Chapter 1 Cases

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Republic of the Philippines

SUPREME COURTManila

EN BANC

G.R. No. L-4089 January 12, 1909

ARTURO PELAYO, plaintiff-appellant,

vs.

MARCELO LAURON, ET AL., defendants-appellees.

J.H. Junquera, for appellant.

Filemon Sotto, for appellee.

TORRES, J.:

On the 2!d of Nove"be!, #$%&, A!tu!o Pela'o, a ph'sician !esidin( in Cebu, filed a co"plaint a(ainst Ma!celo )au!on

and *uana Abella settin( fo!th that on o! about the #th of Octobe! of said 'ea!, at ni(ht, the plaintiff +as called to thehouse of the defendants, situated in an Nicolas, and that upon a!!ival he +as !euested b' the" to !ende! "edical

assistance to thei! dau(hte!-in-la+ +ho +as about to (ive bi!th to a child that the!efo!e, and afte! consultation +ith the

attendin( ph'sician, /!. Esca0o, it +as found necessa!', on account of the difficult bi!th, to !e"ove the fetus b' "eans of

fo!ceps +hich ope!ation +as pe!fo!"ed b' the plaintiff, +ho also had to !e"ove the afte!bi!th, in +hich se!vices he +as

occupied until the follo+in( "o!nin(, and that afte!+a!ds, on the sa"e da', he visited the patient seve!al ti"es that the

1ust and euitable value of the se!vices !ende!ed b' hi" +as P%%, +hich the defendants !efuse to pa' +ithout alle(in(

an' (ood !eason the!efo! that fo! said !eason he p!a'ed that the 1ud("ent be ente!ed in his favo! as a(ainst the

defendants, o! an' of the", fo! the su" of P%% and costs, to(ethe! +ith an' othe! !elief that "i(ht be dee"ed p!ope!.

3n ans+e! to the co"plaint counsel fo! the defendants denied all of the alle(ation the!ein contained and alle(ed as a

special defense, that thei! dau(hte!-in-la+ had died in conseuence of the said childbi!th, and that +hen she +as alive shelived +ith he! husband independentl' and in a sepa!ate house +ithout an' !elation +hateve! +ith the", and that, if on the

da' +hen she (ave bi!th she +as in the house of the defendants, he! sta' thei! +as accidental and due to fo!tuitous

ci!cu"stances the!efo!e, he p!a'ed that the defendants be absolved of the co"plaint +ith costs a(ainst the plaintiff.

4he plaintiff de"u!!ed to the above ans+e!, and the cou!t belo+ sustained the de"u!!e!, di!ectin( the defendants, on the

2!d of *anua!', #$%5, to a"end thei! ans+e!. 3n co"pliance +ith this o!de! the defendants p!esented, on the sa"e date,

thei! a"ended ans+e!, den'in( each and eve!' one of the alle(ations contained in the co"plaint, and !euestin( that the

sa"e be dis"issed +ith costs.

As a !esult of the evidence adduced b' both pa!ties, 1ud("ent +as ente!ed b' the cou!t belo+ on the th of Ap!il, #$%5,

+he!eb' the defendants +e!e absolved f!o" the fo!"e! co"plaint, on account of the lac6 of sufficient evidence to

establish a !i(ht of action a(ainst the defendants, +ith costs a(ainst the plaintiff, +ho e7cepted to the said 1ud("ent and in

addition "oved fo! a ne+ t!ial on the (!ound that the 1ud("ent +as cont!a!' to la+ the "otion +as ove!!uled and the

plaintiff e7cepted and in due cou!se p!esented the co!!espondin( bill of e7ceptions. 4he "otion of the defendants

!euestin( that the decla!ation contained in the 1ud("ent that the defendants had de"anded the!ef!o", fo! the !eason that,

acco!din( to the evidence, no such !euest had been "ade, +as also denied, and to the decision the defendants e7cepted.

Assu"in( that it is a !eal fact of 6no+led(e b' the defendants that the plaintiff, b' vi!tue of havin( been sent fo! b' the

fo!"e!, attended a ph'sician and !ende!ed p!ofessional se!vices to a dau(hte!-in-la+ of the said defendants du!in( a

difficult and labo!ious childbi!th, in o!de! to decide the clai" of the said ph'sician !e(a!din( the !ecove!' of his fees, it

beco"es necessa!' to decide +ho is bound to pa' the bill, +hethe! the fathe! and "othe!-in-la+ of the patient, o! thehusband of the latte!.

Acco!din( to a!ticle #%8$ of the Civil Code, obli(ations a!e c!eated b' la+, b' cont!acts, b' uasi-cont!acts, and b' illicit

acts and o"issions o! b' those in +hich an' 6ind of fault o! ne(li(ence occu!s.

Obli(ations a!isin( f!o" la+ a!e not p!esu"ed. 4hose e7p!essl' dete!"ined in the code o! in special la+s, etc., a!e the

onl' de"andable ones. Obli(ations a!isin( f!o" cont!acts have le(al fo!ce bet+een the cont!actin( pa!ties and "ust be

fulfilled in acco!dance +ith thei! stipulations. 9A!ts. #%$% and #%$#.



4he !ende!in( of "edical assistance in case of illness is co"p!ised a"on( the "utual obli(ations to +hich the spouses a!e

bound b' +a' of "utual suppo!t. 9A!ts. #;2 and #;.

3f eve!' obli(ation consists in (ivin(, doin( o! not doin( so"ethin( 9a!t. #%88, and spouses a!e "utuall' bound to

suppo!t each othe!, the!e can be no uestion but that, +hen eithe! of the" b' !eason of illness should be in need of

"edical assistance, the othe! is unde! the unavoidable obli(ation to fu!nish the necessa!' se!vices of a ph'sician in o!de!

that health "a' be !esto!ed, and he o! she "a' be f!eed f!o" the sic6ness b' +hich life is 1eopa!di<ed the pa!t' bound to

fu!nish such suppo!t is the!efo!e liable fo! all e7penses, includin( the fees of the "edical e7pe!t fo! his p!ofessional

se!vices. 4his liabilit' o!i(inates f!o" the above-cited "utual obli(ation +hich the la+ has e7p!essl' established bet+een

the "a!!ied couple.

3n the face of the above le(al p!ecepts it is unuestionable that the pe!son bound to pa' the fees due to the plaintiff fo! the

p!ofessional se!vices that he !ende!ed to the dau(hte!-in-la+ of the defendants du!in( he! childbi!th, is the husband of the

patient and not he! fathe! and "othe!- in-la+, the defendants he!ein. 4he fact that it +as not the husband +ho called the

plaintiff and !euested his assistance fo! his +ife is no ba! to the fulfill"ent of the said obli(ation, as the defendants, in

vie+ of the i""inent dan(e!, to +hich the life of the patient +as at that "o"ent e7posed, conside!ed that "edical

assistance +as u!(entl' needed, and the obli(ation of the husband to fu!nish his +ife in the indispensable se!vices of a

ph'sician at such c!itical "o"ents is speciall' established b' the la+, as has been seen, and co"pliance the!e+ith is

unavoidable the!efo!e, the plaintiff, +ho believes that he is entitled to !ecove! his fees, "ust di!ect his action a(ainst thehusband +ho is unde! obli(ation to fu!nish "edical assistance to his la+ful +ife in such an e"e!(enc'.

=!o" the fo!e(oin( it "a' !eadil' be unde!stood that it +as i"p!ope! to have b!ou(ht an action a(ainst the defendants

si"pl' because the' +e!e the pa!ties +ho called the plaintiff and !euested hi" to assist the patient du!in( he! difficult

confine"ent, and also, possibl', because the' +e!e he! fathe! and "othe!-in-la+ and the sic6ness occu!!ed in thei! house.

4he defendants +e!e not, no! a!e the' no+, unde! an' obli(ation b' vi!tue of an' le(al p!ovision, to pa' the fees clai"ed,

no! in conseuence of an' cont!act ente!ed into bet+een the" and the plaintiff f!o" +hich such obli(ation "i(ht have

a!isen.

3n appl'in( the p!ovisions of the Civil Code in an action fo! suppo!t, the sup!e"e cou!t of pain, +hile !eco(ni<in( the

validit' and efficienc' of a cont!act to fu!nish suppo!t +he!ein a pe!son bound hi"self to suppo!t anothe! +ho +as not his

!elative, established the !ule that the la+ does i"pose the obli(ation to pa' fo! the suppo!t of a st!an(e!, but as the liabilit'

a!ose out of a cont!act, the stipulations of the a(!ee"ent "ust be held. 9/ecision of Ma' ##, #8$5.

>ithin the "eanin( of the la+, the fathe! and "othe!-in-la+ a!e st!an(e!s +ith !espect to the obli(ation that devolves

upon the husband to p!ovide suppo!t, a"on( +hich is the fu!nishin( of "edical assistance to his +ife at the ti"e of he!

confine"ent and, on the othe! hand, it does not appea! that a cont!act e7isted bet+een the defendants and the plaintiff

ph'sician, fo! +hich !eason it is obvious that the fo!"e! can not be co"pelled to pa' fees +hich the' a!e unde! no liabilit'

to pa' because it does not appea! that the' consented to bind the"selves.

4he fo!e(oin( suffices to de"onst!ate that the fi!st and second e!!o!s assi(ned to the 1ud("ent belo+ a!e unfounded,

because, if the plaintiff has no !i(ht of action a(ainst the defendants, it is needless to decla!e +hethe! o! not the use of

fo!ceps is a su!(ical ope!ation.

4he!efo!e, in vie+ of the conside!ation he!einbefo!e set fo!th, it is ou! opinion that the 1ud("ent appealed f!o" should be

affi!"ed +ith the costs a(ainst the appellant. o o!de!ed.



Republic of the PhilippinesSUPREME COURT

Manila

EN BANC

G.R. No. L-1!02 A"r#$ !, 1918

LEUNG %EN, plaintiff,vs.P. J. O&%R'EN, JAMES A OSTRAN( an) GEO. R. *AR+EY, u)/ o #r/ 'n/an3 o 3#y o Man#$a,defendants.

Thos. D. Aitken and W. A. Armstrong for plaintiff. Kincaid !erkins for defendants.

STREET, J.

4his is an application fo! a +!it of certiorari, the pu!pose of +hich is to uash an attach"ent issued f!o" the Cou!t of =i!st 3nstance of the Cit' of Manila unde! ci!cu"stances he!einbelo+ stated.

?pon /ece"be! #2, #$#5, an action +as instituted in the Cou!t of =i!st 3nstance of the cit' of Manila b' P. *. O@B!ien to!ecove! of )eun( Ben the su" of P#,%%% alle(ed to have been lost b' the plaintiff to the defendant in a se!ies of (a"blin(, ban6in( and pe!centa(e (a"es conducted !uin( the t+o o! th!ee "onths p!io! to the institution of the suit. 3n hisve!ified co"plaint the plaintiff as6ed fo! an attach"ent, unde! section ;2;, and ;#2 9# of the Code of Civil P!ocedu!e,a(ainst the p!ope!t' of the defendant, on the (!ound that the latte! +as about to depa!t f!o" the Philippine islands +ithintent to def!aud his c!edito!s. 4his attach"ent +as issued and actin( unde! the autho!it' the!eof, the she!iff attached thesu" of P#,%%% +hich had been deposited b' the defendant +ith the 3nte!national Ban6in( Co!po!ation.

4he defendant the!eupon appea!ed b' his atto!ne' and "oved the cou!t to uash the attach"ent. aid "otion havin(dis"issed in the Cou!t of =i!st 3nstance, the petitione!, )eun( Ben, the defendant in that action, p!esented to this cou!t,upon *anua!' 8, #$#8 his petition fo! the +!it of certiorari di!ected a(ainst P. *. O@B!ien and the 1ud(es of the Cou!t of =i!st 3nstance of the cit' of Manila +hose na"es a!e "entioned in the caption he!eof. 4he p!a'e! is that the ono!able

*a"es A. Ost!and, as the 1ud(e havin( co(ni<ance of the action in said cou!t be !eui!ed to ce!tif' the !eco!d to this cou!tfo! !evie+ and that the o!de! of attach"ent +hich had been issued should be !evo6ed and discha!(ed. +ith costs. ?pon thefilin( of said petition in this cou!t the usual o!de! +as ente!ed !eui!in( the defendants to sho+ cause +h' the +!it shouldnot issue. 4he !esponse of the defendants, in the natu!e of a de"u!!e!, +as filed upon *anua!' 2#, #$#8 and the "atte! isno+ hea!d upon the pleadin(s thus p!esented.

4he p!ovision of la+ unde! +hich this attach"ent +as issued !eui!es that the!e should be accuse of action a!isin( uponcont!act, e7p!ess o! i"plied. 4he contention of the petitione! is that the statuto!' action to !ecove! "one' lost at (a"in( isthat the statuto!' action to !ecove! "one' lost at (a"in( is no such an action as is conte"plated in this p!ovision, and hethe!efo!e insists that the o!i(inal co"plaint sho+s on its face that the !e"ed' of attach"ent is not available in aid the!eofthat the Cou!t of =i!st 3nstance acted in e7cess of its 1u!isdiction in (!antin( the +!it of attach"ent that the petitione! hasno plain, speed', and adeuate !e"ed' b' appeal o! othe!+ise and that conseuentl' the +!it of certiorari supplies the

app!op!iate !e"ed' fo! his !elief.

4he case p!esents the t+o follo+in( uestions of la+, eithe! of +hich, if decided unfavo!abl' to the petitione!, +ill be fatalto his application:

9# upposin( that the Cou!t of =i!st 3nstance has (!anted an attach"ent fo! +hich the!e is no statuto!' autho!it', can thiscou!t ente!tain the p!esent petition and (!ant the desi!ed !elief

92 3s the statuto!' obli(ation to !esto!e "one' +on at (a"in( an obli(ation a!isin( f!o" cont!act, e7p!ess o! i"plied



>e a!e of the opinion that the ans+e! to the fi!st uestion should be in the affi!"ative. ?nde! section #; of the Code of Civil P!ocedu!e the up!e"e Cou!t has o!i(inal 1u!isdiction b' the +!it of certiorari ove! the p!oceedin(s of Cou!ts of =i!st 3nstance, +he!eve! said cou!ts have e7ceeded thei! 1u!isdiction and the!e is no plaint, speed', and adeuate !e"ed'.3n the sa"e section, it is fu!the! decla!ed that the p!oceedin(s in the up!e"e Cou!t in such cases hall be as p!esc!ibed fo! Cou!ts of =i!st 3nstance in section 2#5-22#, inclusive, of said Code. 4his up!e"e Cou!t, so fa! as applicable, the p!ovisions contained in those section to the sa"e e7tent as if the' had been !ep!oduced ve!bati" i""ediatel' afte! section#;. 4u!nin( to section 2#5, +e find that, in definin( the conditions unde! +hich certiorari can be "aintained in a Cou!tof =i!st 3nstance substantiall' the sa"e lan(ua(e is used as is the sa"e !e"ed' can be "aintained in the up!e"e Cou!t of =i!st 3nstance, substantiall' the sa"e lan(ua(e is used as is found in section #; !elative to the conditions unde! +hich the

sa"e !e"ed' can be "aintained in the up!e"e Cou!t, na"el', +hen the infe!io! t!ibunal has e7ceeded its 1u!isdiction andthe!e is no appeal, no! an' plain, speed' and adeuate !e"ed'. 3n usin( these e7p!essions the autho! of the Code of CivilP!ocedu!e "e!el' adopted the lan(ua(e +hich, in A"e!ican 1u!isdictions at least, had lon( a(o !eached the sta(e of ste!eot'ped fo!"ula.

3n section 22% of the sa"e Code, +e have a p!ovision !elative to the final p!oceedin(s in certiorari, and he!ein it is statedthat the cou!t shall dete!"ine +hethe! the infe!io! t!ibunal has !e(ula!l' pu!sued its autho!it' it shall (ive 1ud("ent eithe! affi!"in( annullin(, o! "odif'in( the p!oceedin(s belo+, as the la+ !eui!es. 4he e7p!ession, has not !e(ula!l' pu!suedits autho!it' as he!e used, is su((estive, and +e thin6 it should be const!ued in connection +ith the othe! e7p!essions havee7ceeded thei! 1u!isdiction, as used in section #;, and has e7ceeded thei! 1u!isdiction as used in section 2#5. 4a6in( theth!ee to(ethe!, it !esults in ou! opinion that an' i!!e(ula! e7e!cise of 1u!idical po+e! b' a Cou!t of =i!st 3nstance, in e7cessof its la+ful 1u!isdiction, is !e"ediable b' the +!it of certiorari, p!ovided the!e is no othe! plain, speed', and adeuate

!e"ed' and in o!de! to "a6e out a case fo! the (!antin( of the +!it it is not necessa!' that the cou!t should have acted inthe "atte! +ithout an' 1u!isdiction +hateve!. 3ndeed the !epeated use of e7p!ession e7cess of 1u!isdiction sho+s that thela+"a6e! conte"plated the situation +he!e a cou!t, havin( 1u!isdiction should i!!e(ula!l' t!anscend its autho!it' as +ellas the situation +he!e the cou!t is totall' devoid of la+ful po+e!.

3t "a' be obse!ved in this connection that the +o!d 1u!isdiction as used in attach"ent cases, has !efe!ence not onl' to theautho!it' of the cou!t to ente!tain the p!incipal action but also to its autho!it' to issue the attach"ent, as dependent uponthe e7istence of the statuto!' (!ound. 9& C. *., 8$. 4his distinction bet+een 1u!isdiction to issue the attach"ent as anancilla!' !e"ed' incident to the p!incipal liti(ation is of i"po!tance as a cou!t@s 1u!isdiction ove! the "ain action "a' beco"plete, and 'et it "a' lac6 autho!it' to (!ant an attach"ent as ancilla!' to such action. 4his distinction bet+een 1u!isdiction ove! the ancilla!' has been !eco(ni<ed b' this cou!t in connection +ith actions involvin( the appoint"ent of a!eceive!. 4hus in Rocha D Co. "s. C!ossfield and =i(ue!as 9& Phil. Rep., , a !eceive! had been appointed +ithout le(al 1ustification. 3t +as held that the o!de! "a6in( the appoint"ent +as be'ond the 1u!isdiction of the cou!t and thou(h thecou!t ad"ittedl' had 1u!isdiction of the "ain cause, the o!de! +as vacated b' this cou!t upon application a +!itof certiorari. 9See Blanco vs. A"ble!, Phil. Rep., 8, Blanco vs. A"ble! and McMic6in( Phil. Rep., 5, an(co vs.Rohde, # Phil. Rep., ;%;.

B' pa!it' of !easonin( it "ust follo+ that +hen a cou!t issues a +!it of attach"ent fo! +hich the!e is no statuto!'autho!it', it is actin( i!!e(ula!l' and in e7cess of its 1u!isdiction, in the sense necessa!' to 1ustif' the up!e"e Cou!t in(!antin( !elief b' the +!it of certiorari. 3n appl'in( this p!oposition it is of cou!se necessa!' to ta6e account of thediffe!ence bet+een a (!ound of attach"ent based on the natu!e of the action and a (!ound of attach"ent based on the actso! the conditions of the defendant. Eve!' co"plaint "ust sho+ a cause of action so"e so!t and +hen the statue decla!esthat the attach"ent "a' issue in an action a!isin( upon cont!act, the e7p!ess o! i"plied, it announces a c!ite!ion +hich"a' be dete!"ined f!o" an inspection of the lan(ua(e of the co"plaint. 4he dete!"ination of this uestion is pu!el' a"atte! of la+. On the othe! hand, +hen the statu!e decla!es that an attach"ent "a' be issued +hen the defendant is aboutto depa!t f!o" the 3slands, a c!ite!ion is announced +hich is +holl' fo!ei(n to the cause of action and the dete!"inationof it "a' involve a disputed uestion of fact +hich "ust be decided b' the cou!t. 3n "a6in( this dete!"ination, the cou!tobviousl' acts +ithin its po+e!s and it +ould be idle to suppose that the +!it of certiorari +ould be available to !eve!sethe action of a Cou!t of =i!st 3nstance in dete!"inin( the sufficienc' of the p!oof on such a disputed point, and in (!antin(o! !efusin( the attach"ent acco!din(l'.

>e should not be unde!stood, in an'thin( that has been said, as intendin( to inf!in(e the doct!ine enunciated b' this cou!tin e!!e!a "s. Ba!!etto and *oauin 92 Phil. Rep., 2;, +hen p!ope!l' applied. 3t +as the!e held that +e +ould not, uponapplication fo! a +!it of certiorari, dissolve an inte!locuto!' "andato!' in1unction that had been issued in a Cou!t of =i!st3nstance as an incident in an action of mandamus. 4he issuance of an inte!locuto!' in1unction depends upon conditionsessentiall' diffe!ent f!o" those involved in the issuance of an attach"ent. 4he in1unction is desi(ned p!i"a!il' fo! the p!evention of i!!epa!able in1u!' and the use of the !e"ed' is in a (!eat "easu!e dependent upon the e7e!cise of disc!etion.Fene!all', it "a' be said that the e7e!cise of the in1unctive po+e!s is inhe!ent in 1udicial autho!it' and o!dina!il' it +ould be i"possible to distin(uish bet+een the 1u!isdiction of the cou!t in the "ain liti(ation and its 1u!isdiction to (!ant aninte!locuto!' in1unction, fo! the latte! is involved in the fo!"e!. 4hat the +!it of certiorari can not be used to !eve!se ano!de! den'in( a "otion fo! a p!eli"ina!' in1unction is of cou!se not to cavil. 9o"es vs. C!ossfield and Molina, 8 Phil.Rep., 28;.

But it +ill be said that the +!it of certiorari is not available in this cae, because the petitione! is p!otected b' theattach"ent bond, and that he has a plain, speed', and adeuate !e"ed' appeal. 4his su((estion see"s to be sufficientl'ans+e!ed in the case of Rocha D Co "s. C!ossfield and =i(ue!as 9& Phil. Rep., , al!ead' !efe!!ed to, and the ea!lie!



case the!e cited. 4he !e"ed' b' appeal is not sufficientl' speed' to "eet the e7i(encies of the case. An attach"ent ise7t!e"el' violent, and its abuse "a' often !esult in infliction of da"a(e +hich could neve! be !epai!ed b' an' pecunia!'a+a!d at the final hea!in(. 4o postpone the (!antin( of the +!it in such a case until the final hea!in( and to co"pel the petitione! to b!in( the case he!e upon appeal "e!el' in o!de! to co!!ect the action of the t!ial cou!t in the "atte! of allo+in( the attach"ent +ould see" both un1ust and unnecessa!'.

Passin( to the p!oble" p!opounded in the second uestion it "a' be obse!ved that, upon (ene!al p!inciples,. !eco(ni<e both the civil and co""on la+, "one' lost in (a"in( and volunta!il' paid b' the lose! to the +inne! can not in theabsence of statue, be !ecove!ed in a civil action. But Act No. #55 of the Philippine Co""ission, +hich defines and penali<es seve!al fo!"s of (a"blin(, contains nu"e!ous p!ovisions !eco(ni<in( the !i(ht to !ecove! "one' lost in(a"blin( o! in the pla'in( of ce!tain (a"es 9secs. &, 5, 8, $, ##. 4he o!i(inal co"plaint in the action in the Cou!t of =i!st3nstance is not clea! as to the pa!ticula! section of Act No. #55 unde! +hich the action is b!ou(ht, but it is alle(ed that the"one' +as lost at (a"blin(, ban6in(, and pe!centa(e (a"e in +hich the defendant +as ban6e!. 3t "ust the!efo!e beassu"ed that the action is based upon the !i(ht of !ecove!' (iven in ection 5 of said Act, +hich decla!es that an action"a' be b!ou(ht a(ainst the ban6e! b' an' pe!son losin( "one' at a ban6in( o! pe!centa(e (a"e.

3s this a cause a!isin( upon cont!act, e7p!ess o! i"plied, as this te!" is used in section ;#2 of the Code of CivilP!ocedu!e 4o be(in the discussion, the En(lish ve!sion of the Code of Civil P!ocedu!e is cont!ollin( 9sec. #, Ad"in.Code, ed. of #$#5. =u!the!"o!e it is unive!sall' ad"itted to be p!ope! in the inte!p!etation of an' statute, to conside! itshisto!ical antecedents and its 1u!is p!udential sou!ces. 4he Code of Civil P!ocedu!e, as is +ell 6no+n, is an A"e!icancont!ibution to Philippine le(islation. 3t the!efo!e spea6s the lan(ua(e of the co""on-la+ and fo! the "ost pa!t !eflects itsideas. >hen the d!afts"an of this Code used the e7p!ession cont!act, e7p!ess o! i"plied, he used a ph!ase that has beenlon( cu!!ent a"on( +!ite!s on A"e!ican and En(lish la+ and it is the!efo!e app!op!iate to !eso!t to that s'ste" of la+ todiscove! the app!op!iate to !eso!t to that s'ste" of la+ to discove! the "eanin( +hich the le(islato! intended to conve' b'those "eanin( +hich the le(islato! intended to conve' b' those te!"s. >e !e"a!6 in passin( that the e7p!ession contratotracito, used in the official t!anslation of the Code of Civil P!ocedu!e as the panish euivalent of i"plied cont!act, doesnot appea! to !ende! the full sense of the En(lish e7p!ession.

4he En(lish cont!act la+, so fa! as !elates to si"ple cont!acts is planted upon t+o foundations, +hich a!e supplied b' t+ove!' diffe!ent conceptions of le(al liabilit'. 4hese t+o conceptions a!e !evealed in the ideas !espectivel' unde!l'in( 9#the co""on- la+ debt and 92 the assu"ptual p!o"ise. 3n the ea!l' and fo!"ative sta(es of the co""on-la+ the onl'si"ple cont!act of +hich the cou!ts too6 account +as the real cont!act o! cont!act re, in +hich the cont!actual dut'i"posed b' la+ a!ises upon the delive!' of a chattle, as in the mutuum, commodatum,depositum, and the li6e and the pu!el' consensual a(!ee"ents of the Ro"an )a+ found no con(enial place in the ea!l' co""on la+ s'ste".

3n cou!se of ti"e the idea unde!l'in( the cont!act !e +as e7tended so as to include f!o" one pe!son to anothe! unde! suchci!cu"stances as to constitute a #usta cuas de$endi. 4he obli(ation the!eb' c!eated +as a debt. 4he constitutive ele"ent inthis liti(ation is found in the fact that the debto! has !eceived so"ethin( f!o" the c!edito!, +hich he is bound b' theobli(ation of la+ to !etu!n o! pa' fo!. =!o" an ea!l' da' this ele"ent +as deno"inated the quid pro quo, an un(ainl' ph!ase coined b' Mediaeval )atinit'. 4he quid pro quo +as p!i"a!il' a "ate!ials o! ph'sical ob1ect, and its constituted the!eco"pense o! euivalent acui!ed b' the debto!. ?pon the passa(e of thequid pro quo f!o" one pa!t' to the othe!, the la+i"posed that !eal cont!actual dut' peculia! to the debt. No one conve!sant +ith the ea!l' histo!' of En(lish la+ +ouldeve! conceive of the debt as an obli(ation c!eated b' p!o"ise. 3t is the le(al dut' to pa' o! delive! a su" ce!tain of "one'o! an asce!tainable uantit' of ponde!able o! "easu!able chattles.

4he o!dina!' debt, as al!ead' stated, o!i(inates in a cont!act in +hich a quid pro quo passes to the debto! at the ti"e of thec!eation of the debt, but the te!" is euall' applicable to duties i"posed b' custo" o! statute, o! b' 1ud("ent of a cou!t.

4he e7istence of a debt supposes one pe!son to have possession of thin( 9res +hich he o%es and hence ou(ht to tu!n ove! the o+ne!. 4his obli(ation is the oldest conception of cont!act +ith +hich the co""on la+ is fa"ilia! andnot+ithstandin( the centu!ies that have !olled ove! >est"inste! all that conception !e"ains as one of the funda"ental bases of the co""on-la+ cont!act.

Nea! the end of the fifteenth centu!' the!e +as evolved in En(land a ne+ conception of cont!actual liabilit', +hiche"bodied the idea of obli(ation !esultin( f!o" p!o"ise and +hich found e7p!ession in the co""on la+ assu"psit, o! pa!ol p!o"ise suppo!ted b' a conside!ation. 4he application of this novel conception had the effect of (!eatl' e7tendin(

the filed of cont!actual liabilit' and b' this "eans !i(hts of action ca"e to be !eco(ni<ed +hich had been un6no+n befo!e.4he action of assu"psit +hich +as the inst!u"ent fo! (ivin( effect to this obli(ation +as found to be a useful !e"ed' and p!esentl' this action ca"e to be used fo! the enfo!ce"ent of co""on-la+ debts. 4he !esult +as to (ive to ou! cont!act la+the supe!ficial appea!ance of bein( based "o!e o! less e7clusivel' upon the notion of the obli(ation of p!o"ise.

