable or measurable chattles. The term implied takers us into shadowy domain of those obligations the theoretical classification of which
The ordinary debt, as already stated, originates in a contract in which a quid pro quo passes to the debtor has engaged the attention of scholars from the time of Gaius until our own day and has been a source of
at the time of the creation of the debt, but the term is equally applicable to duties imposed by custom or as much difficulty to the civilian as to the common-law jurist. There we are concerned with those acts
statute, or by judgment of a court. which make one person debtor to another without there having intervened between them any true
The existence of a debt supposes one person to have possession of thing (res) which he owes and hence agreement tending to produce a legal bond (vinculum juris). Of late years some American and English
ought to turn over the owner. This obligation is the oldest conception of contract with which the common writers have adopted the term quasi-contract as descriptive of these obligations or some of them; but the
law is familiar; and notwithstanding the centuries that have rolled over Westminster Hall that conception expression more commonly used is implied contract.
remains as one of the fundamental bases of the common-law contract. Upon examination of these obligations, from the view point of the common-law jurisprudence, it will be
Near the end of the fifteenth century there was evolved in England a new conception of contractual liability, found that they fall readily into two divisions according as they bear an analogy to the common-law debt
which embodied the idea of obligation resulting from promise and which found expression in the common or to the common law assumpsit. To exhibit the scope of these different classes of obligations is here
law assumpsit, or parol promise supported by a consideration. The application of this novel conception impracticable. It is only necessary in this connection to observe that the most conspicuous division is that
had the effect of greatly extending the filed of contractual liability and by this means rights of action came which comprises duties in the nature of debt. The characteristic feature of these obligations is that upon
to be recognized which had been unknown before. The action of assumpsit which was the instrument for certain states of fact the law imposes an obligation to pay a sum certain of money; and it is characteristic
giving effect to this obligation was found to be a useful remedy; and presently this action came to be used of this obligation that the money in respect to which the duty is raised is conceived as being equivalent of
for the enforcement of common-law debts. The result was to give to our contract law the superficial something taken or detained under circumstances giving rise to the duty to return or compensate therefore.
appearance of being based more or less exclusively upon the notion of the obligation of promise. The proposition that no one shall be allowed to enrich himself unduly at the expense of another embodies
An idea is widely entertained to the effect that all simple contracts recognized in the common-law system the general principle here lying at the basis of obligation. The right to recover money improperly paid
are referable to a singly category. They all have their roots, so many of us imagine, in one general notion (repeticion de lo indebido) is also recognized as belong to this class of duties.
of obligation; and of course the obligation of promise is supposed to supply this general notion, being It will observed that according to the Civil Code obligations are supposed to be derived either from (1) the
considered a sort of menstruum in which all other forms of contractual obligation have been dissolved. law, (2) contracts and quasi-contracts, (3) illicit acts and omission, or (4) acts in which some sort ob lame
or negligence is present. This enumeration of sources of obligations and the obligation imposed by law are of Civil Procedure intend to describe when he sued the term implied contract in section 412.
different types. The learned Italian jurist, Jorge Giorgi, criticises this assumption and says that the In what has been said we have assumed that the obligation which is at the foundation of the original action
classification embodied in the code is theoretically erroneous. His conclusion is that one or the other of in the court below is not a quasi-contract, when judge by the principles of the civil law. A few observations
these categories should have been suppressed and merged in the other. (Giorgi, Teoria de las Obligaciones, will show that this assumption is not by any means free from doubt. The obligation in question certainly
Spanish ed., vol. 5 arts. 5, 7, 9.) The validity of this criticism is, we thin, self-evident; and it is of interest does not fall under the definition of either of the two-quasi- contracts which are made the subject of special
to note that the common law makes no distinction between the two sources of liability. The obligations treatment in the Civil Code, for its does not arise from a licit act as contemplated in article 1895. The
which in the Code are indicated as quasi-contracts, as well as those arising ex lege, are in the common la obligation is clearly a creation of the positive law — a circumstance which brings it within the purview of
system, merged into the category of obligations imposed by law, and all are denominated implied contracts. article 1090, in relation with article, 1089; and it is also derived from an illicit act, namely, the playing of
Many refinements, more or less illusory, have been attempted by various writers in distinguishing different a prohibited game. It is thus seen that the provisions of the Civil Code which might be consulted with a
sorts of implied contracts, as for example, the contract implied as of fact and the contract implied as of view to the correct theoretical classification of this obligation are unsatisfactory and confusing.
law. No explanation of these distinctions will be here attempted. Suffice it to say that the term contract, The two obligations treated in the chapter devoted to quasi-contracts in the Civil Code are (1) the obligation
express or implied, is used to by common-law jurists to include all purely personal obligations other than incident to the officious management of the affairs of other person (gestion de negocios ajenos) and (2)
those which have their source in delict, or tort. As to these it may be said that, generally speaking, the law the recovery of what has been improperly paid (cabro de lo indebido). That the authors of the Civil Code
does not impose a contractual duty upon a wrongdoer to compensate for injury done. It is true that in selected these two obligations for special treatment does not signify an intention to deny the possibility of
certain situations where a wrongdoer unjustly acquired something at the expense of another, the law the existence of other quasi-contractual obligations. As is well said by the commentator Manresa.
imposes on him a duty to surrender his unjust acquisitions, and the injured party may here elect to sue The number of the quasi-contracts may be indefinite as may be the number of lawful facts, the generations
upon this contractual duty instead of suing upon the tort; but even here the distinction between the two of the said obligations; but the Code, just as we shall see further on, in the impracticableness of
liabilities, in contract and in tort, is never lost to sight; and it is always recognized that the liability arising enumerating or including them all in a methodical and orderly classification, has concerned itself with two
out of the tort is delictual and not of a contractual or quasi-contractual nature. only — namely, the management of the affairs of other person and the recovery of things improperly paid
In the case now under consideration the duty of the defendant to refund the money which he won from the — without attempting by this to exclude the others. (Manresa, 2d ed., vol. 12, p. 549.)
plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege. Furthermore, it is a duty to It would indeed have been surprising if the authors of the Code, in the light of the jurisprudence of more
return a certain sum which had passed from the plaintiff to the defendant. By all the criteria which the than a thousand years, should have arbitrarily assumed to limit the quasi-contract to two obligations. The
common law supplies, this a duty in the nature of debt and is properly classified as an implied contract. It author from whom we have just quoted further observes that the two obligations in question were selected
is well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, for special treatment in the Code not only because they were the most conspicuous of the quasi-contracts,
can be recovered by the loser in an action of indebitatus assumpsit for money had and received. (Clarke but because they had not been the subject of consideration in other parts of the Code. (Opus citat., 550.)
vs. Johnson. Lofft, 759; Mason vs. Waite, 17 Mass., 560; Burnham vs. Fisher, 25 Vt., 514.) This means It is well recognized among civilian jurists that the quasi- contractual obligations cover a wide range. The
that in the common law the duty to return money won in this way is an implied contract, or quasi-contract. Italian jurist, Jorge Giorgi, to whom we have already referred, considers under this head, among other
It is no argument to say in reply to this that the obligation here recognized is called an implied contract obligations, the following: payments made upon a future consideration which is not realized or upon an
merely because the remedy commonly used in suing upon ordinary contract can be here used, or that the existing consideration which fails; payments wrongfully made upon a consideration which is contrary to
law adopted the fiction of promise in order to bring the obligation within the scope of the action law, or opposed to public policy; and payments made upon a vicious consideration or obtained by illicit
of assumpsit. Such statements fail to express the true import of the phenomenon. Before the remedy was means (Giorgi, Teoria de las Obligaciones, vol. 5, art. 130.)
the idea; and the use of the remedy could not have been approved if it had not been for historical Im permitting the recovery of money lost at play, Act No. 1757 has introduced modifications in the
antecedents which made the recognition of this remedy at one logical and proper. Furthermore, it should application of articles 1798, 180`, and 1305 of the Civil Code. The first two of these articles relate to
not be forgotten that the question is not how this duty but what sort of obligation did the author of the Code gambling contracts, while article 1305 treats of the nullity of contracts proceeding from a vicious or illicit
consideration. Taking all these provisions together, it must be apparent that the obligation to return money scientific papers, slides and other research material. But the other flights arriving from Rome did not have
lost at play has a decided affinity to contractual obligations; and we believe that it could, without violence her baggage on board.
to the doctrines of the civil law, be held that such obligations is an innominate quasi-contract. It is, By then feeling desperate, she went to Rome to try to locate her bags herself. There, she inquired about
however, unnecessary to place the decision on this ground. her suitcases in the domestic and international airports, and filled out the forms prescribed by ALITALIA
From what has been said it follows that in our opinion the cause of action stated in the complaints in the for people in her predicament. However, her baggage could not be found. Completely distraught and
court below is based on a contract, express or implied and is therefore of such nature that the court had discouraged, she returned to Manila without attending the meeting in Ispra, Italy. : nad
authority to issue writ of attachment. The application for the writ of certiorari must therefore be denied Once back in Manila she demanded that ALITALIA make reparation for the damages thus suffered by
and the proceedings dismissed. So ordered. her. ALITALIA offered her "free airline tickets to compensate her for any alleged damages. . . ." She
Arellano, C.J., Torres, Johnson and Carson, JJ., concur. rejected the offer, and forthwith commenced the action 6 which has given rise to the present appellate
proceedings.
———————————- As it turned out, Prof. Pablo's suitcases were in fact located and forwarded to Ispra, 7 Italy, but only on
the day after her scheduled appearance and participation at the U.N. meeting there. 8 Of course Dr. Pablo
FIRST DIVISION was no longer there to accept delivery; she was already on her way home to Manila. And for some reason
[G.R. No. 71929 : December 4, 1990.] or other, the suitcases were not actually restored to Prof. Pablo by ALITALIA until eleven (11) months
192 SCRA 9 later, and four (4) months after institution of her action. 9
ALITALIA, Petitioner, vs. INTERMEDIATE APPELLATE COURT and FELIPA E. PABLO, After appropriate proceedings and trial, the Court of First Instance rendered judgment in Dr. Pablo's favor:
Respondents. 10
"(1) Ordering the defendant (ALITALIA) to pay . . . (her) the sum of TWENTY THOUSAND PESOS
DECISION (P20,000.00), Philippine Currency, by way of nominal damages;
(2) Ordering the defendant to pay . . . (her) the sum of FIVE THOUSAND PESOS (P5,000.00), Philippine
NARVASA, J.: Currency, as and for attorney's fees; (and)
(3) Ordering the defendant to pay the costs of the suit."
Dr. Felipa Pablo — an associate professor in the University of the Philippines, 1 and a research grantee of ALITALIA appealed to the Intermediate Appellate Court but failed to obtain a reversal of the judgment.
the Philippine Atomic Energy Agency — was invited to take part at a meeting of the Department of 11 Indeed, the Appellate Court not only affirmed the Trial Court's decision but also increased the award
Research and Isotopes of the Joint FAO-IAEA Division of Atomic Energy in Food and Agriculture of the of nominal damages payable by ALITALIA to P40,000.00. 12 That increase it justified as follows: 13
United Nations in Ispra, Italy. 2 She was invited in view of her specialized knowledge in "foreign "Considering the circumstances, as found by the Trial Court and the negligence committed by defendant,
substances in food and the agriculture environment." She accepted the invitation, and was then scheduled the amount of P20,000.00 under present inflationary conditions as awarded . . . to the plaintiff as nominal
by the organizers, to read a paper on "The Fate of Radioactive Fusion Products Contaminating Vegetable damages, is too little to make up for the plaintiff's frustration and disappointment in not being able to
Crops." 3 The program announced that she would be the second speaker on the first day of the meeting. 4 appear at said conference; and for the embarrassment and humiliation she suffered from the academic
To fulfill this engagement, Dr. Pablo booked passage on petitioner airline, ALITALIA. community for failure to carry out an official mission for which she was singled out by the faculty to
She arrived in Milan on the day before the meeting in accordance with the itinerary and time table set for represent her institution and the country. After weighing carefully all the considerations, the amount
her by ALITALIA. She was however told by the ALITALIA personnel there at Milan that her luggage awarded to the plaintiff for nominal damages and attorney's fees should be increased to the cost of her
was "delayed inasmuch as the same . . . (was) in one of the succeeding flights from Rome to Milan." 5 Her round trip air fare or at the present rate of peso to the dollar at P40,000,00."
luggage consisted of two (2) suitcases: one contained her clothing and other personal items; the other, her ALITALIA has appealed to this Court on Certiorari. Here, it seeks to make basically the same points it
tried to make before the Trial Court and the Intermediate Appellate Court, i.e.: other expenses of the litigation, does not exceed the sum which the carrier has offered in writing to the
1) that the Warsaw Convention should have been applied to limit ALITALIA'S liability; and plaintiff within a period of six months from the date of the occurrence causing the damage, or before the
2) that there is no warrant in fact or in law for the award to Dr. Pablo of nominal damages and attorney's commencement of the action, if that is later.
fees. 14 The Warsaw Convention however denies to the carrier availment "of the provisions which exclude or limit
In addition, ALITALIA postulates that it was error for the Intermediate Appellate Court to have refused his liability, if the damage is caused by his wilful misconduct or by such default on his part as, in
to pass on all the assigned errors and in not stating the facts and the law on which its decision is based. 15 accordance with the law of the court seized of the case, is considered to be equivalent to wilful
Under the Warsaw Convention, 16 an air carrier is made liable for damages for: misconduct," or "if the damage is (similarly) caused . . by any agent of the carrier acting within the scope
1) the death, wounding or other bodily injury of a passenger if the accident causing it took place on board of his employment." 22 The Hague Protocol amended the Warsaw Convention by removing the provision
the aircraft or in the course of its operations of embarking or disembarking; 17 that if the airline took all necessary steps to avoid the damage, it could exculpate itself completely, 23 and
2) the destruction or loss of, or damage to, any registered luggage or goods, if the occurrence causing it declaring the stated limits of liability not applicable "if it is proved that the damage resulted from an act
took place during the carriage by air;" 18 and or omission of the carrier, its servants or agents, done with intent to cause damage or recklessly and with
3) delay in the transportation by air of passengers, luggage or goods. 19 knowledge that damage would probably result." The same deletion was effected by the Montreal
In these cases, it is provided in the Convention that the "action for damages, however, founded, can only Agreement of 1966, with the result that a passenger could recover unlimited damages upon proof of wilful
be brought subject to conditions and limits set out" therein. 20 misconduct. 24
The Convention also purports to limit the liability of the carriers in the following manner: 21 The Convention does not thus operate as an exclusive enumeration of the instances of an airline's liability,
1. In the carriage of passengers the liability of the carrier for each passenger is limited to the sum of or as an absolute limit of the extent of that liability. Such a proposition is not borne out by the language of
250,000 francs . . . Nevertheless, by special contract, the carrier and the passenger may agree to a higher the Convention, as this Court has now, and at an earlier time, pointed out. 25 Moreover, slight reflection
limit of liability.: nad readily leads to the conclusion that it should be deemed a limit of liability only in those cases where the
2. a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of cause of the death or injury to person, or destruction, loss or damage to property or delay in its transport
250 francs per kilogramme, unless the passenger or consignor has made, at the time when the package was is not attributable to or attended by any wilful misconduct, bad faith, recklessness, or otherwise improper
handed over to the carrier, a special declaration of interest in delivery at destination and has paid a conduct on the part of any official or employee for which the carrier is responsible, and there is otherwise
supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding no special or extraordinary form of resulting injury. The Convention's provisions, in short, do not "regulate
the declared sum, unless he proves that sum is greater than the actual value to the consignor at delivery. or exclude liability for other breaches of contract by the carrier" 26 or misconduct of its officers and
b) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained employees, or for some particular or exceptional type of damage. Otherwise, "an air carrier would be
therein, the weight to be taken into consideration in determining the amount to which the carrier's liability exempt from any liability for damages in the event of its absolute refusal, in bad faith, to comply with a
is limited shall be only the total weight of the package or packages concerned. Nevertheless, when the contract of carriage, which is absurd." 27 Nor may it for a moment be supposed that if a member of the
loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects aircraft complement should inflict some physical injury on a passenger, or maliciously destroy or damage
the value of other packages covered by the same baggage check or the same air way bill, the total weight the latter's property, the Convention might successfully be pleaded as the sole gauge to determine the
of such package or packages shall also be taken into consideration in determining the limit of liability. carrier's liability to the passenger. Neither may the Convention be invoked to justify the disregard of some
3. As regards objects of which the passenger takes charge himself the liability of the carrier is limited to extraordinary sort of damage resulting to a passenger and preclude recovery therefor beyond the limits set
5000 francs per passenger. by said Convention. It is in this sense that the Convention has been applied, or ignored, depending on the
4. The limits prescribed . . shall not prevent the court from awarding, in accordance with its own law, in peculiar facts presented by each case.:-cralaw
addition, the whole or part of the court costs and of the other expenses of litigation incurred by the plaintiff. In Pan American World Airways, Inc. v. I.A.C., 28 for example, the Warsaw Convention was applied as
The foregoing provision shall not apply if the amount of the damages awarded, excluding court costs and regards the limitation on the carrier's liability, there being a simple loss of baggage without any otherwise
improper conduct on the part of the officials or employees of the airline or other special injury sustained Appeals correctly set the amount thereof at P40,000.00. As to the purely technical argument that the award
by the passenger. to her of such nominal damages is precluded by her omission to include a specific claim therefor in her
On the other hand, the Warsaw Convention has invariably been held inapplicable, or as not restrictive of complaint, it suffices to draw attention to her general prayer, following her plea for moral and exemplary
the carrier's liability, where there was satisfactory evidence of malice or bad faith attributable to its officers damages and attorney's fees, "for such other and further just and equitable relief in the premises," which
and employees. 29 Thus, an air carrier was sentenced to pay not only compensatory but also moral and certainly is broad enough to comprehend an application as well for nominal damages. Besides, petitioner
exemplary damages, and attorney's fees, for instance, where its employees rudely put a passenger holding should have realized that the explicit assertion, and proof, that Dr. Pablo's right had been violated or
a first-class ticket in the tourist or economy section, 30 or ousted a brown Asiatic from the plane to give invaded by it — absent any claim for actual or compensatory damages, the prayer thereof having been
his seat to a white man, 31 or gave the seat of a passenger with a confirmed reservation to another, 32 or voluntarily deleted by Dr. Pablo upon the return to her of her baggage — necessarily raised the issue of
subjected a passenger to extremely rude, even barbaric treatment, as by calling him a "monkey." 33 nominal damages.: rd
In the case at bar, no bad faith or otherwise improper conduct may be ascribed to the employees of This Court also agrees that respondent Court of Appeals correctly awarded attorney's fees to Dr. Pablo,
petitioner airline; and Dr. Pablo's luggage was eventually returned to her, belatedly, it is true, but without and the amount of P5,000.00 set by it is reasonable in the premises. The law authorizes recovery of
appreciable damage. The fact is, nevertheless, that some special species of injury was caused to Dr. Pablo attorney's fees inter alia where, as here, "the defendant's act or omission has compelled the plaintiff to
because petitioner ALITALIA misplaced her baggage and failed to deliver it to her at the time appointed litigate with third persons or to incur expenses to protect his interest," 34 or "where the court deems it just
— a breach of its contract of carriage, to be sure — with the result that she was unable to read the paper and equitable." 35
and make the scientific presentation (consisting of slides, autoradiograms or films, tables and tabulations) WHEREFORE, no error being perceived in the challenged decision of the Court of Appeals, it appearing
that she had painstakingly labored over, at the prestigious international conference, to attend which she on the contrary to be entirely in accord with the facts and the law, said decision is hereby AFFIRMED,
had traveled hundreds of miles, to her chagrin and embarrassment and the disappointment and annoyance with costs against the petitioner.
of the organizers. She felt, not unreasonably, that the invitation for her to participate at the conference, SO ORDERED.
extended by the Joint FAO/IAEA Division of Atomic Energy in Food and Agriculture of the United Cruz, Gancayco, Griño-Aquino and Medialdea, JJ., concur.