An idea is +idel' ente!tained to the effect that all si"ple cont!acts !eco(ni<ed in the co""on-la+ s'ste" a!e !efe!able toa sin(l' cate(o!'. 4he' all have thei! !oots, so "an' of us i"a(ine, in one (ene!al notion of obli(ation and of cou!se theobli(ation of p!o"ise is supposed to suppl' this (ene!al notion, bein( conside!ed a so!t of menstruum in +hich all othe! fo!"s of cont!actual obli(ation have been dissolved. 4his a "ista6e. 4he idea of cont!actual dut' e"bodied in the debt+hich +as the fi!st conception of cont!act liabilit' !evealed in the co""on la+, has !e"ained, althou(h it +as detained to be in a "easu!e obscu!ed b' the "o!e "ode!n conception of obli(ation !esultin( f!o" p!o"ise.



>hat has been said is intended to e7hibit the fact that the dut' to pa' o! delive! a su" ce!tain of "one' o! anasce!tainable uantit' of ponde!able o! "easu!able chattles G +hich is indicated b' the" debt G has eve! been!eco(ni<ed, in the co""on-la+ s'ste", as a t!ue cont!act, !e(a!dless, of the sou!ce of the dut' o! the "anne! in +hich it isc!eate G +hethe! de!ived f!o" custo", statue o! so"e consensual t!ansaction dependin( upon the volunta!' acts of the pa!ties. the fo!" of cont!act 6no+n as the debt is of the "ost ancient linea(e and +hen !efe!ence is had to histo!icalantecedents, the !i(ht of the debt to be classed as a cont!act cannot be uestioned. 3ndeed +hen the ne+ fo!" of en(a(e"ent consistin( of the pa!ol p!o"ise suppo!ted b' a conside!ation fi!st appea!ed, it +as loo6ed upon as an upsta!tand its !i(ht to be conside!ed a t!ue cont!act +as uestioned. 3t +as lon( custo"a!' to !efe! to it e7clusivel' as anassu"psit, a(!ee"ent, unde!ta6in(, o! pa!ol p!o"ise, in fact an'thin( but a cont!act. Onl' in ti"e did the ne+ fo!" of

en(a(e"ent attain the di(nit' of bein( classed a"on( t!ue cont!act.

4he te!" i"plied ta6e!s us into shado+' do"ain of those obli(ations the theo!etical classification of +hich has en(a(edthe attention of schola!s f!o" the ti"e of Faius until ou! o+n da' and has been a sou!ce of as "uch difficult' to thecivilian as to the co""on-la+ 1u!ist. 4he!e +e a!e conce!ned +ith those acts +hich "a6e one pe!son debto! to anothe! +ithout the!e havin( inte!vened bet+een the" an' t!ue a(!ee"ent tendin( to p!oduce a le(al bond 9 "inculum #uris. Of late 'ea!s so"e A"e!ican and En(lish +!ite!s have adopted the te!" uasi-cont!act as desc!iptive of these obli(ations o! so"e of the" but the e7p!ession "o!e co""onl' used is i"plied cont!act.

?pon e7a"ination of these obli(ations, f!o" the vie+ point of the co""on-la+ 1u!isp!udence, it +ill be found that the'fall !eadil' into t+o divisions acco!din( as the' bea! an analo(' to the co""on-la+ debt o! to the co""on la+ assu"psit.4o e7hibit the scope of these diffe!ent classes of obli(ations is he!e i"p!acticable. 3t is onl' necessa!' in this connectionto obse!ve that the "ost conspicuous division is that +hich co"p!ises duties in the natu!e of debt. 4he cha!acte!isticfeatu!e of these obli(ations is that upon ce!tain states of fact the la+ i"poses an obli(ation to pa' a su" ce!tain of "one'and it is cha!acte!istic of this obli(ation that the "one' in !espect to +hich the dut' is !aised is conceived as bein(euivalent of so"ethin( ta6en o! detained unde! ci!cu"stances (ivin( !ise to the dut' to !etu!n o! co"pensate the!efo!e.4he p!oposition that no one shall be allo+ed to en!ich hi"self undul' at the e7pense of anothe! e"bodies the (ene!al p!inciple he!e l'in( at the basis of obli(ation. 4he !i(ht to !ecove! "one' i"p!ope!l' paid 9repeticion de lo inde$ido isalso !eco(ni<ed as belon( to this class of duties.

3t +ill obse!ved that acco!din( to the Civil Code obli(ations a!e supposed to be de!ived eithe! f!o" 9# the la+, 92cont!acts and uasi-cont!acts, 9 illicit acts and o"ission, o! 9; acts in +hich so"e so!t ob la"e o! ne(li(ence is p!esent.4his enu"e!ation of sou!ces of obli(ations and the obli(ation i"posed b' la+ a!e diffe!ent t'pes. 4he lea!ned 3talian 1u!ist, *o!(e Fio!(i, c!iticises this assu"ption and sa's that the classification e"bodied in the code is theo!eticall'e!!oneous. is conclusion is that one o! the othe! of these cate(o!ies should have been supp!essed and "e!(ed in the othe!.9Fio!(i, Teoria de las &$ligaciones, panish ed., vol. a!ts. , 5, $. 4he validit' of this c!iticis" is, +e thin, self-evidentand it is of inte!est to note that the co""on la+ "a6es no distinction bet+een the t+o sou!ces of liabilit'. 4he obli(ations+hich in the Code a!e indicated as uasi-cont!acts, as +ell as those a!isin( e' lege, a!e in the co""on la s'ste", "e!(edinto the cate(o!' of obli(ations i"posed b' la+, and all a!e deno"inated i"plied cont!acts.

Man' !efine"ents, "o!e o! less illuso!', have been atte"pted b' va!ious +!ite!s in distin(uishin( diffe!ent so!ts of i"plied cont!acts, as fo! e7a"ple, the cont!act i"plied as of fact and the cont!act i"plied as of la+. No e7planation of these distinctions +ill be he!e atte"pted. uffice it to sa' that the te!" cont!act, e7p!ess o! i"plied, is used to b'co""on-la+ 1u!ists to include all pu!el' pe!sonal obli(ations othe! than those +hich have thei! sou!ce in delict, o! to!t. Asto these it "a' be said that, (ene!all' spea6in(, the la+ does not i"pose a cont!actual dut' upon a +!on(doe! toco"pensate fo! in1u!' done. 3t is t!ue that in ce!tain situations +he!e a +!on(doe! un1ustl' acui!ed so"ethin( at thee7pense of anothe!, the la+ i"poses on hi" a dut' to su!!ende! his un1ust acuisitions, and the in1u!ed pa!t' "a' he!eelect to sue upon this cont!actual dut' instead of suin( upon the to!t but even he!e the distinction bet+een the t+oliabilities, in cont!act and in to!t, is neve! lost to si(ht and it is al+a's !eco(ni<ed that the liabilit' a!isin( out of the to!t isdelictual and not of a cont!actual o! uasi-cont!actual natu!e.

3n the case no+ unde! conside!ation the dut' of the defendant to !efund the "one' +hich he +on f!o" the plaintiff at(a"in( is a dut' i"posed b' statute. 3t the!efo!e a!ises e' lege. =u!the!"o!e, it is a dut' to !etu!n a ce!tain su" +hich had passed f!o" the plaintiff to the defendant. B' all the c!ite!ia +hich the co""on la+ supplies, this a dut' in the natu!e of debt and is p!ope!l' classified as an i"plied cont!act. 3t is +ell- settled b' the En(lish autho!ities that "one' lost in(a"blin( o! b' lotte!', if !ecove!able at all, can be !ecove!ed b' the lose! in an action of inde$itatus assumpsit fo! "one'had and !eceived. 9Cla!6e vs. *ohnson. )offt, 5$ Mason vs. >aite, #5 Mass., &% Bu!nha" vs. =ishe!, 2 Ht., #;. 4his"eans that in the co""on la+ the dut' to !etu!n "one' +on in this +a' is an i"plied cont!act, o! uasi-cont!act.

3t is no a!(u"ent to sa' in !epl' to this that the obli(ation he!e !eco(ni<ed is called an i"plied cont!act "e!el' because the!e"ed' co""onl' used in suin( upon o!dina!' cont!act can be he!e used, o! that the la+ adopted the fiction of p!o"ise ino!de! to b!in( the obli(ation +ithin the scope of the action of assumpsit . uch state"ents fail to e7p!ess the t!ue i"po!t of the pheno"enon. Befo!e the !e"ed' +as the idea and the use of the !e"ed' could not have been app!oved if it had not been fo! histo!ical antecedents +hich "ade the !eco(nition of this !e"ed' at one lo(ical and p!ope!. =u!the!"o!e, itshould not be fo!(otten that the uestion is not ho+ this dut' but +hat so!t of obli(ation did the autho! of the Code of Civil P!ocedu!e intend to desc!ibe +hen he sued the te!" i"plied cont!act in section ;#2.



3n +hat has been said +e have assu"ed that the obli(ation +hich is at the foundation of the o!i(inal action in the cou!t belo+ is not a uasi-cont!act, +hen 1ud(e b' the p!inciples of the civil la+. A fe+ obse!vations +ill sho+ that thisassu"ption is not b' an' "eans f!ee f!o" doubt. 4he obli(ation in uestion ce!tainl' does not fall unde! the definition of eithe! of the t+o-uasi- cont!acts +hich a!e "ade the sub1ect of special t!eat"ent in the Civil Code, fo! its does not a!isef!o" a licit act as conte"plated in a!ticle #8$. 4he obli(ation is clea!l' a c!eation of the positive la+ G a ci!cu"stance+hich b!in(s it +ithin the pu!vie+ of a!ticle #%$%, in !elation +ith a!ticle, #%8$ and it is also de!ived f!o" an illicit act,na"el', the pla'in( of a p!ohibited (a"e. 3t is thus seen that the p!ovisions of the Civil Code +hich "i(ht be consulted+ith a vie+ to the co!!ect theo!etical classification of this obli(ation a!e unsatisfacto!' and confusin(.

4he t+o obli(ations t!eated in the chapte! devoted to uasi-cont!acts in the Civil Code a!e 9# the obli(ation incident tothe officious "ana(e"ent of the affai!s of othe! pe!son 9 gestion de negocios a#enos and 92 the !ecove!' of +hat has beeni"p!ope!l' paid 9ca$ro de lo inde$ido. 4hat the autho!s of the Civil Code selected these t+o obli(ations fo! specialt!eat"ent does not si(nif' an intention to den' the possibilit' of the e7istence of othe! uasi-cont!actual obli(ations. As is+ell said b' the co""entato! Man!esa.

4he nu"be! of the uasi-cont!acts "a' be indefinite as "a' be the nu"be! of la+ful facts, the (ene!ations of thesaid obli(ations but the Code, 1ust as +e shall see fu!the! on, in the i"p!acticableness of enu"e!atin( o! includin( the" all in a "ethodical and o!de!l' classification, has conce!ned itself +ith t+o onl' G na"el', the"ana(e"ent of the affai!s of othe! pe!son and the !ecove!' of thin(s i"p!ope!l' paid G +ithout atte"ptin( b'this to e7clude the othe!s. 9Man!esa, 2d ed., vol. #2, p. ;$.

3t +ould indeed have been su!p!isin( if the autho!s of the Code, in the li(ht of the 1u!isp!udence of "o!e than a thousand'ea!s, should have a!bit!a!il' assu"ed to li"it the uasi-cont!act to t+o obli(ations. 4he autho! f!o" +ho" +e have 1ustuoted fu!the! obse!ves that the t+o obli(ations in uestion +e!e selected fo! special t!eat"ent in the Code not onl' because the' +e!e the "ost conspicuous of the uasi-cont!acts, but because the' had not been the sub1ect of conside!ationin othe! pa!ts of the Code. 9Opus citat., %.

3t is +ell !eco(ni<ed a"on( civilian 1u!ists that the uasi- cont!actual obli(ations cove! a +ide !an(e. 4he 3talian 1u!ist,*o!(e Fio!(i, to +ho" +e have al!ead' !efe!!ed, conside!s unde! this head, a"on( othe! obli(ations, the follo+in(: pa'"ents "ade upon a futu!e conside!ation +hich is not !eali<ed o! upon an e7istin( conside!ation +hich fails pa'"ents+!on(full' "ade upon a conside!ation +hich is cont!a!' to la+, o! opposed to public polic' and pa'"ents "ade upon avicious conside!ation o! obtained b' illicit "eans 9Fio!(i, Teoria de las &$ligaciones, vol. , a!t. #%.

3" pe!"ittin( the !ecove!' of "one' lost at pla', Act No. #55 has int!oduced "odifications in the application of a!ticles#5$8, #8%I, and #% of the Civil Code. 4he fi!st t+o of these a!ticles !elate to (a"blin( cont!acts, +hile a!ticle #%t!eats of the nullit' of cont!acts p!oceedin( f!o" a vicious o! illicit conside!ation. 4a6in( all these p!ovisions to(ethe!, it"ust be appa!ent that the obli(ation to !etu!n "one' lost at pla' has a decided affinit' to cont!actual obli(ations and +e believe that it could, +ithout violence to the doct!ines of the civil la+, be held that such obli(ations is an inno"inateuasi-cont!act. 3t is, ho+eve!, unnecessa!' to place the decision on this (!ound.

=!o" +hat has been said it follo+s that in ou! opinion the cause of action stated in the co"plaints in the cou!t belo+ is based on a cont!act, e7p!ess o! i"plied and is the!efo!e of such natu!e that the cou!t had autho!it' to issue +!it of attach"ent. 4he application fo! the +!it of certiorari "ust the!efo!e be denied and the p!oceedin(s dis"issed. o o!de!ed.

Arellano, (.J., Torres, Johnson and (arson, JJ., concu!.

S"ara O"#n#on/

MALCOLM, J., concu!!in(:

As 3 finished !eadin( the lea!ned and inte!estin( decision of the "a1o!it', the i"p!ession +hich !e"ained +as that thecou!t +as enticed b' the nice and unusual points p!esented to "a6e a ha!d case out of an eas' one and unfo!tunatel' t doviolence to the p!inciples of certiorari. 4he si"ple uestions a!e : /i the Cou!t of =i!st 3nstance of cit' of Manila e7ceed

its 1u!isdiction in (!antin( an attach"ents a(ainst the p!ope!t' of the defendant, no+ plaintiff as this defendant, no+ beco"e the plaintiff, an' othe! plain, speed' and adeuate !e"ed' 4he ans+e! a!e found in the decision of thin6s cou!t,in e!!e!a "s. Ba!!etto and *oauin 9J#$#K, 2 Phil., 2;, f!o" +hich 3 uote the follo+in(:

3t has been !epeatedl' held b' this cou!t that a +!it of certiorari +ill not be issued unless it clea!l' appea!s thatthe cou!t to +hich it is to be di!ected acted +ithout o! in e7cess of 1u!isdiction. 3t +ill not be issued to cu!e e!!o!sin the p!oceedin(s o! to co!!ect e!!oneous conclusions of la+ o! of fact. 3f the cou!t has 1u!isdiction. 3t +ill not beissued to cu!e e!!o!s in the p!oceedin(s to co!!ect 1u!isdiction of the sub1ect "atte! and f the pe!son, decisionsupon all uestion pe!tainin( to the cause a!e decisions +ithin its 1u!isdiction and, ho+eve! i!!e(ula! o! e!!oneousthe' "a' be, cannot be co!!ected b' certiorari. 4he Code of Civil P!ocedu!e (ivin( Cou!ts of =i!st 3nstance(ene!al 1u!isdiction in actions fo! mandamus, it (oes +ithout sa'in( that the Cou!t of =i!st 3nstance had



1u!isdiction in the p!esent case to !esolve eve!' uestion a!isin( in such an action and t decide eve!' uestion p!esented to it +hich pe!tained to the cause. 3t has al!ead' been held b' this cou!t, that +hile it is a po+e! to bee7e!cised onl' in e7t!e"e case, a Cou!t of =i!st 3nstance has po+e! to issue a "andato!' in1unction t stand untilthe final dete!"ination of the action in +hich it is issued. >hile the issuance of the "andato!' in1unction in this pa!ticula! case "a' have been i!!e(ula! and e!!oneous, a uestion conce!nin( +hich +e e7p!ess no opinion,neve!theless its issuance +as +ithin the 1u!isdiction of the cou!t and its action is not !evei+able on certiorari. 3t isnot sufficient to sa' that it +as issued +!on(full' and +ithout sufficient (!ounds and in the absence of the othe! pa!t'. 4he uestion is, /id the cou!t act +ith 1u!isdiction

3t has been u!(ed that the cou!t e7ceeded its 1u!isdiction in !eui!in( the "unicipal p!esident t issue the license,fo! the !eason that he +as not the p!ope! pe!son to issue it and that, if he +as the p!ope! pe!son, he had the !i(ht toe7e!cise a disc!etion as to +ho" the license should be issued. >e do not believe that eithe! of these uestions(oes to the 1u!isdiction of the cou!t to act. One of the funda"ental uestion in amandamus a(ainst a public office! is +hethe! o! not that office! has the !i(ht to e7e!cise disc!etion in the pe!fo!"ance of the act +hich the plaintiff as6s hi" to pe!fo!". 3t is one of the essential dete!"inations of the cause. 4o clai" that the !esolution of thatuestion "a' dep!ive the cou!t of 1u!isdiction is to asse!t a novel p!oposition. 3t is euivalent to the contentionthat a cou!t has 1u!isdiction if he decides !i(ht but no 1u!isdiction if he decides +!on(. 3t "a' be stated (ene!all'that it is neve! necessa!' to decide the funda"ental uestions of a cause to dete!"ine +hethe! the cou!t has 1u!isdiction. 4he uestion of 1u!isdiction is p!eli"ina!' and neve! touches the "e!its of the case. 4hedete!"ination of the funda"ental uestions of a cause a!e "e!el' the e7e!cise of a 1u!isdiction al!ead' conceded.3n the case at ba! no one denies the po+e!, autho!it' o! 1u!isdiction of the Cou!t of =i!st 3nstance to ta6e

co(ni<ance of an action fo! mandamus and to decide ve!' uestion +hich a!ises in that cause and pe!tains the!eto.4he contention that the decision of one of those uestion, if +!on(, dest!o's 1u!isdiction involves an evidentcont!adiction.

*u!isdiction is the autho!it' to hea! and dete!"ine a cause G the !i(ht to act in a case. ince it is the po+e! to hea! and dete!"ine, it does not depend eithe! upon the !e(ula!it' of the e7e!cise of that po+e! o! upon the !i(htfulnessof the decision "ade. *u!isdiction should the!efo!e be distin(uished f!o" the e7e!cise of 1u!isdiction. 4heautho!it' to decide a case at all, and not the decision !ende!ed the!ein, is +hat "a6es up 1u!isdiction. >he!e the!eis 1u!isdiction of the pe!son and sub1ect "atte!, as +e have said befo!e, the decision of all othe! uestions a!isin(in the case an e7e!cise of that 1u!isdiction.

4hen follo+s an elabo!ate citation and discussion of A"e!ican autho!ities, includin( a decision of the ?nited tatesup!e"e Cou!t and of the applicable Philippine cases. 4he decision continues

4he !easons (ivens in these cases last cited fo! the allo+ance of the +!it of p!ohibition a!e applicable onl' to theclass of cases +ith +hich the decision deal and do not in an' +a' "ilitate a(ainst the (ene!al p!oposition he!einasse!ted. 4hose +hich !elate to election contest a!e based upon the p!inciple that those p!oceedin(s, a!e special inthei! natu!e and "ust be st!ictl' follo+ed, a "ate!ial depa!tu!e f!o" the statute !esultin( a loss, o! in an e7cess of 1u!isdiction. 4he cases !elatin( to !eceive!s a!e based, in a "easu!e, upon the p!inciple the appoint"ent of a!eceive! bein( (ove!ned b' the statute and in pa!t upon the theo!' that the appoint"ent of a !eceive! in ani"p!ope! case is in substance a ban6!uptc' p!oceedin(, the ta6in( of +hich is e7p!essl' p!ohibited b' la+. 4hecase !elative to the allo+ance of ali"on' pendente lite +hen the ans+e! denies the "a!!ia(e is "o!e difficult todistin(uish. 4he !easons in suppo!t of the doct!ine laid do+n in that case a!e (iven the opinion in full and the'see" to place the pa!ticula! case to +hich the' !efe! in a class b' itself.

3t is not ali(ht thin(s that the la+"a6e!s have abolished +!its of e!!o! and +ith the" certiorari and p!ohibition, inso fa! as the' +e!e "ethods b' +hich the "e!e e!!o!s of an infe!io! cu!t could be co!!ected. As inst!u"ents to thatend the' no lon(e! e7ist. 4hei! place is no ta6en b' the appeal. o lon( as the infe!io! cou!t !etains 1u!isdiction itse!!o!s can be co!!ected onl' b' that "ethod. 4he office of the +!it of certiorari has been !educed to the co!!ectionof defects of #urisdiction solel' and cannot le(all' be used fo! an' othe! pu!pose. 3t is t!ul' an e7t!a o!dina!'!e"ed' and in this 1u!isdiction, its use is !est!icted to t!ul' e7t!ao!dina!' cases G cases in +hich the action of theinfe!io! cou!t is +holl' void, +he!e an' fu!the! steps in the case +ould !esult in a +aste of ti"e and "one' and+ould p!oduce no !esult +hateve! +he!e the pa!ties, o! thei! p!ivies, +ould be utte!l' deceived +he!e a final 1ud("ent o! dec!ee +ould be nou(ht but a sna!e and a delusion, decidin( nothin(, p!otectin( nobod', a 1u!idical p!etension, a !eco!ded falsehood, a standin( "enace. 3t is onl' to avoid such !esult as these that a +!itof certiorari is issuable and even he!e an appeal +ill lie if the a((!ieved pa!t' p!efe!s to p!osecute it.

A full and thorough e'amination of all the decided cases in this court touching the question of certiorari and

prohi$ition full) supports the proposition alread) stated that, %here a (ourt of First *nstance has #urisdiction of

the su$#ect matter and of the person, its decision of an) question pertaining to the cause, ho%e"er, erroneous,

cannot $e re"ie%ed $) certiorari, $ut must $e corrected $) appeal .

3 see no !eason to ove!!ide the decision in e!!e!a "s. Ba!!etto and *oauin 9 supra. Acco!din(l', 3 can do no bette! than to"a6e the lan(ua(e of *ustice Mo!eland "' o+n. appl'in( these p!inciples, it is self-evident that this cou!t should noente!tain the p!esent petition and should not (!ant the desi!ed !elief.



'S*ER, J., dissentin(:

3 a" in full acco!d +ith the vie+ that the !e"ed' of certiorari "a' be invo6ed in such cases as this, but 3 a" const!ainedto dissent f!o" the opinion of the "a1o!it' as !e(a!ds the "eanin( of the te!" i"plied cont!act.

ection ;#2 of the code of Civil P!ocedu!e in connection +ith section ;2;, autho!i<es the p!eli"ina!' attach"ent of the p!ope!t' of the defendant: 9# 3n an action fo! the !ecove!' of "one' o! da"a(es on a cause of action a!isin( uponcont!act, e7p!ess o! i"plied, +hen the defendant is about to depa!t f!o" the Philippine 3slands, +ith intent to def!aud hisc!edito!s 92 . . . 9 . . . 9; . . . 9 >hen the defendant has !e"oved o! disposed of his p!ope!t', o! is about to do so,+ith intent to def!aud his c!edito!s.

3t is evident that the te!"s of pa!a(!aph five of the a!ticle cited a!e "uch b!oade! than those of the fi!st pa!a(!aph. 4hefifth pa!a(!aph is not li"ited to action a!isin( f!o" cont!act, but is b' its te!"s applicable to actions b!ou(ht fo! the pu!pose of enfo!cin( e7t!a-cont!actual !i(hts as +ell as cont!act !i(hts. 4he li"itation upon cases fallin( unde! pa!a(!aphfive is to be found, not in the cha!acte! of the obli(ation fo! the enfo!ce"ent fo! +hich the action is b!ou(ht, but in thete!"s of a!ticle ;2&, +hich !eui!es that the affidavit sho+ that the a"ount due the plaintiff . . . is as "uch as the su" fo! +hich the o!de! is (!anted.

4hat is to sa', +hen application is "ade fo! a p!eli"ina!' attach"ent upon the (!ound that the plaintiff is about to disposeof his p!ope!t' +ith intent to def!aud his c!edito!s G thus b!in(in( the case +ithin the te!"s of pa!a(!aph five of thesection G it is not necessa!' to sho+ that the obli(ation in suit is cont!actual in its o!i(in, but is sufficient to sho+ that the b!each of the obli(ation, as sho+n b' the facts stated in the co"plaint and affidavit, i"poses upon the defendant theobli(ation to pa' a specific and definite su". =o! e7a"ple, if it is alle(ed in the co"plaint that the defendant b'ne(li(ence, has caused the dest!uction b' fi!e of a buildin( belon(in( to plaintiff, and that such buildin( +as +o!th ace!tain su" of "one', these facts +ould sho+ a definite basis upon +hich to autho!i<e the (!antin( of the +!it. But if it+e!e ave!!ed that the defendant has published a libel conce!nin( the plaintiff, to the in1u!' of his feelin( and !eputation,the!e is no definite basis upon +hich to (!ant an attach"ent, because the a"ount of the da"a(e suffe!ed, bein( necessa!il'unce!tain and indete!"inate, cannot be asce!tained definitel' until the t!ail has been co"pleted.

But it appea!s that the le(islatu!e althou(h it has seen fit to autho!i<e a p!eli"ina!' attach"ent in aid of action of all 6inds+hen the defendant is concealin( his p!ope!t' +ith intent to def!aud his c!edito!s, has p!ovided is about to depa!t f!o" thecount!' +ith intent to def!aud his c!editos, the +!it +ill issue onl' +hen the action in aid of +hich it is sou(ht a!ises f!o"a contract e7p!ess o! i"plied. 3f an attach"ent +e!e pe!"itted upon facts b!in(in( the application +ith the fi!st pa!a(!aphof the section in suppo!t of action of an' 6ind, +hethe! the obli(ation sued upon is cont!actual o! not, then pa!a(!aph five+ould b' const!uction be "ade absolutel' identical +ith pa!a(!aph one, and this +ould be in effect euivalent to theco"plete eli"inated of the last t+o lines of the fi!st pa!a(!aph. 3t is a !ule of statuto!' const!uction that effect should be(iven to all parts of the statue, if possible. 3 can see no !eason %h) the le(islatu!e should have li"ited cases fallin( +ithinthe fi!s pa!a(!aph to action a!isin( f!o" cont!act and have !ef!ained f!o" i"posin( this li"itation +ith !espect to casesfallin( +ithin the te!"s of the fifth pa!a(!aph, but this should have no effect upon us in appl)ing the la+. >hethe! the!e bea (ood !eason fo! it o! not the distinction e7ists.

ad the ph!ase e7p!ess o! i"plied not been used to ualif' cont!act, the!e +ould be no doubt +hateve! +ith !e(a!d to the"eanin( of the +o!d. 3n the panish Civil la+ cont!act a!e al+a's consensual, and it +ould be i"possible to define as acont!act the 1udicial !elation e7istin( bet+een a pe!son +ho has lost "one' at (a"in( and the +inne! of such "one',si"ple because the la+ i"poses upon the +inne! the obli(ation of "a6in( !estitution. An obli(ation of this 6ind, fa! f!o" bein( consensual in its o!i(in, a!ises against the +ill of the debto!. 4o call such a !elation a contract is, f!o" thestandpoint of the civil la+, a cont!adiction in te!"s.