Nations, was a singular honor not only to herself, but to the University of the Philippines and the country ——————————————
as well, an opportunity to make some sort of impression among her colleagues in that field of scientific
activity. The opportunity to claim this honor or distinction was irretrievably lost to her because of Alitalia's Republic of the Philippines
breach of its contract. SUPREME COURT
Apart from this, there can be no doubt that Dr. Pablo underwent profound distress and anxiety, which Manila
gradually turned to panic and finally despair, from the time she learned that her suitcases were missing up EN BANC
to the time when, having gone to Rome, she finally realized that she would no longer be able to take part G.R. No. L-21438 September 28, 1966
in the conference. As she herself put it, she "was really shocked and distraught and confused." AIR FRANCE, petitioner,
Certainly, the compensation for the injury suffered by Dr. Pablo cannot under the circumstances be vs.
restricted to that prescribed by the Warsaw Convention for delay in the transport of baggage. RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.
She is not, of course, entitled to be compensated for loss or damage to her luggage. As already mentioned, Lichauco, Picazo and Agcaoili for petitioner.
her baggage was ultimately delivered to her in Manila, tardily but safely. She is however entitled to Bengzon Villegas and Zarraga for respondent R. Carrascoso.
nominal damages — which, as the law says, is adjudicated in order that a right of the plaintiff, which has
been violated or invaded by the defendant, may be vindicated and recognized, and not for the purpose of SANCHEZ, J.:
indemnifying the plaintiff for any loss suffered — and this Court agrees that the respondent Court of The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso
P25,000.00 by way of moral damages; P10,000.00 as exemplary damages; P393.20 representing the evidence 10 presented by one party and the other upon the issues raised. Neither is it to be burdened with
difference in fare between first class and tourist class for the portion of the trip Bangkok-Rome, these the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a
various amounts with interest at the legal rate, from the date of the filing of the complaint until paid; plus part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be
P3,000.00 for attorneys' fees; and the costs of suit. so clogged with details such that prolixity, if not confusion, may result. So long as the decision of the Court
On appeal, the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from of Appeals contains the necessary facts to warrant its conclusions, it is no error for said court to withhold
P393.20 to P383.10, and voted to affirm the appealed decision "in all other respects", with costs against therefrom "any specific finding of facts with respect to the evidence for the defense". Because as this Court
petitioner. well observed, "There is no law that so requires". 12 Indeed, "the mere failure to specify (in the decision)
The case is now before us for review on certiorari. the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold the
The facts declared by the Court of Appeals as " fully supported by the evidence of record", are: same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that
Plaintiff, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila for Lourdes on in Manigque, it was held that the mere fact that the findings "were based entirely on the evidence for the
March 30, 1958. prosecution without taking into consideration or even mentioning the appellant's side in the controversy
On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., as shown by his own testimony", would not vitiate the judgment. 13 If the court did not recite in the decision
issued to plaintiff a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, the testimony of each witness for, or each item of evidence presented by, the defeated party, it does not
plaintiff travelled in "first class", but at Bangkok, the Manager of the defendant airline forced plaintiff to mean that the court has overlooked such testimony or such item of evidence. At any rate, the legal
vacate the "first class" seat that he was occupying because, in the words of the witness Ernesto G. Cuento, presumptions are that official duty has been regularly performed, and that all the matters within an issue
there was a "white man", who, the Manager alleged, had a "better right" to the seat. When asked to vacate in a case were laid before the court and passed upon by it. 15
his "first class" seat, the plaintiff, as was to be expected, refused, and told defendant's Manager that his Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement
seat would be taken over his dead body; a commotion ensued, and, according to said Ernesto G. Cuento, of the ultimate facts as found by the court ... and essential to support the decision and judgment rendered
"many of the Filipino passengers got nervous in the tourist class; when they found out that Mr. Carrascoso thereon". 16They consist of the court's "conclusions" with respect to the determinative facts in issue". 17 A
was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and question of law, upon the other hand, has been declared as "one which does not call for an examination of
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26, 1959); the probative value of the evidence presented by the parties." 18
and plaintiff reluctantly gave his "first class" seat in the plane.3 2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court
1. The trust of the relief petitioner now seeks is that we review "all the findings" of respondent Court of of Appeals. 19 That judgment is conclusive as to the facts. It is not appropriately the business of this Court
Appeals. Petitioner charges that respondent court failed to make complete findings of fact on all the issues to alter the facts or to review the questions of fact. 20
properly laid before it. We are asked to consider facts favorable to petitioner, and then, to overturn the With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals
appellate court's decision. support its judgment.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record 3. Was Carrascoso entitled to the first class seat he claims?
without expressing therein clearly and distinctly the facts and the law on which it is based". This is echoed It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class
in the statutory demand that a judgment determining the merits of the case shall state "clearly and distinctly ticket. But petitioner asserts that said ticket did not represent the true and complete intent and agreement
the facts and the law on which it is based"; 6 and that "Every decision of the Court of Appeals shall contain of the parties; that said respondent knew that he did not have confirmed reservations for first class on any
complete findings of fact on all issues properly raised before it". specific flight, although he had tourist class protection; that, accordingly, the issuance of a first class ticket
A decision with absolutely nothing to support it is a nullity. It is open to direct attack. The law, however, was no guarantee that he would have a first class ride, but that such would depend upon the availability of
solely insists that a decision state the "essential ultimate facts" upon which the court's conclusion is first class seats.
drawn. A court of justice is not hidebound to write in its decision every bit and piece of These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of
Appeals under its third assignment of error, which reads: "The trial court erred in finding that plaintiff had judgment of the lower court. 24Implicit in that affirmance is a determination by the Court of Appeals that
confirmed reservations for, and a right to, first class seats on the "definite" segments of his journey, the proceeding in the Court of First Instance was free from prejudicial error and "all questions raised by
particularly that from Saigon to Beirut". the assignments of error and all questions that might have been raised are to be regarded as finally
And, the Court of Appeals disposed of this contention thus: adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all
Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee error". 25 We reached this policy construction because nothing in the decision of the Court of Appeals on
that the passenger to whom the same had been issued, would be accommodated in the first-class this point would suggest that its findings of fact are in any way at war with those of the trial court. Nor
compartment, for as in the case of plaintiff he had yet to make arrangements upon arrival at every station was said affirmance by the Court of Appeals upon a ground or grounds different from those which were
for the necessary first-class reservation. We are not impressed by such a reasoning. We cannot understand made the basis of the conclusions of the trial court. 26
how a reputable firm like defendant airplane company could have the indiscretion to give out tickets it If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding
never meant to honor at all. It received the corresponding amount in payment of first-class tickets and yet the fact that seat availability in specific flights is therein confirmed, then an air passenger is placed in the
it allowed the passenger to be at the mercy of its employees. It is more in keeping with the ordinary course hollow of the hands of an airline. What security then can a passenger have? It will always be an easy matter
of business that the company should know whether or riot the tickets it issues are to be honored or not. for an airline aided by its employees, to strike out the very stipulations in the ticket, and say that there was
Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus: a verbal agreement to the contrary. What if the passenger had a schedule to fulfill? We have long learned
On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from that, as a rule, a written document speaks a uniform language; that spoken word could be notoriously
his testimony, see plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the
witness, Rafael Altonaga, confirmed plaintiff's testimony and testified as follows: ticket so issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence
Q. In these tickets there are marks "O.K." From what you know, what does this OK mean? intended to defeat the covenants in the ticket.
A. That the space is confirmed. The foregoing are the considerations which point to the conclusion that there are facts upon which the
Q. Confirmed for first class? Court of Appeals predicated the finding that respondent Carrascoso had a first class ticket and was entitled
A. Yes, "first class". (Transcript, p. 169) to a first class seat at Bangkok, which is a stopover in the Saigon to Beirut leg of the flight. 27 We perceive
xxx xxx xxx no "welter of distortions by the Court of Appeals of petitioner's statement of its position", as charged by
Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent Carrascoso "surreptitiously
although plaintiff paid for, and was issued a "first class" airplane ticket, the ticket was subject to took a first class seat to provoke an issue". 29And this because, as petitioner states, Carrascoso went to see
confirmation in Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see
cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l", "C" and "C-1" belie the Manager". 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no
the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class seat? Or, if another had a better right to the seat?
ticket without any reservation whatever. 4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that
Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation Carrascoso's action is planted upon breach of contract; that to authorize an award for moral damages there
for a "first class" accommodation for the plaintiff was confirmed. The court cannot believe that after such must be an averment of fraud or bad faith;31 and that the decision of the Court of Appeals fails to make a
confirmation defendant had a verbal understanding with plaintiff that the "first class" ticket issued to him finding of bad faith. The pivotal allegations in the complaint bearing on this issue are:
by defendant would be subject to confirmation in Hongkong. 3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable
We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount consideration, the latter acting as general agents for and in behalf of the defendant, under which said
refunded on Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of contract, plaintiff was entitled to, as defendant agreed to furnish plaintiff, First Class passage on
Appeals in all other respects. We hold the view that such a judgment of affirmance has merged the defendant's plane during the entire duration of plaintiff's tour of Europe with Hongkong as starting point
up to and until plaintiff's return trip to Manila, ... . declared:
4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the
defendant furnished to the plaintiff First Class accommodation but only after protestations, arguments defendant Air France while at Bangkok, and was transferred to the tourist class not only without his consent
and/or insistence were made by the plaintiff with defendant's employees. but against his will, has been sufficiently established by plaintiff in his testimony before the court,
5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff corroborated by the corresponding entry made by the purser of the plane in his notebook which notation
only Tourist Class accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff has reads as follows:
been compelled by defendant's employees to leave the First Class accommodation berths at Bangkok after "First-class passenger was forced to go to the tourist class against his will, and that the captain refused to
he was already seated. intervene",
6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the
by defendant's breach of contract was forced to take a Pan American World Airways plane on his return plane who was asked by the manager of defendant company at Bangkok to intervene even refused to do
trip from Madrid to Manila. so. It is noteworthy that no one on behalf of defendant ever contradicted or denied this evidence for the
xxx xxx xxx plaintiff. It could have been easy for defendant to present its manager at Bangkok to testify at the trial of
2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff the case, or yet to secure his disposition; but defendant did neither. 37
suffered inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, The Court of appeals further stated —
serious anxiety, wounded feelings, social humiliation, and the like injury, resulting in moral damages in Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if
the amount of P30,000.00. the employees of the defendant at Bangkok sold a first-class ticket to him when all the seats had already
xxx xxx xxx been taken, surely the plaintiff should not have been picked out as the one to suffer the consequences and
The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first to be subjected to the humiliation and indignity of being ejected from his seat in the presence of others.
class passage covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was Instead of explaining to the white man the improvidence committed by defendant's employees, the
breached when petitioner failed to furnish first class transportation at Bangkok; and Third, that there was manager adopted the more drastic step of ousting the plaintiff who was then safely ensconsced in his
bad faith when petitioner's employee compelled Carrascoso to leave his first class accommodation rightful seat. We are strengthened in our belief that this probably was what happened there, by the
berth "after he was already, seated" and to take a seat in the tourist class, by reason of which he suffered testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters
inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety, "O.K." appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise,
wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific Zenaida Faustino, another witness for defendant, who was the chief of the Reservation Office of defendant,
mention of the term bad faith in the complaint. But, the inference of bad faith is there, it may be drawn testified as follows:
from the facts and circumstances set forth therein. The contract was averred to establish the relation "Q How does the person in the ticket-issuing office know what reservation the passenger has arranged
between the parties. But the stress of the action is put on wrongful expulsion. with you?
Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)
on guard on what Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso In this connection, we quote with approval what the trial Judge has said on this point:
was ousted by petitioner's manager who gave his seat to a white man; 35 and (b) evidence of bad faith in Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right" to the seat
the fulfillment of the contract was presented without objection on the part of the petitioner. It is, therefore, occupied by Mr. Carrascoso? The record is silent. The defendant airline did not prove "any better", nay,
unnecessary to inquire as to whether or not there is sufficient averment in the complaint to justify an award any right on the part of the "white man" to the "First class" seat that the plaintiff was occupying and for
for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An amendment thereof which he paid and was issued a corresponding "first class" ticket.
to conform to the evidence is not even required. On the question of bad faith, the Court of Appeals If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could
have easily proven it by having taken the testimony of the said Manager by deposition, but defendant did of the carrier's employees, naturally, could give ground for an action for damages.
not do so; the presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, Passengers do not contract merely for transportation. They have a right to be treated by the carrier's
par (e), Rules of Court]; and, under the circumstances, the Court is constrained to find, as it does find, that employees with kindness, respect, courtesy and due consideration. They are entitled to be protected against
the Manager of the defendant airline in Bangkok not merely asked but threatened the plaintiff to throw personal misconduct, injurious language, indignities and abuses from such employees. So it is, that any
him out of the plane if he did not give up his "first class" seat because the said Manager wanted to rule or discourteous conduct on the part of employees towards a passenger gives the latter an action for
accommodate, using the words of the witness Ernesto G. Cuento, the "white man". damages against the carrier. 44
It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a
term "bad faith". But can it be doubted that the recital of facts therein points to bad faith? The manager not tort, giving a right of action for its agent in the presence of third persons to falsely notify her that the check
only prevented Carrascoso from enjoying his right to a first class seat; worse, he imposed his arbitrary was worthless and demand payment under threat of ejection, though the language used was not insulting
will; he forcibly ejected him from his seat, made him suffer the humiliation of having to go to the tourist and she was not ejected." 46 And this, because, although the relation of passenger and carrier is "contractual
class compartment - just to give way to another passenger whose right thereto has not been established. both in origin and nature" nevertheless "the act that breaks the contract may be also a tort". 47 And in
Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different from what is another case, "Where a passenger on a railroad train, when the conductor came to collect his fare tendered
understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train
design or with some motive of self-interest or will or for ulterior purpose." reached such point he would pay the cash fare from that point to destination, there was nothing in the
And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of conduct of the passenger which justified the conductor in using insulting language to him, as by calling
the Court of First Instance, thus: him a lunatic," 48 and the Supreme Court of South Carolina there held the carrier liable for the mental
The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, suffering of said passenger.1awphîl.nèt
with the aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as
the plaintiff in the presence of many passengers to have him thrown out of the airplane to give the "first we have said, is placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air
class" seat that he was occupying to, again using the words of the witness Ernesto G. Cuento, a "white carrier — a case of quasi-delict. Damages are proper.
man" whom he (defendant's Manager) wished to accommodate, and the defendant has not proven that this 7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —
"white man" had any "better right" to occupy the "first class" seat that the plaintiff was occupying, duly Q You mentioned about an attendant. Who is that attendant and purser?
paid for, and for which the corresponding "first class" ticket was issued by the defendant to him. A When we left already — that was already in the trip — I could not help it. So one of the flight attendants
5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well approached me and requested from me my ticket and I said, What for? and she said, "We will note that
settled in law. For the willful malevolent act of petitioner's manager, petitioner, his employer, must you transferred to the tourist class". I said, "Nothing of that kind. That is tantamount to accepting my
answer. Article 21 of the Civil Code says: transfer." And I also said, "You are not going to note anything there because I am protesting to this
ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, transfer".
good customs or public policy shall compensate the latter for the damage. Q Was she able to note it?
In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of A No, because I did not give my ticket.
Article 2219 (10), Civil Code, moral damages are recoverable. 42 Q About that purser?
6. A contract to transport passengers is quite different in kind and degree from any other contractual A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I
relation. And this, because of the relation which an air-carrier sustains with the public. Its business is stood up and I went to the pantry that was next to me and the purser was there. He told me, "I have recorded
mainly with the travelling public. It invites people to avail of the comforts and advantages it offers. The the incident in my notebook." He read it and translated it to me — because it was recorded in French —
contract of air carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance "First class passenger was forced to go to the tourist class against his will, and that the captain refused to
intervene." interfere with the same. The dictates of good sense suggest that we give our imprimatur thereto. Because,
Mr. VALTE — the facts and circumstances point to the reasonableness thereof.57
I move to strike out the last part of the testimony of the witness because the best evidence would be the On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We
notes. Your Honor. accordingly vote to affirm the same. Costs against petitioner. So ordered.
COURT — Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar and Castro, JJ., concur.
I will allow that as part of his testimony. Bengzon, J.P., J., took no part.
Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook
reading "First class passenger was forced to go to the tourist class against his will, and that the captain —————————————
refused to intervene" is predicated upon evidence [Carrascoso's testimony above] which is incompetent.
We do not think so. The subject of inquiry is not the entry, but the ouster incident. Testimony on the entry Republic of the Philippines
does not come within the proscription of the best evidence rule. Such testimony is admissible. SUPREME COURT
Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the Manila
startling occurrence was still fresh and continued to be felt. The excitement had not as yet died down. EN BANC
Statements then, in this environment, are admissible as part of the res gestae. For, they grow "out of the G.R. No. 34840 September 23, 1931
nervous excitement and mental and physical condition of the declarant". The utterance of the purser NARCISO GUTIERREZ, plaintiff-appellee,
regarding his entry in the notebook was spontaneous, and related to the circumstances of the ouster vs.
incident. Its trustworthiness has been guaranteed. It thus escapes the operation of the hearsay rule. It BONIFACIO GUTIERREZ, MARIA V. DE GUTIERREZ, MANUEL GUTIERREZ, ABELARDO
forms part of the res gestae. VELASCO, and SATURNINO CORTEZ, defendants-appellants.
At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have L.D. Lockwood for appellants Velasco and Cortez.
been an easy matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that San Agustin and Roxas for other appellants.
no such entry was made, the deposition of the purser could have cleared up the matter. Ramon Diokno for appellee.
We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence. MALCOLM, J.:
8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary This is an action brought by the plaintiff in the Court of First Instance of Manila against the five defendants,
damages — in contracts and quasi- contracts. The only condition is that defendant should have "acted in to recover damages in the amount of P10,000, for physical injuries suffered as a result of an automobile
a wanton, fraudulent, reckless, oppressive, or malevolent manner." The manner of ejectment of accident. On judgment being rendered as prayed for by the plaintiff, both sets of defendants appealed.
respondent Carrascoso from his first class seat fits into this legal precept. And this, in addition to moral On February 2, 1930, a passenger truck and an automobile of private ownership collided while attempting
damages. to pass each other on the Talon bridge on the Manila South Road in the municipality of Las Piñas, Province
9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar of Rizal. The truck was driven by the chauffeur Abelardo Velasco, and was owned by Saturnino Cortez.
judgment for attorneys' fees. The least that can be said is that the courts below felt that it is but just and The automobile was being operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by
equitable that attorneys' fees be given. 55 We do not intend to break faith with the tradition that discretion Bonifacio's father and mother, Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was
well exercised — as it was here — should not be disturbed. not in the car, but the mother, together will several other members of the Gutierrez family, seven in all,
10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: were accommodated therein. A passenger in the autobus, by the name of Narciso Gutierrez, was en route
P25,000.00 as moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' from San Pablo, Laguna, to Manila. The collision between the bus and the automobile resulted in Narciso
fees. The task of fixing these amounts is primarily with the trial court. The Court of Appeals did not Gutierrez suffering a fracture right leg which required medical attendance for a considerable period of
time, and which even at the date of the trial appears not to have healed properly. of the plaintiff, consisting principally of his keeping his foot outside the truck, which occasioned his injury.
It is conceded that the collision was caused by negligence pure and simple. The difference between the In this connection, it is sufficient to state that, aside from the fact that the defense of contributory
parties is that, while the plaintiff blames both sets of defendants, the owner of the passenger truck blames negligence was not pleaded, the evidence bearing out this theory of the case is contradictory in the extreme
the automobile, and the owner of the automobile, in turn, blames the truck. We have given close attention and leads us far afield into speculative matters.
to these highly debatable points, and having done so, a majority of the court are of the opinion that the The last subject for consideration relates to the amount of the award. The appellee suggests that the amount
findings of the trial judge on all controversial questions of fact find sufficient support in the record, and so could justly be raised to P16,517, but naturally is not serious in asking for this sum, since no appeal was
should be maintained. With this general statement set down, we turn to consider the respective legal taken by him from the judgment. The other parties unite in challenging the award of P10,000, as excessive.
obligations of the defendants. All facts considered, including actual expenditures and damages for the injury to the leg of the plaintiff,
In amplification of so much of the above pronouncement as concerns the Gutierrez family, it may be which may cause him permanent lameness, in connection with other adjudications of this court, lead us to
explained that the youth Bonifacio was in incompetent chauffeur, that he was driving at an excessive rate conclude that a total sum for the plaintiff of P5,000 would be fair and reasonable. The difficulty in
of speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by his approximating the damages by monetary compensation is well elucidated by the divergence of opinion
negligence to the accident. The guaranty given by the father at the time the son was granted a license to among the members of the court, three of whom have inclined to the view that P3,000 would be amply
operate motor vehicles made the father responsible for the acts of his son. Based on these facts, pursuant sufficient, while a fourth member has argued that P7,500 would be none too much.
to the provisions of article 1903 of the Civil Code, the father alone and not the minor or the mother, would In consonance with the foregoing rulings, the judgment appealed from will be modified, and the plaintiff
be liable for the damages caused by the minor. will have judgment in his favor against the defendants Manuel Gutierrez, Abelardo Velasco, and Saturnino
We are dealing with the civil law liability of parties for obligations which arise from fault or negligence. Cortez, jointly and severally, for the sum of P5,000, and the costs of both instances.
At the same time, we believe that, as has been done in other cases, we can take cognizance of the common Avanceña, C.J., Johnson, Street, Villamor, Ostrand, Romualdez, and Imperial, JJ., concur.
law rule on the same subject. In the United States, it is uniformly held that the head of a house, the owner
of an automobile, who maintains it for the general use of his family is liable for its negligent operation by
one of his children, whom he designates or permits to run it, where the car is occupied and being used at Addison vs. Felix, 38 Phil. 404 (August 3, 1918)
the time of the injury for the pleasure of other members of the owner's family than the child driving it. The March 16, 2016
theory of the law is that the running of the machine by a child to carry other members of the family is FACTS
within the scope of the owner's business, so that he is liable for the negligence of the child because of the Petitioner Addison sold four parcels of land to Defendant spouses Felix and Tioco located in LucenaCity.
relationship of master and servant. (Huddy On Automobiles, 6th ed., sec. 660; Missell vs. Hayes [1914], Respondents paid P3,000.00 for the purchase price and promised to pay the remaining by installment. The
91 Atl., 322.) The liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo contract provides that the purchasers may rescind the contract within one year after the issuance of title on
Velasco rests on a different basis, namely, that of contract which, we think, has been sufficiently their name.
demonstrated by the allegations of the complaint, not controverted, and the evidence. The reason for this The petitioner went to Lucena for the survey designaton and delivery of the land but only 2 parcels were
conclusion reaches to the findings of the trial court concerning the position of the truck on the bridge, the designated and 2/3 of it was in possession of a Juan Villafuerte.
speed in operating the machine, and the lack of care employed by the chauffeur. While these facts are not The other parcels were not surveyed and designated by Addison.
as clearly evidenced as are those which convict the other defendant, we nevertheless hesitate to disregard Addison demanded from petitioner the payment of the first installment but the latter contends that there
the points emphasized by the trial judge. In its broader aspects, the case is one of two drivers approaching was no delivery and as such, they are entitled to get back the 3K purchase price they gave upon the
a narrow bridge from opposite directions, with neither being willing to slow up and give the right of way execution of the contract.
to the other, with the inevitable result of a collision and an accident. ISSUE
The defendants Velasco and Cortez further contend that there existed contributory negligence on the part WON there was a valid delivery.
HELD Manila, demanding from the defendant the payment of P90.00 as actual and compensatory damages,
The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, P100.00 for temperate damages, P500.00 for moral damages, and P500.00 as attorney's fees. The
he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of defendant made no denials of the facts narrated above, except the claim of the plaintiff that the cost of the
their area was in the hostile and adverse possession of a third person. repair made by Freixas Business Machines be fully chargeable against him.
It is true that the same article declares that the execution of a public instruments is equivalent to the delivery Issue: Whether or not the defendant is liable for the total cost of the repair made by Freixas Business
of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the Machines with the plaintiff typewriter?
effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at the Ruling: No, he is not liable for the total cost of the repair made by Freixas Business Machines instead he
moment of the sale, its material delivery could have been made. It is not enough to confer upon the is only liable for the cost of the missing parts and screws. The defendant contravened the tenor of his
purchaser the ownership and the right of possession. The thing sold must be placed in his control. When obligation in repairing the typewriter of the plaintiff that he fails to repair it and returned it with the missing
there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the parts, he is liable under "ART. 1167. If a person obliged to do something fails to do it, the same shall be
sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient. But if executed at his cost.
there is an impediment, delivery cannot be deemed effected. This same rule shall be observed if he does it in contravention of the tenor of the obligation. Furthermore
it may be decreed that what has been poorly done he undone."
Chavez vs. Gonzales G.R. No. 141968 February 12, 2001
March 25, 2016 THE INTERNATIONAL CORPORATE BANK (now UNION BANK OF THE
Case Digest PHILIPPINES), petitioner,
G.R. No. L-27454 April 30, 1970 vs.
Rosendo O. Chavez, plaintiff-appellant SPS. FRANCIS S. GUECO and MA. LUZ E. GUECO, respondents.
vs. KAPUNAN, J.:
Fructuoso Gonzales, defendant-appellee The respondent Gueco Spouses obtained a loan from petitioner International Corporate Bank (now Union
REYES, J.B.L., J.: Bank of the Philippines) to purchase a car - a Nissan Sentra 1600 4DR, 1989 Model. In consideration
thereof, the Spouses executed promissory notes which were payable in monthly installments and chattel
Facts: On July 1963, Rosendo Chavez brought his typewriter to Fructuoso Gonzales a typewriter mortgage over the car to serve as security for the notes.1âwphi1.nêt
repairman for the cleaning and servicing of the said typewriter but the latter was not able to finish the job. The Spouses defaulted in payment of installments. Consequently, the Bank filed on August 7, 1995 a civil
During October 1963, the plaintiff gave the amount of P6.00 to the defendant which the latter asked from action docketed as Civil Case No. 658-95 for "Sum of Money with Prayer for a Writ of Replevin" 1 before
the plaintiff for the purchase of spare parts, because of the delay of the repair the plaintiff decided to the Metropolitan Trial Court of Pasay City, Branch 45.2 On August 25, 1995, Dr. Francis Gueco was served
recover the typewriter to the defendant which he wrapped it like a package. When the plaintiff reached summons and was fetched by the sheriff and representative of the bank for a meeting in the bank premises.
their home he opened it and examined that some parts and screws was lost. That on October 29, 1963 the Desi Tomas, the Bank's Assistant Vice President demanded payment of the amount of P184,000.00 which
plaintiff sent a letter to the defendant for the return of the missing parts, the interior cover and the sum of represents the unpaid balance for the car loan. After some negotiations and computation, the amount was
P6.00 (Exhibit D). The following day, the defendant returned to the plaintiff some of the missing parts, the lowered to P154,000.00, However, as a result of the non-payment of the reduced amount on that date, the
interior cover and the P6.00. The plaintiff brought his typewriter to Freixas Business Machines and the car was detained inside the bank's compound.
repair cost the amount of P89.85. He commenced this action on August 23, 1965 in the City Court of On August 28, 1995, Dr. Gueco went to the bank and talked with its Administrative Support, Auto
Loans/Credit Card Collection Head, Jefferson Rivera. The negotiations resulted in the further reduction of of Court, raising the following assigned errors:
the outstanding loan to P150,000.00. I
On August 29, 1995, Dr. Gueco delivered a manager's check in amount of P150,000.00 but the car was not THE COURT OF APPEALS ERRED IN HOLDING THAT THERE WAS NO AGREEMENT WITH
released because of his refusal to sign the Joint Motion to Dismiss. It is the contention of the Gueco spouses RESPECT TO THE EXECUTION OF THE JOINT MOTION TO DISMISS AS A CONDITION FOR
and their counsel that Dr. Gueco need not sign the motion for joint dismissal considering that they had not THE COMPROMISE AGREEMENT.
yet filed their Answer. Petitioner, however, insisted that the joint motion to dismiss is standard operating II
procedure in their bank to effect a compromise and to preclude future filing of claims, counterclaims or THE COURT OF APPEALS ERRED IN GRANTING MORAL AND EXEMPLARY DAMAGES AND
suits for damages. ATTORNEY'S FEES IN FAVOR OF THE RESPONDENTS.
After several demand letters and meetings with bank representatives, the respondents Gueco spouses III
initiated a civil action for damages before the Metropolitan Trial Court of Quezon City, Branch 33. The THE COURT OF APPEALS ERRED IN HOLDING THAT THE PETITIONER RETURN THE
Metropolitan Trial Court dismissed the complaint for lack of merit. SUBJECT CAR TO THE RESPONDENTS, WITHOUT MAKING ANY PROVISION FOR THE
On appeal to the Regional Trial Court, Branch 227 of Quezon City, the decision of the Metropolitan Trial ISSUANCE OF THE NEW MANAGER'S/CASHIER'S CHECK BY THE RESPONDENTS IN FAVOR
Court was reversed. In its decision, the RTC held that there was a meeting of the minds between the parties OF THE PETITIONER IN LIEU OF THE ORIGINAL CASHIER'S CHECK THAT ALREADY
as to the reduction of the amount of indebtedness and the release of the car but said agreement did not BECAME STALE.6
include the signing of the joint motion to dismiss as a condition sine qua non for the effectivity of the As to the first issue, we find for the respondents. The issue as to what constitutes the terms of the oral
compromise. The court further ordered the bank: compromise or any subsequent novation is a question of fact that was resolved by the Regional Trial Court
1. to return immediately the subject car to the appellants in good working condition; Appellee may deposit and the Court of Appeals in favor of respondents. It is well settled that the findings of fact of the lower
the Manager's check - the proceeds of which have long been under the control of the issuing bank in favor court, especially when affirmed by the Court of Appeals, are binding upon this Court. 7 While there are
of the appellee since its issuance, whereas the funds have long been paid by appellants to .secure said exceptions to this rule,8 the present case does not fall under anyone of them, the petitioner's claim to the
Manager's Check, over which appellants have no control; contrary, notwithstanding.
2. to pay the appellants the sum of P50,000.00 as moral damages; P25,000.00 as exemplary damages, and Being an affirmative allegation, petitioner has the burden of evidence to prove his claim that the oral
P25,000.00 as attorney's fees, and compromise entered into by the parties on August 28, 1995 included the stipulation that the parties would
3. to pay the cost of suit. jointly file a motion to dismiss. This petitioner failed to do. Notably, even the Metropolitan Trial Court,
In other respect, the decision of the Metropolitan Trial Court Branch 33 is hereby AFFIRMED. while ruling in favor of the petitioner and thereby dismissing the complaint, did not make a factual finding
The case was elevated to the Court of Appeals, which on February 17, 2000, issued the assailed decision, that the compromise agreement included the condition of the signing of a joint motion to dismiss.
the decretal portion of which reads: The Court of Appeals made the factual findings in this wise:
WHEREFORE, premises considered, the petition for review on certiorari is hereby DENIED and the In support of its claim, petitioner presented the testimony of Mr. Jefferson Rivera who related that
Decision of the Regional Trial Court of Quezon City, Branch 227, in Civil Case No. Q-97-31176, for lack respondent Dr. Gueco was aware that the signing of the draft of the Joint Motion to Dismiss was one of
of any reversible error, is AFFIRMED in toto. Costs against petitioner. the conditions set by the bank for the acceptance of the reduced amount of indebtedness and the release of
SO ORDERED.5 the car. (TSN, October 23, 1996, pp. 17-21, Rollo, pp. 18, 5). Respondents, however, maintained that no
The Court of Appeals essentially relied on the respect accorded to the finality of the findings of facts by such condition was ever discussed during their meeting of August 28, 1995 (Rollo, p. 32).
the lower court and on the latter's finding of the existence of fraud which constitutes the basis for the award The trial court, whose factual findings are entitled to respect since it has the 'opportunity to directly observe
of damages. the witnesses and to determine by their demeanor on the stand the probative value of their testimonies'
The petitioner comes to this Court by way of petition for review on certiorari under Rule 45 of the Rules (People vs. Yadao, et al. 216 SCRA 1, 7 [1992]), failed to make a categorical finding on the issue. In
dismissing the claim of damages of the respondents, it merely observed that respondents are not entitled inconsistent with human experience. Considering the effect of the signing of the Joint Motion to Dismiss
to indemnity since it was their unjustified reluctance to sign of the Joint Motion to Dismiss that delayed on the appellants' substantive right, it is more in accord with human experience to expect Dr. Gueco, upon
the release of the car. The trial court opined, thus: being shown the Joint Motion to Dismiss, to refuse to pay the Manager's Check and for the bank to refuse
'As regards the third issue, plaintiffs' claim for damages is unavailing. First, the plaintiffs could have to accept the manager's check. The only logical explanation for this inaction is that Dr. Gueco was not
avoided the renting of another car and could have avoided this litigation had he signed the Joint Motion to shown the Joint Motion to Dismiss in the meeting of August 28, 1995, bolstering his claim that its signing
Dismiss. While it is true that herein defendant can unilaterally dismiss the case for collection of sum of was never put into consideration in reaching a compromise.' xxx. 9
money with replevin, it is equally true that there is nothing wrong for the plaintiff to affix his signature in We see no reason to reverse.
the Joint Motion to Dismiss, for after all, the dismissal of the case against him is for his own good and Anent the issue of award of damages, we find the claim of petitioner meritorious. In finding the petitioner
benefit. In fact, the signing of the Joint Motion to Dismiss gives the plaintiff three (3) advantages. First, liable for damages, both .the Regional Trial Court and the Court of Appeals ruled that there was fraud on
he will recover his car. Second, he will pay his obligation to the bank on its reduced amount of P150,000.00 the part of the petitioner. The CA thus declared:
instead of its original claim of P184,985.09. And third, the case against him will be dismissed. Plaintiffs, The lower court's finding of fraud which became the basis of the award of damages was likewise
likewise, are not entitled to the award of moral damages and exemplary damages as there is no showing sufficiently proven. Fraud under Article 1170 of the Civil Code of the Philippines, as amended is the
that the defendant bank acted fraudulently or in bad faith.' (Rollo, p. 15) 'deliberate and intentional evasion of the normal fulfillment of obligation' When petitioner refused to
The Court has noted, however, that the trial court, in its findings of facts, clearly indicated that the release the car despite respondent's tender of payment in the form of a manager's check, the former
agreement of the parties on August 28, 1995 was merely for the lowering of the price, hence - intentionally evaded its obligation and thereby became liable for moral and exemplary damages, as well
'xxx On August 28, 1995, bank representative Jefferson Rivera and plaintiff entered into an oral as attorney's fees.10
compromise agreement, whereby the original claim of the bank of P184,985.09 was reduced to We disagree.
P150,000.00 and that upon payment of which, plaintiff was informed that the subject motor vehicle would Fraud has been defined as the deliberate intention to cause damage or prejudice. It is the voluntary
be released to him.' (Rollo, p. 12) execution of a wrongful act, or a willful omission, knowing and intending the effects which naturally and
The lower court, on the other hand, expressly made a finding that petitioner failed to include the aforesaid necessarily arise from such act or omission; the fraud referred to in Article 1170 of the Civil Code is the
signing of the Joint Motion to Dismiss as part of the agreement. In dismissing petitioner's claim, the lower deliberate and intentional evasion of the normal fulfillment of obligation. 11 We fail to see how the act of
court declared, thus: the petitioner bank in requiring the respondent to sign the joint motion to dismiss could constitute as fraud.