But is said that as the phase e7p!ess o! i"plied has been used to ualif' the +o!d cont!act and these +o!ds a!e found instatue +hich spea6s the lan(ua(e of the co""on la+, this i"plies the int!oduction into ou! la+ of the concept of thei"plied cont!act of the En(lish co""on-la+, a concept +hich e"b!aces a ce!tain class of obli(ation o!i(inatin( e' lege,+hich have been a!bit!a!il' classified as cont!acts, so that the' "i(ht be enfo!ced b' one of the fo!"al actions of theco""on la+ +hich le(al t!adition and p!actice has !ese!ved fo! the enfo!ce"ent of cont!act. 3 cannot concu! in this

!easonin(. 3 believe that +hen a technical 1u!idical te!" of substantive la+ is used in the ad1ective la+ of these islands, +eshould see6 its "eanin( in ou! o+n substantive la+ !athe! than in the la+ of A"e!ica o! of En(land. 4he code of CivilP!ocedu!e +as not enacted to establish !ules of substantive la+, but upon the assu"ption of the e7istence of these !ules.

3n the case of Ca'ce vs. Cu!tis 9/alla"@s /ecisions 4e7as Repo!ts, ;%, it appea!s that the le(islatu!e, at a ti"e +hen thattate still !etained to a la!(e e7tent the panish substantive civil la+, enacted a statue in +hich the +o!d bonds is used. 3nliti(ation involvin( the const!uction of that statute, one of the pa!ties contended that the +o!6 bond should be (iven thetechnical "eanin( +hich it had in the En(lish Co""on )a+. 4he cou!t !e1ected this contention sa'in( G

On the fi!st point it is u!(ed b' counsel fo! the appellant that the +o!d bond used in the statute bein( a co""on la+ te!",+e "ust !efe! to the co""on la+ fo! its le(al si(nification and that b' that la+ no inst!u"ent is a bond +hich is not



unde! seal. 4he t!uth of the p!oposition that sealin( is an absolute !euisite to the validit' of a bond at co""on la+ is!eadil' ad"itted but the applicabilit' of that !ule of the case unde! conside!ation is not pe!ceived. 4his bond +as ta6en ata ti"e +hen the co""on la+ affo!ded no !ule of decision o! p!actice in this count!', and conseuentl' that la+ cannot bele(iti"atel' !eso!ted to, even fo! the pu!pose fo! +hich it is invo6ed b' the counsel fo! the appellant, unless it be sho+nthat the civil la+ had not te!" of si"ila! i"po!t fo! +e !e(a!d it as a co!!ect !ule of const!uction, that +he!e technicalte!"s a!e used in a statute the' a!e to be !efe!!ed fo! thei! si(nification to te!"s f si"ila! i"po!t in the s'ste" of la+s+hich p!evails in the count!' +he!e the statues is passed, and not to anothe! s'ste" +hich is enti!el' fo!ei(n t the +holes'ste" of "unicipal !e(ulations b' +hich that count!' is (ove!ned. 9Ma!tin@s Repo!ts, vol. , #8 5 Ma!tin JN. .K, #&2.

Conseuentl', 3 believe that in the inte!p!etation of phase cont!act, e7p!ess o! i"plied, +e should appl' the !ules of ou! o+n substantive la+. 4he ph!ase in itself offe!s no difficult'. 4he concept of the cont!act, unde! the Civil Code, as a le(al!elation of e'clusi"el) consensual o!i(in, offe!s no difficult'. No! is an' difficult' encounte!ed in the (!a"atical sense of the +o!ds e7p!ess and i"plied. E7p!ess acco!din( to the Ne+ 3nte!national /ictiona!' is that +hich is di!ectl' anddistinctl' stated e7p!essed, not "e!el' i"plied o! left to inte!fe!ence. 4he!efo!e, a cont!act ente!ed into b' "eans of lette!s, in +hich the offe! and the acceptance have been "anifested b' app!op!iate +o!ds, +ould be an e7p!ess cont!act.4he +o!d i"pl' acco!din( to the sa"e dictiona!', is to involve in substance o! essence, o! b' fai! infe!ence, o! b'const!uction of la+, +hen not e7p!essl' stated in +o!ds o! si(ns to contain b' i"plication to include vi!tuall'.

4he!efo!e, if 3 ente! a tailo! shop and o!de! a suit of clothes, althou(h nothin( is said !e(a!din( pa'"ent, it is an infe!ence, both lo(ical and le(al, f!o" "' act that is "' intention to pa' the !easonable value of the (a!"ents. 4he cont!act isi"plied, the!efo!e, is that in +hich the consent of the pa!ties is i"plied.

Man!esa, co""entin( upon a!ticle #2&2 of the Civil Code, sa's:

4he essence of consent is the a(!ee"ent of the pa!ties conce!nin( that +hich is to constitute the cont!act . . . . 4hefo!"s of this a(!ee"ent "a' va!' acco!din( to +hethe! it is e7p!essed ve!ball' o! in +!itin(, b' +o!ds o! b' acts.)eavin( the othe! diffe!ences fo! conside!ation he!eafte!, +e +ill onl' !efe! no+ to those +hich e7ist bet+een e'press consent and implied consent . . . . 3t is unuestionable that i"plied consent "anifested b' act o! conduct, p!oduces a cont!act. . . .

3f it +e!e necessa!' to have !ecou!se to the En(lish co""on la+ fo! the pu!pose of asce!tainin( the "eanin( of the ph!aseunde! conside!ation, +e could find "an' decisions +hich (ave it the sa"e "eanin( as that fo! +hich 3 contend.

An i"plied cont!act is +he!e one pa!t' !eceives benefits f!o" anothe! pa!t', unde! such ci!cu"stances that thela+ p!esu"e a p!o"ise on the pa!t of the pa!t' benefited to pa' a !easonable p!ice fo! the sa"e. 9*ones vs. 4uc6e! J/el.K, 8; Atlantic, #%#2.

3t is t!ue that En(lish cou!ts have e7tended the concept of the te!" cont!act to include ce!tain obli(ations a!isin( e'

lege +ithout consent, e7p!ess o! i"plied. 4!ue cont!acts c!eated b' i"plied consent a!e desi(nated in the En(lish co""onla+ as cont!acts i"plied in the fact, +hile the so-called cont!acts in +hich the consent is a fiction of la+ a!e calledcont!acts i"plied b' la+. But is evident that the latte! a!e not !eal cont!acts. 4he' have been called cont!act a!bit!a!il' b'the cou!ts of En(land, and those of the ?ntied tates in +hich the En(lish co""on la+ is in fo!ce, in o!de! that ce!tainactions a!isin( e7 le(e "a' be enfo!ced b' the action of assu"psit. 3n the !i(id fo!"ulis" of the En(lish co""on la+ thesubstantive !i(ht had to be acco""odated to the fo!" of action. As is stated in the "ono(!aph on the action of assu"psit

in Rulin( Case )a+. 9volu"e 2, 5; G

3n theo!' it +an action to !ecove! fo! the nonpe!fo!"ance f si"ple cont!acts, and the fo!"ula and p!oceedin(s+e!e const!ucted and ca!!ied on acco!din(l'. . . . =!o" the !ei(n of Eli<abeth this action has been e7tended toal"ost eve!' case +he!e an obli(ation a!ises f!o" natu!al !eason, . . . and it is no+ "aintained in "an' cases+hich its p!inciples do not co"p!ehend and +he!e fictions and intend"ents a!e !eso!ted to, to fit the actual causeof action to the theo!' of the !e"ed'. 3t is thus sanctioned +he!e the!e has been no . . . !eal cont!act, but +he!eso"e dut' is dee"ed sufficient to 1ustif' the court in i"putin( the p!o"ise to pe!fo!" its, and hence in $ending

the transaction to the form of action.

3n the ancient En(lish co""on la+ p!ocedu!e the fo!" of the action +as !e(a!ded as bein( "uch "o!e i"po!tant than thesubstantive !i(ht to be enfo!ced. 3f no fo!" of action +as found in +hich the facts +ould fit, so "uch the +o!se fo! the

factsL to avoid the in1ustices to +hich this condition of affai!s (ave !ise, the 1ud(es invented those fictions +hich pe!"ittedthe" to p!ese!ve the appea!ance of conse!vatis" and chan(e the la+ +ithout e7p!essl' ad"ittin( that the' +e!e doin( so.4he indispensable ave!"ent, that the' +e!e doin( so. 4he indispensable ave!n"ent +ithout +hich the action of assu"psit+ould not lie, +as that the defendant p!o"ised to pa' plaintiff the a"ount de"anded. 9ecto! vs. ol"es, #5 Hs., &&. 3nt!ue cont!acts, +hethe! e7p!ess o! i"plied, this p!o"ise in fact e7ists. 3n obli(ations a!isin( e' lege the!e is no such p!o"ise, and the!efo!e the action of assu"psit could not be "aintained, and the!efo!e the action of assu"psit could not be"aintained, althou(h b' !eason of its !elative si"plicit' it +as one of the "ost favo!ed fo!"s of action. 3n o!de! to pe!"itthe liti(ant to "a6e use of this fo!" of action fo! the enfo!ce"ent of asce!tain classes of obli(ations a!isin( e' lege, the 1ud(es invented the fiction of the p!o"ise of the defendant to pa' the a"ount of the obli(ation, and as this fictitious p!o"ise (ive the appea!ance of consensualit' to the le(al !elations of the pa!ties, the na"e of i"plied cont!act is (iven tothat class of e7t!a-cont!actual obli(ations enfo!cible b' the action of assu"psit.



No+, it is not be supposed that it +as the intention of the )e(islatu!e in "a6in( use in the fi!st pa!a(!aph of a!ticle ;#2 of the ph!ase cont!act, e7p!ess o! i"plied to co!!upt the lo(ical si"plicit' of ou! concept of obli(ations b' i"po!tin( into ou! la+ the antiuated fictions of the "ediaeval En(lish co""on la+. 3f one of the concepts of the te!" i"plied cont!act inthe En(lish co""on la+, na"el', that in +hich consent is p!esu"e f!o" the conduct of the debto!, ha!"oni<es +ith theconcept of the cont!act in ou! la+, +h' should +e !e1ect that "eanin( and hold that the )e(islatu!e intended to use this ph!ase in the fo!ei(n and illo(ical sense of a cont!act a!isin( +ithout consent 4his is a civil la+ count!'. +h' should +e be co"pelled to stud' the fictions of the ancient En(lish co""on la+, in o!de! to be info!"ed as to the "eanin( of the+o!d cont!act in the la+ of the Philippine 3slands Much "o!e !easonable to "' "ind +as the conclusion of the 4e7ascou!t, unde! si"ila! ci!cu"stances, to the effect to be !efe!!ed fo! thei! si(nification to te!"s of si"ila! i"po!t in the

s'ste" of la+s +hich p!evails in the count!' +he!e the statue is passed. 9Ca'ce "s. Cu!tis, supra.

M' conclusion is that the phase cont!act, e7p!ess o! i"plied should be inte!p!eted in the (!a""atical sense of the +o!dsand li"ited to t!ue cont!acts, consensual obli(ations a!isin( f!o" consent , +hethe! e7p!essed in +o!ds, +!itin( o! si(ns, o! p!esu"ed f!o" conduct. As it is evident that the defendant in the p!esent case neve! p!o"ised, hi" in the (a"blin( (a"ein uestion, his obli(ation to !esto! the a"ounts +on, i"posed b' the la%, is no cont!actual, but pu!el' e7t!a-cont!actualand the!efo!e the action b!ou(ht not bein( one a!isin( upon cont!act e7p!ess o! i"plied, the plaintiff is not entitled to a p!eli"ina!' attach"ent upon the ave!"ent that the defendant is about to depa!t f!o" the Philippine 3slands +ith +ithintent t def!aud his c!edito!s, no ave!"ent bein( "ade in the co"pliant o! in the affidavit that the defendant has !e"ovedo! disposed of his p!ope!t', o! is about to depa!t +ith intent to def!aud his c!edito!s, so as to b!in( the case +ithin thete!"s of the fifth pa!a(!aph of section ;#2.

3 a" unable to a(!ee +ith the contention of the application 9B!ief, p. $ he!e that the phase in uestion should beinte!p!eted in such a +a' as to include all obli(ations, +hethe! a!isin( f!o" consent o! e' lege, because that is euivalentto eli"inatin( all distinction bet+een the fi!st and the fifth pa!a(!aphs b' p!acticall' st!i6in( out the fi!st t+o lines of pa!a(!aph one. 4he )e(islatu!e has delibe!atel' established this distinction, and +hile +e "a' be unable to see an' !eason+h' it should have been "ade, it is ou! dut' to appl' and interpret the la+, and +e a!e not autho!i<ed unde! the (uise of inte!p!etation to vi!tuall' !epeal pa!t of the statute.

No! can it be said that the !elations bet+een the pa!ties liti(ant constitute a uasi-cont!act. 3n the fi!st place, uasi-cont!acts a!e la%ful and pu!el' volunta!' acts b' +hich the autho!s the!eof beco"e obli(ated in favo! of a thi!d pe!son. . . . 4he act +hich (ave !ise to the obli(ation e' lege !elied upon b' the plaintiff in the cou!t belo+ is illicit G anunla+ful (a"blin( (a"e. 3n the second place, the fi!st pa!a(!aph of section ;#2 of the Code of Civil P!ocedu!e does notautho!i<e an attach"ent in actions a!isin( out of quasi contracts, but onl' in actions a!isin( out of contract , e7p!ess o! i"plied.

3 a" the!efo!e of the opinion that the cou!t belo+ +as +ithout 1u!isdiction to issue that +!it of attach"ent and that the +!itshould be decla!ed null and void.

A"ance+a, J., concu!s.


SUPREME COURT

Manila

EN BANC

G.R. No. 1228 S"56r 1, 1918

7'LL'AM OLLEN(OR, plaintiff-appellee,

vs.

'RA A%RA*AMSON, defendant-appellant.

a%rence -oss for appellant.

Wolfson Wolfson for appellee.

'S*ER, J.:

4his is an appeal b' defendant f!o" a 1ud("ent of the Cou!t of =i!st 3nstance of Manila b' +hich he +as en1oined fo! a

te!" of five 'ea!s, f!o" epte"be! #%, #$#, f!o" en(a(in( in the Philippine 3slands in an' business si"ila! to o!

co"petitive +ith that of plaintiff.



4he !eco!d discloses that plaintiff is and fo! a lon( ti"e past has been en(a(ed in the cit' of Manila and else+he!e in the

Philippine 3slands in the business of "anufactu!in( ladies e"b!oide!ed unde!+ea! fo! e7po!t. Plaintiff i"po!ts the

"ate!ial f!o" +hich this unde!+ea! is "ade and adopts deco!ative desi(ns +hich a!e e"b!oide!ed upon it b' =ilipino

needle +o!6e!s f!o" patte!ns selected and supplied b' hi". Most of the e"b!oide!' +o!6 is done in the ho"es of the

+o!6e!s. 4he e"b!oide!ed "ate!ial is then !etu!ned to plaintiff@s facto!' in Manila +he!e it is "ade into finished (a!"ents

and p!epa!ed fo! e7po!t. 4he e"b!oide!e!s e"plo'ed b' plaintiff a!e unde! cont!act to +o!6 fo! plaintiff e7clusivel'. o"e

fifteen thousand ho"e +o!6e!s and ei(ht hund!ed facto!' +o!6e!s a!e en(a(ed in this +o!6 fo! plaintiff, and so"e t+o

and a half "illion pesos a!e invested in his business.

On epte"be! #%, #$#, plaintiff and defendant ente!ed into a cont!act in the follo+in( te!"s:

Cont!act of a(!ee"ent "ade and ente!ed into this date b' and bet+een >illia" Ollendo!ff, of Manila, Philippine

3slands, pa!t' of the fi!st pa!t, and 3!a Ab!aha"son, of Manila, Philippine 3slands, pa!t' of the second pa!t:

4he pa!t' of fi!st pa!t he!eb' a(!ees to e"plo' the pa!t' of the second pa!t, and the pa!t' of the second pa!t

he!eb' obli(ates and binds hi"self to +o!6 fo! the pa!t' of the fi!st pa!t fo! a te!" of t+o 'ea!s f!o" date

co""encin( f!o" the si7th of epte"be!, one thousand nine hund!ed and fifteen and endin( on the fifth da' of

epte"be!, one thousand nine hund!ed seventeen, at a sala!' of fift' peso 9% pe! +ee6 pa'able at the end of

each +ee6.

4he pa!t' of the second pa!t he!eb' obli(ates and binds hi"self to devote his enti!e ti"e, attention, ene!(ies and

indust!' to the p!o"otion of the fu!the!ance of the business and inte!est of the pa!t' of the fi!st pa!t and to

pe!fo!" du!in( the te!" of this cont!act such duties as "a' be assi(ned to hi" b' the pa!t' of the fi!st pa!t, and

failu!e b' the said pa!t' of the second pa!t to co"pl' +ith these conditions to the satisfaction of the pa!t' of the

fi!st shall entitle the pa!t' of the fi!st pa!t to discha!(e and dis"iss the said pa!t' of the second pa!t f!o" the

e"plo' of the pa!t' of the fi!st pa!t.

3t is "utuall' unde!stood and a(!eed b' the pa!ties he!eto that this cont!act, upon its te!"ination, "a' be e7tended

fo! a li6e fo! a lon(e! o! a sho!te! pe!iod b' the "utual consent of both cont!actin( pa!ties.

4he said pa!t' of the second pa!t he!eb' fu!the! binds and obli(ates hi"self, his hei!s, successo!s and assi(ns, that

he +ill not ente! into o! en(a(e hi"self di!ectl' o! indi!ectl', no! pe!"it an' othe! pe!son unde! his cont!ol to

ente! in o! en(a(e in a si"ila! o! co"petitive business to that of the said pa!t' of the fi!st pa!t an'+he!e +ithin the

Philippine 3slands fo! a pe!iod of five 'ea!s f!o" this date.

?nde! the te!"s of this a(!ee"ent defendant ente!ed the e"plo' of plaintiff and +o!6ed fo! hi" until Ap!il, #$#&, +hen

defendant, on account of ill health, left plaintiff@s e"plo' and +ent to the ?nited tates. >hile in plaintiff@s establish"ent,

and had full oppo!tunit' to acuaint hi"self +ith plaintiff@s business "ethod and business connection. 4he duties

pe!fo!"ed b' hi" +e!e such as to "a6e it necessa!' that he should have this 6no+led(e of plaintiff@s business. /efendant

had a (ene!al 6no+led(e of the Philippine e"b!oide!' business befo!e his e"plo'"ent b' plaintiff, havin( been en(a(ed

in si"ila! +o!6 fo! seve!al 'ea!s.

o"e "onths afte! his depa!tu!e fo! the ?nited tates, defendant !etu!ned to Manila as the "ana(e! of the Philippine

?nde!+ea! Co"pan', a co!po!ation. 4his co!po!ation does not "aintain a facto!' in the Philippine 3slands, but send

"ate!ial and e"b!oide!' desi(ns f!o" Ne+ o!6 to its local !ep!esentative he!e +ho e"plo's =ilipino needle +o!6e!s to

e"b!oide! the desi(ns and "a6e up the (a!"ents in thei! ho"es. 4he onl' diffe!ence bet+een plaintiff@s business and that

of the fi!" b' +hich the defendant is e"plo'ed, is the "ethod of doin( the finishin( +o!6 -- the "anufactu!e of the

e"b!oide!ed "ate!ial into finished (a!"ents. /efendant ad"its that both fi!"s tu!n out the sa"e class of (oods and that

the' a!e e7po!ted to the sa"e "a!6et. 3t also clea!l' appea!s f!o" the evidence that defendant has e"plo'ed to +o!6 his

fo!" so"e of the sa"e +o!6e!s e"plo'ed b' the plaintiff.

ho!tl' afte! defendant@s !etu!n to Manila and the co""ence"ent b' hi" of the discha!(e of the duties of his position as

local "ana(e! of the Philippine E"b!oide!' Co"pan', as local "ana(e! of the Philippine E"b!oide!' Co"pan', plaintiff

co""enced this action, the p!incipal pu!pose of +hich is to p!event b' in1unction, an' fu!the! b!each of that pa!t of

defendant@s cont!act of e"plo'"ent b' plaintiff, b' +hich he a(!eed that he +ould not ente! into o! en(a(e hi"self

di!ectl' o! indi!ectl' . . . in a si"ila! o! co"petitive business to that of 9plaintiff an'+he!e +ithin the Philippine 3slands

fo! a pe!iod of five 'ea!s . . . f!o" the date of the a(!ee"ent. 4he lo+e! cou!t (!anted a p!eli"ina!' in1unction, and upon

t!ial the in1unction +as "ade pe!petual.



/efendant, as appellant, a!(ues that plaintiff failed to substantiate the ave!"ents of his co"plaints to the effect that the

business in +hich the defendant is e"plo'ed is co"petitive +ith that of plaintiff. 4he cou!t belo+ found f!o" the

evidence that the business +as ve!' si"ila!. >e have e7a"ined the evidence and !a!e of the opinion that the business in

+hich defendant is en(a(ed is not onl' ve!' si"ila! to that of plaintiff, but that it is conducted in open co"petition +ith

that business +ithin the "eanin( of the cont!act in uestion. /efendant hi"self e7p!essl' ad"itted, on c!oss-e7a"ination,

that the fi!" b' +hich he is no+ e"plo'ed puts out the sa"e class of foods as that +hich plaintiff is en(a(ed in

p!oducin(. >hen t+o conce!ns ope!ate in the sa"e field, p!oduce the sa"e class of (oods and dispose the" in the sa"e

"a!6et, thei! businesses a!e of necessit' co"petitive. /efendant havin( en(a(ed in the Philippine 3slands in a business

di!ectl' co"petitive +ith that of plaintiff, +ithin five 'ea!s f!o" the date of his cont!act of e"plo'"ent b' plaintiff, unde!

the te!"s of +hich he e7p!essl' a(!eed that he +ould !ef!ain fo!" doin( that ve!' thin(, his conduct constitutes a b!each

of that a(!ee"ent.

/efendant a!(ues that even assu"in( that the!e has been a b!each of the a(!ee"ent, the 1ud("ent of the cou!t belo+ is

neve!theless e!!oneous, contendin( that 9# the cont!act is void fo! lac6 of "utualit' 92 that the cont!act is void as

constitutin( an un!easonable !est!aint of t!ade 9 that plaintiff has failed to sho+ that he has suffe!ed an' esti"able

pecunia!' da"a(e and 9; that even assu"in( that such da"a(e as to +a!!ant the cou!t in !est!ainin( b' in1unction its

continuance.

4he contention that the cont!act is void fo! lac6 of "utualit' is based upon that pa!t of the a(!ee"ent +hich autho!i<es plaintiff to discha!(e the defendant befo!e the e7pi!ation of the stipulated te!", should defendant fail to co"pl' +ith its

conditions to plaintiff@s satisfaction. 3t is a!(ued that b' this cont!acts it +as sou(ht to i"pose upon defendant the absolute

obli(ation of !ende!in( se!vice, +hile !ese!vin( to plaintiff the !i(ht to !escind it at +ill. >e a!e of the opinion that this

uestion is la!(el' acade"ic. 3t is ad"itted that defendant left plaintiff@s e"plo' at his o+n !euest befo!e the e7pi!ation

of the stipulated te!"s of the cont!act. ad plaintiff sou(ht to discha!(e defendant +ithout 1ust cause, befo!e the e7pi!ation

of the te!" of the e"plo'"ent, it "i(ht have been a se!ious uestion +hethe! he could la+full' do so, not+ithstandin( the

te!"s in +hich the cont!act +as d!a+n. 9Civil Code, a!t. #2&. But even assu"in( this pa!ticula! clause of the cont!act to

be invalid, this +ould not necessa!il' affect the !est of the a(!ee"ent. 4he inclusion is an a(!ee"ent of one o! "o!e pacts

+hich a!e invalid does not of necessit' invalidate the +hole cont!act.

>e a!e of the opinion that the cont!act +as not void as constitutin( an un!easonable !est!aint of t!ade. >e have been cited

to no statuto!' e7p!ession of the le(islative +ill to +hich such an a(!ee"ent is di!ectl' obno7ious. 4he !ule in this

1u!isdiction is that the obli(ations c!eated b' cont!acts have the force of la% bet+een the cont!actin( pa!ties and "ust be

enfo!ce in acco!dance +ith thei! teno!. 9Civil Code, a!t #%$#. 4he onl' li"itation upon the f!eedo" of cont!actual

a(!ee"ent is that the pacts established shall not be cont!a!' to la+, "o!als o! public o!de!. 9Civil Code, A!t. #2. 4he

indust!' of counsel has failed to discove! an' di!ect e7p!ession of the le(islative +ill +hich p!ohibits such a cont!act as

that befo!e us. 3t ce!tainl' is not cont!a!' to an' !eco(ni<ed "o!al p!ecept, and it the!efo!e onl' !e"ains to conside!

+hethe! it is cont!a!' to public o!de!. 4his te!", as co!!ectl' stated b' Man!esa 9Co""enta!ies, vol. 8, p. &%& does not

"ean, as he!e used, the actual 6eepin( of the public peace, but si(nifies the public +eal . . . that +hich is pe!"anent, and

essential in institutions . . . . 3t is the euivalent, as he!e used and as defined b' Man!esa, of the te!" public polic' as

used in the la+ of the ?nited tates. Public polic' has been defined as bein( that p!inciple unde! +hich f!eedo" of cont!act o! p!ivate dealin( is !est!icted fo! the f!eedo" of cont!act o! p!ivate dealin( is !est!icted fo! the (ood of the

co""unit'. 9People@s Ban6 "s. /alton, 2 O6la., ;5&. 3t is upon this theo!' that cont!acts bet+een p!ivate individuals

+hich !esult in an un!easonable !est!aint of t!ade have f!euentl' bein( !eco(ni<ed b' a!ticle #2 of ou! Civil Code, the

cou!t of these 3slands a!e vested +ith li6e autho!it'.

3n the natu!e of thin(s, it is i"possible to f!a"e a (ene!al !ule b' +hich to dete!"ine in advance the p!ecise point at +hich

the !i(ht of f!eedo" of cont!act "ust 'ield to the supe!io! inte!est of co""unit' in 6eepin( t!ade and co""e!ce f!ee f!o"

un!easonable !est!ictions. O!i(inall' the En(lish cou!ts adopted the vie+ that an' a(!ee"ent +hich i"posed !est!ictions

upon a "an@s !i(ht to e7e!cise his t!ade o! callin( +as void as a(ainst public polic'. 9C'c. vol. $, p. 2. 3n the cou!se of

ti"e this opinion +as abandoned and the A"e!ican and En(lish cou!ts adopted the doct!ine that +he!e the !est!aint +as

unli"ited as to space but unli"ited as to ti"e +e!e valid. 3n !ecent 'ea!s the!e has been a tendenc' on the pa!t of thecou!ts of En(land and A"e!ica to disca!d these fi7ed !ules and to decide each case acco!din( to its peculia!

ci!cu"stances, and "a6e the validit' of the !est!aint depend upon its !easonableness. 3f the !est!aint is no (!eate! than is

!easonabl' necessa!' fo! the p!otection of the pa!t' in +hose favo! it is i"posed it is upheld, but if it (oes be'ond this is

decla!ed void. 4his is the p!inciple follo+ed in such cases b' the up!e"e Cou!t of the ?nited tates. 3n the case of

Fibbs "s. Consolidated Fas Co. of Balti"o!e 9#% ?.., $& the cou!t said:

4he decision in Mitchel "s. Re'nolds 9#P. >"s. #8# J"ith@s )eadin( Cases, Hol. #, Pt. 33, %8K, is the

foundation of !ule in !elation to the invalidit' of cont!acts in !est!aint of t!ade but as it +as "ade unde! a



condition of thin(s, and a state of societ', diffe!ent f!o" those +hich no+ p!evail, the !ule laid do+n is not

!e(a!ded as infle7ible, and has been conside!abl' "odified. Public +elfa!e is fi!st conside!ed, and if it be not

involved, and the !est!aint upon one pa!t' is not (!eate! than p!otection to the othe! pa!t' !eui!es, the cont!act

"a' be sustained. 4he uestion is, +hethe!, unde! the pa!ticula! ci!cu"stances of the case and the natu!e of the

pa!ticula! cont!act involved in it, the cont!act is, o! is not, un!easonable. 9Rousillon "s.Rousillon, ). R. #; Ch.

/iv., # )eathe! Cloth Co. "s. )o!sont, ). R. $ E., ;.

=ollo+in( this opinion, +e adopt the "ode!n !ule that the validit' of !est!aints upon t!ade o! e"plo'"ent is to be

dete!"ined b' the int!insinc !easonableness of !est!iction in each case, !athe! than b' an' fi7ed !ule, and that such

!est!ictions "a' be upheld +hen not cont!a!' to affo!d a fai! and !easonable p!otection to the pa!t' in +hose favo! it is

i"posed.