'If it is true, as the appellees allege, that the signing of the joint motion was a condition sine qua non for True, petitioner may have been remiss in informing Dr. Gueco that the signing of a joint motion to dismiss
the reduction of the appellants' obligation, it is only reasonable and logical to assume that the joint motion is a standard operating procedure of petitioner bank. However, this can not in anyway have prejudiced Dr.
should have been shown to Dr. Gueco in the August 28, 1995 meeting. Why Dr. Gueco was not given a Gueco. The motion to dismiss was in fact also for the benefit of Dr. Gueco, as the case filed by petitioner
copy of the joint motion that day of August 28, 1995, for his family or legal counsel to see to be brought against it before the lower court would be dismissed with prejudice. The whole point of the parties entering
signed, together with the P150,000.00 in manager's check form to be submitted on the following day on into the compromise agreement was in order that Dr. Gueco would pay his outstanding account and in
August 29, 1995? (sic) [I]s a question whereby the answer up to now eludes this Court's comprehension. return petitioner would return the car and drop the case for money and replevin before the Metropolitan
The appellees would like this Court to believe that Dr Gueco was informed by Mr. Rivera Rivera of the Trial Court. The joint motion to dismiss was but a natural consequence of the compromise agreement and
bank requirement of signing the joint motion on August 28, 1995 but he did not bother to show a copy simply stated that Dr. Gueco had fully settled his obligation, hence, the dismissal of the case. Petitioner's
thereof to his family or legal counsel that day August 28, 1995. This part of the theory of appellee is too act of requiring Dr. Gueco to sign the joint motion to dismiss can not be said to be a deliberate attempt on
complicated for any simple oral agreement. The idea of a Joint Motion to Dismiss being signed as a the part of petitioner to renege on the compromise agreement of the parties. It should, likewise, be noted
condition to the pushing through a deal surfaced only on August 29, 1995. that in cases of breach of contract, moral damages may only be awarded when the breach was attended by
'This Court is not convinced by the appellees' posturing. Such claim rests on too slender a frame, being fraud or bad faith.12 The law presumes good faith. Dr. Gueco failed to present an iota of evidence to
overcome this presumption. In fact, the act of petitioner bank in lowering the debt of Dr. Gueco from with respect to such instruments, and the facts of the particular case.23 The test is whether the payee
P184,000.00 to P150,000.00 is indicative of its good faith and sincere desire to settle the case. If respondent employed such diligence as a prudent man exercises in his own affairs. 24 This is because the nature and
did suffer any damage, as a result of the withholding of his car by petitioner, he has only himself to blame. theory behind the use of a check points to its immediate use and payability. In a case, a check payable on
Necessarily, the claim for exemplary damages must fait. In no way, may the conduct of petitioner be demand which was long overdue by about two and a half (2-1/2) years was considered a stale
characterized as "wanton, fraudulent, reckless, oppressive or malevolent." check.25 Failure of a payee to encash a check for more than ten (10) years undoubtedly resulted in the
We, likewise, find for the petitioner with respect to the third assigned error. In the meeting of August 29, check becoming stale.26 Thus, even a delay of one (1) week27 or two (2) days,28 under the specific
1995, respondent Dr. Gueco delivered a manager's check representing the reduced amount of P150,000.00. circumstances of the cited cases constituted unreasonable time as a matter of law.
Said check was given to Mr. Rivera, a representative of respondent bank. However, since Dr. Gueco In the case at bar, however, the check involved is not an ordinary bill of exchange but a manager's check.
refused to sign the joint motion to dismiss, he was made to execute a statement to the effect that he was A manager's check is one drawn by the bank's manager upon the bank itself. It is similar to a cashier's
withholding the payment of the check.14 Subsequently, in a letter addressed to Ms. Desi Tomas, vice check both as to effect and use. A cashier's check is a check of the bank's cashier on his own or another
president of the bank, dated September 4, 1995, Dr. Gueco instructed the bank to disregard the 'hold order" check. In effect, it is a bill of exchange drawn by the cashier of a bank upon the bank itself, and accepted
letter and demanded the immediate release of his car, to which the former replied that the condition of in advance by the act of its issuance.29 It is really the bank's own check and may be treated as a promissory
signing the joint motion to dismiss must be satisfied and that they had kept the check which could be note with the bank as a maker.30The check becomes the primary obligation of the bank which issues it and
claimed by Dr. Gueco anytime.16 While there is controversy as to whether the document evidencing the constitutes its written promise to pay upon demand. The mere issuance of it is considered an acceptance
order to hold payment of the check was formally offered as evidence by petitioners, it appears from the thereof. If treated as promissory note, the drawer would be the maker and in which case the holder need
pleadings that said check has not been encashed. not prove presentment for payment or present the bill to the drawee for acceptance.31
The decision of the Regional Trial Court, which was affirmed in toto by the Court of Appeals, orders the Even assuming that presentment is needed, failure to present for payment within a reasonable time will
petitioner: result to the discharge of the drawer only to the extent of the loss caused by the delay. 32 Failure to present
1. to return immediately the subject car to the appellants in good working condition. Appellee may deposit on time, thus, does not totally wipe out all liability. In fact, the legal situation amounts to an
the Manager's Check - the proceeds of which have long been under the control of the issuing bank in favor acknowledgment of liability in the sum stated in the check. In this case, the Gueco spouses have not
of the appellee since its issuance, whereas the funds have long been paid by appellants to secure said alleged, much less shown that they or the bank which issued the manager's check has suffered damage or
Manager's Check over which appellants have no control. loss caused by the delay or non-presentment. Definitely, the original obligation to pay certainly has not
Respondents would make us hold that petitioner should return the car or its value and that the latter, been erased.
because of its own negligence, should suffer the loss occasioned by the fact that the check had become It has been held that, if the check had become stale, it becomes imperative that the circumstances that
stale. It is their position that delivery of the manager's check produced the effect of payment and, thus, caused its non-presentment be determined.33 In the case at bar, there is no doubt that the petitioner bank
petitioner was negligent in opting not to deposit or use said check. Rudimentary sense of justice and fair held on the check and refused to encash the same because of the controversy surrounding the signing of
play would not countenance respondents' position. the joint motion to dismiss. We see no bad faith or negligence in this position taken by the
A stale check is one which has not been presented for payment within a reasonable time after its issue. It Bank.1âwphi1.nêt
is valueless and, therefore, should not be paid. Under the negotiable instruments law, an instrument not WHEREFORE, premises considered, the petition for review is given due course. The decision of the
payable on demand must be presented for payment on the day it falls due. When the instrument is payable Court of Appeals affirming the decision of the Regional Trial Court is SET ASIDE. Respondents are
on demand, presentment must be made within a reasonable time after its issue. In the case of a bill of further ordered to pay the original obligation amounting to P150,000.00 to the petitioner upon surrender
exchange, presentment is sufficient if made within a reasonable time after the last negotiation thereof. or cancellation of the manager's check in the latter's possession, afterwhich, petitioner is to return the
A check must be presented for payment within a reasonable time after its issue, and in determining what subject motor vehicle in good working condition.
is a "reasonable time," regard is to be had to the nature of the instrument, the usage of trade or business SO ORDERED.
dimly by a single light located some distance away, objects on the platform where the accident occurred
—————————————— were difficult to discern especially to a person emerging from a lighted car.
The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found
Republic of the Philippines in the fact that it was the customary season for harvesting these melons and a large lot had been brought
SUPREME COURT to the station for the shipment to the market. They were contained in numerous sacks which has been piled
Manila on the platform in a row one upon another. The testimony shows that this row of sacks was so placed of
EN BANC melons and the edge of platform; and it is clear that the fall of the plaintiff was due to the fact that his foot
G.R. No. L-12191 October 14, 1918 alighted upon one of these melons at the moment he stepped upon the platform. His statement that he
JOSE CANGCO, plaintiff-appellant, failed to see these objects in the darkness is readily to be credited.
vs. The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries
MANILA RAILROAD CO., defendant-appellee. which he had received were very serious. He was therefore brought at once to a certain hospital in the city
Ramon Sotelo for appellant. of Manila where an examination was made and his arm was amputated. The result of this operation was
Kincaid & Hartigan for appellee. unsatisfactory, and the plaintiff was then carried to another hospital where a second operation was
performed and the member was again amputated higher up near the shoulder. It appears in evidence that
FISHER, J.: the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other expenses
At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the in connection with the process of his curation.
employment of Manila Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to
in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the defendant recover damages of the defendant company, founding his action upon the negligence of the servants and
railroad company; and in coming daily by train to the company's office in the city of Manila where he employees of the defendant in placing the sacks of melons upon the platform and leaving them so placed
worked, he used a pass, supplied by the company, which entitled him to ride upon the company's trains as to be a menace to the security of passenger alighting from the company's trains. At the hearing in the
free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his seat in the Court of First Instance, his Honor, the trial judge, found the facts substantially as above stated, and drew
second class-car where he was riding and, making, his exit through the door, took his position upon the therefrom his conclusion to the effect that, although negligence was attributable to the defendant by reason
steps of the coach, seizing the upright guardrail with his right hand for support. of the fact that the sacks of melons were so placed as to obstruct passengers passing to and from the cars,
On the side of the train where passengers alight at the San Mateo station there is a cement platform which nevertheless, the plaintiff himself had failed to use due caution in alighting from the coach and was
begins to rise with a moderate gradient some distance away from the company's office and extends along therefore precluded form recovering. Judgment was accordingly entered in favor of the defendant
in front of said office for a distance sufficient to cover the length of several coaches. As the train slowed company, and the plaintiff appealed.
down another passenger, named Emilio Zuñiga, also an employee of the railroad company, got off the It can not be doubted that the employees of the railroad company were guilty of negligence in piling these
same car, alighting safely at the point where the platform begins to rise from the level of the ground. When sacks on the platform in the manner above stated; that their presence caused the plaintiff to fall as he
the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his feet alighted from the train; and that they therefore constituted an effective legal cause of the injuries sustained
came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell by the plaintiff. It necessarily follows that the defendant company is liable for the damage thereby
violently on the platform. His body at once rolled from the platform and was drawn under the moving car, occasioned unless recovery is barred by the plaintiff's own contributory negligence. In resolving this
where his right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the
train the car moved forward possibly six meters before it came to a full stop. defendant company and the contributory negligence of the plaintiff should be separately examined.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted It is important to note that the foundation of the legal liability of the defendant is the contract of carriage,
and that the obligation to respond for the damage which plaintiff has suffered arises, if at all, from the the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within
breach of that contract by reason of the failure of defendant to exercise due care in its performance. That the scope of his employment or not, if the damage done by the servant does not amount to a breach of the
is to say, its liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive contract between the master and the person injured.
responsibility for the negligence of its servants, imposed by article 1903 of the Civil Code, which can be It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves
rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of the Civil the master from liability for the latter's acts — on the contrary, that proof shows that the responsibility has
Code is not applicable to obligations arising ex contractu, but only to extra-contractual obligations — or never existed. As Manresa says (vol. 8, p. 68) the liability arising from extra-contractual culpa is always
to use the technical form of expression, that article relates only to culpa aquiliana and not to culpa based upon a voluntary act or omission which, without willful intent, but by mere negligence or inattention,
contractual. has caused damage to another. A master who exercises all possible care in the selection of his servant,
Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points taking into consideration the qualifications they should possess for the discharge of the duties which it is
out this distinction, which was also recognized by this Court in its decision in the case of his purpose to confide to them, and directs them with equal diligence, thereby performs his duty to third
Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa persons to whom he is bound by no contractual ties, and he incurs no liability whatever if, by reason of
clearly points out the difference between "culpa, substantive and independent, which of itself constitutes the negligence of his servants, even within the scope of their employment, such third person suffer damage.
the source of an obligation between persons not formerly connected by any legal tie" and culpa considered True it is that under article 1903 of the Civil Code the law creates a presumption that he has been negligent
as an accident in the performance of an obligation already existing . . . ." in the selection or direction of his servant, but the presumption is rebuttable and yield to proof of due care
In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that and diligence in this respect.
article 1903 of the Civil Code is not applicable to acts of negligence which constitute the breach of a The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has
contract. held that these articles are applicable to cases of extra-contractual culpa exclusively. (Carmona vs. Cuesta,
Upon this point the Court said: 20 Porto Rico Reports, 215.)
The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and
those not growing out of pre-existing duties of the parties to one another. But where relations already Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the extra-contractual liability
formed give rise to duties, whether springing from contract or quasi-contract, then breaches of those duties of the defendant to respond for the damage caused by the carelessness of his employee while acting within
are subject to article 1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 the scope of his employment. The Court, after citing the last paragraph of article 1903 of the Civil Code,
Phil. Rep., 359 at 365.) said:
This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant
imposed upon employers with respect to damages occasioned by the negligence of their employees to or employee there instantly arises a presumption of law that there was negligence on the part of the master
persons to whom they are not bound by contract, is not based, as in the English Common Law, upon the or employer either in selection of the servant or employee, or in supervision over him after the selection,
principle of respondeat superior — if it were, the master would be liable in every case and unconditionally or both; and (2) that that presumption is juris tantum and not juris et de jure, and consequently, may be
— but upon the principle announced in article 1902 of the Civil Code, which imposes upon all persons rebutted. It follows necessarily that if the employer shows to the satisfaction of the court that in selection
who by their fault or negligence, do injury to another, the obligation of making good the damage caused. and supervision he has exercised the care and diligence of a good father of a family, the presumption is
One who places a powerful automobile in the hands of a servant whom he knows to be ignorant of the overcome and he is relieved from liability.
method of managing such a vehicle, is himself guilty of an act of negligence which makes him liable for This theory bases the responsibility of the master ultimately on his own negligence and not on that of his
all the consequences of his imprudence. The obligation to make good the damage arises at the very instant servant. This is the notable peculiarity of the Spanish law of negligence. It is, of course, in striking contrast
that the unskillful servant, while acting within the scope of his employment causes the injury. The liability to the American doctrine that, in relations with strangers, the negligence of the servant in conclusively the
of the master is personal and direct. But, if the master has not been guilty of any negligence whatever in negligence of the master.
The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon their conduct.
negligence, it is necessary that there shall have been some fault attributable to the defendant personally, The position of a natural or juridical person who has undertaken by contract to render service to another,
and that the last paragraph of article 1903 merely establishes a rebuttable presumption, is in complete is wholly different from that to which article 1903 relates. When the sources of the obligation upon which
accord with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the liability created by plaintiff's cause of action depends is a negligent act or omission, the burden of proof rests upon plaintiff
article 1903 is imposed by reason of the breach of the duties inherent in the special relations of authority to prove the negligence — if he does not his action fails. But when the facts averred show a contractual
or superiority existing between the person called upon to repair the damage and the one who, by his act or undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff has failed or refused to
omission, was the cause of it. perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the
On the other hand, the liability of masters and employers for the negligent acts or omissions of their contract is due to willful fault or to negligence on the part of the defendant, or of his servants or agents.
servants or agents, when such acts or omissions cause damages which amount to the breach of a contact, Proof of the contract and of its nonperformance is sufficient prima facie to warrant a recovery.
is not based upon a mere presumption of the master's negligence in their selection or control, and proof of As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor should assume the
exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the burden of proof of its existence, as the only fact upon which his action is based; while on the contrary, in
breach of his contract. a case of negligence which presupposes the existence of a contractual obligation, if the creditor shows that
Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation it exists and that it has been broken, it is not necessary for him to prove negligence. (Manresa, vol. 8, p.
has its source in the breach or omission of those mutual duties which civilized society imposes upon it 71 [1907 ed., p. 76]).
members, or which arise from these relations, other than contractual, of certain members of society to As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was
others, generally embraced in the concept of status. The legal rights of each member of society constitute due to the negligent conduct of defendant or of his servants, even though such be in fact the actual cause
the measure of the corresponding legal duties, mainly negative in character, which the existence of those of the breach, it is obvious that proof on the part of defendant that the negligence or omission of his servants
rights imposes upon all other members of society. The breach of these general duties whether due to willful or agents caused the breach of the contract would not constitute a defense to the action. If the negligence
intent or to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured of servants or agents could be invoked as a means of discharging the liability arising from contract, the
party. The fundamental distinction between obligations of this character and those which arise from anomalous result would be that person acting through the medium of agents or servants in the performance
contract, rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act of their contracts, would be in a better position than those acting in person. If one delivers a valuable watch
or omission itself which creates the vinculum juris, whereas in contractual relations the vinculum exists to watchmaker who contract to repair it, and the bailee, by a personal negligent act causes its destruction,
independently of the breach of the voluntary duty assumed by the parties when entering into the contractual he is unquestionably liable. Would it be logical to free him from his liability for the breach of his contract,
relation. which involves the duty to exercise due care in the preservation of the watch, if he shows that it was his
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is servant whose negligence caused the injury? If such a theory could be accepted, juridical persons would
competent for the legislature to elect — and our Legislature has so elected — whom such an obligation is enjoy practically complete immunity from damages arising from the breach of their contracts if caused by
imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend that liability, negligent acts as such juridical persons can of necessity only act through agents or servants, and it would
without regard to the lack of moral culpability, so as to include responsibility for the negligence of those no doubt be true in most instances that reasonable care had been taken in selection and direction of such
person who acts or mission are imputable, by a legal fiction, to others who are in a position to exercise an servants. If one delivers securities to a banking corporation as collateral, and they are lost by reason of the
absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit negligence of some clerk employed by the bank, would it be just and reasonable to permit the bank to
extra-contractual liability — with certain well-defined exceptions — to cases in which moral culpability relieve itself of liability for the breach of its contract to return the collateral upon the payment of the debt
can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed by proving that due care had been exercised in the selection and direction of the clerk?
to exercise due care in the selection and control of one's agents or servants, or in the control of persons This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere
who, by reason of their status, occupy a position of dependency with respect to the person made liable for incident to the performance of a contract has frequently been recognized by the supreme court of Spain.
(Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the decisions of November in dealing with the liability of a master for the negligent acts of his servants "makes the distinction between
20, 1896, it appeared that plaintiff's action arose ex contractu, but that defendant sought to avail himself private individuals and public enterprise;" that as to the latter the law creates a rebuttable presumption of
of the provisions of article 1902 of the Civil Code as a defense. The Spanish Supreme Court rejected negligence in the selection or direction of servants; and that in the particular case the presumption of
defendant's contention, saying: negligence had not been overcome.
These are not cases of injury caused, without any pre-existing obligation, by fault or negligence, such as It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded
those to which article 1902 of the Civil Code relates, but of damages caused by the defendant's failure to in tort rather than as based upon the breach of the contract of carriage, and an examination of the pleadings
carry out the undertakings imposed by the contracts . . . . and of the briefs shows that the questions of law were in fact discussed upon this theory. Viewed from the
A brief review of the earlier decision of this court involving the liability of employers for damage done by standpoint of the defendant the practical result must have been the same in any event. The proof disclosed
the negligent acts of their servants will show that in no case has the court ever decided that the negligence beyond doubt that the defendant's servant was grossly negligent and that his negligence was the proximate
of the defendant's servants has been held to constitute a defense to an action for damages for breach of cause of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of negligence in its
contract. failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the
In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not injury suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa
liable for the damages caused by the negligence of his driver. In that case the court commented on the fact aquiliana or culpa contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs
that no evidence had been adduced in the trial court that the defendant had been negligent in the an incident in the course of the performance of a contractual undertaking or its itself the source of an extra-
employment of the driver, or that he had any knowledge of his lack of skill or carefulness. contractual undertaking obligation, its essential characteristics are identical. There is always an act or
In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued omission productive of damage due to carelessness or inattention on the part of the defendant.
the defendant for damages caused by the loss of a barge belonging to plaintiff which was allowed to get Consequently, when the court holds that a defendant is liable in damages for having failed to exercise due
adrift by the negligence of defendant's servants in the course of the performance of a contract of towage. care, either directly, or in failing to exercise proper care in the selection and direction of his servants, the
The court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the defendant grew out of a practical result is identical in either case. Therefore, it follows that it is not to be inferred, because the court
contract made between it and the plaintiff . . . we do not think that the provisions of articles 1902 and 1903 held in the Yamada case that defendant was liable for the damages negligently caused by its servants to a
are applicable to the case." person to whom it was bound by contract, and made reference to the fact that the defendant was negligent
In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover in the selection and control of its servants, that in such a case the court would have held that it would have
damages for the personal injuries caused by the negligence of defendant's chauffeur while driving been a good defense to the action, if presented squarely upon the theory of the breach of the contract, for
defendant's automobile in which defendant was riding at the time. The court found that the damages were defendant to have proved that it did in fact exercise care in the selection and control of the servant.
caused by the negligence of the driver of the automobile, but held that the master was not liable, although The true explanation of such cases is to be found by directing the attention to the relative spheres of
he was present at the time, saying: contractual and extra-contractual obligations. The field of non- contractual obligation is much more
. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a broader than that of contractual obligations, comprising, as it does, the whole extent of juridical human
reasonable opportunity to observe them and to direct the driver to desist therefrom. . . . The act complained relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is
of must be continued in the presence of the owner for such length of time that the owner by his bound to another by contract does not relieve him from extra-contractual liability to such person. When
acquiescence, makes the driver's acts his own. such a contractual relation exists the obligor may break the contract under such conditions that the same
In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it act which constitutes the source of an extra-contractual obligation had no contract existed between the
is true that the court rested its conclusion as to the liability of the defendant upon article 1903, although parties.
the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to him arising The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in
out of the contract of transportation. The express ground of the decision in this case was that article 1903, safety and to provide safe means of entering and leaving its trains (civil code, article 1258). That duty,
being contractual, was direct and immediate, and its non-performance could not be excused by proof that alighting; and his failure so to desist was contributory negligence.1awph!l.net
the fault was morally imputable to defendant's servants. As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect
The railroad company's defense involves the assumption that even granting that the negligent conduct of that plaintiff was guilty of contributory negligence is that he stepped off the car without being able to
its servants in placing an obstruction upon the platform was a breach of its contractual obligation to discern clearly the condition of the platform and while the train was yet slowly moving. In considering the
maintain safe means of approaching and leaving its trains, the direct and proximate cause of the injury situation thus presented, it should not be overlooked that the plaintiff was, as we find, ignorant of the fact
suffered by plaintiff was his own contributory negligence in failing to wait until the train had come to a that the obstruction which was caused by the sacks of melons piled on the platform existed; and as the
complete stop before alighting. Under the doctrine of comparative negligence announced in the Rakes case defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe
(supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him
negligence and plaintiff's negligence merely contributed to his injury, the damages should be apportioned. to the contrary, that the platform was clear. The place, as we have already stated, was dark, or dimly lighted,
It is, therefore, important to ascertain if defendant was in fact guilty of negligence. and this also is proof of a failure upon the part of the defendant in the performance of a duty owing by it
It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the to the plaintiff; for if it were by any possibility concede that it had right to pile these sacks in the path of
particular injury suffered by him could not have occurred. Defendant contends, and cites many authorities alighting passengers, the placing of them adequately so that their presence would be revealed.
in support of the contention, that it is negligence per se for a passenger to alight from a moving train. We As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following
are not disposed to subscribe to this doctrine in its absolute form. We are of the opinion that this proposition circumstances are to be noted: The company's platform was constructed upon a level higher than that of
is too badly stated and is at variance with the experience of every-day life. In this particular instance, that the roadbed and the surrounding ground. The distance from the steps of the car to the spot where the
the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop alighting passenger would place his feet on the platform was thus reduced, thereby decreasing the risk
within six meters from the place where he stepped from it. Thousands of person alight from trains under incident to stepping off. The nature of the platform, constructed as it was of cement material, also assured
these conditions every day of the year, and sustain no injury where the company has kept its platform free to the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was possessed of
from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury the vigor and agility of young manhood, and it was by no means so risky for him to get off while the train
whatever in alighting as he did had it not been for defendant's negligent failure to perform its duty to was yet moving as the same act would have been in an aged or feeble person. In determining the question
provide a safe alighting place. of contributory negligence in performing such act — that is to say, whether the passenger acted prudently
We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work or recklessly — the age, sex, and physical condition of the passenger are circumstances necessarily
on Negligence (vol. 3, sec. 3010) as follows: affecting the safety of the passenger, and should be considered. Women, it has been observed, as a general
The test by which to determine whether the passenger has been guilty of negligence in attempting to alight rule are less capable than men of alighting with safety under such conditions, as the nature of their wearing
from a moving railway train, is that of ordinary or reasonable care. It is to be considered whether an apparel obstructs the free movement of the limbs. Again, it may be noted that the place was perfectly
ordinarily prudent person, of the age, sex and condition of the passenger, would have acted as the passenger familiar to the plaintiff as it was his daily custom to get on and of the train at this station. There could,
acted under the circumstances disclosed by the evidence. This care has been defined to be, not the care therefore, be no uncertainty in his mind with regard either to the length of the step which he was required
which may or should be used by the prudent man generally, but the care which a man of ordinary prudence to take or the character of the platform where he was alighting. Our conclusion is that the conduct of the
would use under similar circumstances, to avoid injury." (Thompson, Commentaries on Negligence, vol. plaintiff in undertaking to alight while the train was yet slightly under way was not characterized by
3, sec. 3010.) imprudence and that therefore he was not guilty of contributory negligence.
Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist
we may say that the test is this; Was there anything in the circumstances surrounding the plaintiff at the clerk, and that the injuries he has suffered have permanently disabled him from continuing that
time he alighted from the train which would have admonished a person of average prudence that to get off employment. Defendant has not shown that any other gainful occupation is open to plaintiff. His
the train under the conditions then existing was dangerous? If so, the plaintiff should have desisted from expectancy of life, according to the standard mortality tables, is approximately thirty-three years. We are
of the opinion that a fair compensation for the damage suffered by him for his permanent disability is the treatment. She used her savings in the Bank of the Philippine Islands (BPI) to pay for the trip and for her
sum of P2,500, and that he is also entitled to recover of defendant the additional sum of P790.25 for husbands medical expenses.[8] In January 1993, her husband died and Estrella returned to
medical attention, hospital services, and other incidental expenditures connected with the treatment of his the Philippines. She went to petitioner FEBTC to withdraw her deposit but, to her dismay, she was told
injuries. that her husband had withdrawn the money in deposit.[9] Through counsel, respondent sent a demand letter
The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, to petitioner FEBTC. In another letter, respondent reiterated her request for updating and payment of the
and for the costs of both instances. So ordered. certificates of deposit, including interest earned.[10] As petitioner FEBTC refused respondents demands,
Arellano, C.J., Torres, Street and Avanceña, JJ., concur. the latter filed a complaint, joining in the action Edgardo F. Blanco, Branch Manager of FEBTC Harrison
Plaza Branch, and Octavio Espiritu, FEBTC President.[11]
—————————————— Petitioner FEBTC alleged that it had given respondents late husband Dominador an accommodation to
SECOND DIVISION allow him to withdraw Estrellas deposit.[12] Petitioner presented certified true copies of documents
[G.R. No. 148582. January 16, 2002] showing that payment had been made, to wit:
FAR EAST BANK AND TRUST COMPANY, petitioner, vs. ESTRELLA O. 1. Four FEBTC Harrison Plaza Branch Dollar Demand Drafts Nos. 886694903, 886694904, 886694905
QUERIMIT, respondent. and 886694906 for US$15,110.96 each, allegedly issued by petitioner to respondents
DECISION husband Dominador after payment on the certificates of deposit;
MENDOZA, J.: 2. A letter of Alicia de Bustos, branch cashier of FEBTC at Harrison Plaza, dated January 23, 1987, which
This is a petition for review on certiorari seeking review of the decision, dated March 6, 2001, and was sent to Citibank, N.A., Citibank Center, Paseo de Roxas, Makati, Metro Manila, informing the latter
resolution, dated June 19, 2001, of the Court of Appeals in CA-G.R. CV No. 67147, that FEBTC had issued the four drafts and requesting Citibank New York to debit from petitioners account
entitled Estrella O. Querimit v. Far East Bank and Trust Company, which affirmed with modification the $60,443.84, the aggregate value of the four drafts;[14]
decision of the Regional Trial Court, Branch 38, Manila,[2] ordering petitioner Far East Bank and Trust Co. 3. Citicorp Remittance Service: Daily Summary and Payment Report dated January 23, 1987;[15]
(FEBTC) to allow respondent Estrella O. Querimit to withdraw her time deposit with the FEBTC. 4. Debit Ticket dated January 23, 1987, showing the debit of US$60,443.84 or its equivalent at the time
The facts are as follows: of P1,240,912.04 from the FEBTC Harrison Plaza Branch;[16] and
Respondent Estrella O. Querimit worked as internal auditor of the Philippine Savings Bank (PSB) for 19 5. An Interbranch Transaction Ticket Register or Credit Ticket dated January 23, 1987 showing that
years, from 1963 to 1992. On November 24, 1986, she opened a dollar savings account in petitioners US$60,443.84 or P1,240,912.04 was credited to petitioners International Operation Division (IOD). [17]
Harrison Plaza branch,[4] for which she was issued four (4) Certificates of Deposit (Nos. 79028, 79029, On May 6, 2000, the trial court rendered judgment for respondent. The dispositive portion of the decision
79030, and 79031), each certificate representing the amount of $15,000.00, or a total amount of stated:
$60,000.00. The certificates were to mature in 60 days, on January 23, 1987, and were payable to bearer WHEREFORE, judgment is hereby rendered in favor of plaintiff [Estrella O. Querimit] and against
at 4.5% interest per annum. The certificates bore the word accrued, which meant that if they were not defendants [FEBTC et al.]:
presented for encashment or pre-terminated prior to maturity, the money deposited with accrued interest 1. ORDERING defendants to allow plaintiff to withdraw her U.S.$ Time Deposit of $60,000.00 plus
would be rolled over by the bank and annual interest accrued interests;
would accumulateautomatically.[5] The petitioner banks manager assured respondent that her deposit 2. ORDERING defendants to pay moral damages in the amount of P50,000.00;
would be renewed and earn interest upon maturity even without the surrender of the certificates if these 3. ORDERING defendants to pay exemplary damages in the amount of P50,000.00;
were not indorsed and withdrawn. Respondent kept her dollars in the bank so that they would earn 4. ORDERING defendants to pay attorneys fees in the amount of P100,000.00 plus P10,000.00 per
interest and so that she could use the fund after she retired. appearance of counsel; and
In 1989, respondent accompanied her husband Dominador Querimit to the United States for medical 5. ORDERING defendants to pay the costs of the suit.
SO ORDERED.[18] certificates of deposit,[25] as are the rules governing promissory notes when they contain an unconditional
On May 15, 2000, petitioner appealed to the Court of Appeals which, on March 6, 2001, affirmed through promise to pay a sum certain of money absolutely.[26] The principle that payment, in order to discharge a
its Fourteenth Division the decision of the trial court, with the modification that FEBTC was declared debt, must be made to someone authorized to receive it is applicable to the payment of certificates of
solely liable for the amounts adjudged in the decision of the trial court. The appeals court stated that deposit. Thus, a bank will be protected in making payment to the holder of a certificate indorsed by the
petitioner FEBTC failed to prove that the certificates of deposit had been paid out of its funds, since the payee, unless it has notice of the invalidity of the indorsement or the holders want of title.[27] A bank acts
evidence by the [respondent] stands unrebutted that the subject certificates of deposit until now at its peril when it pays deposits evidenced by a certificate of deposit, without its production and surrender
remain unindorsed, undelivered and unwithdrawn by [her]. But the Court of Appeals held that the after properindorsement.[28] As a rule, one who pleads payment has the burden of proving it. Even where
individual defendants, Edgardo F. Blanco, FEBTC-Harrison Plaza Branch Manager, and Octavio Espiritu, the plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to prove
FEBTC President, could not be held solidarily liable with the FEBTC because the latter has a personality payment, rather than on the plaintiff to prove payment. The debtor has the burden of showing with legal
separate from its officers and stockholders.[20] certainty that the obligation has been discharged by payment.[29]
Hence this appeal. In this case, the certificates of deposit were clearly marked payable to bearer, which means, to [t]he
As stated by the Court of Appeals, the main issue in this case is whether the subject certificates of deposit person in possession of an instrument, document of title or security payable to bearer or indorsed in
have already been paid by petitioner. Petitioner contends that- blank.[30] Petitioner should not have paid respondents husband or any third party without requiring the
I. Petitioner is not liable to respondent for the value of the four (4) Certificates of Deposit, including the surrender of the certificates of deposit.
interest thereon as well as moral and exemplary damages, attorneys and appearance fees. Petitioner claims that it did not demand the surrender of the subject certificates of deposit since respondents
II. The aggregate value - both principal and interest earned at maturity - of the four (4) certificates of husband, DominadorQuerimit, was one of the banks senior managers. But even long after respondents
deposit was already paid to or withdrawn at maturity by the late Dominador Querimit who was the husband had allegedly been paid respondents deposit and before his retirement from service, the FEBTC
respondents deceased husband. never required him to deliver the certificates of deposit in question.[31]Moreover, the accommodation given
III. Respondent is guilty of laches since the four (4) certificates of deposit were all issued on 24 November to respondents husband was made in violation of the banks policies and procedures. [32]
1986 but she attempted to withdraw their aggregate value on 29 July 1996 only on or after the lapse of Petitioner FEBTC thus failed to exercise that degree of diligence required by the nature of its
more than nine (9) years and eight (8) months. business.[33] Because the business of banks is impressed with public interest, the degree of diligence
IV. Respondent is not liable to petitioner for attorneys fees.[22] required of banks is more than that of a good father of the family or of an ordinary business firm. The
After reviewing the records, we find the petition to be without merit. fiduciary nature of their relationship with their depositors requires them to treat the accounts of their clients
First. Petitioner bank failed to prove that it had already paid Estrella Querimit, the bearer and lawful holder with the highest degree of care.[34] A bank is under obligation to treat the accounts of its depositors with
of the subject certificates of deposit. The finding of the trial court on this point, as affirmed by the Court meticulous care whether such accounts consist only of a few hundred pesos or of millions of
of Appeals, is that petitioner did not pay either respondent Estrella or her husband the amounts evidenced pesos. Responsibility arising from negligence in the performance of every kind of obligation is
by the subject certificates of deposit. This Court is not a trier of facts and generally does not weigh anew demandable.[35] Petitioner failed to prove payment of the subject certificates of deposit issued to the
the evidence already passed upon by the Court of Appeals.[23] The finding of respondent court which shows respondent and, therefore, remains liable for the value of the dollar deposits indicated thereon with accrued
that the subject certificates of deposit are still in the possession of Estrella Querimit and have not been interest.
indorsed or delivered to petitioner FEBTC is substantiated by the record and should therefore stand. [24] Second. The equitable principle of laches is not sufficient to defeat the rights of respondent over the subject
A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt of a sum certificates of deposit.
of money on deposit which the bank or banker promises to pay to the depositor, to the order of the Laches is the failure or neglect, for an unreasonable length of time, to do that which, by exercising due
depositor, or to some other person or his order, whereby the relation of debtor and creditor between the diligence, could or should have been done earlier. It is negligence or omission to assert a right within a
bank and the depositor is created. The principles governing other types of bank deposits are applicable to reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or
declined to assert it.[36] For the third time, Defendants secured from Plaintiff another loan in the amount of P300, 000.00, maturing
There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be determined in 1 month, and secured by a real estate mortgage. They executed a promissory note in favor of the Plaintiff.
according to its particular circumstances. The question of laches is addressed to the sound discretion of However, only the sum of P275, 000.00, was given to them out of the proceeds of the loan.
the court and, being an equitable doctrine, its application is controlled by equitable considerations. It Upon maturity of the three promissory notes, Defendants failed to pay the indebtedness.
cannot be used to defeat justice or perpetrate fraud and injustice. Courts will not be guided or bound strictly Defendants consolidated all their previous unpaid loans totalling P440, 000.00, and sought from Plaintiff
by the statute of limitations or the doctrine of laches when to do so, manifest wrong or injustice would another loan in the amount of P60, 000.00, bringing their indebtedness to a total of P50,000.00. They
result. executed another promissory note in favor of Plaintiff to pay the sum of P500, 000.00 with a 5.5% interest
In this case, it would be unjust to allow the doctrine of laches to defeat the right of respondent to recover per month plus 2% service charge per annum, with an additional amount of 1% per month as penalty
her savings which she deposited with the petitioner. She did not withdraw her deposit even after the charges.
maturity date of the certificates of deposit precisely because she wanted to set it aside for her retirement. On maturity of the loan, the Defendants failed to pay the indebtedness which prompt the Plaintiffs to file
She relied on the banks assurance, as reflected on the face of the instruments themselves, that interest with the RTC a complaint for collection of the full amount of the loan including interests and other charges.
would accrue or accumulate annually even after their maturity. Declaring that the due execution and genuineness of the four promissory notes has been duly proved, the
Third. Respondent is entitled to moral damages because of the mental anguish and humiliation she suffered RTC ruled that although the Usury Law had been repealed, the interest charged on the loans was
as a result of the wrongful refusal of the FEBTC to pay her even after she had delivered the certificates of unconscionable and "revolting to the conscience" and ordered the payment of the amount of the first 3
deposit. In addition, petitioner FEBTC should pay respondent exemplary damages, which the trial court loans with a 12% interest per annum and 1% per month as penalty.
imposed by way of example or correction for the public good. Finally, respondent is entitled to attorneys On appeal, Plaintiff-appellants argued that the promissory note, which consolidated all the unpaid loans of
fees since petitioners act or omission compelled her to incur expenses to protect her interest, making such the defendants, is the law that governs the parties.
award just and equitable. However, we find the award of attorneys fees to be excessive and accordingly The Court of Appeals ruled in favor of the Plaintiff-appellants on the ground that the Usury Law has
reduce it to P20,000.00. become legally inexistent with the promulgation by the Central Bank in 1982 of Circular No. 905, the
WHEREFORE, premises considered, the present petition is hereby DENIED and the Decision in CA- lender and the borrower could agree on any interest that may be charged on the loan, and ordered the
G.R. CV No. 67147 AFFIRMED, with the modification that the award of attorneys fees is reduced Defendants to pay the Plaintiffs the sum of P500,000, plus 5.5% per month interest and 2& service charge
to P20,000.00. per annum , and 1% per month as penalty charges.
SO ORDERED. Defendants filed the present case via petition for review on certiorari.
Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur. Issue: WON the stipulated 5.5% interest rate per month on the loan in the sum of P500, 000.00 is usurious.
Held: No.