E7a"inin( the cont!act he!e in uestion f!o" this stand point, it does not see" so +ith !espect to an e"plo'ee +hose

duties a!e such as of necessit' to (ive hi" an insi(ht into the (ene!al scope and details of his e"plo'e!s business. A

business ente!p!ise "a' and often does depend fo! its success upon the o+ne!@s !elations +ith othe! deale!s, his s6ill in

establishin( favo!able connections, his "ethods of bu'in( and sellin( -- a "ultitude of details, none vital if conside!ed

alone, but +hich in the a((!e(ate constitute the su" total of the advanta(es +hich the !esult of the e7pe!ience o!

individual aptitude and abilit' of the "an o! "en b' +ho" the business has been built up. =ailu!e o! success "a' depend

upon the possession of these intan(ible but all i"po!tant assets, and it is natu!al that thei! possesso! should see6 to 6eepthe" f!o" fallin( into the hands of his co"petito!s. 3t is +ith this ob1ect in vie+ that such !est!ictions as that no+ unde!

conside!ation a!e +!itten into cont!acts of e"plo'"ent. 4hei! pu!pose is the p!otection of the e"plo'e!, and if the' do not

(o be'ond +hat is !easonabl' necessa!' to effectuate this pu!pose the' should be upheld. >e a!e of the opinion, and so

hold, that in the li(ht of the established facts the !est!aint i"posed upon defendant b' his cont!act is not un!easonable. As

+as +ell said in the case of ?nde!+ood "s. Ba!6e! 9&8 )a+ *. Ch., 2%#. 3f the!e is one thin( "o!e than anothe! +hich is

essential to the t!ade and co""e!ce of this count!', it is the inviolabilit' of cont!act delibe!atel' ente!ed into and to allo+

a pe!son of "atu!e a(e, and not i"posed upon, to ente! into a cont!act, to obtain the benefit of it, and then to !epudiate it

and the obli(ation +hich he has unde!ta6en, is p!i"a facie, at all events, cont!a!' to the inte!est of an' and eve!' count!' .

. . . 4he public polic' +hich allo+s a pe!son to obtain e"plo'"ent on ce!tain te!"s unde!stood b' and a(!eed to b' hi",

and to !epudiate his cont!act, conflicts +ith, and "ust, to avail the defendant, fo! so"e sufficient !eason, p!evail ove!, the

"anifest public polic', +hich, as a !ule holds hi" to his bond . . . .

avin( held that the cont!act is valid, +e pass to a conside!ation of defendant@s ob1ections to its enfo!ce"ent b'

in1unction.

3t is contended that plaintiff has not p!oved that he has suffe!ed an' esti"able pecunia!' da"a(e b' !eason of defendant@s

b!each of the cont!act, and that fo! that !eason his action "ust fail. 3t is fu!the! contended that in no event is it p!ope! to

enfo!ce such a cont!act as this b' in1unction, because it has not been alle(ed and p!oved that the continuance of the acts

co"plained of +ill cause plaintiff i!!epa!able da"a(e. 4hese ob1ections can convenientl' be conside!ed to(ethe!.

4he obli(ation i"posed upon defendant b' the pa!ticula! clause of his cont!act no+ unde! conside!ation is ne(ative incha!acte!. ?nless defendant volunta!il' co"plies +ith his unde!ta6in( the!e is no +a' b' +hich the cont!act can be

enfo!ced e7cept b' the in1unctive po+e! of 1udicial p!ocess. uch ne(ative obli(ations have lon( been enfo!ced b' the

cou!ts in this "anne!. As stated b' i(h in his +ell-6no+n +o!6 on 3n1unctions 9vol. 2, pp. 855-858:

4he !e"ed' b' in1unction to p!event the violation of ne(ative a(!ee"ents, o! cont!acts not to do a pa!ticula! thin(,

is closel' a6in to the !e"ed' b' +a' of specific pe!fo!"ance of a(!ee"ents of an affi!"ative natu!e. 3n both cases

the ob1ect sou(ht is substantiall' one and the sa"e, and b' en1oinin( the violation of a ne(ative a(!ee"ent the

cou!t of euit' in effect dec!ees its specific pe!fo!"ance. 9)u"le' "s. >a(ne!, # /eFe7, M. D F., &%;.

>he!e b' the te!"s of a cont!act i"posin( a positive obli(ation the obli(o! is entitled to a specific pe!fo!"ance, it +ill not

avail the defendant to sho+ that plaintiff +ill suffe! no pecunia!' da"a(e if the cont!act is not pe!fo!"ed. ?pon li6e!easons, +hen the unde!ta6in( is ne(ative in cha!acte! and defendant is violatin( the obli(ation i"posed upon hi" the

cou!t "a' inte!fe!e +ithout !eui!in( p!oof of actual da"a(e. 9i(h on 3n1unctions, pa!. ##, citin( /ic6enson "s. F!and

*unction Canal Co., # Beav., 25%.

4he ad"itted fact that plaintiff has failed to establish p!oof of pecunia!' da"a(e b' !eason of the b!each of the cont!act b'

defendant b' the acts co""itted p!io! to the issuance of the p!eli"ina!' in1unction is, of cou!se, a ba! o! na' "one'

1ud("ent fo! da"a(es fo! the b!each of the cont!act, but +ill not 1ustif' us in pe!"ittin( defendant to continue to b!ea6

his cont!act ove! plaintiff@s ob1ection. 4he in1u!' is a continuous one. 4he fact that the cou!t "a' not be able to (ive



da"a(es fo! that pa!t of the b!each of the cont!act +hich had al!ead' ta6en place +hen its aid +as invo6ed is no !eason

+h' it should countenance a continuance of such dis!e(a!d of plaintiff@s !i(hts.

>ith !espect to the contention that an in1unction "a' onl' be (!anted to p!event i!!epa!able in1u!', the ans+e! is that an'

continuin( b!each of a valid ne(ative covenant is i!!epa!able b' the o!dina!' p!ocess of cou!ts of la+. As stated b' i(h,

9vol. 2, p. $%& in1unctive !elief is (!anted in cases li6e this upon the (!ound that the pa!ties cannot be placed in statu

quo, and that da"a(es at la+ can affo!d no adeuate co"pensation, the in1u!' bein( a continuous one irrepara$le b' the

o!dina!' p!ocess of cou!ts of la+.

3n the case of Filch!ist "s. Cudd' 92$ Phil. !ep., ;2, at pa(e 2, this cou!t said, citin( +ith app!oval the case of

>ahle "s. Reinbach 95& 3ll., 22:

B' i!!epa!able in1u!' is not "eant such in1u!' as is be'ond the possibilit' of !epai!, o! be'ond possible

co"pensation in da"a(es, no! necessa!il' (!eat in1u!' o! (!eat da"a(e, but that species of in1u!', +hethe! (!eat

o! s"all, that ou(ht not be sub"itted to on the one hand o! inflicted on the othe! and, because it is so la!(e on the

one hand, o! so s"all on the othe!, is of such constant and frequent !ecu!!ence that no fai! o! !easonable !ed!ess

can be had the!efo! in a cou!t of la+.

4his definition +as uoted +ith app!oval b' the up!e"e Cou!t of the ?nited tates in the case of /onovan "s.Penns'lvania Co., 9#$$ ?.., 25$, in +hich the in1u!' co"plained of +as continuous in its natu!e.

3t is t!ue, as held in the case of )ion(son "s. Ma!tine< 9& Phil. Rep., $;8 that an in1unction should neve! issue +hen an

action fo! da"a(es +ould adeuatel' co"pensate the in1u!ies caused But it f!euentl' happens that the acts of the

defendant, +hile constitutin( a ve!' substantial invasion of plaintiff@s !i(hts a!e of such a cha!acte! that the da"a(es +hich

!esult the!ef!o" cannot be "easu!ed b' an' ce!tain pecunia!' standa!d. 9Eau Clai!e >ate! Co. "s. Cit' of Eau Clai!e,

#25 >is., #;. 4he Civil Code 9a!t. #$%8 casts upon !eal estate o+ne!s liabilit' in da"a(es fo! the e"ission, upon thei!

p!e"ises, of e7cessive s"o6e, +hich "a' be no7ious to pe!son o! p!ope!t'. 4he in1u!' caused b' such a nuisance "i(ht

b!in( about a dep!eciation in the value of ad1oinin( p!ope!ties, but the!e is no certain pecuniar) standard b' +hich such

da"a(es can be "easu!ed, and in that sense the th!eatened in1u!' is i!!epa!able and "a' app!op!iatel' be !est!ained b'

in1unction.

. . . 3f the nuisance is a continuin( one, invadin( substantial !i(hts of the co"plainant in such a "anne! that he

+ould the!eb' lose such !i(hts enti!el' but fo! the assistance of a cou!t of euit' he +ill entitled but fo! the

assistance of a cou!t of euit' he +ill be entitled to an in1unction upon a p!ope! sho+in(, not+ithstandin( the fact

the he "i(ht !ecove! so"e da"a(es in an action at la+. 94ise "s. >hita6e!-a!ve' Co., #;; N. C., %5.

4he in1u!' done the business of a "e!chant b' ille(al o! unfai! co"petition is e7ceedin(l' difficult to "easu!e. A

di"inution of the volu"e of a business ma) be due to so "an' diffe!ent causes that it is often i"possible to de"onst!ate

that it has in fact been caused b' the ille(al co"petition of the defendant. 4his is f!euentl' the case in suit fo! the

inf!in(e"ent of t!ade"a!6 !i(hts, in +hich the cou!ts "a' en1oin the continued use of the inf!in(in( "a!6, althou(h

unable to assess da"a(es fo! the past in1u!'.

4he 1ud("ent of the t!ial cou!t is affi!"ed +ith costs. o o!de!ed.

Arellano, (.J., Torres, Johnson, Street and A"ance+a, JJ., concu!.

alcolm, J., concu!s in !esult.


SUPREME COURTManila

=3R4 /3H33ON

G.R. No. 1282 January 0, 201

C'TY O CE%U, Petitione!,

vs.

APOLON'O M. (E(AMO, JR., Respondent.



R E O ) ? 4 3 O N

REYES, J.:

4his is a Petition fo! Revie+ on Ce!tio!a!i unde! Rule ; of the Rules of Cou!t see6in( to annul and set aside the

/ecision# dated Nove"be! %, 2%% of the Cou!t of Appeals 9CA o!de!in( petitione! Cit' of Cebu 9petitione! to pa'

t+elve pe!cent 9#2 le(al inte!est pe! annu" on the unpaid balance of the 1ust co"pensation paid to !espondent

Apolonio /eda"o, *!. 9!espondent. )i6e+ise assailed is the Resolution2 dated Ma' $, 2%%& den'in( !econside!ation.

4he ensuin( facts a!e not disputed.

4he p!esent cont!ove!s' is an off-shoot of Civil Case No. CEB-#;&2 fo! e"inent do"ain ove! t+o 92 pa!cels of land

o+ned b' spouses Apolonio and Blasa /eda"o 9pouses /eda"o, filed b' the petitione! befo!e the Re(ional 4!ial Cou!t

9R4C of Cebu Cit', B!anch #, on epte"be! #5, #$$. 4he petitione! i""ediatel' too6 possession of the lots afte!

depositin( P#,#&.%% +ith the Philippine National Ban6 pu!suant to ection #$ of Republic Act No. 5#&%.;

/u!in( the pendenc' of the case, o! on /ece"be! #;, #$$;, the petitione! and pouses /eda"o ente!ed into a

Co"p!o"ise A(!ee"ent +he!eb' the latte! a(!eed to pa!t +ith the o+ne!ship of the pa!cels of land in favo! of the fo!"e!

in conside!ation of ONE M3))3ON EHEN ?N/RE/ E3F4-3 4O?AN/ =O?R ?N/RE/ PEO9P#,58&,;%%.%% as p!ovisional pa'"ent and 1ust co"pensation in an a"ount to be dete!"ined b' a panel of

co""issione!s.

=o!th+ith, the panel +as constituted and a !epo!t +as sub"itted to the R4C !eco""endin( the su" ofP2%,82&,$.% as

1ust co"pensation. 4he !epo!t +as adopted and app!oved b' the R4C in its O!de! dated /ece"be! 25, #$$&.

4he R4C O!de! +as affi!"ed b' the CA and then b' the Cou!t, in a /ecision dated Ma' 5, 2%%2, +hen the "atte! +as

elevated fo! !evie+ in a petition doc6eted as F.R. No. #;2$5#.

>hen the said decision beca"e final and e7ecuto!' on epte"be! 2%, 2%%2, the case +as !e"anded fo! e7ecution to the

R4C, befo!e +hich, a "otion fo! the issuance of a +!it of e7ecution +as filed b' pouses /eda"o on Ap!il ;, 2%%. OnMa' #&, 2%%, the R4C (!anted the "otion and o!de!ed the issuance of the +!it.

3n the "eanti"e, pouses /eda"o passed a+a' and the' +e!e substituted in the case b' he!ein !espondent.

On /ece"be! 2, 2%%, the petitione! paid the !espondent the su" of P#$,%$,$$.% +hich is the diffe!ence bet+een the

1ust co"pensation due and the p!ovisional pa'"ent al!ead' "ade.

On Ma!ch 2;, 2%%;, the !espondent filed a Manifestation and Motion befo!e the R4C to o!de! the petitione! to pa' inte!est

on the 1ust co"pensation co"puted f!o" the ti"e of actual ta6in( of the lands.

On Ap!il %, 2%%;, the R4C denied the "otion and !uled that it can no lon(e! a"end a final and e7ecuto!' 1ud("ent that

did not specificall' di!ect the pa'"ent of le(al inte!est. Ada"ant, the !espondent sou(ht !ecou!se befo!e the CA asse!tin(

that the petitione! is liable to pa': 9a #2 le(al inte!est on the unpaid balance of the 1ust co"pensation co"puted f!o"

the ti"e of actual ta6in( of the p!ope!t' up to the date of pa'"ent of 1ust co"pensation and 9b #2 le(al inte!est f!o"

the ti"e the decision a+a!din( 1ust co"pensation beca"e final and e7ecuto!' on epte"be! 2%, 2%%2 until its satisfaction

on /ece"be! 2, 2%%.

4he Rulin( of the CA

3n its /ecision dated Nove"be! %, 2%%, the CA !e1ected the !espondents fi!st clai" since the issue +as belatedl' !aised

du!in( the e7ecution sta(e and afte! the 1ud("ent of 1ust co"pensation attained finalit'.

Nonetheless, the CA found the !espondents second contention "e!ito!ious. 4he CA a+a!ded le(al inte!est acc!uin( f!o"

the ti"e the R4C O!de! dated /ece"be! 25, #$$& a+a!din( 1ust co"pensation +as affi!"ed +ith finalit' b' the up!e"e

Cou!t up to the ti"e of full pa'"ent the!eof in line +ith the !ulin( in Easte!n hippin( )ines, 3nc. v. Cou!t of

Appeals& that +hen a cou!t 1ud("ent a+a!din( a su" of "one' beco"es final and e7ecuto!', it shall ea!n le(al inte!est of

#2 pe! annu" !ec6oned f!o" such finalit' until satisfaction.

Acco!din(l', the dec!etal po!tion of the decision !eads:

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>ERE=ORE, in vie+ of the fo!e(oin(, the instant petition is pa!tiall' FRAN4E/ in that the !esolution dated Ap!il %,

2%%; is MO/3=3E/ to FRAN4 pa'"ent of le(al inte!est of #2 pe! annu" !ec6oned f!o" the date of finalit' of the

decision of the up!e"e Cou!t on Ma' 2, 2%%2 up to the ti"e full pa'"ent fo! the 1ust co"pensation shall have been

"ade.

No p!onounce"ent as to cost.

O OR/ERE/.5

4he CA effectivel' !eite!ated the above decision +hen it denied 8 the petitione!s "otion fo! !econside!ation the!eof. Both

pa!ties elevated the CA 1ud("ent to the Cou!t. 4he !espondents petition +as doc6eted as F.R. No. #52$;2 +he!e he

sou(ht, in the "ain, that the #2 inte!est !ate be !ec6oned f!o" the date of ta6in( of the p!ope!t' and not f!o" the date of

finalit' of the /ecision dated Ma' 5, 2%%2 in F.R. No. #;2$5#. 4he Cou!t denied his petition on Au(ust 22, 2%%& fo!

failu!e to sufficientl' sho+ that the CA co""itted an' !eve!sible e!!o! in the uestioned 1ud("ent. 4he !espondents

"otion fo! !econside!ation of the said decision +as denied +ith finalit' on Nove"be! 25, 2%%&.$

At ba! is the !ecou!se inte!posed b' the petitione! +he!ein he see6s the settin( aside of the sa"e CA /ecision dated

Nove"be! %, 2%%.

On Octobe! 2%, 2%%&, the !espondent "oved fo! the consolidation of the p!esent petition +ith F.R. No. #52$;2. #%4he

"otion +as denied in vie+ of the p!io! denial of F.R. No. #52$;2 on Au(ust 22, 2%%&.##

3n the case at ba!, the petitione! p!a's fo! the annul"ent of the a+a!d of #2 le(al inte!est "ade b' the CA in vie+ of the

te!"ination of the e"inent do"ain case upon pa'"ent of the 1ust co"pensation in satisfaction of the +!it of e7ecution.

4he petitione! fu!the! asse!ts that the final 1ud("ent in Civil Case No. CEB-#;&2 +hich did not e7plicitl' p!onounce the

pa'"ent of inte!est can no lon(e! be "odified lest the basic p!inciples of !e"edial la+ be defiled.#2

=o! his pa!t, the !espondent ave!s# that ection #%, Rule &5 of the Rules of Cou!t "andatin( the pa'"ent of le(al inte!est

on 1ust co"pensation fo!"s pa!t of eve!' 1ud("ent !ende!ed in e"inent do"ain cases even if the sa"e +as not di!ectl'

o!de!ed the!ein.

4he !espondent also clai"s that the a+a!d of 1ust co"pensation "ust be !ec6oned f!o" the date of ta6in( of sub1ect lots

and not f!o" the date of finalit' of F.R. No. #;2$5# because 1ust co"pensation, befo!e it is paid, constitutes loan o!

fo!bea!ance of "one' that entails the i"position of a #2 inte!est pe! annu".

Rulin( of the Cou!t

4he petition is denied on the (!ound of !es 1udicata in the "ode of conclusiveness of 1ud("ent.

A pe!usal of the alle(ations in the p!esent case evidentl' sho+s that the petitione! b!oaches the issues si"ila!l' !aised and

al!ead' !esolved in F.R. No. #52$;2.

?nde! the p!inciple of conclusiveness of 1ud("ent, +hen a !i(ht o! fact has been 1udiciall' t!ied and dete!"ined b' a cou!t

of co"petent 1u!isdiction, o! +hen an oppo!tunit' fo! such t!ial has been (iven, the 1ud("ent of the cou!t, as lon( as it

!e"ains un!eve!sed, should be conclusive upon the pa!ties and those in p!ivit' +ith the".#; tated diffe!entl',

conclusiveness of 1ud("ent ba!s the !e-liti(ation in a second case of a fact o! uestion al!ead' settled in a p!evious

case.#/0%phi/

4he ad1udication in F.R. No. #52$;2 has beco"e bindin( and conclusive on the petitione! +ho can no lon(e! uestion the

!espondents entitle"ent to the #2 le(al inte!est a+a!ded b' the CA. 4he Cou!ts dete!"ination in F.R. No. #52$;2 on

the !ec6onin( point of the #2 le(al inte!est is li6e+ise bindin( on the petitione! +ho cannot !e-liti(ate the said "atte! ane+ th!ou(h the p!esent !ecou!se.

4hus, the 1ud("ent in F.R. No. #52$;2 ba!s the p!esent case as the !elief sou(ht in the latte! is ine7t!icabl' !elated to the

!ulin( in the fo!"e!.

>ERE=ORE, p!e"ises conside!ed, the Petition is he!eb' /EN3E/.

O OR/ERE/.























Republic of the PhilippinesSUPREME COURT

Manila

=3R4 /3H33ON

G.R. No. 1890 6ruary 2, 201

NE7 7ORL( (E+ELOPERS AN( MANAGEMENT, 'NC., Petitione!,vs.AMA COMPUTER LEARN'NG CENTER, 'NC., Respondent.

7 - - - - - - - - - - - - - - - - - - - - - - - 7

G.R. No. 18820

AMA COMPUTER LEARN'NG CENTER, 'NC., Petitione!.vs.NE7 7ORL( (E+ELOPERS AN( MANAGEMENT, 'NC., Respondent,

/ E C 3 3 O N

SERENO, CJ:

Befo!e us a!e consolidated Petitions fo! Revie+ on Ce!tio!a!i unde! Rule ; of the Rules of Cou!t assailin( the Cou!t of Appeals 9CA /ecision# dated 22 *anua!' 2%%$ and Resolution2 dated #8 Ma' 2%%$ in CA-F.R. CH No. 8$;8.

4he CA /ecision o!de!ed AMA Co"pute! )ea!nin( Cente!, 3nc. 9AMA to pa' Ne+ >o!ld /evelope!s and Mana(e"ent,3nc. 9Ne+ >o!ld unpaid !entals fo! 2 "onths, as +ell asliuidated da"a(es euivalent to ; "onths !ent. 4he CAResolution denied the sepa!ate "otions fo! !econside!ation filed b' the pa!ties.

=AC4

Ne+ >o!ld is the o+ne! of a co""e!cial buildin( located at No. ##%;-###8 Espa0a co!ne! Pa!edes t!eets, a"paloc,Manila. 3n #$$8, AMA a(!eed to lease the enti!e second floo! of the buildin( fo! its co"pute! lea!nin( cente!, and the pa!ties ente!ed into a Cont!act of )ease; cove!in( the ei(ht-'ea! pe!iod f!o" # *une #$$8 to #; Ma!ch 2%%&.

4he "onthl' !ental fo! the fi!st 'ea! +as set at P#8#,%%, +ith an annual escalation !ate euivalent to # fo! thesucceedin( 'ea!s. 3t +as also p!ovided that AMA "a' p!ete!"inate the cont!act b' sendin( notice in +!itin( to Ne+>o!ld at least si7 "onths befo!e the intended date.& 3n case of p!ete!"ination, AMA shall be liable fo! liuidated da"a(esin an a"ount euivalent to si7 "onths of the p!evailin( !ent.

3n co"pliance +ith the cont!act, AMA paid Ne+ >o!ld the a"ount of P;%,%%% as advance !ental and anothe!P

;%,%%% as

secu!it' deposit.

5

=o! the fi!st th!ee 'ea!s, AMA paid the "onthl' !ent as stipulated in the cont!act, +ith the !eui!ed ad1ust"ent inacco!dance +ith the escalation !ate fo! the second and the thi!d 'ea!s.8

3n a lette! dated #8 Ma!ch 2%%2, AMA !euested the defe!"ent of the annual inc!ease in the "onthl' !ent b' citin(financial const!aints b!ou(ht about b' a dec!ease in its en!oll"ent. Ne+ >o!ld a(!eed to !educe the escalation !ate b'% fo! the ne7t si7 "onths. 4he follo+in( 'ea!, AMA a(ain !euested the ad1ust"ent of the "onthl' !ent and Ne+>o!ld obli(ed b' (!antin( a ; !eduction of the "onthl' !ent and a !eduction of the escalation !ate fo! the !e"ainin(te!" of the lease. =o! this pu!pose, the pa!ties ente!ed into an Addendu" to the Cont!act of )ease.$

On the evenin( of & *ul' 2%%;, AMA !e"oved all its office euip"ent and fu!nitu!e f!o" the leased p!e"ises. 4he

follo+in( da', Ne+ >o!ld !eceived a lette! f!o" AMA dated & *ul' 2%%;#%

statin( that the fo!"e! had decided to p!ete!"inate the cont!act effective i""ediatel' on the (!ound of business losses due to a d!astic decline in en!oll"ent.AMA also de"anded the !efund of its advance !ental and secu!it' deposit.

Ne+ >o!ld !eplied in a lette! dated #2 *ul' 2%%;,## to +hich +as attached a tate"ent of Account #2 indicatin( thefollo+in( a"ounts to be paid b' AMA: # unpaid t+o "onths !ent in the a"ount of P

;&&,&2% 2 "onthl' inte!est fo! the unpaid !ent in the a"ount of P&5,;2&.$ liuidated da"a(es euivalent to si7 "onths of the p!evailin( !ent in thea"ount of P#,$$,8&% and ; da"a(e to the leased p!e"ises a"ountin( to P#,8%. 4he deduction of the advance !entaland secu!it' deposit paid b' AMA still left an unpaid balance in the a"ount ofP#,%;$,;8&.$.

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/espite the "eetin(s bet+een the pa!ties, the' failed to a!!ive at a settle"ent !e(a!din( the pa'"ent of the fo!e(oin(a"ounts.#

On 25 Octobe! 2%%;, Ne+ >o!ld filed a co"plaint fo! a su" of "one' and da"a(es a(ainst AMA befo!e the Re(ional4!ial Cou!t of Ma!i6ina Cit', B!anch #& 9R4C.#;

R?)3NF O= 4E R4C

3n a /ecision

#

dated # *anua!' 2%%5, the R4C o!de!ed AMA to pa' Ne+ >o!ld P

;&&,&2% as unpaid !entals plus "onthl' penalt' inte!est until pa'"ent P#,$$,8&% as liuidated da"a(es euivalent to si7 "onths !ent, +ith the advance!ental and secu!it' deposit paid b' AMA to be deducted the!ef!o" P#,8% fo! the da"a(e to the leased p!e"ises P#%%,%%% as atto!ne's fees and costs of the suit.

Acco!din( to the R4C, AMA neve! denied that it had a!!ea!a(es euivalent to t+o "onths !ent. Othe! than its alle(ationthat it did not pa!ticipate in the p!epa!ation of the tate"ent of Account, AMA did not p!offe! an' evidence disputin( theunpaid !ent. =o! its pa!t, Ne+ >o!ld clea!l' e7plained the e7istence of the a!!ea!s.

>hile s'"pathi<in( +ith AMA in vie+ of its business losses, the R4C !uled that AMA could not shi!6 f!o" its cont!actualobli(ations, +hich p!ovided that it had to pa' liuidated da"a(es euivalent to si7 "onths !ent in case of a p!ete!"ination of the lease.

4he R4C p!ovided no bases fo! a+a!din( P#,8% fo! the da"a(e to the leased p!e"ises and P#%%,%%% fo! atto!ne's fees,+hile den'in( the p!a'e! fo! e7e"pla!' and "o!al da"a(es.

?pon the denial of its "otion fo! !econside!ation, AMA filed an appeal befo!e the CA.#&

R?)3NF O= 4E CA

3n the assailed /ecision dated 22 *anua!' 2%%$, the CA o!de!ed AMA to pa' Ne+ >o!ld P

;&&,&2% fo! unpaid !entalsand P$,2;% fo! liuidated da"a(es euivalent to fou! "onths !ent, +ith the advance !ental and secu!it' deposit paid b'AMA to be deducted the!ef!o".#5

4he appellate cou!t !uled that the R4C e!!ed in i"posin( a "onthl' penalt' inte!est on the unpaid !ent, because the!e+as no stipulation eithe! in the Cont!act of )ease o! in the Addendu" to the Cont!act of )ease conce!nin( the i"positionof inte!est in the event of a dela' in the pa'"ent of the !ent. #8 4hus, the CA !uled that the !ent in a!!ea!s should ea!ninte!est at the !ate of & pe! annu" onl', !ec6oned f!o" the date of the e7t!a1udicial de"and on #2 *ul' 2%%; until thefinalit' of the /ecision. 4he!eafte!, inte!est at the !ate of#2 pe! annu" shall be i"posed until full pa'"ent.