Medel vs Court of Appeals, 299 SCRA 481; GR No. 131622, November 27, 1998, digested A stipulated rate of interest at 5.5% per month on the P500, 000.00 loan is excessive, iniquitous,
Posted by Pius Morados on November 30, 2011 unconscionable and exorbitant, but it cannot be considered "usurious" because Central Bank Circular No.
(Credit Transactions – Loans, Usury Law, Interest Rates) 905 has expressly removed the interest ceilings prescribed by the Usury Law and that the Usury Law is
Facts: Defendants obtained a loan from Plaintiff in the amount P50, 000.00, payable in 2 months and now "legally inexistent."
executed a promissory note. Plaintiff gave only the amount of P47, 000.00 to the borrowers and retained Doctrine: A CB Circular cannot repeal a law. Only a law can repeal another law.
P3, 000.00 as advance interest for 1 month at 6% per month. Jurisprudence provides that CB Circular did not repeal nor in a way amend the Usury Law but simply
Defendants obtained another loan from Defendant in the amount of P90, 000.00, payable in 2 months, at suspended the latter's effectivity (Security Bank and Trust Co vs RTC). Usury has been legally non-
6% interest per month. They executed a promissory note to evidence the loan and received only P84, existent in our jurisdiction. Interest can now be charged as lender and borrower may agree upon.
000.00 out of the proceeds of the loan. Law: Article 2227, Civil Code
The courts shall reduce equitably liquidated damages, whether intended as an indemnity or a penalty if that the original term fixed for the redemption was not extended and, therefore, dismissed the complaint.
they are iniquitous or unconscionable. The case was appealed to the Court of Appeals, but this court affirmed the judgment of the trial court. It
Note: While the Usury Law ceiling on interest rates was lifted by the CB Circular 905, nothing in the found that the transaction was a true sale with right to repurchase, that there was no extension of the period
said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates of redemption, and that no tender of the purchase was in due time. It, therefore, affirmed the judgment in
to levels which would either enslave their borrowers or lead to a haemorrhaging of their assets (Almeda so far as the denial of the right to redeem was concerned, although it modified it in the sense of making
vs. CA, 256 SCRA 292 [1996]). the sale ineffective with respect to the share of two co-owners of the property, who had not participated in
the sale.
———————— The present action was filed on October 14, 1951, exactly one day after the judgment rendered by the
Republic of the Philippines Court of Appeals in the previous action had become final. The complaint alleges that the Court of Appeals
SUPREME COURT found that the contract entered into by the parties was a sale with right to repurchase, but that the plaintiffs
Manila were confused and were not clear about the date when the repurchase should have been made. The
EN BANC complaint further alleges that on October 9, 1951, plaintiffs herein had demanded that the defendant allow
G.R. No. L-5515 April 24, 1953 them to repurchase the land, offering the full amount of the price, but that the defendant ignored the said
FELIPA FERIA, CARLOS F. CRUZ, CLARA DE LA CRUZ, LEONILA DE LA CRUZ, offer. The action is evidently brought under the provision of the last paragraph of article 1606 of the Civil
PETRONILA DE LA CRUZ, ROSARIO DE LA CRUZ, FAUSTINO DE LA CRUZ AND RUFINO Code of the Philippines, which is as follows:
DE LA CRUZ, plaintiffs-appellants, ART. 1606. . . . .
vs. However, the vendor may still exercise the right to repurchase within thirty days from the time final
GERONIMO T. SUVA, defendant-appellee. judgment was rendered in a civil action on the basis that the contract was a true sale with right to
Francisco Lavides for appellants. repurchase.
Angel S. Alvir for appellee. After the complaint was filed, the defendant presented a motion to dismiss on the ground that the action is
LABRADOR, J.: barred by the prior judgment of the Court of Appeals. The court sustained the motion and dismissed the
This is an appeal from a judgment of the Court of First Instance of Nueva Ecija dismissing a complaint complaint, and the plaintiffs-appellants have appealed. It is contended on their behalf that the Court of
filed by plaintiffs-appellants on the ground of res adjudicata, i.e., that the right sought to be enforced has Appeals did not pass upon the applicability of Article 1606 of the Civil Code of the Philippines. It is further
already been previously decided adversely against them in a judgment of the Court of Appeals. claimed that the above provision may be invoked, in view of the express provision of article 2253 ordaining
The record discloses that plaintiff herein conveyed to the defendant on April 18, 1938, by way of sale with that rights declared for the first time shall be effective at once.
the right to repurchase, a parcel of land, together with its improvements, situated in the District of Cruz, The pertinent part of the decision of the Court of Appeals is as follows:
Municipality of Quezon, Province of Nueva Ecija, executing to that effect a deed of sale with pacto de As to the nature of the original transaction represented by Exhibit A, not only are its terms clear beyond
retro. On September 14, 1944, plaintiffs, who were the vendors a retro, brought an action in the Court of doubt, but it is noteworthy that the complaint expressly avers that plaintiffs executed a pacto de retro sale
First Instance of Nueva Ecija alleging the existence of said pacto de retro sale, and praying that they be in favor of defendant, with option on the part of herein plaintiffs to repurchase said parcel of land within
allowed to redeem the property, as the defendant had agreed to re-sell the property after the harvest of five years from April 18, 1938 (Rec. on App., pp. 2-3), and that a copy of the deed was made part of the
1943-1944. The defendant in that previous action, who is also the defendant herein, admitted the existence complaint as Annex A (Rec. on App., p. 12 et seq.), without any allegation that it did not express the true
of the contract of pacto de retro, but denied that he had ever allowed the plaintiffs to make a redemption intent of the parties; and the answer expressly admitted such pacto de retro sale. The case was tried on that
of the property in the year 1944, after the expiration of the period fixed for the repurchase, as claimed by theory, and the counsel for defendant in fact objeced at the trial to any reference to the transaction as
the plaintiffs. Trial having been had on the above issue, the Court of First Instance of Nueva Ecija found "mortgage."
xxx xxx xxx EN BANC
As to article 1602, 1605 and 1606 of the New Civil Code, we find no reason for applying their G.R. No. L-24190 July 13, 1926
presumptions retroactively to a transaction that took place in 1938 which both parties have specifically GEORGE L. PARKS, plaintiff-appellant,
pleaded to be a sale with pacto de retro, and which was tried on that one year before the new Code became vs.
operative. PROVINCE OF TARLAC, MUNICIPALITY OF TARLAC, CONCEPCION CIRER, and JAMES
(Record on Appeal, pp. 19-20, 21-22.) HILL, her husband,defendants-appellees.
A cursory study of the decision readily shows that the Court of Appeals did not refuse to apply the Jos. N. Wolfson for appellant.
provisions of the New Civil Code. It expressly applied article 1606 but it denied the right granted Provincial Fiscal Lopez de Jesus for the Province and Municipality of Tarlac.
thereunder because the transaction was, in the very words of the decision, "specifically pleaded to be a No appearance for the other appellees.
sale with pacto de retro and was tried on the theory." The last paragraph of said article 1606 provides that AVANCEÑA, C. J.:
"the vendor may still exercise the right to repurchase within thirty days from the time final judgment was On October 18, 1910, Concepcion Cirer and James Hill, the owners of parcel of land No. 2 referred to in
rendered in civil action on the basis that the contract was a true sale with right to repurchase." One of the the complaint, donated it perpetually to the municipality of Tarlac, Province of Tarlac, under certain
members of the Code Committee, commenting on the aforequoted provision, says: conditions specified in the public document in which they made this donation. The donation was accepted
Paragraph three of the article is a new provision formulated by the Code Commission. It is intended to by Mr. Santiago de Jesus in the same document on behalf of the municipal council of Tarlac of which he
cover suits where the seller claims that the real intention was a loan with equitable mortgage, but the court was the municipal president. The parcel thus donated was later registered in the name of the donee, the
decides otherwise. (IV Capistrano on the Civil Code, p. 1507). municipality of Tarlac. On January 15, 1921, Concepcion Cirer and James Hill sold this parcel to the herein
The refusal of the Court of Appeals to grant the plaintiffs-appellants the privilege of redemption under the plaintiff George L. Parks. On August 24, 1923, the municipality of Tarlac transferred the parcel to the
above-quoted provision of article 1606 of the New Civil Code was based on the fact that the nature and Province of Tarlac which, by reason of this transfer, applied for and obtained the registration thereof in its
character of the transaction as a pacto de retro sale or as an equitable mortgage was never in question name, the corresponding certificate of title having been issued to it.
before the trial court, the transaction being admittedly one of sale with pacto de retro. The plaintiff, George L. Parks, alleging that the conditions of the donation had not been complied with
But even if the decision of the Court of Appeals be interpreted in the sense indicated by appellants, i.e., and invoking the sale of this parcel of land made by Concepcion Cirer and James Hill in his favor, brought
that the transaction is not covered by the provisions of article 1606 of the New Civil Code because it took this action against the Province of Tarlac, the municipality of Tarlac, Concepcion Cirer and James Hill and
place before the latter took effect, and the action thereon brought before the said code took effect, a claim prayed that he be declared the absolute owner entitled to the possession of this parcel, that the transfer of
which we do not now decide being unnecessary, the said decision would still bar the present action. The the same by the municipality of Tarlac to the Province of Tarlac be annulled, and the transfer certificate
finality of decisions of court is not dependent upon their correctness, but upon the expiration of the period issued to the Province of Tarlac cancelled.
fixed by the rule therefor. (Layda vs.Legazpi, 39 Phil., 83) Evidently, as indicated in appellee's brief, the The lower court dismissed the complaint.
question now raised was actually passed upon adversely by the Court of Appeals in a resolution on a The plaintiff has no right of action. If he has any, it is only by virtue of the sale of this parcel made by
motion for reconsideration, and also by this Court in G.R. No. L-5025. From whatever point the decision Concepcion Cirer and James Hill in his favor on January 15, 1921, but that sale cannot have any effect.
of the Court of Appeals may be considered, it is evident that the present action is barred thereby. This parcel having been donated by Concepcion Cirer and James Hill to the municipality of Tarlac, which
The order appealed from is hereby affirmed, with costs against the plaintiffs-appellants. donation was accepted by the latter, the title to the property was transferred to the municipality of Tarlac.
————————- It is true that the donation might have been revoked for the causes, if any, provided by the law, but the fact
Republic of the Philippines is that it was not revoked when Concepcion Cirer and James Hill made the sale of this parcel to the plaintiff.
SUPREME COURT Even supposing that causes existed for the revocation of this donation, still, it was necessary, in order to
Manila consider it revoked, either that the revocation had been consented to by the donee, the municipality of
Tarlac, or that it had been judicially decreed. None of these circumstances existed when Concepcion Cirer By virtue of the foregoing, the judgment appealed from is affirmed, with the costs against the appellant.
and James Hill sold this parcel to the plaintiff. Consequently, when the sale was made Concepcion Cirer So ordered.
and James Hill were no longer the owners of this parcel and could not have sold it to the plaintiff, nor Street, Villamor, Ostrand, Johns, Romualdez and Villa-Real, JJ., concur.
could the latter have acquired it from them.
But the appellant contends that a condition precedent having been imposed in the donation and the same ————————————-
not having been complied with, the donation never became effective. We find no merit in this contention. Republic of the Philippines
The appellant refers to the condition imposed that one of the parcels donated was to be used absolutely SUPREME COURT
and exclusively for the erection of a central school and the other for a public park, the work to commence Manila
in both cases within the period of six months from the date of the ratification by the partes of the document EN BANC
evidencing the donation. It is true that this condition has not been complied with. The allegation, however, G.R. No. L-9935 February 1, 1915
that it is a condition precedent is erroneous. The characteristic of a condition precedent is that the YU TEK and CO., plaintiff-appellant,
acquisition of the right is not effected while said condition is not complied with or is not deemed complied vs.
with. Meanwhile nothing is acquired and there is only an expectancy of right. Consequently, when a BASILIO GONZALES, defendant-appellant.
condition is imposed, the compliance of which cannot be effected except when the right is deemed Beaumont, Tenney and Ferrier for plaintiff.
acquired, such condition cannot be a condition precedent. In the present case the condition that a public Buencamino and Lontok for defendant.
school be erected and a public park made of the donated land, work on the same to commence within six TRENT, J.:
months from the date of the ratification of the donation by the parties, could not be complied with except The basis of this action is a written contract, Exhibit A, the pertinent paragraphs of which follow:
after giving effect to the donation. The donee could not do any work on the donated land if the donation 1. That Mr. Basilio Gonzalez hereby acknowledges receipt of the sum of P3,000 Philippine currency from
had not really been effected, because it would be an invasion of another's title, for the land would have Messrs. Yu Tek and Co., and that in consideration of said sum be obligates himself to deliver to the said
continued to belong to the donor so long as the condition imposed was not complied with. Yu Tek and Co., 600 piculs of sugar of the first and second grade, according to the result of the polarization,
The appellant also contends that, in any event, the condition not having been complied with, even within the period of three months, beginning on the 1st day of January, 1912, and ending on the 31st day
supposing that it was not a condition precedent but subsequent, the non-compliance thereof is sufficient of March of the same year, 1912.
cause for the revocation of the donation. This is correct. But the period for bringing an action for the 2. That the said Mr. Basilio Gonzales obligates himself to deliver to the said Messrs. Yu Tek and Co., of
revocation of the donation has prescribed. That this action is prescriptible, there is no doubt. There is no this city the said 600 piculs of sugar at any place within the said municipality of Santa Rosa which the said
legal provision which excludes this class of action from the statute of limitations. And not only this, — the Messrs. Yu Tek and Co., or a representative of the same may designate.
law itself recognizes the prescriptibility of the action for the revocation of a donation, providing a special 3. That in case the said Mr. Basilio Gonzales does not deliver to Messrs. Yu Tek and Co. the 600 piculs of
period of five years for the revocation by the subsequent birth of children (art. 646, Civil Code), and one sugar within the period of three months, referred to in the second paragraph of this document, this contract
year for the revocation by reason of ingratitude. If no special period is provided for the prescription of the will be rescinded and the said Mr. Basilio Gonzales will then be obligated to return to Messrs. Yu Tek and
action for revocation for noncompliance of the conditions of the donation (art. 647, Civil Code), it is Co. the P3,000 received and also the sum of P1,200 by way of indemnity for loss and damages.
because in this respect the donation is considered onerous and is governed by the law of contracts and the Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to recover
general rules of prescription. Under the law in force (sec. 43, Code of Civ. Proc.) the period of prescription the P3,000. Plaintiff prayed for judgment for the P3,000 and, in addition, for P1,200 under paragraph 4,
of this class of action is ten years. The action for the revocation of the donation for this cause arose on supra. Judgment was rendered for P3,000 only, and from this judgment both parties appealed.
April 19, 1911, that is six months after the ratification of the instrument of donation of October 18, 1910. The points raised by the defendant will be considered first. He alleges that the court erred in refusing to
The complaint in this action was presented July 5, 1924, more than ten years after this cause accrued. permit parol evidence showing that the parties intended that the sugar was to be secured from the crop
which the defendant raised on his plantation, and that he was unable to fulfill the contract by reason of the contents was held sold under a contract which did not provide for either delivery of the price or of the
almost total failure of his crop. This case appears to be one to which the rule which excludes parol evidence thing until a future time. McCullough vs. Aenlle and Co. (3 Phil. Rep., 295). Quite similar was the recent
to add to or vary the terms of a written contract is decidedly applicable. There is not the slightest intimation case of Barretto vs. Santa Marina (26 Phil. Rep., 200) where specified shares of stock in a tobacco factory
in the contract that the sugar was to be raised by the defendant. Parties are presumed to have reduced to were held sold by a contract which deferred delivery of both the price and the stock until the latter had
writing all the essential conditions of their contract. While parol evidence is admissible in a variety of been appraised by an inventory of the entire assets of the company. In Borromeo vs. Franco (5 Phil. Rep.,
ways to explain the meaning of written contracts, it cannot serve the purpose of incorporating into the 49) a sale of a specific house was held perfected between the vendor and vendee, although the delivery of
contract additional contemporaneous conditions which are not mentioned at all in the writing, unless there the price was withheld until the necessary documents of ownership were prepared by the vendee. In Tan
has been fraud or mistake. In an early case this court declined to allow parol evidence showing that a party Leonco vs. Go Inqui (8 Phil. Rep., 531) the plaintiff had delivered a quantity of hemp into the warehouse
to a written contract was to become a partner in a firm instead of a creditor of the firm. (Pastor vs. Gaspar, of the defendant. The defendant drew a bill of exchange in the sum of P800, representing the price which
2 Phil. Rep., 592.) Again, in Eveland vs. Eastern Mining Co. (14 Phil. Rep., 509) a contract of employment had been agreed upon for the hemp thus delivered. Prior to the presentation of the bill for payment, the
provided that the plaintiff should receive from the defendant a stipulated salary and expenses. The hemp was destroyed. Whereupon, the defendant suspended payment of the bill. It was held that the hemp
defendant sought to interpose as a defense to recovery that the payment of the salary was contingent upon having been already delivered, the title had passed and the loss was the vendee's. It is our purpose to
the plaintiff's employment redounding to the benefit of the defendant company. The contract contained no distinguish the case at bar from all these cases.
such condition and the court declined to receive parol evidence thereof. In the case at bar the undertaking of the defendant was to sell to the plaintiff 600 piculs of sugar of the first
In the case at bar, it is sought to show that the sugar was to be obtained exclusively from the crop raised and second classes. Was this an agreement upon the "thing" which was the object of the contract within
by the defendant. There is no clause in the written contract which even remotely suggests such a condition. the meaning of article 1450, supra? Sugar is one of the staple commodities of this country. For the purpose
The defendant undertook to deliver a specified quantity of sugar within a specified time. The contract of sale its bulk is weighed, the customary unit of weight being denominated a "picul." There was no
placed no restriction upon the defendant in the matter of obtaining the sugar. He was equally at liberty to delivery under the contract. Now, if called upon to designate the article sold, it is clear that the defendant
purchase it on the market or raise it himself. It may be true that defendant owned a plantation and expected could only say that it was "sugar." He could only use this generic name for the thing sold. There was no
to raise the sugar himself, but he did not limit his obligation to his own crop of sugar. Our conclusion is "appropriation" of any particular lot of sugar. Neither party could point to any specific quantity of sugar
that the condition which the defendant seeks to add to the contract by parol evidence cannot be considered. and say: "This is the article which was the subject of our contract." How different is this from the contracts
The rights of the parties must be determined by the writing itself. discussed in the cases referred to above! In the McCullough case, for instance, the tobacco factory which
The second contention of the defendant arises from the first. He assumes that the contract was limited to the parties dealt with was specifically pointed out and distinguished from all other tobacco factories. So,
the sugar he might raise upon his own plantation; that the contract represented a perfected sale; and that in the Barretto case, the particular shares of stock which the parties desired to transfer were capable of
by failure of his crop he was relieved from complying with his undertaking by loss of the thing due. (Arts. designation. In the Tan Leonco case, where a quantity of hemp was the subject of the contract, it was
1452, 1096, and 1182, Civil Code.) This argument is faulty in assuming that there was a perfected sale. shown that that quantity had been deposited in a specific warehouse, and thus set apart and distinguished
Article 1450 defines a perfected sale as follows: from all other hemp.