4he CA also !uled that the R4Cs i"position of liuidated da"a(es euivalent to si7 "onths !ent +as iniuitous. #$>hileconcedin( that AMA +as liable fo! liuidated da"a(es fo! p!ete!"inatin( the lease, the CA also !eco(ni<ed that stipulated penalties "a' be euitabl' !educed b' the cou!ts based on its sound disc!etion. Conside!in( that the une7pi!ed po!tion of the te!" of lease +as al!ead' less than t+o 'ea!s, and that AMA had suffe!ed business losses !ende!in( it incapable of pa'in( fo! its e7penses, the CA dee"ed that liuidated da"a(es euivalent to fou! "onths !ent +as !easonable.2%

4he appellate cou!t deleted the a+a!d fo! the da"a(e to the leased p!e"ises, because no p!oof othe! than the tate"ent of Account +as p!esented b' Ne+ >o!ld.2# =u!the!"o!e, notin( that the latte! +as al!ead' entitled to liuidated da"a(es,and that the t!ial cou!t did not (ive an' 1ustification fo! atto!ne's fees, the CA disallo+ed the a+a!d the!eof.22

Both pa!ties filed thei! !espective "otions fo! !econside!ation, +hich +e!e denied in the assailed Resolution dated #% Ma'2%%$.

ence, the p!esent petitions fo! !evie+ on ce!tio!a!i. On Au(ust 2%%$, the Cou!t !esolved to consolidate the petitions,conside!in( that the' involve the sa"e pa!ties and assail the sa"e CA /ecision and Resolution.2

PAR43E PO343ON

Acco!din( to Ne+ >o!ld, +hen pa!ties f!eel' stipulate on the "anne! b' +hich one "a' p!ete!"inate the lease, thatstipulation has the fo!ce of la+ bet+een the" and should be co"plied +ith in (ood faith. 2; ince AMA p!ete!"inated thelease, it beca"e liable to liuidated da"a(es euivalent to si7 "onths !ent. =u!the!"o!e, its failu!e to (ive notice to Ne+>o!ld si7 "onths p!io! to the intended p!ete!"ination of the cont!act and its leavin( the leased p!e"ises in the "iddle of the ni(ht, +ith all its office euip"ent and fu!nitu!e, s"ac6ed of (!oss bad faith that !ende!s it undese!vin( of s'"path'f!o" the cou!ts.2 4hus, the CA e!!ed in !educin( the liuidated da"a(es f!o" an a"ount euivalent to si7 "onths !ent toonl' fou! "onths.






























Ne+ >o!ld also challen(es the CA /ecision and Resolution fo! disallo+in( the i"position of the "onthl' inte!est onthe unpaid !entals. 3t is a!(ued that AMA neve! disputed the i"position of the "onthl' inte!est !athe!, it onl'!euested that the inte!est !ate be !educed.2&

On the othe! hand, AMA assails the CA !ulin( fo! not !eco(ni<in( the fact that co"pensation too6 place bet+een theunpaid !entals and the advance !ental paid b' AMA. 25 Conside!in( that the obli(ation of AMA as to the a!!ea!s has beene7tin(uished b' ope!ation of la+, the!e +ould be no occasion fo! the i"position of inte!est.28

AMA also p!a's fo! the fu!the! !eduction of the liuidated da"a(es to an a"ount euivalent to one "onths !ent up to oneand a half "onths, a!(uin( that fou! "onths +o!th of !ent is still iniuitous on account of the seve!e financial losses itsuffe!ed.2$

3?E

#. >hethe! AMA is liable to pa' si7 "onths +o!th of !ent as liuidated da"a(es.

2. >hethe! AMA !e"ained liable fo! the !ental a!!ea!s.

O?R R?)3NF

3.

AMA is liable fo! si7 "onths +o!th of !ent as liuidated da"a(es.

3te" No. #; of the Cont!act of )ease states:

4hat JAMAK "a' p!e-te!"inate this Cont!act of )ease b' notice in +!itin( to JNe+ >o!ldK at least si7 9& "onths befo!ethe intended date of p!ete!"ination, p!ovided, ho+eve!, that in such case, JAMAK shall be liable to JNe+ >o!ldK fo! ana"ount euivalent to si7 9& "onths cu!!ent !ental as liuidated da"a(es%

uite notable is the fact that AMA neve! denied its liabilit' fo! the pa'"ent of liuidated da"a(es in vie+ of its p!ete!"ination of the lease cont!act +ith Ne+ >o!ld. >hat it clai"s, ho+eve!, is that it is entitled to the !eduction of the

a"ount due to the se!ious business losses it suffe!ed as a !esult of a d!astic dec!ease in its en!oll"ent.

4his Cou!t is, fi!st and fo!e"ost, one of la+. >hile +e a!e also a cou!t of euit', +e do not e"plo' euitable p!inciples+hen +ell-established doct!ines and positive p!ovisions of the la+ clea!l' appl'.#

4he la+ does not !elieve a pa!t' f!o" the conseuences of a cont!act it ente!ed into +ith all the !eui!edfo!"alities.2 Cou!ts have no po+e! to ease the bu!den of obli(ations volunta!il' assu"ed b' pa!ties, 1ust because thin(sdid not tu!n out as e7pected at the inception of the cont!act. 3t "ust also be e"phasi<ed that AMA is an entit' that hashad si(nificant business e7pe!ience, and is not a "e!e babe in the +oods.

A!ticles ##$ and #%& of the Civil Code state:

A!t. ##$. Obli(ations a!isin( f!o" cont!acts have the fo!ce of la+ bet+een the cont!actin( pa!ties and should beco"plied +ith in (ood faith.

7 7 7 7

A!t. #%&. 4he cont!actin( pa!ties "a' establish such stipulations, clauses, te!"s and conditions as the' "a' dee"convenient, p!ovided the' a!e not cont!a!' to la+, "o!als, (ood custo"s, public o!de!, o! public polic'.

4he funda"ental !ule is that a cont!act is the la+ bet+een the pa!ties. ?nless it has been sho+n that its p!ovisions a!e+holl' o! in pa!t cont!a!' to la+, "o!als, (ood custo"s, public o!de!, o! public polic', the cont!act +ill be st!ictl'enfo!ced b' the cou!ts.;

3n !ebuttal, AMA invo6es A!ticle 2225 of the Civil Code, to +it:

A!t. 2225. )iuidated da"a(es, +hethe! intended as an inde"nit' o! a penalt', shall be euitabl' !educed if the' a!einiuitous o! unconscionable.

3n )i(utan v. CA, +e held that the !esolution of the uestion of +hethe! a penalt' is !easonable, o! iniuitous o! unconscionable +ould depend on facto!s includin( but not li"ited to the t'pe, e7tent and pu!pose of the penalt' thenatu!e of the obli(ation the "ode of the b!each and its conseuences the supe!venin( !ealities and the standin( and!elationship of the pa!ties. 4he app!eciation of these facto!s is essentiall' add!essed to the sound disc!etion of the cou!t. &




























3t is uite eas' to unde!stand the !eason +h' a lesso! +ould i"pose liuidated da"a(es in the event of the p!ete!"inationof a lease cont!act. P!ete!"ination is effectivel' the b!each of a cont!act, that +as o!i(inall' intended to cove! an a(!eedupon pe!iod of ti"e. A definite pe!iod assu!es the lesso! a stead' inco"e fo! the du!ation. A p!ete!"ination +ouldsuddenl' cut sho!t +hat +ould othe!+ise have been a lon(e! p!ofitable !elationship. Alon( the +a', the lesso! is bound toincu! losses until it is able to find a ne+ lessee, and it is this loss of inco"e that is sou(ht to be co"pensated b' the pa'"ent of liuidated da"a(es.

4he!e "i(ht have been othe! +a's to +o!6 a!ound its difficult financial situation and lessen the i"pact of the p!ete!"ination to both pa!ties. o+eve!, AMA opted to do the follo+in(:

#. 3t p!ete!"inated the lease +ithout notif'in( Ne+ >o!ld at least si7 "onths befo!e the intended date.

2. 3t !e"oved all its office euip"ent and left the p!e"ises in the "iddle of the ni(ht.

. Onl' afte! it had clea!ed the p!e"ises did it send Ne+ >o!ld a notice of p!ete!"ination effective i""ediatel'.

;. 3t had the (all to de"and a full !efund of the advance !ental and secu!it' deposit, albeit +ithout p!e1udice tothei! !e"oval of the i"p!ove"ents int!oduced in the p!e"ises.

>e cannot unde!stand the inabilit' of AMA to be fo!th!i(ht +ith Ne+ >o!ld, conside!in( that the fo!"e! had been

t!anspa!ent about its business losses in its p!evious !euests fo! the !eduction of the "onthl' !ental. 4he d!astic dec!easein AMAs en!oll"ent had been unfoldin( since 2%%2. 4hus, it cannot be said that the business losses had ta6en it b'su!p!ise. 3t is also hi(hl' unli6el' that the decision to p!ete!"inate the lease cont!act +as "ade at the last "inute. 4hecancellation of classes, the t!ansfe! of students, and ad"inist!ative p!epa!ations fo! the closu!e of the co"pute! lea!nin(cente! and the !e"oval of office euip"ent the!ef!o" should ta6e at least +ee6s, if not "onths, of lo(istic plannin(. adAMA co"e clean about the i"pendin( p!ete!"ination, "easu!es beneficial to both pa!ties could have been a!!ived at, andthe instant cases +ould not have !eached this Cou!t. 3nstead, AMA fo!ced Ne+ >o!ld to sha!e in the fo!"e!s losses,causin( the latte! to sc!a"ble fo! ne+ lessees +hile the p!e"ises !e"ained untenanted and unp!oductive.

3n the sphe!e of pe!sonal and cont!actual !elations (ove!ned b' la+s, !ules and !e(ulations c!eated to p!o"ote 1ustice andfai!ness, euit' is dese!ved, not de"anded. 4he application of euit' necessitates a balancin( of the euities involved in acase,5 fo! JhKe +ho see6s euit' "ust do euit', and he +ho co"es into euit' "ust co"e +ith clean hands. 8 Pe!sons

in di!e st!aits a!e neve! 1ustified in t!a"plin( on othe! pe!sons !i(hts. )iti(ants shall be denied !elief if thei! conduct has been ineuitable, unfai! and dishonest as to the cont!ove!s' in issue.$ 4he actions of AMA s"ac6 of bad faith.

>e cannot abide b' the p!a'e! fo! the fu!the! !eduction of the liuidated da"a(es. >e find that, in vie+ of thesu!!oundin( ci!cu"stances, the CA even e!!ed in !educin( the liuidated da"a(es to fou! "onths +o!th of !ent. ?nde! the te!"s of the cont!act, and in li(ht of the failu!e of AMA to sho+ that it is dese!vin( of this Cou!ts indul(ence, the pa'"ent of liuidated da"a(es in an a"ount euivalent to si7 "onths !ent is p!ope!.

Also p!ope! is an a+a!d of e7e"pla!' da"a(es. A!ticle 22; of the Civil Code p!ovides:

A!t. 22;. >hile the a"ount of the e7e"pla!' da"a(es need not be p!oved, the plaintiff "ust sho+ that he is entitled to"o!al, te"pe!ate o! co"pensato!' da"a(es befo!e the cou!t "a' conside! the uestion of +hethe! o! not e7e"pla!'

da"a(es should be a+a!ded. 3n case liuidated da"a(es have been a(!eed upon, althou(h no p!oof of loss is necessa!' ino!de! that such liuidated da"a(es "a' be !ecove!ed, neve!theless, befo!e the cou!t "a' conside! the uestion of (!antin(e7e"pla!' in addition to the liuidated da"a(es, the plaintiff "ust sho+ that he +ould be entitled to "o!al, te"pe!ate o! co"pensato!' da"a(es +e!e it not fo! the stipulation fo! liuidated da"a(es. 9E"phasis supplied

3n this case, it is uite clea! that Ne+ >o!ld sustained losses as a !esult of the un+a!!anted acts of AMA. =u!the!, +e!e itnot fo! the stipulation in the cont!act !e(a!din( the pa'"ent of liuidated da"a(es, +e +ould be a+a!din( co"pensato!'da"a(es to Ne+ >o!ld.

E7e"pla!' da"a(es a!e desi(ned b' ou! civil la+ to pe!"it the cou!ts to !eshape behaviou! that is sociall' delete!ious inits conseuence b' c!eatin( ne(ative incentives o! dete!!ents a(ainst such behaviou!. ;% As such, the' "a' be a+a!dedeven +hen not pleaded o! p!a'ed fo!.;# 3n o!de! to p!event the co""ission of a si"ila! act in the futu!e, AMA shall pa'

Ne+ >o!ld e7e"pla!' da"a(es in the a"ount of P#%%,%%%.

33.

AMAs liabilit' fo! the !ental a!!ea!s has al!ead' been e7tin(uished.

AMA assails the CA !ulin( "ainl' fo! the i"position of le(al inte!est on the !ent in a!!ea!s. AMA a!(ues that the advance!ental has e7tin(uished its obli(ation as to the a!!ea!s. 4hus, it sa's, the!e is no "o!e basis fo! the i"position of inte!est atthe !ate of & pe! annu" f!o" the date of e7t!a1udicial de"and on #2 *ul' 2%%; until the finalit' of the /ecision, plusinte!est at the !ate of #2 pe! annu" f!o" finalit' until full pa'"ent.
















At this 1unctu!e, it is necessa!' to loo6 into the cont!act to dete!"ine the pu!pose of the advance !ental and secu!it'deposit.

3te" Nos. 2, and ; of the Cont!act of )ease p!ovide:

7 7 7 7

2. 4hat JAMAK shall pa' to JNe+ >o!ldK in advance +ithin the fi!st da's of each calenda! "onth a "onthl'

!ental in acco!dance +ith the follo+in( schedule fo! the enti!e te!" of this Cont!act of )ease

PER3O/ MON4) REN4A) RA4E

ea! # *une #, #$$8 Q Ma! #;, #$$$ #8#,%%.%%

ea! 2 Ma! #, #$$$ Q Ma! #;, 2%%% P2%8,52.%%

ea! Ma! #, 2%%% Q Ma! #;, 2%%# P2;%,%.5

ea! ; Ma! #, 2%%# Q Ma! #;, 2%%2 P25&,%8.8#

ea! Ma! #, 2%%2 Q Ma! #;, 2%% P#5,;;;.&

ea! & Ma! #, 2%% Q Ma! #;, 2%%; P&,%&#.

ea! 5 Ma! #, 2%%; Q Ma! #;, 2%% P;#$,82%.

ea! 8 Ma! #, 2%% Q Ma! #;, 2%%& P;82,5$.&#

9P

;82,5$.&# Q 5,%% P;;,2$.&#

4he "onthl' !entals !efe!!ed to above +e!e co"puted at an escalation !ate of =ifteen Pe!cent 9# eve!' 'ea! fo! the enti!e du!ation of this lease cont!act.

. ?pon si(nin( of this Cont!act, JAMAK shall pa' advance !ental in the a"ount of =O?R ?N/RE/ =3=4

4O?AN/ PEO 9P

;%,%%%.%% aid advance !ental shall be applied as pa!t of the !ental fo! the last 'ea! of the Cont!act +ith a !e"ainin( balance of =ou! und!ed =o!t' =ive 4housand 4+o und!ed Ninet' 4h!ee and&#S#%% Pesos 9P

;;,2$.&# as "onthl' !ental fo! the tenth JsicK and last 'ea! of the lease te!"

;. ?pon si(nin( of the Cont!act, JAMAK shall pa' JNe+ >o!ldK a ecu!it' /eposit in the a"ount of =O?R ?N/RE/ =3=4 4O?AN/ PEO 9P

;%,%%%.%% +hich shall be applied fo! an' unpaid !ental balance andda"a(es on the leased p!e"ises, and the balance of +hich shall be !efunded b' JNe+ >o!ldK to JAMAK +ithinsi7t' 9&% da's afte! the te!"ination of the Cont!act, it bein( unde!stood that such balance is bein( held b' JNe+>o!ldK in t!ust fo! JAMAK.;2

Based on 3te" No. ;, the secu!it' deposit +as paid p!ecisel' to ans+e! fo! unpaid !entals that "a' be incu!!ed b' AMA+hile the cont!act +as in fo!ce. 4he secu!it' deposit +as held in t!ust b' Ne+ >o!ld, and +hateve! "a' have been left of

it afte! the te!"ination of the lease shall be !efunded to AMA.

Based on 3te" No. in !elation to 3te" No. 2, the pa!ties divided the advance !ental of P;%,%%% b' #2 "onths. 4he'ca"e up +ith P5,%%, +hich the' intended to deduct f!o" the "onthl' !ental to be paid b' AMA fo! the last 'ea! of thelease te!". 4hus, unli6e the secu!it' deposit, no pa!t of the advance !ental +as eve! "eant to be !efunded to AMA.3nstead, the pa!ties intended to appl' the advance !ental, on a sta((e!ed basis, to a po!tion of the "onthl' !ental in the last'ea! of the lease te!".

Conside!in( the p!ete!"ination of the lease cont!act in the p!esent case, this intent of the pa!ties as !e(a!ds the advance!ental failed to ta6e effect. 4he advance !ental, ho+eve!, !etains its pu!pose of ans+e!in( fo! the outstandin( a"ounts thatAMA "a' o+e Ne+ >o!ld.

>e no+ delve into the actual application of the secu!it' deposit and the advance !ental.

At the ti"e of the p!ete!"ination of the cont!act of lease, the "onthl' !ent stood at P2,#%, inclusive of ta7es;hence,the t+o-"onth !ental a!!ea!s in the a"ount of P;&&,&2%.

Appl'in( the secu!it' deposit of P;%,%%% to the a!!ea!s +ill leave a balance of P#&,&2% in Ne+ >o!ldsfavo!./0%phi/Fiven that +e have found AMA liable fo! liuidated da"a(es euivalent to si7 "onths !ent in the a"ountofP#,$$,8&% 9"onthl' !ent of P2,#% "ultiplied b' & "onths, its total liabilit' to Ne+ >o!ld is P#,;#&,;8%.







>e then appl' the advance !ental of P

;%,%%% to this a"ount to a!!ive at a total e7tin(uish"ent of the liabilit' fo! theunpaid !entals and a pa!tial e7tin(uish"ent of the liabilit' fo! liuidated da"a(es. 4his shall leave AMA still liable to Ne+ >o!ld in the a"ount of P$&&,;8% 9P#,;#&,;8% total liabilit' less P;%,%%% advance !ental.

Not constitutin( a fo!bea!ance of "one',;; this a"ount shall ea!n inte!est pu!suant to 3te" 3392; of ou! p!onounce"ent inEaste!n hippin( )ines v. CA.;& 4his ite" !e"ained unchan(ed b' the "odification "ade in Naca! v. Falle!'=!a"es.;5 3nte!est at the !ate of & pe! annu" is he!eb' i"posed on the a"ount of $&&,;8% f!o" the ti"e of e7t!a1udicialde"and on #2 *ul' 2%%; until the finalit' of this /ecision.

4he!eafte! Q this ti"e pu!suant to the "odification in Naca!Q the a"ount due shall ea!n inte!est at the !ate of & pe! annu" until satisfaction, this inte!i" pe!iod bein( dee"ed to be b' then euivalent to a fo!bea!ance of c!edit.;8

Conside!in( the fo!e(oin(, the!e +as no occasion fo! the unpaid t+o "onths !ental to ea!n inte!est. Besides, +e cannotsanction the i"position of "onthl' penalt' inte!est the!eon. >e uote +ith app!oval the !ulin( of the CA on this issue:

3f the obli(ation consists in the pa'"ent of a su" of "one', and the debto! incu!s in dela', the inde"nit' fo! da"a(es,the!e bein( no stipulation to the cont!a!', shall be the pa'"ent of the inte!est a(!eed upon and in the absence of stipulation, the le(al inte!est, +hich is si7 pe! cent pe! annu".

3n the instant case, the Cont!act of )ease and the Addendu" to the Cont!act of )ease do not specif' an' inte!est in the

event of dela' of pa'"ent of !entals. Acco!din(l', the!e bein( no stipulation conce!nin( inte!est, the t!ial cou!t e!!ed ini"posin( inte!est pe! "onth on the t+o-"onth unpaid !entals.

JNe+ >o!ldK a!(ues that the said inte!est pe! "onth on the unpaid !entals +as a(!eed upon b' the pa!ties as alle(edl'sho+n in E7hibits A-;, A-, A-&, B-;, and B-.

>e a!e not pe!suaded.

JNe+ >o!ldsK lette! dated #2 *ul' 2%%; to JAMAK, tate"ent of Account dated %5 *ul' 2%%; and anothe! tate"ent of Account dated 25 Octobe! 2%%; +e!e all p!epa!ed b' JNe+ >o!ldK, +ith no pa!ticipation o! an' indication of a(!ee"enton JAMAsK pa!t. 4he alle(ed p!oposal of JAMAK as contained in the chedule of ReceivableSPa'able is 1ust a co"pute! p!int-out and does not contain an' si(natu!e sho+in( JAMAsK confo!"it' to the sa"e.;$

avin( !elied on the Cont!act of )ease fo! its de"and fo! pa'"ent of liuidated da"a(es, Ne+ >o!ld should have also!efe!!ed to the cont!act to dete!"ine the p!ope! application of the advance !ental and secu!it' deposit. ad it done so inthe fi!st instance, it +ould have 6no+n that the!e is no occasion fo! the i"position of inte!est, o! othe!+ise, on theunpaid !entals. >ERE=ORE, the Cou!t of Appeals /ecision dated 22 *anua!' 2%%$ and Resolution dated #% Ma' 2%%$in CA-F.R. CH No. 8$;8 is A==3RME/ +ith MO/3=3CA43ON.

AMA Co"pute! )ea!nin( Cente!, 3nc. is o!de!ed to pa' Ne+ >o!ld /evelope!s and Mana(e"ent, 3nc. the a"ountof P$&&,;8%, +ith inte!est at the !ate of & pe! annu" f!o" #2 *ul' 2%%; until full pa'"ent.

3n addition, AMA shall pa' Ne+ >o!ld e7e"pla!' da"a(es in the a"ount of P#%%,%%%, +hich shall ea!n inte!est at the!ate of & pe! annu" f!o" the finalit' of this /ecision until full pa'"ent.

O OR/ERE/.

MAR'A LOUR(ES P.A. SERENOChief *ustice, Chai!pe!son

>E CONC?R:


SUPREME COURTManila

ECON/ /3H33ON

G.R. No. 18240 O3o6r 1, 2014

CARLOS A. LOR'A, Petitione!,

vs.

LU(OLO P. MU:O;, JR. Respondent.


















/ E C 3 3 O N

LEONEN, J.:

No pe!son should un1ustl' en!ich hi"self o! he!self at the e7pense of anothe!.

4his is a petition fo! !evie+ on ce!tio!a!i # to set aside the Cou!t of Appeals@ decision2 and !esolution in CA-F.R. CH No.

8#882. 4he Cou!t of Appeals o!de!ed petitione! Ca!los A. )o!ia to pa' !espondent )udolfo P. Mu0o<, *!.P2,%%%,%%%.%% in

actual da"a(es +ith #2 inte!est pe! 'ea! f!o" the filin( of the co"plaint until full pa'"ent.;

4he facts of this case a!e as follo+s:

)udolfo P. Mu0o<, *!. 9Mu0o< filed a co"plaint fo! su" of "one' and da"a(es +ith an application fo! issuance of a +!it

of p!eli"ina!' attach"ent a(ainst Ca!los A. )o!ia 9)o!ia +ith the Re(ional 4!ial Cou!t of )e(a<pi Cit'.

3n his co"plaint, Mu0o< alle(ed that he has been en(a(ed in const!uction unde! the na"e, )udolfo P. Mu0o<, *!.

Const!uction. 3n Au(ust 2%%%, )o!ia visited Mu0o< in his office in /o0a Ma!ia ubdivision in /a!a(a, Alba'. e invited

Mu0o< to advance P2,%%%,%%%.%% fo! a subcont!act of a P%,%%%,%%%.%% !ive!-d!ed(in( p!o1ect in Fuinobatan.&

)o!ia !ep!esented that he +ould "a6ea!!an(e"ents such that Eli<ald' Co, o+ne! of un+est Const!uction and

/evelop"ent Co!po!ation, +ould tu!n out to be the lo+est bidde! fo! the p!o1ect. Eli<ald' Co +ould pa'P8,%%%,%%%.%% to

ensu!e the p!o1ects a+a!d to un+est. Afte! the a+a!d to un+est, un+est +ould subcont!act 2% o! P#%,%%%,%%%.%%

+o!th of the p!o1ect to Mu0o<.5

ince Mu0o< had 6no+n )o!ia fo! five 'ea!s, Mu0o< accepted )o!ias p!oposal.8

On Octobe! 2, 2%%%, Mu0o< !euested Allied Ban6 to !elease P,%%%,%%%.%% f!o" his 1oint account +ithhis business

pa!tne!, Ch!istophe! Co, to a ce!tain F!ace delos antos 9delos antos. )o!ia then obtained the "one' f!o" delos antos.$

=ou! da's late!, P#,8%%,%%%.%% of the P,%%%,%%%.%% +as !etu!ned to Mu0o<.#%

On *anua!' #%, 2%%#, )o!ia collectedMu0o<s P8%%,%%%.%% balance. Afte! deductin( )o!ias pe!sonal loans f!o" Mu0o<,

Mu0o< issued a chec6 to )o!ia fo! P

;8#,8%%.%%. )o!ia ac6no+led(ed !eceivin( this a"ount f!o" Mu0o<.##

4he p!o1ect to d!ed(e the Masa!a+a( and an =!ancisco Rive!s in Fuinobatan +as sub1ected to public biddin(. 4he

p!o1ect +as a+a!ded to the lo+est bidde!, un+est Const!uction and /evelop"ent Co!po!ation.#2

un+est alle(edl' finished d!ed(in( the Masa!a+a( and an =!ancisco Rive!s +ithout subcont!actin( Mu0o<. #>ith the

p!o1ect alle(edl' finished, Mu0o<de"anded )o!ia to !etu!n his P2,%%%,%%%.%%. )o!ia, ho+eve!, did not !etu!n the "one'.#;

Mu0o< fi!st cha!(ed )o!ia and Eli<ald' Co +ith estafa. 4his c!i"inal case +as dis"issed b' the Municipal 4!ial Cou!t of

/a!a(a, Alba' fo! lac6 of p!obable cause.#

Mu0o< then filed the co"plaint fo! su" of "one'. 4he case +as !affled to B!anch & and p!esidedb' *ud(e Hladi"i! B.

B!usola.#&

)o!ia ans+e!ed Mu0o<s co"plaint. e ad"itted !eceivin( P

;8#,8%%.%% f!o" Mu0o< but a!(ued that the co"plaint did

not state a cause of action a(ainst hi". Acco!din( to )o!ia, he follo+ed up the p!o1ects app!oval +ith the Cent!al Office

of the /epa!t"ent of Public >o!6s and i(h+a's as the pa!ties a(!eed upon. e +as, the!efo!e, entitled to his

!ep!esentation e7penses.#5

)o!ia also a!(ued that Mu0o< +as (uilt' of fo!u" shoppin(. Mu0o< fi!st filed a c!i"inal co"plaint fo! estafa a(ainst hi"

and Eli<ald' Co, +hich co"plaint the Municipal 4!ial Cou!t of /a!a(a, Alba' dis"issed. 4he subseuentl' filed

co"plaint fo! su" of "one', alle(edl' a co"plaint to !ecove! the civil aspect of the estafa case, "ust, the!efo!e, be

dis"issed as a!(ued b' )o!ia.#8

/u!in( p!e-t!ial, the pa!ties a(!eed to liti(ate the sole issue of +hethe! )o!ia is liable to Mu0o< fo!P2,%%%,%%%.%%.#$

http://www.lawphil.net/judjuris/juri2014/oct2014/gr_187240_2014.html#fnt1











































Acco!din( to the t!ial cou!t, Mu0o< established +ith p!eponde!ant evidence that )o!ia !eceived P2,%%%,%%%.%% f!o"

Mu0o< fo! a subcont!act of the !ive!-d!ed(in( p!o1ect. ince no pa!t of the p!o1ect +as subcont!acted to Mu0o<, )o!ia

"ust !etu!n the P2,%%%,%%%.%% he !eceived, o! he +ould be undul' en!ichin( hi"self at the e7pense of JMu0o<K.2%

On the clai" of fo!u" shoppin(, the t!ial cou!t !uled that )o!ias obli(ation to !etu!n the 2,%%%,%%%.%% did not a!ise f!o"

c!i"inal liabilit'. Mu0o< "a', the!efo!e, file a civil action to !ecove! his P2,%%%,%%%.%%.2#

As to the p!a'e! fo! issuance of a +!it of p!eli"ina!' attach"ent, the t!ial cou!t denied the p!a'e! fo! lac6 of sufficient

basis.22

4hus, in the decision2 dated *anua!' %, 2%%;, the t!ial cou!t o!de!ed )o!ia to !etu!n the P2,%%%,%%%.%% toMu0o< as actual

da"a(es +ith #2 inte!est f!o" the filin( of the co"plaint until the a"ounts full pa'"ent. 4he t!ial cou!t li6e+ise

o!de!ed )o!ia to pa' Mu0o< P#%%,%%%.%% in atto!ne's fees, P2,%%%.%% in liti(ation e7penses, andP2,%%%.%% in

e7e"pla!' da"a(es +ith costs a(ainst )o!ia.2;

)o!ia appealed to the Cou!t of Appeals, a!(uin( that Mu0o< failed to establish his !eceipt of the P2,%%%,%%%.%%.

pecificall', Mu0o< failed to establish that he obtained P,%%%,%%%.%%f!o" a ce!tain F!ace delos antos. )o!ia also

appealed the a+a!d of atto!ne's fees, liti(ation e7penses, and e7e"pla!' da"a(es fo! havin( no basis in fact and in la+.2

4he Cou!t of Appeals sustained the t!ial cou!ts factual findin(s. 3n !ulin( that )o!ia !eceived the net a"ount

ofP2,%%%,%%%.%% f!o" Mu0o<, the Cou!t of Appeals !efe!!ed to Mu0o<s testi"on' that he o!de!ed Allied Ban6 to

!elease P,%%%,%%%.%% f!o" his 1oint account +ith Ch!istophe! Co to a ce!tain F!ace delos antos. 2& )o!ia then obtained

the "one' f!o" delos antos and confi!"ed +ith Mu0o< his !eceipt of the "one'.25 4his testi"on', acco!din( to the

appellate cou!t, +as suppo!ted b' E7hibit C, a chec6 vouche! the t!ial cou!t ad"itted inevidence. )o!ia si(ned this

chec6 vouche! and ac6no+led(ed !eceivin( P#,2%%,%%%.%% on Octobe! 2, 2%%% andP8%%,%%%.%% on *anua!' #%, 2%%#, o!a

total of P2,%%%,%%%.%%.28

Conside!in( that Mu0o< did not benefit f!o" pa'in( )o!ia P2,%%%,%%%.%%, the appellate cou!t !uled that )o!ia "ust !etu!n

the "one' to Mu0o< unde! the p!inciple of un1ust en!ich"ent.2$

4he appellate cou!t, ho+eve!, !uled that Mu0o< failed to sho+ his !i(ht to e7e"pla!' da"a(es and atto!ne's fees.%

4hus, in the decision# dated Octobe! 2, 2%%8, the Cou!t of Appeals affi!"ed the t!ial cou!ts decision but deleted the

a+a!d of e7e"pla!' da"a(es and atto!ne's fees.2 4he appellate cou!t li6e+ise denied )o!ias "otion fo! !econside!ation

in the !esolution dated Ma!ch #2, 2%%$.

)o!ia filed a petition fo! !evie+ on ce!tio!a!i; +ith this cou!t, a!(uin( that the p!inciple of un1ust en!ich"ent does not

appl' in this case. As the t!ial and appellate cou!ts found, Mu0o< paid )o!ia P2,%%%,%%%.%% fo! a subcont!act of a

(ove!n"ent p!o1ect. 4he pa!ties a(!ee"ent, the!efo!e, +as void fo! bein( cont!a!' to la+, specificall', the Anti-F!aft and

Co!!upt P!actices Act, the Revised Penal Code, and ection & of P!esidential /ec!ee No. #$;. 4he a(!ee"ent +as

li6e+ise cont!a!' to the public polic' of public o! open co"petitive biddin( of (ove!n"ent cont!acts.

ince the pa!ties a(!ee"ent +as void, )o!ia a!(ues that the pa!ties +e!e in pa!i delicto, and Mu0o< should not be allo+ed

to !ecove! the "one' he (ave unde! the cont!act.&

On the findin( that he !eceived a net a"ount of P2,%%%,%%%.%% f!o" Mu0o<, )o!ia "aintains that Mu0o< failed to p!ove

his !eceipt of P,%%%,%%%.%% th!ou(h a ce!tain F!ace delos antos.5

3n the !esolution8 dated *une , 2%%$, thiscou!t o!de!ed Mu0o< to co""ent on )o!ias petition.

3n his co""ent,$

Mu0o< a!(ues that )o!ias petition !aises uestions of fact and la+ that the t!ial and appellate cou!tshave al!ead' passed upon and !esolved in his favo!. e p!a's that this cou!t den' )o!ias petition fo! !aisin( uestions of

fact.

)o!ia !eplied;% to the co""ent, a!(uin( thathe !aised onl' uestions of la+ in his petition.;# Even assu"in( that he !aised

uestions of fact, )o!ia a!(ues that this does not +a!!ant the auto"atic dis"issal of his petition since the t!ial and

appellate cou!ts alle(edl' e!!ed in!ulin( fo! Mu0o<.;2























































On Octobe! 8, 2%#%, the pa!ties filed thei! 1oint "otion to !ende! 1ud("ent based on the co"p!o"ise a(!ee"ent. ; 3n thei!

co"p!o"ise a(!ee"ent,;; the pa!ties decla!ed that thiscase +as a p!oduct of a "e!e "isunde!standin(. ; 4o a"icabl'

settle thei! dispute, the pa!ties a(!eed to +aive all thei! clai"s, !i(hts, and inte!ests a(ainst each othe!.;&

4his cou!t denied the 1oint "otion fo! lac6 of "e!it in the !esolution;5 dated /ece"be! #, 2%#%.

4he issues fo! ou! !esolution a!e the follo+in(:

3. >hethe! )o!ia initiall' obtained P,%%%,%%%.%% f!o" a ce!tain F!ace delos antos

33. >hethe! )o!ia is liable fo! P2,%%%,%%%.%% to Mu0o<

>e !ule fo! Mu0o< and den' )o!ias petition fo! !evie+ on ce!tio!a!i.

3

>hethe! )o!ia initiall' !eceived ,%%%,%%%.%% is a uestion of fact not p!ope! in a petition fo! !evie+ on ce!tio!a!i

>e fi!st add!ess )o!ias contention that Mu0o< failed to p!ove his initial !eceipt of P,%%%,%%%.%%. 4his is a uestion of

fact the t!ial and appellate cou!ts have al!ead' !esolved. 3n a Rule ; petition, +e do not add!ess uestions of fact,

uestions +hich !eui!e us to !uleon the t!uth o! falsehood of alle(ed facts. ;8 ?nde! ection #, Rule ; of the Rules of

Cou!t, +e onl' ente!tain uestions of la+ G uestions as to the applicable la+ (iven a set of facts ;$ G in a petition fo!

!evie+ on ce!tio!a!i:

ection #. =ilin( of petition +ith up!e"e Cou!t.

A pa!t' desi!in( to appeal b' ce!tio!a!i f!o" a 1ud("ent o! final o!de! o! !esolution of the Cou!t of Appeals, the

andi(anba'an, the Re(ional 4!ial Cou!t o! othe! cou!ts +heneve! autho!i<ed b' la+, "a' file +iththe up!e"e Cou!t a

ve!ified petition fo! !evie+ on ce!tio!a!i. 4he petition shall !aise onl' uestions of la++hich "ust be distinctl' set fo!th.

9E"phasis supplied%

>e "a' !evie+ uestions of fact in a Rule ; petition:

. . . 9# +hen the findin(s a!e (!ounded enti!el' on speculations, su!"ises, o! con1ectu!es 92 +hen the infe!ence "ade is

"anifestl' "ista6en, absu!d, o! i"possible 9 +hen the!e is a (!ave abuse of disc!etion 9; +hen the 1ud("ent is based

on "isapp!eciation of facts 9 +hen the findin(s of fact a!e conflictin( 9& +hen in "a6in( its findin(s, the sa"e a!e

cont!a!' to the ad"issions of both appellant and appellee 95 the findin(s a!e cont!a!' to those of the t!ial cou!t 98 +hen

the findin(s a!e conclusions +ithout citation of specific evidence on +hich the' a!e based 9$ the facts set fo!th in the

petition as +ell as in petitione!s "ain and !epl' b!iefs a!e not disputed b' !espondent and 9#% the findin(s of fact a!e

p!e"ised on the supposed absence of evidence and cont!adicted b' the evidence on !eco!d.# JE"phases o"ittedK

)o!ia failed to convince us +h' +e should "a6e an e7ception in this case.

/u!in( t!ial, Mu0o< testified thathe o!de!ed Allied Ban6 to !elease P,%%%,%%%.%% f!o" his 1oint account +ithCh!istophe!

Co to a ce!tain F!ace delos antos.2 )o!ia then obtained the "one' f!o" delos antos and confi!"ed +ith Mu0o< his

!eceipt of the a"ount. P#,8%%,%%%.%% +as subseuentl' !etu!ned to Mu0o<, leavin( aP#,2%%,%%%.%% balance +ith )o!ia.

4his testi"on' +as suppo!ted b' E7hibit C, the chec6 vouche! +he!e )o!ia ac6no+led(ed !eceivin( P#,2%%,%%%.%%

f!o" Mu0o<.;

>e a(!ee that these pieces ofevidence dul' p!ove )o!ias initial !eceipt of P,%%%,%%%.%%. >e +ill not distu!b this findin(.

33

)o!ia "ust !etu!n Muno<s P2,%%%,%%%.%% unde! the p!inciple of un1ust en!ich"ent

?nde! A!ticle 22 of the Civil Codeof the Philippines, eve!' pe!son +ho th!ou(h an act of pe!fo!"ance b' anothe!, o! an'

othe! "eans, acui!es o! co"es into possession of so"ethin( at the e7pense of the latte! +ithout 1ust o! le(al (!ound, shall

!etu!n the sa"e to hi". 4he!e is un1ust en!ich"ent +hen a pe!son un1ustl' !etains a benefit to the loss of anothe!, o!

+hen a pe!son !etains "one' o!p!ope!t' of anothe! a(ainst the funda"ental p!inciples of 1ustice, euit' and (ood

conscience.

































4he p!inciple of un1ust en!ich"ent has t+o conditions. =i!st, a pe!son "ust have been benefited +ithout a !eal o! valid

basis o! 1ustification. econd, the benefit +as de!ived at anothe! pe!sons e7pense o! da"a(e.&

3n this case, )o!ia !eceived P2,%%%,%%%.%% f!o" Mu0o< fo! a subcont!act of a (ove!n"ent p!o1ectto d!ed(e the Masa!a+a(

and an =!ancisco Rive!s in Fuinobatan, Alba'. o+eve!, cont!a!' to the pa!ties a(!ee"ent, Mu0o< +as not

subcont!acted fo! the p!o1ect. Neve!theless, )o!ia !etained the P2,%%%,%%%.%%.

4hus, )o!ia +as un1ustl' en!iched. e !etained Mu0o<s "one' +ithout valid basis o! 1ustification. ?nde! A!ticle 22 of

the Civil Code of the Philippines, )o!ia "ust !etu!n the P2,%%%,%%%.%% to Mu0o<.

Cont!a!' to )o!ias clai", ection & of the P!esidential /ec!ee No. #$; does not p!event Mu0o< f!o" !ecove!in( his

"one'.

?nde! ection & of the P!esidential /ec!ee No. #$;,5 a cont!acto! shall not subcont!act a pa!t o! inte!estin a (ove!n"ent

inf!ast!uctu!e p!o1ect +ithout the app!oval of the !elevant depa!t"ent sec!eta!':

ection &. Assi(n"ent and Cont!act.4he cont!acto! shall not assi(n, t!ansfe!, pled(e, subcont!act o!"a6e an' othe!

disposition of the cont!act o! an' pa!t o! inte!est the!ein e7cept +ith the app!oval of the Ministe! of Public >o!6s,

4!anspo!tation and Co""unications, the Ministe! of Public i(h+a's, o! the Ministe! of Ene!(', as the case "a' be.App!oval of the subcont!act shall not !elieve the "ain cont!acto! f!o" an' liabilit' o! obli(ation unde! his cont!act +ith

the Fove!n"ent no! shall it c!eate an' cont!actual !elation bet+een the subcont!acto! and the Fove!n"ent.

A subcont!act, the!efo!e, is void onl' if not app!oved b' the depa!t"ent sec!eta!'.

3n this case, it is p!e"atu!e to !ule on the le(alit' of the pa!ties a(!ee"ent p!ecisel' becausethe subcont!act did not push

th!ou(h. No actual a(!ee"ent +as p!oven in evidence.4he ec!eta!' of Public >o!6s and i(h+a's could have app!oved

the subcont!act, +hich is allo+ed unde! ection & of the P!esidential /ec!ee No. #$;.

At an' !ate, even assu"in( that the!e +as a subcont!actin( a!!an(e"ent bet+een un+est Const!uction and /evelop"ent

Co!po!ation and Mu0o<, this cou!t has allo+ed !ecove!' unde! a void subcont!act as an e7ception to the in pa!i delictodoct!ine.

3n Fon<alo v. 4a!nate, *!.,8 the /epa!t"ent of Public >o!6s and i(h+a's 9/P> a+a!ded the cont!actto /o"inado!

Fon<alo to i"p!ove the adsadan-Maba-a' section of the Mountain P!ovince Road. Fon<alo then subcont!acted the

suppl' of "ate!ials and labo! to *ohn 4a!nate, *!. +ithout the app!oval of the ec!eta!' of Public >o!6s and i(h+a's.

4he pa!ties a(!eed to a total subcont!act fee of #2 of the p!o1ects cont!act p!ice.$

4a!nate, *!. also !ented euip"ent to Fon<alo. 3n a deed of assi(n"ent, the pa!ties a(!eed to a !etention fee of #% of

Fon<alos total collection f!o" the /epa!t"ent of Public >o!6s and i(h+a's, o! 2,2&.#, as !ent fo! the euip"ent.

4he' then sub"itted the deed of assi(n"ent to the /epa!t"ent fo! app!oval.&%

ubseuentl', 4a!nate, *!. lea!ned that Fon<alo filed +ith the /epa!t"ent of Public >o!6s and i(h+a's an affidavit to

unilate!all' cancel the deed of assi(n"ent. Fon<alo also collected the !etention fee f!o" the /epa!t"ent.&#

4a!nate, *!. de"anded pa'"ent fo! the !ent of the euip"ent, but Fon<alo i(no!ed his de"and. e thenfiled a co"plaint

fo! su" of "one' and da"a(es +ith the Re(ional 4!ial Cou!t of Mountain P!ovince to collect on the #% !etention fee.&2

3n his defense, Fon<alo a!(ued thatthe subcont!act +as void fo! bein( cont!a!' to la+, specificall', ection & of the

P!esidential /ec!ee No. #$;. ince the deed of assi(n"ent +as a "e!e p!oduct of the subcont!act, & the deed of

assi(n"ent +as li6e+ise void. >ith 4a!nate, *!. full' a+a!e of the ille(alit' and ineffectualit' of the deed of

assi(n"ent,&;

Fon<alo contended that 4a!nate, *!. could not collect on the !etention fee unde! the p!inciple of in pa!idelicto.&

4his cou!t !uled that the subcont!act +as void fo! bein( cont!a!' to la+. ?nde! ection & of the P!esidential /ec!ee No.

#$;, a cont!acto! shall not subcont!act the i"ple"entation of a (ove!n"ent inf!ast!uctu!e p!o1ect +ithout the app!oval of

the !elevant depa!t"ent sec!eta!'.&& ince Fon<alo subcont!acted the p!o1ect to 4a!nate, *!. +ithout the app!ovalof the

ec!eta!' of Public >o!6s and i(h+a's, the subcont!act +as void, includin( the deed of assi(n"ent, +hich sp!un(

f!o" the subcont!act.&5




























Fene!all', pa!ties to an ille(al cont!act "a' not !ecove! +hat the' (ave unde! the cont!act. &8 ?nde! the doct!ine of in pa!i

delicto, no action a!ises, in euit' o! at la+, f!o" anille(al cont!actJ.K No suit can be "aintained fo! its specific

pe!fo!"ance, o! to !ecove! the p!ope!t' a(!eed to be sold o! delive!ed, o! the "one' a(!eed to be paid, o! da"a(es fo! its

violationJ.K&$ Neve!theless, this cou!t allo+ed 4a!nate, *!. to !ecove! #% of the !etention fee. Acco!din( to this cou!t,the

application of the doct!ine of in pa!i delictois not al+a's !i(id.5% An e7ception to the doct!ine is +hen its application

cont!avenes +ell-established public polic'.5# 3n Fon<alo, this cou!t !uled that the p!evention of un1ust en!ich"ent is a

!eco(ni<ed public polic' of the tate.52 3t is, the!efo!e, an e7ception to the application of the in pa!i delicto doct!ine. 4his

cou!t e7plained:

. . . the application of the doct!ine of in pa!i delicto is not al+a's !i(id. /0%phi/ An accepted e7ception a!ises +hen its

application cont!avenes +ellestablished public polic'. 3n this 1u!isdiction, public polic' has been defined as that p!inciple

of the la+ +hich holds that no sub1ect o! citi<en can la+full' do that +hich has a tendenc' to be in1u!ious to the public o!

a(ainst the public (ood.

?n1ust en!ich"ent e7ists, acco!din( to ulst v. PR Builde!s, 3nc., +hen a pe!son un1ustl' !etains a benefit at the loss of

anothe!, o! +hen a pe!son !etains "one' o! p!ope!t' of anothe! a(ainst the funda"ental p!inciples of 1ustice, euit' and

(ood conscience. 4he p!evention of un1ust en!ich"ent is a !eco(ni<ed public polic' of the tate, fo! A!ticle 22 of the

Civil Code e7plicitl' p!ovides that JeKve!'pe!son +ho th!ou(h an act of pe!fo!"ance b' anothe!, o! an' othe! "eans,

acui!es o! co"es into possession of so"ethin( at the e7pense of the latte! +ithout 1ust o! le(al (!ound, shall !etu!n thesa"e to hi". 3t is +ell to note that A!ticle 22 is pa!t of the chapte! of the Civil Code on u"an Relations, the p!ovisions

of +hich +e!e fo!"ulated as basic p!inciples to be obse!ved fo! the !i(htful !elationship bet+een hu"an bein(s and fo!

the stabilit' of the social o!de! desi(ned to indicate ce!tain no!"s that sp!in( f!o" the fountain of (ood conscience(uides

fo! hu"an conduct that should !un as (olden th!eads th!ou(h societ' to the end that la+ "a' app!oach its sup!e"e ideal

+hich is the s+a' and do"inance of 1ustice.5 9Citations o"itted

Fiven that 4a!nate, *!. pe!fo!"ed his obli(ations unde! the subcont!act and the deed of assi(n"ent, this cou!t !uled that he

+as entitled to the a(!eed fee. Acco!din( to this cou!t, Fon<alo +ould be un1ustl' en!iched at the e7pense of 4a!nate if

the latte! +as tobe ba!!ed f!o" !ecove!in( because of the !i(id application of the doct!ine of in pa!i delicto.5;

3n this case, both the t!ial and appellate cou!ts found that )o!ia !eceived P2,%%%,%%%.%% f!o" Mu0o< fo! a subcont!act of

the !ive!-d!ed(in( p!o1ect. )o!ia neve! denied that hefailed to fulfill his a(!ee"ent +ith Mu0o<. 4h!ou(hout the cases

p!oceedin(s, )o!ia failed to 1ustif' +h' he has the !i(ht to !etain Mu0o<s P2,%%%,%%%.%%. As the Cou!t of Appeals !uled,

it +as not sho+n that JMu0o<K benefited f!o" the delive!' of the a"ount ofP2,%%%,%%%.%% to J)o!iaK.5

)o!ia, the!efo!e, is !etainin( the P2,%%%,%%%.%% +ithout 1ust o! le(al (!ound. 4his cannot be done. ?nde! A!ticle 22 of the

Civil Code of the Philippines, he "ust !etu!n the P2,%%%,%%%.%% to Mu0o<.

4his cou!t notes the possible i!!e(ula!ities in these t!ansactions. At the ve!' least, the!e appea!s to have been an atte"pt to

ci!cu"vent ou! p!ocu!e"ent la+s. 3f petitione! indeed had the autho!it' of un+est Const!uction and /evelop"ent

Co!po!ation, it is st!an(e that )o!ia could have (ua!anteed a biddin( !esult. 3f he did not have an' t!ue dealin( +ith

un+est Const!uction, then his is an elabo!ate sche"e to cause financie!s to lose thei! ha!d-ea!ned "one' fo! nothin(.

>ERE=ORE, the petition fo! !evie+ on ce!tio!a!i is /EN3E/. 4he Cou!t of Appeals@ decision and !esolution in CA-FR.

CH No. 8#882 a!e A==3RME/ +ith MO/3=3CA43ON as to inte!est !ate. Petitione! Ca!los A. )o!ia shall pa' !espondent

)udolfo P. Mufioi, *!. P2,%%%,%%%.%% in actual da"a(es, +ith inte!est of #2 inte!est pe! annu" f!o" the filin( of the

co"plaint until *une %, 2%#, and & inte!est pe! annu" f!o" *ul' #, 2%# until full pa'"ent.5&

)et a cop' of this decision be ERHE/ on the Office of the O"buds"an and the /epa!t"ent of *ustice fo! thei!

app!op!iate actions.

O OR/ERE/.

MAR+'C M.+.. LEONENAssociate *ustice

>E CONC?R:


SUPREME COURTManila
























ECON/ /3H33ON

G.R. No. 1801 Auu/ 28, 201

+'RG'N'A M. +EN;ON, Petitione!,

vs.

RURAL %AN< O %UENA+'STA =AGUSAN (EL NORTE>, 'NC., r"r/n) 6y LOUR(ES'TA E.PARAJES,Respondent.

/ E C 3 3 O N

(EL CAST'LLO, J.:

Befo!e us is a Petition fo! Revie+ on Ce!tio!a!i # uestionin( the /ece"be! #;, 2%%& Resolution2 of the Cou!t of Appeals

9CA in CA-F.R. P No. %#;#-M3N +hich dis"issed the Petition in said case, as +ell as its Ma' 5, 2%%5

Resolution den'in( !econside!ation the!eof.

=actual Antecedents

On *anua!' 28, 2%%, petitione! Hi!(inia M. Hen<on filed a Petition; to nullif' fo!eclosu!e p!oceedin(s and 4a7

/ecla!ation Nos. $&-FR-%&-%%-5%%2-R and $&-FR-%&-5%%-R issued in the na"e of !espondent Ru!al Ban6 of

Buenavista 9A(usan del No!te, 3nc. 4he case +as doc6eted as Civil Case No. and !affled to B!anch of the

Re(ional 4!ial Cou!t 9R4C of Butuan Cit'. Petitione! alle(ed that in #$8 she and he! late spouse, Feo!(e =. Hen<on, !.,

obtained a P,%%%.%% loan f!o" !espondent a(ainst a "o!t(a(e on thei! house and lot in )ibe!tad, Butuan Cit', cove!ed b'

4a7 /ecla!ation Nos. 2828$ and ;25#% issued in thei! na"es, +hich +e!e late! on !eplaced +ith 4a7 /ecla!ation Nos. $&

FR-%&-%%-288;-R and $& FR-%&-%%-288-R that she +as able to pa'P2,%%.%%, thus leavin( an outstandin( balance of

onl' P2,5%.%% that so"eti"e in Ma!ch #$85, she offe!ed to pa' the said balance in full, but the latte! !efused to accept

pa'"ent, and instead shoved petitione! a+a' f!o" the ban6 p!e"ises that in Ma!ch #$85, !espondent fo!eclosed on the

"o!t(a(e, and the p!ope!t' +as sold at auction fo! P&,;52.5& to !espondent, bein( the hi(hest bidde! that the fo!eclosu!e

p!oceedin(s a!e null and void fo! lac6 of notice and publication of the sale, lac6 of she!iffs final deed of sale and noticeof !ede"ption pe!iod and that she paid !espondent P&,%%%.%% on Octobe! $, #$$, as evidenced b' !espondents Official

Receipt No. ;#%8;8&issued on Octobe! $, #$$.

3n its Ans+e! +ith Counte!clai"s,5 !espondent clai"ed that petitione! did not "a6e an' pa'"ent on the loan that

petitione! neve! +ent to the ban6 in Ma!ch #$85 to settle he! obli(ations in full that petitione! +as not shoved and d!iven

a+a' f!o" its p!e"ises that the fo!eclosu!e p!oceedin(s +e!e !e(ula!l' done and all !eui!e"ents +e!e co"plied +ith

that a ce!tificate of sale +as issued b' the she!iff and dul' !eco!ded in the Re(ist!' of /eeds that petitione!s clai" that

she paid P&,%%%.%% on Octobe! $, #$$ is utte!l' false that petitione!s cause of action has lon( p!esc!ibed as the case +as

filed onl' in 2%% o! #8 'ea!s afte! the fo!eclosu!e sale and that petitione! is (uilt' of laches. Respondent inte!posed its

counte!clai" fo! da"a(es and atto!ne's fees as +ell.

3n he! Repl',8 petitione! insisted that the fo!eclosu!e p!oceedin(s +e!e i!!e(ula! and that p!esc!iption and laches do not

appl' as the fo!eclosu!e p!oceedin(s a!e null and void to be(in +ith.

Rulin( of the Re(ional 4!ial Cou!t

On *ul' #, 2%%&, the t!ial cou!t issued a Resolution$ dis"issin( Civil Case No. . 3t held that Q

4he plaintiff, ho+eve!, "a' have e!!oneousl' !elied the JsicK "andato!il' JsicK !eui!e"ent of the afo!estated p!ovision of

la+ upon failu!e to conside! that the othe! pa!t' is a Ru!al Ban6. ?nde! the R.A. No. 52% as a"ended, 9Ru!al Ban6 Act

p!ope!t' +o!th e7ceedin( P#%%,%%%.%% JsicK is e7e"pt f!o" the !eui!e"ent of publication. 4his "a' have been the!eason +h' the fo!eclosu!e p!ospe! JsicK +ithout the obse!vance of the !eui!ed publication. Mo!eove!, neithe! in the said

applicable la+s p!ovide JsicK fo! the i"pai!"ent of the e7t!a1udicial fo!eclosu!e and the subseuent sale to the public. 4he

Cou!t !uled in Bonnevie, et al. vs. CA, et al. that Act No. # as a"ended does not !eui!e pe!sonal notice to the

"o!t(a(o!. 3n the sa"e vie+, lac6 of final de"and o! notice of !ede"ption a!e JsicK not conside!ed indispensable

!eui!e"ents and failu!e to obse!ve the sa"e does not !ende! the e7t!a1udicial fo!eclosu!e sale a nullit'.#%

3n othe! +o!ds, the t!ial cou!t "eant that unde! the Ru!al Ban6s Act, the fo!eclosu!e of "o!t(a(es cove!in( loans (!anted

b' !u!al ban6s and e7ecutions of 1ud("ents the!eon involvin( !eal p!ope!ties levied upon b' a she!iff shall be e7e"pt

f!o" publication +he!e the total a"ount of the loan, includin( inte!ests due and unpaid, does not

http://www.lawphil.net/judjuris/juri2013/aug2013/gr_178031_2013.html#fnt1























e7ceed P#%,%%%.%%.## ince petitione!s outstandin( obli(ation a"ounted to 1ust ove! P&,%%%.%% publication +as not

necessa!'.

Petitione! "oved fo! !econside!ation,#2 but in the epte"be! &, 2%%& Resolution,# the t!ial cou!t denied the sa"e.

Rulin( of the Cou!t of Appeals

Petitione! +ent up to the CA via an o!i(inal Petition fo! Ce!tio!a!i. #; On /ece"be! #;, 2%%&, the CA issued the fi!st

assailed Resolution# dis"issin( the Petition. 3t held that petitione!s !e"ed' should have been an appeal unde! Rule ;# of

the Rules of Cou!t since the *ul' #, 2%%& Resolution is a final o!de! of dis"issal. Petitione! !eceived the Resolution

den'in( he! Motion fo! Reconside!ation on epte"be! #8, 2%%& #& but she filed the Petition fo! Ce!tio!a!i on Octobe! 2,

2%%& +hen she should have inte!posed an appeal on o! befo!e Octobe! , 2%%&. avin( done so, he! Petition "a' not even

be t!eated as an appeal fo! the sa"e +as belatedl' filed.

4he CA added that the Petition does not p!ovide a sufficient factual bac6(!ound of the case as it "e!el' alle(es a

ch!onolo(' of the le(al !e"edies she too6 befo!e the t!ial cou!t +hich does not co"pl' +ith the !eui!e"ent unde!

ection of Rule ;&.#5

Petitione! "oved fo! !econside!ation

#8

b' sub"ittin( a !e+!itten Petition. o+eve!, in a Resolution dated Ma' 5, 2%%5,the CA denied the sa"e, hence the p!esent Petition.