The sale shall be perfected between vendor and vendee and shall be binding on both of them, if they have A number of cases have been decided in the State of Louisiana, where the civil law prevails, which confirm
agreed upon the thing which is the object of the contract and upon the price, even when neither has been our position. Perhaps the latest is Witt Shoe Co. vs. Seegars and Co. (122 La., 145; 47 Sou., 444). In this
delivered. case a contract was entered into by a traveling salesman for a quantity of shoes, the sales having been
Article 1452 reads: "The injury to or the profit of the thing sold shall, after the contract has been perfected, made by sample. The court said of this contract:
be governed by the provisions of articles 1096 and 1182." But it is wholly immaterial, for the purpose of the main question, whether Mitchell was authorized to make
This court has consistently held that there is a perfected sale with regard to the "thing" whenever the article a definite contract of sale or not, since the only contract that he was in a position to make was an agreement
of sale has been physically segregated from all other articles Thus, a particular tobacco factory with its to sell or an executory contract of sale. He says that plaintiff sends out 375 samples of shoes, and as he
was offering to sell by sample shoes, part of which had not been manufactured and the rest of which were as contemplated by the law. "It also appears," said the lower court, "that in any event the defendant was
incorporated in plaintiff's stock in Lynchburg, Va., it was impossible that he and Seegars and Co. should prevented from fulfilling the contract by the delivery of the sugar by condition over which he had no
at that time have agreed upon the specific objects, the title to which was to pass, and hence there could control, but these conditions were not sufficient to absolve him from the obligation of returning the money
have been no sale. He and Seegars and Co. might have agreed, and did (in effect ) agree, that the which he received."
identification of the objects and their appropriation to the contract necessary to make a sale should The above quoted portion of the trial court's opinion appears to be based upon the proposition that the
thereafter be made by the plaintiff, acting for itself and for Seegars and Co., and the legend printed in red sugar which was to be delivered by the defendant was that which he expected to obtain from his own
ink on plaintiff's billheads ("Our responsibility ceases when we take transportation Co's. receipt `In good hacienda and, as the dry weather destroyed his growing cane, he could not comply with his part of the
order'" indicates plaintiff's idea of the moment at which such identification and appropriation would contract. As we have indicated, this view is erroneous, as, under the contract, the defendant was not limited
become effective. The question presented was carefully considered in the case of State vs. Shields, et al. to his growth crop in order to make the delivery. He agreed to deliver the sugar and nothing is said in the
(110 La., 547, 34 Sou., 673) (in which it was absolutely necessary that it should be decided), and it was contract about where he was to get it.
there held that in receiving an order for a quantity of goods, of a kind and at a price agreed on, to be We think is a clear case of liquidated damages. The contract plainly states that if the defendant fails to
supplied from a general stock, warehoused at another place, the agent receiving the order merely enters deliver the 600 piculs of sugar within the time agreed on, the contract will be rescinded and he will be
into an executory contract for the sale of the goods, which does not divest or transfer the title of any obliged to return the P3,000 and pay the sum of P1,200 by way of indemnity for loss and damages. There
determinate object, and which becomes effective for that purpose only when specific goods are thereafter cannot be the slightest doubt about the meaning of this language or the intention of the parties. There is no
appropriated to the contract; and, in the absence of a more specific agreement on the subject, that such room for either interpretation or construction. Under the provisions of article 1255 of the Civil Code
appropriated takes place only when the goods as ordered are delivered to the public carriers at the place contracting parties are free to execute the contracts that they may consider suitable, provided they are not
from which they are to be shipped, consigned to the person by whom the order is given, at which time and in contravention of law, morals, or public order. In our opinion there is nothing in the contract under
place, therefore, the sale is perfected and the title passes. consideration which is opposed to any of these principles.
This case and State vs. Shields, referred to in the above quotation are amply illustrative of the position For the foregoing reasons the judgment appealed from is modified by allowing the recovery of P1,200
taken by the Louisiana court on the question before us. But we cannot refrain from referring to the case of under paragraph 4 of the contract. As thus modified, the judgment appealed from is affirmed, without costs
Larue and Prevost vs.Rugely, Blair and Co. (10 La. Ann., 242) which is summarized by the court itself in in this instance.
the Shields case as follows:
. . . It appears that the defendants had made a contract for the sale, by weight, of a lot of cotton, had ——————————————
received $3,000 on account of the price, and had given an order for its delivery, which had been presented
to the purchaser, and recognized by the press in which the cotton was stored, but that the cotton had been Obligations and Contracts: Usurious Transactions – Article 1175
destroyed by fire before it was weighed. It was held that it was still at the risk of the seller, and that the
buyer was entitled to recover the $3,000 paid on account of the price. Facts:
We conclude that the contract in the case at bar was merely an executory agreement; a promise of sale and
not a sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are not applicable. On or about September 7, 1957, the petitioner loaned P10,000.00, without interest, to the respondent. The
The defendant having defaulted in his engagement, the plaintiff is entitled to recover the P3,000 which it loan became ultimately due on January 31, 1960 but was not paid. The petitioner asked for a 3-month
advanced to the defendant, and this portion of the judgment appealed from must therefore be affirmed. extension, or up to April 30, 1960. On March 17, 1960, the parties executed another loan document for
The plaintiff has appealed from the judgment of the trial court on the ground that it is entitled to recover the payment of P10, 000.00 extended up to April 30, 1960 but the obligation was increased by P6,000.00
the additional sum of P1,200 under paragraph 4 of the contract. The court below held that this paragraph to answer for the attorney's fees, legal interest, and other cost incident thereto. The petitioner again failed
was simply a limitation upon the amount of damages which could be recovered and not liquidated damages to pay their obligation by April 30, 1960. On September 23, 1957, the respondent instituted a collection
case. The petitioner admitted the P10, 000.00 principal obligation but claimed that the additional P6, P128,572.00 and P123,993.85, including the interests which may have already accrued thereon, deposited
000.00 constituted usurious interest. with the Paluwagan ng Bayan Savings Bank (Paombong, Bulacan Branch) in the name of the Clerk of
Court and/or Deputy Clerk of Court Rodrigo C. Libunao under this Courts Order dated February 14, 1980;
however, the plaintiff is required to pay defendant Perez the corresponding rental on the fishpond for the
Issue: period June 1979-January 1980 based on the rate of P150,000.00 per annum, deducting therefrom the
amount of P21,428.00 already paid to and received by then co-usufructuary Maria Perez (Exh. E);
Whether or not the additional P6, 000.00 constituted usurious interest. d) dismissing the defendants separate counter-claims for damages, for lack of merit; and
e) dismissing the Pleading in Intervention Pro Interesse Suo filed by VICENTE ASUNCION on the ground
of lis pendens.
Held: SO ORDERED.
The facts upon which the Court of Appeals based its Decision are the following:
No. Usury has been legally non-existent. Interest can now be charged as lender and borrower may agree Along with Maria Perez, Fructuosa Perez, Victoria Perez, Apolonio Lorenzo and Vicente Asuncion,
upon. In the present case, the petitioner had not proven that the P6, 000.00 additional obligation was petitioner Juan Perez is a usufructuary of a parcel of land popularly called the "Papaya Fishpond. Covered
illegal. by Transfer Certificate of Title No. 8498 of the Registry of Deeds for the Province of Bulacan, the fishpond
is located in Sto. Rosario, Hagonoy, Bulacan and has an area of around 110 hectares. On June 5, 1975, the
usufructuaries entered into a contract leasing the fishpond to Luis Keh for a period of five (5) years and
renewable for another five (5) years by agreement of the parties, under the condition that for the first five-
THIRD DIVISION year period the annual rental would be P150,000.00 and for the next five years, P175,000.00.Paragraph 5
[G.R. No. 107737. October 1, 1999] of the lease contract states that the lessee cannot sublease the fishpond nor assign his rights to anyone. [3]
JUAN L. PEREZ, LUIS KEH, CHARLIE LEE and ROSENDO G. TANSINSIN, JR., petitioners, vs. Private respondent Luis Crisostomo, who reached only the 5 th grade, is a businessman engaged in the
COURT OF APPEALS, LUIS CRISOSTOMO and VICENTE ASUNCION, respondents. operation of fishponds. On September 20, 1977, while he was at his fishpond in Almazar, Hermosa,
DECISION Bataan, his bosom friend named Ming Cosim arrived with petitioner Charlie Lee. The two persuaded
GONZAGA-REYES, J.: private respondent to take over the operation of Papaya Fishpond as petitioner Lee and his partner,
This is a petition for review on certiorari of the Decision of the Court of Appeals affirming the decision petitioner Luis Keh, were allegedly losing money in its operation. Private respondent having acceded to
of the Regional Trial Court of Bulacan, Branch 9 that disposed of Civil Case No. 5610-M (Luis the proposal, sometime in December of that year, he and petitioners Lee and Keh executed a written
Crisostomo v. Luis Keh, Juan Perez, Charlie Kee and Atty. Rosendo G. Tansinsin, Jr.) as follows: agreement denominated as pakiao buwis whereby private respondent would take possession of the Papaya
WHEREFORE, premises considered, judgment is hereby rendered: Fishpond from January 6, 1978 to June 6, 1978 in consideration of the amount of P128,000.00 broken
a) directing defendant JUAN PEREZ to allow plaintiff LUIS CRISOSTOMO to occupy and operate the down as follows: P75,000.00 as rental, P50,000.00 for the value of milkfish in the fishpond and P3,000
`Papaya Fishpond for a period of 5 years at the rental rates of P150,000.00 for the first six months and for labor expenses. Private respondent paid the P75,000.00 to petitioner Keh at the house of petitioner Lee
P175,000.00 for the remaining five years (the same rates provided for in Exh. 4); in Sta. Cruz, Hagonoy, Bulacan in the presence of Lees wife, brother-in-law and other persons. He paid
b) ordering defendants LUIS KEH, CHARLIE LEE, JUAN PEREZ and ATTY. ROSENDO TANSINSIN, the balance to petitioner Lee sometime in February or March 1978 because he was uncertain as to the right
JR. to pay unto the plaintiff the amounts of P150,000.00 as actual damages; P20,000.00 as moral damages; of petitioners Keh and Lee to transfer possession over the fishpond to him. Private respondent made that
P20,000.00 as exemplary damages; and P10,000.00 as attorneys fees, plus the costs of the suit; payment only after he had received a copy of a written agreement dated January 9, 1978 [4] whereby
c) directing the release, delivery or payment directly to plaintiff LUIS CRISOSTOMO of the amounts of petitioner Keh ceded, conveyed and transferred all his rights and interests over the fishpond to petitioner
Lee, up to June 1985. From private respondents point of view, that document assured him of continuous damages in an amount that the court might award, and attorneys fees of P10,000.00.[7]
possession of the property for as long as he paid the agreed rentals of P150,000.00 until 1980 and That same day, June 14, 1979, the lower court granted the prayer for a restraining order. On November 13,
P175,000.00 until 1985. 1979, Crisostomo paid one of the usufructuaries, Maria Perez (who died in 1984), the amount of
For the operation of the fishpond from June 1978 to May 1979, private respondent, accompanied by Ming P21,428.00 as her 1/7 share of the annual rental of the fishpond for 1979-80. Maria Perez issued a notarized
Cosim and Ambrocio Cruz, paid the amount of P150,000.00 at the Malabon, Metro Manila office of receipt for that amount.[8]
petitioner Keh. The following receipt was issued to him: On January 11, 1980, the court lifted the restraining order thereby effectively depriving private respondent
RECEIPT of possession over the fishpond. On February 14, 1980, the parties submitted a partial compromise
June 6, 1978 agreement with the following stipulations:
P150,000.00 1. The amount of P128,572.00 that private respondent deposited as rental with the Office of the Clerk of
Received from Mr. LUIS KEH the sum of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00), Court under O.R. No. 21630 dated November 15, 1979 be withdrawn from that office and deposited with
Philippine Currency, as full payment of the yearly leased rental of the Papaya Fishpond for the year the Paluwagan ng Bayan Savings & Loan Association, Inc. (Paombong, Bulacan branch) and which
beginning June 1978 and ending on May 1979. The next payment shall be made on June 6, 1979. deposit shall not be withdrawn unless authorized by the court; and
Said sum was paid in Producers Bank of the Philippines Check No. (illegible) 164595 dated June 6, 1978. 2. The plaintiff could personally harvest milkfish with commercial value in the presence of Perez and
Mr. Luis Keh has not transferred his rights over the fishpond to any person. under the supervision of the deputy clerk of court within the appointed period and that the net proceeds of
Caloocan City, June 6, 1978. the sale (P123,993.85 per the Report dated March 4, 1980 of the deputy clerk of court) be deposited in the
JUAN L. PEREZ ET AL. name of the deputy clerk of court of Branch 6 of the then Court of First Instance of Bulacan with the same
By: branch of the Paluwagan ng Bayan Savings & Loan Association, Inc. and which deposit shall not be
(Sgd.) withdrawn unless upon order of the court after hearing.
Rosendo G. Tansinsin, Jr. The court approved that agreement on that same date.
CONFORME TO THE ABOVE: Thereafter, the usufructuaries entered into a contract of lease with Vicente Raymundo and Felipe Martinez
(Sgd.) for the six-year period of June 1, 1981 to May 30, 1987 in consideration of the annual rentals of
LUIS KEH P550,000.00 for the first two years and P400,000.00 for the next four years. Upon expiration of that lease,
Handwritten below that receipt but above the signature of petitioner Charlie Lee, are the following: Recd the same property was leased to Pat Laderas for P1 million a year.
from Luis Crisostomo sum of one hundred fifty-four thousand P154,000.00 for above payment. The complaint was later amended to include petitioner Tansinsin, the alleged administrator of the fishpond,
Private respondent incurred expenses for repairs in and improvement of the fishpond in the total amount as one of the defendants.[9] Except in the joint answer that the defendants had filed, petitioners Keh and
of P486,562.65.[6] However, sometime in June 1979, petitioners Tansinsin and Juan Perez, in the company Lee did not appear before the court. Neither did they testify.
of men bearing armalites, went to the fishpond and presented private respondent with a letter dated June In their defense, petitioners Juan Perez and Tansinsin presented evidence to prove that they had negotiated
7, 1979 showing that petitioner Luis Keh had surrendered possession of the fishpond to the usufructuaries. for the lease of the property with Benito Keh in 1975. However, they averred, for reasons unknown to
Because of the threat to deprive him of earnings of around P700,000.00 that the 700,000 milkfish in the petitioner Perez, in the contract of lease that petitioner Tansinsin prepared, petitioner Luis Keh was named
fishpond would yield, and the refusal of petitioners Keh, Juan Perez and Lee to accept the rental for June as lessee. Petitioner Perez had never met Keh or Lee but according to petitioner Tansinsin, petitioner Luis
5, 1979 to June 6, 1980, private respondent filed on June 14, 1979 with the then Court of First Instance of Keh was substituted for Benito Keh because the latter was preoccupied with his other
Bulacan an action for injunction and damages. He prayed for the issuance of a restraining order enjoining businesses. Sometime in 1979, petitioner Kehs agent named Catalino Alcantara relayed to petitioner Perez,
therein defendants Keh, Perez and Lee from entering the premises and taking possession of the Kehs intention to surrender possession of the fishpond to the usufructuaries. Because petitioner Perez
fishpond. He also prayed for actual damages of P50,000.00, moral damages of P20,000.00, exemplary demanded that said intention should be made in writing, on June 5, 1979, Perez received from Keh a letter
to that effect. between the plaintiff, and Lee and Keh.
When private respondent received a copy of that letter of petitioner Keh, he took the position that petitioner 5. The nonpresentation of Lee and Keh on the witness stand by Atty. Tansinsin can very well be construed
Perez had no right to demand possession of the fishpond from him because Perez had no contract with as a smart maneuver to cover up the sinister cabal for deception inferrable from the attendant facts and
him. Private respondent was allowed four (4) months within which to vacate the premises but he circumstances. In their joint answer, Keh and Lee tried to relieve Perez of any liability in favor of the
immediately filed the complaint for injunction and damages. Thereafter, private respondents counsel, Atty. plaintiff. That is understandable because, should the Court disregard the reliance of Perez on the
Angel Cruz, and other persons tried to prevail upon petitioner Perez to allow private respondent to occupy prohibition against sub-lease or assignment of the Papaya Fishpond, then all the defendants shall have
the property for three (3) more years. Petitioner Perez declined that proposition. exposed themselves to unavoidable liability for the acts complained of by the plaintiff.
On September 6, 1989, the lower court rendered the aforesaid decision. It arrived at the conclusion that 6. Atty. Tansinsin was the common legal counsel of all the defendants and, by his testimony, even the
the defendants therein conspired with one another to exploit the plaintiffs naivete and educational plaintiff. Atty. Tansinsins denial that he was plaintiffs counsel was his way of deflecting plaintiffs
inadequacies and, in the process, to defraud him by inducing him into taking possession of the `Papaya imputations of professional improprieties against him. Plaintiff must have assumed that Atty. Tansinsin
Fishpond in their fond hope that, as soon as the plaintiff applying his known expertise as a successful was also his lawyer considering that they were on very friendly terms and therefore Atty. Tansinsin might
fishpond operator shall have considerably improved the fishpond, they will regain possession of the have been instrumental in dispelling whatever fears plaintiff had entertained as regards the business
premises and offer the lease thereof to other interested parties at much higher rental rates as laid bare by transactions involved.
supervening realities. That conclusion was founded on the following: 7. The fact that the fishpond was subsequently rented out for astronomical amounts is proof that the
1. The plaintiffs (private respondent Crisostomos) testimony bears the hallmarks of truth: candid, plaintiff had considerably improved the fishpond.[10]
straightforward and uncontrived. He had proven himself a much more credible witness than his opponents. The lower court added:
2. The notarized receipt of Maria Perez of her share as a usufructuary in the rental for 1979-80 is a clear Bluntly yet succinctly put, the foregoing circumstances when viewed collectively with other cogent aspects
avowal of plaintiffs legitimate operation of the Papaya Fishpond as assignee or transferee thereof. It was of the instant case inexorably lead to the Courts well-considered view that the defendants tempted by the
impossible for the other usufructuaries, especially Juan Perez who was residing in the same locality and bright prospect of a lucrative business coup embarked themselves in an egregious scheme to take undue
actively involved in the affairs of the fishpond, not to have known that plaintiff occupied the fishpond for advantage of the gullibility of the plaintiff who, as borne by ensuing events, proved himself an ideal victim
one and a half years as assignee of Keh and Lee. It was unbelievable that both Tansinsin and Perez would to prey upon:pathetically unsuspecting yet only too eager to invest his material resources and self-acquired
only perceive the plaintiff as a mere encargado of Keh and Lee. technical know-how to redeem what was then a dwindling business enterprise from total
3. The receipt whereby Tansinsin acknowledged payment of P150,000.00 as rental for June 1978-May collapse. Plaintiffs impressive performance, alas, only redounded ultimately to the supreme benefit
1979 bears tell-tale signs of the conspiracy.Firstly, the statement Mr. Luis Keh has not transferred his rights exclusively of the defendants. A classic case of ako ang nagsaing, iba ang kumain!
over the fishpond to any person is entirely irrelevant to that receipt unless it was intended to preempt The defendants elevated the case to the Court of Appeals which, as earlier mentioned, affirmed the decision
plaintiffs claim of rights and interests over the said property as either sub-lessee or assignee. Secondly, of the trial court and disposed of the appeal on February 18, 1992 as follows:
Kehs having signified Conforme to the above is a gratuitous notation as it actually indicates that the money WHEREFORE, in view of all the foregoing, judgment appealed from, is hereby AFFIRMED.
came from the plaintiff. Thirdly, Atty. Tansinsins receipt of the amount for and in behalf of JUAN L. However, intervenor-appellant is hereby declared co-usufructuary of the Papaya fishpond, and is,
PEREZ ET AL. illustrates his active and dominant role in the affairs of the fishpond whether as therefore, entitled to all rights and interest due to the usufructuaries of the said fishpond.
administrator thereof or as beneficiary of a share from its fruits. SO ORDERED.