3ssues

Petitione! sub"its the follo+in( assi(n"ent of e!!o!s:

3

>34 /?E REPEC4, 4E ONORAB)E CO?R4 O= APPEA) REHER3B) ERRE/ 3N /3M33NF 4E

PE4343ON =OR CER43ORAR3 4EREB PREHEN43NF 4E CO?R4 =ROM =3N/3NF O?4 4A4 AC4?A))

NO E4RA*?/3C3A) =OREC)O?RE >A CON/?C4E/ B 4E O==3CE O= 4E PROH3NC3A) ER3== ONPE4343ONER PROPER4 A4 4E 3N4ANCE O= 4E PR3HA4E REPON/EN4.

33

>34 /?E REPEC4, 4E ONORAB)E CO?R4 O= APPEA) REHER3B) ERRE/ 3N NO4 /3REFAR/3NF

4ECN3CA)343E 3N OR/ER 4O A/M3N34ER ?B4AN43A) *?43CE 4O 4E PE4343ONER. #$

Petitione!s A!(u"ents

Petitione! clai"s that no e7t!a1udicial fo!eclosu!e p!oceedin(s eve! too6 place, citin( a =eb!ua!' 2, 2%% Ce!tification

issued b' the Office of the Cle!6 of Cou!t of Butuan Cit' statin( that the !eco!d pe!tainin( to the fo!eclosu!e p!oceedin(s

cove!in( he! p!ope!t' could not be found in spite of dili(ent effo!ts to find the sa"e.2%And because no fo!eclosu!e

p!oceedin(s too6 place, the!e could not have been notice and publication of the sale, and no she!iffs ce!tificate of sale.

=o! this !eason, she clai"s that the CA e!!ed in dis"issin( he! case.

Petitione! adds that, technicalities aside, a Petition fo! Ce!tio!a!i is available to he! in o!de! to p!event the denial of he!

substantial !i(hts. he also a!(ues that he! pa'"ent to !espondent of the a"ount of P&,%%%.%% in #$$ should be

conside!ed as a valid !ede"ption of he! p!ope!t'.

Respondents A!(u"ents

=o! its pa!t, !espondent "e!el' validates the p!onounce"ents of the CA b' citin( and echoin( the sa"e, and holdin(

petitione! to a st!ict obse!vance of the !ules fo! pe!fectin( an appeal +ithin the !e(le"enta!' pe!iod, as it clai"s the' a!e

necessa!' fo! the o!de!l' ad"inist!ation of 1ustice,2# as +ell as that +hich !eui!es that onl' uestions of la+ "a' be

!aised in a Petition fo! Revie+ on Ce!tio!a!i.

Ou! Rulin(

4he Cou!t denies the Petition.




























4he Cou!t finds no e!!o! in the CAs t!eat"ent of the Petition fo! Ce!tio!a!i. 4he t!ial cou!ts *ul' #, 2%%& Resolution

dis"issin( the case +as indeed to be t!eated as a final o!de!, disposin( of the issue of publication and notice of the

fo!eclosu!e sale Q +hich is the ve!' co!e of petitione!s cause of action in Civil Case No. Q and decla!in( the sa"e to

be unnecessa!' pu!suant to the Ru!al Ban6s Act, as petitione!s outstandin( obli(ation did not e7ceed P#%,%%%.%%, and

thus leavin( petitione! +ithout basis to "aintain he! case. 4his constitutes a dis"issal +ith the cha!acte! of finalit'. As

such, petitione! should have availed of the !e"ed' unde! Rule ;#, and not Rule &.

4he Cou!t is not p!epa!ed to be lenient in petitione!s case, eithe!. Civil Case No. +as instituted onl' in 2%%, +hile

the uestioned fo!eclosu!e p!oceedin(s too6 place +a' bac6 in #$85. Petitione!s lon( inaction and co""ission of a

p!ocedu!al fau7 pas ce!tainl' cannot ea!n the s'"path' of the Cou!t.

No! can the Cou!t (!ant the Petition on the "e!e alle(ation that no fo!eclosu!e p!oceedin(s eve! too6 place. 4he =eb!ua!'

2, 2%% Ce!tification issued b' the Office of the Cle!6 of Cou!t of Butuan Cit' to the effect that the !eco!d of the

fo!eclosu!e p!oceedin(s could not be found is not sufficient (!ound to invalidate the p!oceedin(s ta6en. Petitione! he!self

attached the he!iffs Ce!tificate of ale22 as Anne7 A of he! Petition in Civil Case No. this should belie the clai"

that no !eco!d e7ists cove!in( the fo!eclosu!e p!oceedin(s. Besides, if petitione! insists that no fo!eclosu!e p!oceedin(s

too6 place, then she should not have filed an action to annul the sa"e since the!e +as no fo!eclosu!e to be(in +ith. he

should have filed a diffe!ent action.

o+eve!, petitione! is entitled to a !etu!n of the P&,%%%.%% she paid to !espondent in #$$. >hile this "a' not be validl'

conside!ed as a !ede"ption of he! p!ope!t' as the pa'"ent +as "ade lon( afte! the !ede"ption pe!iod e7pi!ed, !espondent

had no !i(ht to !eceive the a"ount. 3n its Ans+e! +ith Counte!clai"s in Civil Case No. , !espondent si"pl' alle(ed

the!ein that Q

#%. /efendant /EN3E the alle(ations unde! pa!a(!aph #% of the petition fo! bein( utte!l' false, hi(hl' self-se!vin( and

patentl' speculative, the t!uth bein( ---

T Assu"ption cannot be had that the!e +as an alle(ed fo!eclosu!e of the then p!ope!t' of the petitione! fo! the t!uth of the

"atte! is that a fo!eclosu!e p!oceedin( +as dul' conducted, +hich fact !e"ains undisputable fo! so "an' 'ea!s no+.

T >ithout necessa!il' ad"ittin( that pa'"ent of P&,%%%.%% +as "ade, the sa"e ho+eve! could ha!dl' and could neve! be

conside!ed as !ede"ption p!ice fo! the follo+in( !easons ---

¬ 4he !ede"ption pe!iod had lon( lapsed +hen the pa'"ent of P&,%%%.%% +as alle(edl' "ade. 4hus, the!e is no point

tal6in( about !ede"ption p!ice +hen the !ede"ption pe!iod had lon( been (one at the ti"e the alle(ed pa'"ent +as

"ade.

¬ Even 7 7 7 (!antin(, +ithout concedin(, that the a"ount of P&,%%%.%% +as a !ede"ption p!ice, said a"ount, ho+eve!,

could not constitute as a le(al !ede"ption p!ice since the sa"e +as not enou(h to cove! the enti!e !ede"ption p!ice as

"andated b' the !ules and la+s.2

9E"phases supplied

3nte!estin(l', !espondent did not den' bein( the issue! of Official Receipt No. ;#%8;8. 3nstead, it ave!!ed that petitione!s

pa'"ent to it of P&,%%%.%% +as false and self-se!vin(, but in the sa"e b!eath a!(ued that, +ithout necessa!il' ad"ittin(

that pa'"ent of P&,%%%.%% +as "ade, the sa"e cannot be conside!ed as !ede"ption p!ice.

B' "a6in( such an a"bi(uous alle(ation in its Ans+e! +ith Counte!clai"s, !espondent is dee"ed to have ad"itted

!eceivin( the a"ount of P&,%%%.%% f!o" petitione! as evidenced b' Official Receipt No. ;#%8;8, +hich a"ount unde! the

ci!cu"stances it had no !i(ht to !eceive. 3f an alle(ation is not specificall' denied o! the denial is a ne(ative p!e(nant, the

alle(ation is dee"ed ad"itted.2; >he!e a fact is alle(ed +ith so"e ualif'in( o! "odif'in( lan(ua(e, and the denial is

con1unctive, a Une(ative p!e(nant e7ists, and onl' the ualification o! "odification is denied, +hile the fact itself is

ad"itted.2 A denial in the fo!" of a ne(ative p!e(nant is an a"bi(uous pleadin(, since it cannot be asce!tained +hethe! it is the fact o! onl' the ualification that is intended to be denied. 2& P!ofession of i(no!ance about a fact +hich is

patentl' and necessa!il' +ithin the pleade!@s 6no+led(e, o! "eans of 6no+in( as ineffectual, is no denial at all. 25 3n fine,

!espondent failed to !efute petitione!s clai" of havin( paid the a"ount of P&,%%%.%%.

ince !espondent +as not entitled to !eceive the said a"ount, as it is dee"ed full' paid f!o" the fo!eclosu!e of petitione!s

p!ope!t' since its bid p!ice at the auction sale cove!ed all that petitione! o+ed it b' +a' of p!incipal, inte!est, atto!ne's

fees and cha!(es,28 it "ust !etu!n the sa"e to petitione!. 3f so"ethin( is !eceived +hen the!e is no !i(ht to de"and it, and

it +as undul' delive!ed th!ou(h "ista6e, the obli(ation to !etu!n it a!ises.2$Mo!eove!, pu!suant to Ci!cula! No. 5$$, se!ies




















of 2%# of the Ban(6o ent!al n( Pilipinas +hich too6 effect *ul' #, 2%#, the a"ount of P&,%%%.%% shall ea!n inte!est at

the !ate of & pe! annu" co"puted f!o" the filin( of the Petition in Civil Case No. up to its full satisfaction.

>ERE=ORE, p!e"ises conside!ed, the Petition is /EN3E/. 4he /ece"be! #;, 2%%& and Ma' 5, 2%%5 Resolutions of

the Cou!t of Appeals in CA-F.R. P No. %#;#-M3N a!e A==3RME/.

o+eve!, !espondent Ru!al Ban6 of Buenavista 9A(usan del No!te, 3nc. is OR/ERE/ to !etu!n to petitione! Hi!(inia M.

Hen<on o! he! assi(ns the a"ount of P&,%%%.%%, +ith inte!est at the !ate of & pe! annu" co"puted f!o" the filin( of the

Petition in Civil Case No. up to its full satisfaction.

O OR/ERE/.

MAR'ANO C. (EL CAST'LLOAssociate *ustice


SUPREME COURTManila

EN BANC

G.R. No. 10200 S"56r 2, 1994

PEOPLE O T*E P*'L'PP'NES, plaintiff-appellee,

vs.

ROGEL'O %AYOTAS y COR(O+A, accused-appellant.

ROMERO, J.:

3n C!i"inal Case No. C-2#5 filed befo!e B!anch #&, R4C Ro7as Cit', Ro(elio Ba'otas ' Co!dova +as cha!(ed +ith

Rape and eventuall' convicted the!eof on *une #$, #$$# in a decision penned b' *ud(e Manuel E. Auta1a'. Pendin(

appeal of his conviction, Ba'otas died on =eb!ua!' ;, #$$2 at

the National Bilibid ospital due to ca!dio !espi!ato!' a!!est seconda!' to hepatic encephalopath' seconda!' to hipato

ca!cino"a (ast!ic "alin(e!in(. Conseuentl', the up!e"e Cou!t in its Resolution of Ma' 2%, #$$2 dis"issed the

c!i"inal aspect of the appeal. o+eve!, it !eui!ed the olicito! Fene!al to file its co""ent +ith !e(a!d to Ba'otas@ civil

liabilit' a!isin( f!o" his co""ission of the offense cha!(ed.

3n his co""ent, the olicito! Fene!al e7p!essed his vie+ that the death of accused-appellant did not e7tin(uish his civil

liabilit' as a !esult of his co""ission of the offense cha!(ed. 4he olicito! Fene!al, !el'in( on the case of !eople

". Senda)diego 1 insists that the appeal should still be !esolved fo! the pu!pose of !evie+in( his conviction b' the lo+e!

cou!t on +hich the civil liabilit' is based.

Counsel fo! the accused-appellant, on the othe! hand, opposed the vie+ of the olicito! Fene!al a!(uin( that the death of

the accused +hile 1ud("ent of conviction is pendin( appeal e7tin(uishes both his c!i"inal and civil penalties. 3n suppo!t

of his position, said counsel invo6ed the !ulin( of the Cou!t of Appeals in !eople ". (astillo and &cfemia 2 +hich held

that the civil obli(ation in a c!i"inal case ta6es !oot in the c!i"inal liabilit' and, the!efo!e, civil liabilit' is e7tin(uished if

accused should die befo!e final 1ud("ent is !ende!ed.

>e a!e thus conf!onted +ith a sin(le issue: /oes death of the accused pendin( appeal of his conviction e7tin(uish his civil

liabilit'

3n the afo!e"entioned case of !eople ". (astillo, this issue +as settled in the affi!"ative. 4his sa"e issue posed the!ein

+as ph!ased thus: /oes the death of Alf!edo Castillo affect both his c!i"inal !esponsibilit' and his civil liabilit' as a

conseuence of the alle(ed c!i"e

3t !esolved this issue th!u the follo+in( disuisition:



A!ticle 8$ of the Revised Penal Code is the cont!ollin( statute. 3t !eads, in pa!t:

A!t. 8$. Ho% criminal lia$ilit) is totall) e'tinguished . G C!i"inal liabilit' is totall'

e7tin(uished:

#. B' the death of the convict, as to the pe!sonal penalties and as to the pecunia!'

penalties liabilit' the!efo! is e7tin(uished onl' +hen the death of the offende! occu!s

befo!e final 1ud("ent

>ith !efe!ence to Castillo@s c!i"inal liabilit', the!e is no uestion. 4he la+ is plain. tatuto!' const!uction

is unnecessa!'. aid liabilit' is e7tin(uished.

4he civil liabilit', ho+eve!, poses a p!oble". uch liabilit' is e7tin(uished onl' +hen the death of the

offende! occu!s befo!e final 1ud("ent. addled upon us is the tas6 of asce!tainin( the le(al i"po!t of the

te!" final 1ud("ent. 3s it final 1ud("ent as cont!adistin(uished f!o" an inte!locuto!' o!de! O!, is it a

1ud("ent +hich is final and e7ecuto!'

>e (o to the (enesis of the la+. 4he le(al p!ecept contained in A!ticle 8$ of the Revised Penal Code

he!etofo!e t!ansc!ibed is lifted f!o" A!ticle #2 of the panish El Codi(o Penal de #85% +hich, in pa!t,!ecites:

)a !esponsabilidad penal se e7tin(ue.

#. Po! la "ue!te del !eo en cuanto a las penas pe!sonales sie"p!e, ' !especto a las

pecunia!ias, solo cuando a su falleci"iento no hubie!e !ecaido sentencia firme.

777 777 777

4he code of #85% . . . it +ill be obse!ved e"plo's the te!" sentencia firme. >hat is sentencia fi!"e

unde! the old statute

H333 Enciclopedia *u!idica Espa0ola, p. ;5, fu!nishes the !ead' ans+e!: 3t sa's:

EN4ENC3A =3RME. )a sentencia ue aduie!e la fue!<a de las definitivas po! no

habe!se utili<ado po! las pa!tes liti(antes !ecu!so al(uno cont!a ella dent!o de los

te!"inos ' pla<os le(ales concedidos al efecto.

entencia fi!"e !eall' should be unde!stood as one +hich is definite. Because, it is onl' +hen 1ud("ent

is such that, as Medina ' Ma!anon puts it, the c!i"e is confi!"ed G en condena dete!"inada o!, in the

+o!ds of F!oi<a!d, the (uilt of the accused beco"es G una ve!dad le(al. P!io! the!eto, should the

accused die, acco!din( to Hiada, no ha' le(al"ente, en tal caso, ni !eo, ni delito, ni !esponsabilidad

c!i"inal de nin(una clase. And, as *ud(e Vapunan +ell e7plained, +hen a defendant dies befo!e

1ud("ent beco"es e7ecuto!', the!e cannot be an' dete!"ination b' final 1ud("ent +hethe! o! not the

felon' upon +hich the civil action "i(ht a!ise e7ists, fo! the si"ple !eason that the!e is no pa!t'

defendant. 93 Vapunan, Revised Penal Code, Annotated, p. ;2#. enato! =!ancisco holds the sa"e vie+.

=!ancisco, Revised Penal Code, Boo6 One, 2nd ed., pp. 8$-8&%

4he le(al i"po!t of the te!" final 1ud("ent is si"ila!l' !eflected in the Revised Penal Code. A!ticles 52

and 58 of that le(al bod' "ention the te!" final 1ud("ent in the sense that it is al!ead' enfo!ceable.

4his also b!in(s to "ind ection 5, Rule ##& of the Rules of Cou!t +hich states that a 1ud("ent in a

c!i"inal case beco"es final afte! the lapse of the pe!iod fo! pe!fectin( an appeal o! +hen the sentencehas been pa!tiall' o! totall' satisfied o! se!ved, o! the defendant has e7p!essl' +aived in +!itin( his !i(ht

to appeal.

B' fai! intend"ent, the le(al p!ecepts and opinions he!e collected funnel do+n to one positive

conclusion: 4he te!" final 1ud("ent e"plo'ed in the Revised Penal Code "eans 1ud("ent be'ond !ecall.

Reall', as lon( as a 1ud("ent has not beco"e e7ecuto!', it cannot be t!uthfull' said that defendant is

definitel' (uilt' of the felon' cha!(ed a(ainst hi".



Not that the "eanin( thus (iven to final 1ud("ent is +ithout !eason. =o! +he!e, as in this case, the !i(ht to

institute a sepa!ate civil action is not !ese!ved, the decision to be !ende!ed "ust, of necessit', cove! both

the c!i"inal and the civil aspects of the case. !eople "s. 1usico 9Nove"be! $, #$;2, 2 O.F., No. #%%, p.

$&;. ee also: !eople "s. oll , &8 Phil., &2&, &; Francisco, C!i"inal P!ocedu!e, #$8 ed., Hol. 3, pp.

2;, 2&. Co!!ectl', *ud(e Vapunan obse!ved that as the civil action is based solel' on the felon'

co""itted and of +hich the offende! "i(ht be found (uilt', the death of the offende! e7tin(uishes the

civil liabilit'. 3 Vapunan, Revised Penal Code, Annotated, supra.

e!e is the situation obtainin( in the p!esent case: Castillo@s c!i"inal liabilit' is out. is civil liabilit' is

sou(ht to be enfo!ced b' !eason of that c!i"inal liabilit'. But then, if +e dis"iss, as +e "ust, the c!i"inal

action and let the civil aspect !e"ain, +e +ill be faced +ith the ano"alous situation +he!eb' +e +ill be

called upon to cla"p civil liabilit' in a case +he!e the sou!ce the!eof G c!i"inal liabilit' G does not

e7ist. And, as +as +ell stated in 2autista, et al . "s. 3strella, et al ., CA-F.R.

No. #$22&-R, epte"be! #, #$8, no pa!t' can be found and held c!i"inall' liable in a civil suit, +hich

solel' +ould !e"ain if +e a!e to divo!ce it f!o" the c!i"inal p!oceedin(.

4his !ulin( of the Cou!t of Appeals in the (astillo case +as adopted b' the up!e"e Cou!t in the cases of !eople of the

!hilippines ". 2onifacio Alison, et al ., 4 !eople of the !hilippines ". Jaime Jose, et al . and !eople of the !hilippines

".Satorre!

b' dis"issin( the appeal in vie+ of the death of the accused pendin( appeal of said cases.

As held b' then up!e"e Cou!t *ustice =e!nando in the Alison case:

4he death of accused-appellant Bonifacio Alison havin( been established, and conside!in( that the!e is as

'et no final 1ud("ent in vie+ of the pendenc' of the appeal, the c!i"inal and civil liabilit' of the said

accused-appellant Alison +as e7tin(uished b' his death 9A!t. 8$, Revised Penal Code Re'es@ C!i"inal

)a+, #$5# Rev. Ed., p. 5#5, citin( People v. Castillo and Ofe"ia C.A., & O.F. ;%; conseuentl', the

case a(ainst hi" should be dis"issed.

On the othe! hand, this Cou!t in the subseuent cases of 2uena"entura 2elamala ". arcelino !olinar and am$erto

Torri#os ". The Honora$le (ourt of Appeals 8 !uled diffe!entl'. 3n the fo!"e!, the issue decided b' this cou!t +as: >hethe! the civil liabilit' of one accused of ph'sical in1u!ies +ho died befo!e final 1ud("ent is e7tin(uished b' his de"ise to the

e7tent of ba!!in( an' clai" the!efo!e a(ainst his estate. 3t +as the contention of the ad"inist!ato!-appellant the!ein that the

death of the accused p!io! to final 1ud("ent e7tin(uished all c!i"inal and civil liabilities !esultin( f!o" the offense, in

vie+ of A!ticle 8$, pa!a(!aph # of the Revised Penal Code. o+eve!, this cou!t !uled the!ein:

>e see no "e!it in the plea that the civil liabilit' has been e7tin(uished, in vie+ of the p!ovisions of the

Civil Code of the Philippines of #$% 9Rep. Act No. 8& that beca"e ope!ative ei(hteen 'ea!s afte! the

!evised Penal Code. As pointed out b' the Cou!t belo+, A!ticle of the Civil Code establishes a civil

action fo! da"a(es on account of ph'sical in1u!ies, enti!el' separate and distinct from the criminal

action.

A!t. . 3n cases of defa"ation, f!aud, and ph'sical in1u!ies, a civil action fo! da"a(es,

enti!el' sepa!ate and distinct f!o" the c!i"inal action, "a' be b!ou(ht b' the in1u!ed

pa!t'. uch civil action shall p!oceed independentl' of the c!i"inal p!osecution, and shall

!eui!e onl' a p!eponde!ance of evidence.

Assu"in( that fo! lac6 of e7p!ess !ese!vation, Bela"ala@s civil action fo! da"a(es +as to be conside!ed

instituted to(ethe! +ith the c!i"inal action still, since both p!oceedin(s +e!e te!"inated +ithout final

ad1udication, the civil action of the offended pa!t' unde! A!ticle "a' 'et be enfo!ced sepa!atel'.

3n Torri#os, the up!e"e Cou!t held that:

777 777 777

3t should be st!essed that the e7tinction of civil liabilit' follo+s the e7tinction of the c!i"inal liabilit'

unde! A!ticle 8$, onl' +hen the civil liabilit' a!ises f!o" the c!i"inal act as its onl' basis. tated

diffe!entl', +he!e the civil liabilit' does not e7ist independentl' of the c!i"inal !esponsibilit', the

e7tinction of the latte! b' death, ipso facto e7tin(uishes the fo!"e!, pro"ided , of cou!se, that death

supe!venes befo!e final 1ud("ent. 4he said p!inciple does not appl' in instant case +he!ein the civil



liabilit' sp!in(s neithe! solel' no! o!i(inall' f!o" the c!i"e itself but f!o" a civil cont!act of pu!chase

and sale. 9E"phasis ou!s

777 777 777

3n the above case, the cou!t +as convinced that the civil liabilit' of the accused +ho +as cha!(ed +ith estafa

could li6e+ise t!ace its (enesis to A!ticles #$, 2% and 2# of the Civil Code since said accused had s+indled the

fi!st and second vendees of the p!ope!t' sub1ect "atte! of the cont!act of sale. 3t the!efo!e concluded:

Conseuentl', +hile the death of the accused he!ein e7tin(uished his c!i"inal liabilit' includin( fine, his civil

liabilit' based on the la+s of hu"an !elations !e"ains.

4hus it allo+ed the appeal to p!oceed +ith !espect to the civil liabilit' of the accused, not+ithstandin( the e7tinction of

his c!i"inal liabilit' due to his death pendin( appeal of his conviction.

4o fu!the! 1ustif' its decision to allo+ the civil liabilit' to su!vive, the cou!t !elied on the follo+in( !atiocination: ince

ection 2#, Rule of the Rules of Cou!t 9 !eui!es the dis"issal of all "one' clai"s a(ainst the defendant +hose death

occu!!ed p!io! to the final 1ud("ent of the Cou!t of =i!st 3nstance 9C=3, then it can be infe!!ed that actions fo! !ecove!' of

"one' "a' continue to be hea!d on appeal, +hen the death of the defendant supe!venes afte! the C=3 had !ende!ed its

1ud("ent. 3n such case, e7plained this t!ibunal, the na"e of the offended pa!t' shall be included in the title of the case as plaintiff-appellee and the le(al !ep!esentative o! the hei!s of the deceased-accused should be substituted as defendants-

appellants.

3t is, thus, evident that as 1u!isp!udence evolved f!o" Castillo to 4o!!i1os, the !ule established +as that the su!vival of the

civil liabilit' depends on +hethe! the sa"e can be p!edicated on sou!ces of obli(ations othe! than delict. tated diffe!entl',

the clai" fo! civil liabilit' is also e7tin(uished to(ethe! +ith the c!i"inal action if it +e!e solel' based the!eon, i.e., civil

liabilit' e' delicto.

o+eve!, the up!e"e Cou!t in !eople ". Senda)diego, et al . 10 depa!ted f!o" this lon(-established p!inciple of la+. 3n

this case, accused enda'die(o +as cha!(ed +ith and convicted b' the lo+e! cou!t of "alve!sation th!u falsification of

public docu"ents. enda'die(o@s death supe!vened du!in( the pendenc' of the appeal of his conviction.

4his cou!t in an unp!ecedented "ove !esolved to dis"iss enda'die(o@s appeal but onl' to the e7tent of his c!i"inal

liabilit'. is civil liabilit' +as allo+ed to su!vive althou(h it +as clea! that such clai" the!eon +as e7clusivel' dependent

on the c!i"inal action al!ead' e7tin(uished. 4he le(al i"po!t of such decision +as fo! the cou!t to continue e7e!cisin(

appellate 1u!isdiction ove! the enti!e appeal, passin( upon the co!!ectness of enda'die(o@s conviction despite dis"issal of

the c!i"inal action, fo! the pu!pose of dete!"inin( if he is civill' liable. 3n doin( so, this Cou!t issued a Resolution of *ul'

8, #$55 statin( thus:

4he clai" of co"plainant P!ovince of Pan(asinan fo! the civil liabilit' su!vived enda'die(o because his

death occu!!ed afte! final 1ud("ent +as !ende!ed b' the Cou!t of =i!st 3nstance of Pan(asinan, +hich

convicted hi" of th!ee co"ple7 c!i"es of "alve!sation th!ou(h falsification and o!de!ed hi" to

inde"nif' the P!ovince in the total su" of P&#,%;8.2 9should be P5,%;8.2.

4he civil action fo! the civil liabilit' is dee"ed i"pliedl' instituted +ith the c!i"inal action in the

absence of e7p!ess +aive! o! its !ese!vation in a sepa!ate action 9ec. #, Rule ### of the Rules of Cou!t.

4he civil action fo! the civil liabilit' is sepa!ate and distinct f!o" the c!i"inal action 9People and Manuel

vs. Colo"a, #% Phil. #285 Roa vs. /e la C!u<, #%5 Phil. 8.

>hen the action is fo! the !ecove!' of "one' and the defendant dies befo!e final 1ud("ent in the Cou!t of

=i!st 3nstance, it shall be dis"issed to be p!osecuted in the "anne! especiall' p!ovided in Rule 85 of the

Rules of Cou!t 9ec. 2#, Rule of the Rules of Cou!t.

4he i"plication is that, if the defendant dies afte! a "one' 1ud("ent had been !ende!ed a(ainst hi" b'

the Cou!t of =i!st 3nstance, the action su!vives hi". 3t "a' be continued on appeal 94o!!i1os vs. Cou!t of

Appeals, )-;%&, Octobe! 2;, #$5 &5 CRA $;.

4he accountable public office! "a' still be civill' liable fo! the funds i"p!ope!l' disbu!sed althou(h he

has no c!i"inal liabilit' 9?.. vs. Elvina, 2; Phil. 2% Philippine National Ban6 vs. 4u(ab, && Phil. 8.



3n vie+ of the fo!e(oin(, not+ithstandin( the dis"issal of the appeal of the deceased enda'die(o insofa!

as his c!i"inal liabilit' is conce!ned, the Cou!t Resolved to continue e7e!cisin( appellate 1u!isdiction ove!

his possible civil liabilit' fo! the "one' clai"s of the P!ovince of Pan(asinan a!isin( f!o" the alle(ed

c!i"inal acts co"plained of, as if no c!i"inal case had been instituted a(ainst hi", thus "a6in(

applicable, in dete!"inin( his civil liabilit', A!ticle % of the Civil Code . . . and, fo! that pu!pose, his

counsel is di!ected to info!" this Cou!t +ithin ten 9#% da's of the na"es and add!esses of the decedent@s

hei!s o! +hethe! o! not his estate is unde! ad"inist!ation and has a dul' appointed 1udicial ad"inist!ato!.

aid hei!s o! ad"inist!ato! +ill be substituted fo! the deceased insofa! as the civil action fo! the civil

liabilit' is conce!ned 9ecs. #& and #5, Rule , Rules of Cou!t.

ucceedin( cases 11 !aisin( the identical issue have "aintained adhe!ence to ou! !ulin( in Senda)diego in othe! +o!ds,

the' +e!e a !eaffi!"ance of ou! abandon"ent of the settled !ule that a civil liabilit' solel' ancho!ed on the c!i"inal 9civil

liabilit' e' delicto is e7tin(uished upon dis"issal of the enti!e appeal due to the de"ise of the accused.