4. Service upon plaintiff of Kehs letter surrendering possession of the fishpond implied that defendants On the defendant-appellants contention that the principle of res judicata should be applied because the
knew that plaintiff was in possession thereof.That they resorted to the intimidating presence of armed men Court of Appeals had ruled on the issue of possession in CA-G.R. No. 10415-R, a petition
is proof that they expected the plaintiff to refuse to give up possession of the property.These circumstances for certiorari and injunction with preliminary mandatory injunction, the Court of Appeals held that said
completely belie the protestations of Perez and Tansinsin of lack of knowledge of the contract entered into principle was unavailing. The petition in CA-G.R. No. 10415-R involved a writ of injunction which
presupposes the pendency of a principal or main action. Moreover, the decision in that case did not resolve it.[11] Those grounds may be distilled into the following: (a) the applicability of the principle of res
the issue of who should be in possession of the Papaya Fishpond as findings of fact of the trial court cannot judicata; (b) the premature promulgation of the Decision of the Court of Appeals, and (c) private
be reviewed in a certiorari proceeding. respondent was not a sublesee of the fishpond under the law.
The Court of Appeals ruled further that appellee Crisostomo cannot be considered a possessor in bad faith, In arguing that the principle of res judicata applies in this case, petitioners rely on the portion of the
considering that he took possession of the fishpond when appellants Keh and Lee assigned to him appellant Decision[12] of the Court of Appeals in CA-G.R. No. 10415 that states:
Kehs leasehold right. It held that appellant Perez knew of the transfer of possession of the fishpond to We find no basis for declaring respondent Judge guilty of grave abuse of discretion on this regard. The
appellee and that the receipt evidencing payment of the 1978-1979 rental even bears an expressed trial courts finding that petitioner does not appear entitled to any contract or law to retain possession of
admission by Lee that the payment came from appellee Crisostomo. the fishpond in question since he is neither an assignee or sub-lessee and, therefore, merely a stranger to
Agreeing with the court a quo that defendants-appellants employed fraud to the damage and prejudice of the contract of lease is a finding of fact review of which is not proper in a certiorari proceedings. Not only
plaintiff-appellee, the Court of Appeals held that appellants should be held liable for damages. As regards is petitioner not a party to the lease agreement over the fishpond in question but also the very authority
the intervention pro interesse suo, the appellate court ruled that the same should be allowed because, even upon which he predicates his possession over the fishpond that the leasehold right of Luis Keh had been
if the litigation would not be technically binding upon him, complications might arise that would prejudice assigned to him undoubtedly lacks basis for the very contract between Luis Keh and the lessors expressly
his rights. Pointing out that a usufruct may be transferred, assigned or disposed of, the Court of Appeals provides
ruled that the intervenor cannot be excluded as a usufructuary because he had acquired his right as such That the lessee cannot sub-lease above-described fishpond nor assign his rights to anyone.
from a sale in execution of the share of Jorge Lorenzo, one of the usufructuaries of the fishpond. X x x x x x x x x.
Herein petitioners filed a motion for the reconsideration of that Decision of the Court of Appeals. They (Underscoring supplied by petitioners.)[13]
alleged that the Decision was premature because it was rendered when they had not yet even received a Petitioners assert that said Decision of the Court of Appeals which was in effect upheld by this Court when
copy of the intervenors brief wherein assignments of errors that directly affected their rights and interests it denied the petition for review on certiorari in G. R. No. 64354 (Luis Crisostomo v. Intermediate
were made. They insisted that the principle of res judicata was applicable because in G.R. No. 64354, this Appellate Court),[14] is res judicata to the issue of possession in this case.[15]However, as expressed in that
Court upheld the Decision of the Court of Appeals in CA G.R. No. 10415. They added that appellee quoted portion of the Decision in CA-G.R. No. 10415, the issue of whether private respondent is an
Crisostomo was guilty of forum shopping because the issue of possession had been squarely decided in assignee or a sub-lessee is a finding of fact review of which is not proper in a certiorari proceeding or the
CA-G.R. No. 10415. They stressed that the contract of lease between Keh and the usufructuaries proceeding in that case.
prohibited subleasing of the fishpond; that by the receipt dated June 6, 1978, it was Keh who paid the CA-G.R. No. 10415 was spawned by the lifting on January 11, 1980 of the restraining order previously
rental; that appellee Crisostomo was a perjured witness because in the notebook showing his expenses, the issued by the trial court on June 14, 1979.Private respondent filed a special civil action of certiorari and
amount of P150,000.00 for rentals does not appear; that the term of the contract had expired and there was injunction with preliminary mandatory injunction and/or mandatory restraining order to question the order
no renewal thereof, and that the consideration of P150,000.00 was grossly inadequate. They averred that of January 11, 1980. Thus, the issue in that petition was whether or not the trial court gravely abused its
the Court of Appeals erred in awarding damages that were not prayed for in the second amended complaint discretion in lifting the restraining order. The statement in that Decision of the Court of Appeals that a writ
and that amounts not specified in the complaint were awarded as damages. They disclaimed that Atty. of preliminary injunction may be denied if the party applying for it has insufficient title or interest to
Tansinsin was the administrator of the fishpond. sustain it and no claim to an ultimate relief (is) sought by no means resolved the issue of who is entitled
On October 30, 1992, the Court of Appeals denied the motion for reconsideration for lack of merit. It ruled to possess the fishpond. In denying the petition for certiorari, the Court of Appeals was simply saying that
that the Decision was not prematurely promulgated considering that the intervention proceeding is solely there was no reason to restore private respondent to the possession of the fishpond pursuant to the
between intervenor and defendants-appellants, which is completely separable and has nothing to do with restraining order that he had earlier obtained. The issue of possession was collaterally discussed only to
the merits of the appeal. resolve the propriety of the lifting of the restraining order based on evidence available at that time. Hence,
In the instant petition for review on certiorari, petitioners raise six (6) grounds for giving due course to there was no judgment on the merits in the main case or in Civil Case No. 5610-M. Simply put, the
Decision in CA-G.R. No. 10415 involves an interlocutory order on the propriety of the lifting of the deposited with the court. That Vicente Asuncion had filed Civil Case No. 8215-M seeking recovery of his
restraining order and not a judgment on the merits of Civil Case No. 5610-M. alleged share in the fruits of the Papaya Fishpond from 1978 would not be a reason for the dismissal of
For res judicata to apply, the following requisites must concur: (a) the former judgment must be final; (b) the motion for intervention pursuant to Rule 16, Sec. 1 (e) of the Rules of Court. [23] The Court of Appeals
the court which rendered it had jurisdiction over the subject matter and the parties; (c) the judgment must explained as follows:
be on the merits, and (d) there must be between the first and second actions identity of parties, subject Indeed, if by means of intervention a stranger to a lawsuit is permitted to intervene without thereby
matter and causes of action. The Decision in CA-G.R. No. 10415 having resolved only an interlocutory becoming a formal plaintiff or defendant (Joaquin v. Herrera, 37 Phil. 705, 723 [1918]), then there is in
matter, the principle of res judicata cannot be applied in this case. There can be no res judicata where the the case at bar no identity of parties to speak of. Lis pendens as a ground for a motion to dismiss requires
previous order in question was not an order or judgment determinative of an issue of fact pending before as a first element identity of parties in the two cases.
the court but was only an interlocutory order because it required the parties to perform certain acts for final Nor is there an identity of relief sought. Civil Case No. 8295-M seeks an accounting of the proceeds of the
adjudication.[17] In this case, the lifting of the restraining order paved the way for the possession of the fishpond while Civil Case No. 5610-M is for injunction to prevent the petitioner from retaking the fishpond
fishpond on the part of petitioners and/or their representatives pending the resolution of the main action from Luis Crisostomo. The herein private respondent sought to intervene in the latter case simply to protect
for injunction. In other words, the main issue of whether or not private respondent may be considered a his right as usufructuary in the money deposited in the court by the plaintiff Luis Crisostomo. We hold that
sublessee or a transferee of the lease entitled to possess the fishpond under the circumstances of the case in allowing the intervention in this case the trial court acted with prudence and exercised its discretion
had yet to be resolved when the restraining order was lifted. wisely.[24]
Petitioners assail the Court of Appeals Decision as premature and therefore null and void, because prior to Unconvinced by the Court of Appeals Decision in CA-G.R. SP No. 13519, petitioner Juan Perez filed a
the promulgation of that Decision, private respondent-intervenor Vicente Asuncion failed to furnish them petition for review on certiorari with this Court under G.R. No. 82096. On May 9, 1988, this Court denied
with a copy of his brief the assignment of errors of which allegedly directly affected their rights and the petition on the grounds that the issues raised are factual and that there is no sufficient showing that the
interests. While it is true that petitioners were deprived of the opportunity to contravene the allegations findings of the respondent court are not supported by substantial evidence or that the court had committed
of the intervenor in his brief, that fact can not result in the nullity of the Decision of the Court of any reversible error in the questioned judgment.[25] The Resolution of the Court dated May 9, 1988 became
Appeals.[19] Vicente Asuncion intervened pro interesse suo or according to his interest.[20] Intervention pro final and executory on August 26, 1988.[26]
interesse suo is a mode of intervention in equity wherein a stranger desires to intervene for the purpose of Moreover, granting that the intervention be considered as Vicente Asuncions appeal, a litigants failure to
asserting a property right in the res, or thing, which is the subject matter of the litigation, without becoming furnish his opponent with a copy of his appeal does not suffice to warrant dismissal of that appeal. In such
a formal plaintiff or defendant, and without acquiring control over the course of a litigation, which is an instance, all that is needed is for the court to order the litigant to furnish his opponent with a copy of
conceded to the main actors therein. In this case, intervenor Vicente Asuncion aimed to protect his right his appeal.[27] This is precisely what happened in this case. On May 13, 1992, the Court of Appeals issued
as a usufructuary. Inasmuch as he has the same rights and interests as petitioner Juan Perez, any judgment a Resolution directing counsel for intervenor to furnish herein petitioners with a copy of intervenor Vicente
rendered in the latters favor entitled him to assert his right as such usufructuary against his co- Asuncions brief within a 10-day period. It also granted petitioners an opportunity to file a reply-brief or
usufructuary. Should said intervenor claim his share in the usufruct, no rights of the petitioners other than memorandum and the intervenor, a reply to said memorandum. [28] That Resolution is proper under the
those of Juan Perez would be prejudiced thereby. premises because, by the nature of an intervention pro interesse suo, it can proceed independently of the
Worth noting is the fact that after the trial court had allowed Vicente Asuncions intervention pro interesse main action. Thus, in the Resolution of October 30, 1992, in resolving the issue of the alleged prematurity
suo, petitioner Juan Perez filed a petition for certiorari docketed as CA-G.R. No. 13519 to set aside the of its Decision, the Court of Appeals held that the proceeding is solely between intervenor and defendants-
order denying his motion to dismiss the pleading in intervention. In its Decision of January 27, 1988, the appellants, which is completely separable and has nothing to do with the merits of the appeal.[29]
Seventh Division of the Court of Appeals[22] denied the petition for certiorari for lack of merit. It upheld At the hearing of Civil Case No. 5610-M, petitioner Juan Perez attempted to establish the death on October
the trial courts ruling to allow the intervention pro interesse suo to protect Vicente Asuncions right as a 14, 1979 of Jorge Lorenzo,[30] the usufructuary from whom Vicente Asuncion derived his right to
co-usufructuary in the distribution or disposition of the amounts representing the rentals that were intervene pro interesse suo. Since under Article 603 of the Civil Code a usufruct is extinguished by the
death of the usufructuary, unless a contrary intention clearly appears, there is no basis by which to arrive of the fishpond as a consequence of his unjustified ejectment therefrom. To restore possession of the
at the conclusion that the usufruct originally exercised by Jorge Lorenzo has indeed been extinguished or, fishpond to him would entail violation of contractual obligations that the usufructuaries have entered into
on the contrary, has survived Lorenzos demise on account of provisions in the document constituting the over quite a long period of time now. Supervening events, such as the devaluation of the peso as against
usufruct. That matter is best addressed in Civil Case No. 8215-M wherein Vicente Asuncion seeks his the dollar as well as the addition of improvements in the fishpond that the succeeding lessees could have
share as a transferee of the usufruct established for Jorge Lorenzo. All that is discussed here is the matter introduced, have contributed to the increase in rental value of the property. To place private respondent in
of intervention pro interesse suo vis--vis the issue of prematurity of the Decision of the Court of Appeals. the same position he was in before the lifting of the restraining order in 1980 when he was deprived the
Petitioners principal argument against the Court of Appeals Decision in favor of private respondent right to operate the fishpond under the contract that already expired in 1985 shall be to sanction injustice
Crisostomo is that he could not have been an assignee or sub-lessee of the fishpond because no contract and inequity. This Court, after all, may not supplant the right of the usufructuaries to enter into contracts
authorized him to be so. Petitioners argument is anchored on factual issues that, however, have no room over the fishpond through this Decision. Nonetheless, under the circumstances of the case, it is but proper
for discussion before this Court. It is well-entrenched doctrine that questions of fact are not proper subjects that private respondent should be properly compensated for the improvements he introduced in the
of appeal by certiorariunder Rule 45 of the Rules of Court as this mode of appeal is confined to questions fishpond.
of law. Factual findings of the Court of Appeals are conclusive on the parties and carry even more Article 1168 of the Civil Code provides that when an obligation consists in not doing and the obligor does
weight when said court affirms the factual findings of the trial court. Accordingly, this review shall be what has been forbidden him, it shall also be undone at his expense. The lease contract prohibited petitioner
limited to questions of law arising from the facts as found by both the Court of Appeals and the trial court. Luis Keh, as lessee, from subleasing the fishpond. In entering into the agreement for pakiao-buwis with
Admittedly, the contract between the usufructuaries and petitioner Keh has a provision barring the sublease private respondent, not to mention the apparent artifice that was his written agreement with petitioner Lee
of the fishpond. However, it was petitioner Keh himself who violated that provision in offering the on January 9, 1978, petitioner Keh did exactly what was prohibited of him under the contract to sublease
operation of the fishpond to private respondent. Apparently on account of private respondents the fishpond to a third party. That the agreement for pakiao-buwis was actually a sublease is borne out by
apprehensions as regards the right of petitioners Keh and Lee to transfer operation of the fishpond to him, the fact that private respondent paid petitioners Luis Keh and Juan Perez, through petitioner Tansinsin the
on January 9, 1978, petitioner Keh executed a document ceding and transferring his rights and interests amount of annual rental agreed upon in the lease contract between the usufructuaries and petitioner
over the fishpond to petitioner Lee. That the same document might have been a ruse to inveigle private Keh. Petitioner Keh led private respondent to unwittingly incur expenses to improve the operation of the
respondent to agree to their proposal that he operate the fishpond is of no moment. The fact is, petitioner fishpond. By operation of law, therefore, petitioner Keh shall be liable to private respondent for the value
Keh did transfer his rights as a lessee to petitioner Lee in writing and that, by virtue of that document, of the improvements he had made in the fishpond or for P486,562.65 with interest of six percent (6%) per
private respondent acceded to take over petitioner Kehs rights as a lessee of the fishpond. annum from the rendition of the decision of the trial court on September 6, 1989. [35]
Although no written contract to transfer operation of the fishpond to private respondent was offered in The law supports the awards of moral and exemplary damages in favor of private respondent and against
evidence, the established facts further show that petitioner Juan Perez and his counsel, petitioner the petitioners. Their conspiratorial scheme to utilize private respondents expertise in the operation of
Tansinsin, knew of and acquiesced to that arrangement by their act of receiving from the private respondent fishponds to bail themselves out of financial losses has been satisfactorily established to warrant a ruling
the rental for 1978-79. By their act of receiving rental from private respondent through the peculiarly that they violated Article 21 of the Civil Code and therefore private respondent should be entitled to an
written receipt dated June 6, 1978, petitioners Perez and Tansinsin were put in estoppel to question private award of moral damages. Article 21 states that (a)ny person who wilfully causes loss or injury to another
respondents right to possess the fishpond as a lessee. Estoppel in pais arises when one, by his acts, in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the
representations or admissions, or by his own silence when he ought to speak out, intentionally or through damage. Exemplary damages shall likewise be awarded pursuant to Article 2229 of the Civil
culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and Code.[36] Because private respondent was compelled to litigate to protect his interest, attorneys fees shall
acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such also be awarded.[37]
facts.[34] WHEREFORE, in light of the foregoing premises, the decision of the Court of Appeals is AFFIRMED
Nevertheless, we hesitate to grant private respondents prayer that he should be restored to the possession insofar as it (a) directs the release to private respondent of the amounts of P128,572.00 and P123,993.85
deposited with the Paluwagan ng Bayan Savings Bank in Paombong, Bulacan and (b) requires private
respondent Crisostomo to pay petitioner Juan Perez the rental for the period June 1979 to January 1980 at
the rate of P150,000.00 per annum less the amount of P21,428.00 already paid to usufructuary Maria
Perez. It should, however, be subject to the MODIFICATIONS that:
1. Petitioner Luis Keh shall pay private respondent Luis Crisostomo in the amount of P486,562.25 with
legal interest from the rendition of the judgment in Civil Case No. 5610-M or on September 6, 1989, and
2. Petitioners be made liable jointly and severally liable for moral damages of P50,000.00, exemplary
damages of P20,000 and attorneys fees of P10,000.00.
No costs.
Melo (Chairman), Vitug, Panganiban, and Purisima, JJ., concur.
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