But +as it 1udicious to have abandoned this old !ulin( A !e-e7a"ination of ou! decision in Senda)diego i"pels us to

!eve!t to the old !ulin(.

4o !estate ou! !esolution of *ul' 8, #$55 in Senda)diego: 4he !esolution of the civil action i"pliedl' instituted in the

c!i"inal action can p!oceed i!!espective of the latte!@s e7tinction due to death of the accused pendin( appeal of hisconviction, pu!suant to A!ticle % of the Civil Code and ection 2#, Rule of the Revised Rules of Cou!t.

A!ticle % of the Civil Code p!ovides:

>hen a sepa!ate civil action is b!ou(ht to de"and civil liabilit' a!isin( f!o" a c!i"inal offense, and no

c!i"inal p!oceedin(s a!e instituted du!in( the pendenc' of the civil case, a p!eponde!ance of evidence

shall li6e+ise be sufficient to p!ove the act co"plained of.

Clea!l', the te7t of A!ticle % could not possibl' lend suppo!t to the !ulin( in Senda)diego. No+he!e in its te7t is the!e a

(!ant of autho!it' to continue e7e!cisin( appellate 1u!isdiction ove! the accused@s civil liabilit' e' delicto+hen his death

supe!venes du!in( appeal. >hat A!ticle % !eco(ni<es is an alte!native and sepa!ate civil action +hich "a' be b!ou(ht tode"and civil liabilit' a!isin( f!o" a c!i"inal offense independentl' of an' c!i"inal action. 3n the event that no c!i"inal

p!oceedin(s a!e instituted du!in( the pendenc' of said civil case, the uantu" of evidence needed to p!ove the c!i"inal

act +ill have to be that +hich is co"patible +ith civil liabilit' and that is, p!eponde!ance of evidence and not p!oof of

(uilt be'ond !easonable doubt. Citin( o! invo6in( A!ticle % to 1ustif' the su!vival of the civil action despite e7tinction of

the c!i"inal +ould in effect "e!el' be( the uestion of +hethe! civil liabilit' e' delicto su!vives upon e7tinction of the

c!i"inal action due to death of the accused du!in( appeal of his conviction. 4his is because +hethe! asse!ted in

the c!i"inal action o! in a sepa!ate civil action, civil liabilit' e' delicto is e7tin(uished b' the death of the accused +hile

his conviction is on appeal. A!ticle 8$ of the Revised Penal Code is clea! on this "atte!:

A!t. 8$. Ho% criminal lia$ilit) is totall) e'tinguished . G C!i"inal liabilit' is totall' e7tin(uished:

#. B' the death of the convict, as to the pe!sonal penalties and as to pecunia!' penalties, liabilit' the!efo!

is e7tin(uished onl' +hen the death of the offende! occu!s befo!e final 1ud("ent

777 777 777

o+eve!, the !ulin( in Senda)diego deviated f!o" the e7p!essed intent of A!ticle 8$. 3t allo+ed clai"s fo! civil

liabilit' e' delicto to su!vive b' ipso facto t!eatin( the civil action i"pliedl' instituted +ith the c!i"inal, as one filed

unde! A!ticle %, as thou(h no c!i"inal p!oceedin(s had been filed but "e!el' a sepa!ate civil action. 4his had the effect

of conve!tin( such clai"s f!o" one +hich is dependent on the outco"e of the c!i"inal action to an enti!el' ne+ and

sepa!ate one, the p!osecution of +hich does not even necessitate the filin( of c!i"inal p!oceedin(s.12

One +ould be ha!d put to pinpoint the statuto!' autho!it' fo! such a t!ansfo!"ation. 3t is to be bo!ne in "ind that in !ecove!in( civil

liabilit' e' delicto, the sa"e has pe!fo!ce to be dete!"ined in the c!i"inal action, !ooted as it is in the cou!t@s

p!onounce"ent of the (uilt o! innocence of the accused. 4his is but to !ende! fealt' to the intend"ent of A!ticle #%% of the

Revised Penal Code +hich p!ovides that eve!' pe!son c!i"inall' liable fo! a felon' is also civill' liable. 3n such cases,

e7tinction of the c!i"inal action due to death of the accused pendin( appeal inevitabl' si(nifies the conco"itant e7tinction

of the civil liabilit'. ors &mnia Sol"i. /eath dissolves all thin(s.

3n su", in pu!suin( !ecove!' of civil liabilit' a!isin( f!o" c!i"e, the final dete!"ination of the c!i"inal liabilit' is a

condition p!ecedent to the p!osecution of the civil action, such that +hen the c!i"inal action is e7tin(uished b' the de"ise



of accused-appellant pendin( appeal the!eof, said civil action cannot su!vive. 4he clai" fo! civil liabilit' sp!in(s out of

and is dependent upon facts +hich, if t!ue, +ould constitute a c!i"e. uch civil liabilit' is an inevitable conseuence of

the c!i"inal liabilit' and is to be decla!ed and enfo!ced in the c!i"inal p!oceedin(. 4his is to be distin(uished f!o" that

+hich is conte"plated unde! A!ticle % of the Civil Code +hich !efe!s to the institution of a sepa!ate civil action that does

not d!a+ its life f!o" a c!i"inal p!oceedin(. 4he enda'die(o !esolution of *ul' 8, #$55, ho+eve!, failed to ta6e note of

this funda"ental distinction +hen it allo+ed the su!vival of the civil action fo! the !ecove!' of civil liabilit' e' delicto b'

t!eatin( the sa"e as a sepa!ate civil action !efe!!ed to unde! A!ticle %. u!el', it +ill ta6e "o!e than 1ust a su""a!'

1udicial p!onounce"ent to autho!i<e the conve!sion of said civil action to an independent one such as that conte"plated

unde! A!ticle %.

3!onicall' ho+eve!, the "ain decision in enda'die(o did not appl' A!ticle %, the !esolution of *ul' 8, #$55

not+ithstandin(. 4hus, it +as held in the "ain decision:

enda'die(o@s appeal +ill be !esolved onl' fo! the pu!pose of sho+in( his c!i"inal liabilit' +hich is the

basis of the civil liabilit' fo! +hich his estate +ould be liable. 1

3n othe! +o!ds, the Cou!t, in !esolvin( the issue of his civil liabilit', conco"itantl' "ade a dete!"ination on +hethe!

enda'die(o, on the basis of evidenced adduced, +as indeed (uilt' be'ond !easonable doubt of co""ittin( the offense

cha!(ed. 4hus, it upheld enda'die(o@s conviction and p!onounced the sa"e as the source of his civil liabilit'.Conseuentl', althou(h A!ticle % +as not applied in the final dete!"ination of enda'die(o@s civil liabilit', the!e +as a

!eopenin( of the c!i"inal action al!ead' e7tin(uished +hich se!ved as basis fo! enda'die(o@s civil liabilit'. >e !eite!ate:

?pon death of the accused pendin( appeal of his conviction, the c!i"inal action is e7tin(uished inas"uch as the!e is no

lon(e! a defendant to stand as the accused the civil action instituted the!ein fo! !ecove!' of civil liabilit' e' delicto is ipso

facto e7tin(uished, (!ounded as it is on the c!i"inal.

ection 2#, Rule of the Rules of Cou!t +as also invo6ed to se!ve as anothe! basis fo! the Senda)diego!esolution of *ul'

8, #$55. 3n citin( ec. 2#, Rule of the Rules of Cou!t, the Cou!t "ade the infe!ence that civil actions of the t'pe

involved in Senda)diego consist of "one' clai"s, the !ecove!' of +hich "a' be continued on appeal if defendant dies

pendin( appeal of his conviction b' holdin( his estate liable the!efo!. ence, the Cou!t@s conclusion:

>hen the action is fo! the !ecove!' of "one' and the defendant dies befo!e final 1ud("ent in the cou!t

of =i!st 3nstance, it shall be dis"issed to be p!osecuted in the "anne! especiall' p!ovided in Rule 85 of

the Rules of Cou!t 9ec. 2#, Rule of the Rules of Cou!t.

4he i"plication is that, if the defendant dies afte! a "one' 1ud("ent had been !ende!ed a(ainst hi" b'

the Cou!t of =i!st 3nstance, the action su!vives hi". 3t "a' be continued on appeal.

adl', !eliance on this p!ovision of la+ is "isplaced. =!o" the standpoint of p!ocedu!al la+, this cou!se ta6en

inSenda)diego cannot be sanctioned. As co!!ectl' obse!ved b' *ustice Re(alado:

777 777 777

3 do not, ho+eve!, a(!ee +ith the 1ustification advanced in both Torri#os and Senda)diego +hich, !el'in(

on the p!ovisions of ection 2#, Rule of the Rules of Cou!t, d!e+ the st!ained i"plication the!ef!o" that

+he!e the civil liabilit' instituted to(ethe! +ith the c!i"inal liabilities had al!ead' passed be'ond the

1ud("ent of the then Cou!t of =i!st 3nstance 9no+ the Re(ional 4!ial Cou!t, the Cou!t of Appeals can

continue to e7e!cise appellate 1u!isdiction the!eove! despite the e7tin(uish"ent of the co"ponent c!i"inal

liabilit' of the deceased. 4his p!onounce"ent, +hich has been follo+ed in the Cou!t@s 1ud("ents

subseuent and consonant to Torri#os and Senda)diego, should be set aside and abandoned as bein(

clea!l' e!!oneous and un1ustifiable.

aid ection 2# of Rule is a !ule of civil p!ocedu!e in o!dina!' civil actions. 4he!e is neithe! autho!it'

no! 1ustification fo! its application in c!i"inal p!ocedu!e to civil actions instituted to(ethe! +ith and as

pa!t of c!i"inal actions. No! is the!e an' autho!it' in la+ fo! the su""a!' conve!sion f!o" the latte!

cate(o!' of an o!dina!' civil action upon the death of the offende!. . . .

Mo!eove!, the civil action i"pliedl' instituted in a c!i"inal p!oceedin( fo! !ecove!' of civil liabilit' e' delicto can ha!dl'

be cate(o!i<ed as an o!dina!' "one' clai" such as that !efe!!ed to in ec. 2#, Rule enfo!ceable befo!e the estate of the

deceased accused.



O!dina!' "one' clai"s !efe!!ed to in ection 2#, Rule "ust be vie+ed in li(ht of the p!ovisions of ection , Rule 8&

involvin( clai"s a(ainst the estate, +hich in Senda)diego +as held liable fo! enda'die(o@s civil liabilit'. >hat a!e

conte"plated in ection 2# of Rule , in !elation to ection of Rule 8&, 14 a!e cont!actual "one' clai"s +hile the clai"s

involved in civil liabilit' e' delicto "a' include even the !estitution of pe!sonal o! !eal p!ope!t'. 1 ection , Rule 8&

p!ovides an e7clusive enu"e!ation of +hat clai"s "a' be filed a(ainst the estate. 4hese a!e: fune!al e7penses, e7penses

fo! the last illness, 1ud("ents fo! "one' and clai" a!isin( f!o" cont!acts, e7p!essed o! i"plied. 3t is clea! that "one'

clai"s a!isin( f!o" delict do not fo!" pa!t of this e7clusive enu"e!ation. ence, the!e could be no le(al basis in 9#

t!eatin( a civil action e' delicto as an o!dina!' cont!actual "one' clai" !efe!!ed to in ection 2#, Rule of the Rules of

Cou!t and 92 allo+in( it to su!vive b' filin( a clai" the!efo! befo!e the estate of the deceased accused. Rathe!, it should

be e7tin(uished upon e7tinction of the c!i"inal action en(ende!ed b' the death of the accused pendin( finalit' of his

conviction.

Acco!din(l', +e !ule: if the p!ivate offended pa!t', upon e7tinction of the civil liabilit' e' delicto desi!es to !ecove!

da"a(es f!o" the same act or omission complained of, he "ust sub1ect to ection #, Rule ### 1! 9#$8 Rules on C!i"inal

P!ocedu!e as a"ended file a sepa!ate civil action, this ti"e p!edicated not on the felon' p!eviousl' cha!(ed but on othe!

sou!ces of obli(ation. 4he sou!ce of obli(ation upon +hich the sepa!ate civil action is p!e"ised dete!"ines a(ainst +ho"

the sa"e shall be enfo!ced.

3f the sa"e act o! o"ission co"plained of also a!ises f!o" quasi4delict o! "a', b' p!ovision of la+, !esult in an in1u!' to pe!son o! p!ope!t' 9!eal o! pe!sonal, the sepa!ate civil action "ust be filed a(ainst the e7ecuto! o! ad"inist!ato! 1 of the

estate of the accused pu!suant to ec. #, Rule 85 of the Rules of Cou!t:

ec. #. Actions %hich ma) and %hich ma) not $e $rought against e'ecutor or administrator . G No action

upon a clai" fo! the !ecove!' of "one' o! debt o! inte!est the!eon shall be co""enced a(ainst the

e7ecuto! o! ad"inist!ato! but actions to !ecove! !eal o! pe!sonal p!ope!t', o! an inte!est the!ein, f!o" the

estate, o! to enfo!ce a lien the!eon, and actions to reco"er damages for an in#ur) to person or propert),

real or personal, "a' be co""enced a(ainst hi".

4his is in consonance +ith ou! !ulin( in Bela"ala 18 +he!e +e held that, in !ecove!in( da"a(es fo! in1u!' to pe!sons th!u

an independent civil action based on A!ticle of the Civil Code, the sa"e "ust be filed a(ainst the e7ecuto! o!

ad"inist!ato! of the estate of deceased accused and not a(ainst the estate unde! ec. , Rule 8& because this !ule e7plicitl'

li"its the clai" to those fo! fune!al e7penses, e7penses fo! the last sic6ness of the decedent, 1ud("ent fo! "one' and

clai"s a!isin( f!o" cont!act, e7p!ess o! i"plied. Cont!actual "one' clai"s, +e st!essed, !efe!s onl' to purel) personal

o$ligations othe! than those +hich have thei! sou!ce in delict o! to!t.

Conve!sel', if the sa"e act o! o"ission co"plained of also a!ises f!o" cont!act, the sepa!ate civil action "ust be filed

a(ainst the estate of the accused, pu!suant to ec. , Rule 8& of the Rules of Cou!t.

=!o" this len(th' disuisition, +e su""a!i<e ou! !ulin( he!ein:

#. /eath of the accused pendin( appeal of his conviction e7tin(uishes his c!i"inal liabilit' as +ell as the civil liabilit'

based solel' the!eon. As opined b' *ustice Re(alado, in this !e(a!d, the death of the accused p!io! to final 1ud("ent

te!"inates his c!i"inal liabilit' and onl) the civil liabilit' directl) a!isin( f!o" and based solel' on the offense

co""itted, i.e., civil liabilit' e' delicto in senso strictiore.

2. Co!olla!il', the clai" fo! civil liabilit' su!vives not+ithstandin( the death of accused, if the sa"e "a' also be

p!edicated on a sou!ce of obli(ation othe! than delict. 19 A!ticle ##5 of the Civil Code enu"e!ates these othe! sou!ces of

obli(ation f!o" +hich the civil liabilit' "a' a!ise as a !esult of the sa"e act o! o"ission:

a )a+ 20

b Cont!acts

c uasi-cont!acts

d . . .

e uasi-delicts



. >he!e the civil liabilit' su!vives, as e7plained in Nu"be! 2 above, an action fo! !ecove!' the!efo! "a' be pu!sued but

onl' b' +a' of filin( a sepa!ate civil action and sub1ect to ection #, Rule ### of the #$8 Rules on C!i"inal P!ocedu!e as

a"ended. 4his sepa!ate civil action "a' be enfo!ced eithe! a(ainst the e7ecuto!Sad"inist!ato! o! the estate of the accused,

dependin( on the sou!ce of obli(ation upon +hich the sa"e is based as e7plained above.

;. =inall', the p!ivate offended pa!t' need not fea! a fo!feitu!e of his !i(ht to file this sepa!ate civil action b' p!esc!iption,

in cases +he!e du!in( the p!osecution of the c!i"inal action and p!io! to its e7tinction, the p!ivate-offended pa!t'

instituted to(ethe! the!e+ith the civil action. 3n such case, the statute of li"itations on the civil liabilit' is dee"ed

inte!!upted du!in( the pendenc' of the c!i"inal case, confo!"abl' +ith p!ovisions of A!ticle ## 21 of the Civil Code,

that should the!eb' avoid an' app!ehension on a possible p!ivation of !i(ht b' p!esc!iption. 22

Appl'in( this set of !ules to the case at bench, +e hold that the death of appellant Ba'otas e7tin(uished his c!i"inal

liabilit' and the civil liabilit' based solel' on the act co"plained of, i.e., !ape. Conseuentl', the appeal is he!eb'

dis"issed +ithout ualification.

>ERE=ORE, the appeal of the late Ro(elio Ba'otas is /3M3E/ +ith costs de oficio.


SUPREME COURTManila

ECON/ /3H33ON

G.R. No. 18204 January 1, 2014

T*E METROPOL'TAN %AN< AN( TRUST COMPANY, Petitione!,

vs.

ANA GRACE ROSALES AN( YO YU< TO, Respondents.

/ E C 3 3 O N

(EL CAST'LLO, J.:

Ban6 deposits, +hich a!e in the natu!e of a si"ple loan o! "utuu",# "ust be paid upon de"and b' the deposito!.2

4his Petition fo! Revie+ on Ce!tio!a!i unde! Rule ; of the Rules of Cou!t assails the Ap!il 2, 2%%8 /ecision ; and the

Ma' %, 2%%8 Resolution of he Cou!t of Appeals CA in CA-F.R. CH No. 8$%8&.

=actual Antecedents

Petitione! Met!opolitan Ban6 and 4!ust Co"pan' is a do"estic ban6in( co!po!ation dul' o!(ani<ed and e7istin( unde! the

la+s of the Philippines.& Respondent Ana F!ace Rosales 9Rosales is the o+ne! of China Folden B!id(e 4!avel

e!vices,5 a t!avel a(enc'.8 Respondent o u6 4o is the "othe! of !espondent Rosales.$

3n 2%%%, !espondents opened a *oint Peso Account#% +ith petitione!s P!itil-4ondo B!anch.## As of Au(ust ;, 2%%;,

!espondents *oint Peso Account sho+ed a balance of P2,#,&$.2.#2

3n Ma' 2%%2, !espondent Rosales acco"panied he! client )iu Chiu =an(, a 4ai+anese National appl'in( fo! a !eti!ees

visa f!o" the Philippine )eisu!e and Reti!e"ent Autho!it' 9P)RA, to petitione!s b!anch in Escolta to open a savin(saccount, as !eui!ed b' the P)RA.# ince )iu Chiu =an( could spea6 onl' in Manda!in, !espondent Rosales acted as an

inte!p!ete! fo! he! .#;

On Ma!ch , 2%%, !espondents opened +ith petitione!s P!itil-4ondo B!anch a *oint /olla! Account # +ith an initial

deposit of ?W#;,%%%.%%.#&

On *ul' #, 2%%, petitione! issued a old Out o!de! a(ainst !espondents accounts.#5









































On epte"be! , 2%%, petitione!, th!ou(h its pecial Audit /epa!t"ent ead Antonio 3van A(ui!!e, filed befo!e the

Office of the P!osecuto! of Manila a c!i"inal case fo! Estafa th!ou(h =alse P!etences, Mis!ep!esentation, /eceit, and ?se

of =alsified /ocu"ents, doc6eted as 3.. No. %3-2%#;,#8 a(ainst !espondent Rosales.#$Petitione! accused !espondent

Rosales and an unidentified +o"an as the ones !esponsible fo! the unautho!i<ed and f!audulent +ithd!a+al of

?W5,%%%.%% f!o" )iu Chiu =an(s dolla! account +ith petitione!s Escolta B!anch. 2%Petitione! alle(ed that on =eb!ua!'

, 2%%, its b!anch in Escolta !eceived f!o" the P)RA a >ithd!a+al Clea!ance fo! the dolla! account of )iu Chiu

=an(2# that in the afte!noon of the sa"e da', !espondent Rosales +ent to petitione!s Escolta B!anch to info!" its B!anch

ead, Celia A. Futie!!e< 9Futie!!e<, that )iu Chiu =an( +as (oin( to +ithd!a+ he! dolla! deposits in cash 22 that

Futie!!e< told !espondent Rosales to co"e bac6 the follo+in( da' because the ban6 did not have enou(h dolla!s2 that on

=eb!ua!' &, 2%%, !espondent Rosales acco"panied an unidentified i"posto! of )iu Chiu =an( to the ban6 2; that the

i"posto! +as able to +ithd!a+ )iu Chiu =an(s dolla! deposit in the a"ount of ?W5,%%%.%% 2 that on Ma!ch , 2%%,

!espondents opened a dolla! account +ith petitione! and that the ban6 late! discove!ed that the se!ial nu"be!s of the

dolla! notes deposited b' !espondents in the a"ount of ?W##,8%%.%% +e!e the sa"e as those +ithd!a+n b' the

i"posto! .2&

Respondent Rosales, ho+eve!, denied ta6in( pa!t in the f!audulent and unautho!i<ed +ithd!a+al f!o" the dolla! account

of )iu Chiu =an(.25 Respondent Rosales clai"ed that she did not (o to the ban6 on =eb!ua!' , 2%%. 28 Neithe! did she

info!" Futie!!e< that )iu Chiu =an( +as (oin( to close he! account. 2$ Respondent Rosales fu!the! clai"ed that afte! )iu

Chiu =an( opened an account +ith petitione!, she lost t!ac6 of he!.%

Respondent Rosales ve!sion of the events thatt!anspi!ed the!eafte! is as follo+s:

On =eb!ua!' &, 2%%, she !eceived a call f!o" Futie!!e< info!"in( he! that )iu Chiu =an( +as at the ban6 to close he!

account.# At noon of the sa"e da', !espondent Rosales +ent to the ban6 to "a6e a t!ansaction. 2>hile she +as

t!ansactin( +ith the telle!, she cau(ht a (li"pse of a +o"an seated at the des6 of the B!anch Ope!atin( Office!, Melinda

Pe!e< 9Pe!e<. Afte! co"pletin( he! t!ansaction, !espondent Rosales app!oached Pe!e< +ho info!"ed he! that )iu Chiu

=an( had closed he! account and had al!ead' left.; Pe!e< then (ave a cop' of the >ithd!a+al Clea!ance issued b' the

P)RA to !espondent Rosales. On *une #&, 2%%, !espondent Rosales !eceived a call f!o" )iu Chiu =an( inui!in( about

the e7tension of he! P)RA Hisa and he! dolla! account. & 3t +as onl' then that )iu Chiu =an( found out that he! account

had been closed +ithout he! 6no+led(e.5 Respondent Rosales then +ent to the ban6 to info!" Futie!!e< and Pe!e< of the

unautho!i<ed +ithd!a+al.8 On *une 2, 2%%, !espondent Rosales and )iu Chiu =an( +ent to the P)RA Office, +he!e

the' +e!e info!"ed that the >ithd!a+al Clea!ance +as issued on the basis of a pecial Po+e! of Atto!ne' 9PA e7ecuted

b' )iu Chiu =an( in favo! of a ce!tain Richa!d o.$ )iu Chiu =an(, ho+eve!, denied e7ecutin( the PA.;% 4he follo+in(

da', !espondent Rosales, )iu Chiu =an(, Futie!!e<, and Pe!e< "et at the P)RA Office to discuss the unautho!i<ed

+ithd!a+al.;# /u!in( the confe!ence, the ban6 office!s assu!ed )iu Chiu =an( that the "one' +ould be !etu!ned to he!.;2

On /ece"be! #, 2%%, the Office of the Cit' P!osecuto! of Manila issued a Resolution dis"issin( the c!i"inal case fo!

lac6 of p!obable cause.; ?nfa<ed, petitione! "oved fo! !econside!ation.

On epte"be! #%, 2%%;, !espondents filed befo!e the Re(ional 4!ial Cou!t 9R4C of Manila a Co"plaint ;; fo! B!each of

Obli(ation and Cont!act +ith /a"a(es, doc6eted as Civil Case No. %;##%8$ and !affled to B!anch 2#, a(ainst petitione!.Respondents alle(ed that the' atte"pted seve!al ti"es to +ithd!a+ thei! deposits but +e!e unable to because petitione!

had placed thei! accounts unde! old Out status.; No e7planation, ho+eve!, +as (iven b' petitione! as to +h' it issued

the old Out o!de!.;& 4hus, the' p!a'ed that the old Out o!de! be lifted and that the' be allo+ed to +ithd!a+ thei!

deposits.;5 4he' li6e+ise p!a'ed fo! actual, "o!al, and e7e"pla!' da"a(es, as +ell as atto!ne's fees.;8

Petitione! alle(ed that !espondents have no cause of action because it has a valid !eason fo! issuin( the old Out

o!de! .;$ 3t ave!!ed that due to the f!audulent sche"e of !espondent Rosales, it +as co"pelled to !ei"bu!se )iu Chiu =an(

the a"ount of ?W5,%%%.%%% and to file a c!i"inal co"plaint fo! Estafa a(ainst !espondent Rosales.#

>hile the case fo! b!each of cont!act +as bein( t!ied, the Cit' P!osecuto! of Manila issued a Resolution dated =eb!ua!'

#8, 2%%, !eve!sin( the dis"issal of the c!i"inal co"plaint. 2 An 3nfo!"ation, doc6eted as C!i"inal Case No. %-2&#%, +as then filed cha!(in( !espondent Rosales +ith Estafa befo!e B!anch #; of the R4C of Manila.;

Rulin( of the Re(ional 4!ial Cou!t

On *anua!' #, 2%%5, the R4C !ende!ed a /ecision findin( petitione! liable fo! da"a(es fo! b!each of cont!act. & 4he

R4C !uled that it is the dut' of petitione! to !elease the deposit to !espondents as the act of +ithd!a+al of a ban6 deposit is

an act of de"and b' the c!edito! .5 4he R4C also said that the !ecou!se of petitione! is a(ainst its ne(li(ent e"plo'ees and

not a(ainst !espondents.8 4he dispositive po!tion of the /ecision !eads:



































































































>ERE=ORE, p!e"ises conside!ed, 1ud("ent is he!eb' !ende!ed o!de!in( Jpetitione!K ME4ROPO)34AN BANV D

4R?4 COMPAN to allo+ J!espondentsK ANA FRACE ROA)E and O ?V 4O to +ithd!a+ thei! avin(s and

4i"e /eposits +ith the a(!eed inte!est, actual da"a(es of P%,%%%.%%, "o!al da"a(es of P%,%%%.%%, e7e"pla!' da"a(es

of P%,%%%.%% and #% of the a"ount due J!espondentsK as and fo! atto!ne's fees plus the cost of suit.

4he counte!clai" of Jpetitione!K is he!eb' /3M3E/ fo! lac6 of "e!it.

O OR/ERE/.$

Rulin( of the Cou!t of Appeals

A((!ieved, petitione! appealed to the CA.

On Ap!il 2, 2%%8, the CA affi!"ed the !ulin( of the R4C but deleted the a+a!d of actual da"a(es because the basis fo!

J!espondentsK clai" fo! such da"a(es is the p!ofessional fee that the' paid to thei! le(al counsel fo! J!espondentK

Rosales defense a(ainst the c!i"inal co"plaint of Jpetitione!K fo! estafa befo!e the Office of the Cit' P!osecuto! of

Manila and not this case.&% 4hus, the CA disposed of the case in this +ise:

>ERE=ORE, p!e"ises conside!ed, the /ecision dated *anua!' #, 2%%5 of the R4C, B!anch 2#, Manila in Civil Case No. %;-##%8$ is A==3RME/ +ith MO/3=3CA43ON that the a+a!d of actual da"a(es to J!espondentsK Rosales and o

u6 4o is he!eb' /E)E4E/.

O OR/ERE/.&#

Petitione! sou(ht !econside!ation but the sa"e +as denied b' the CA in its Ma' %, 2%%8 Resolution.&2

3ssues

ence, this !ecou!se b' petitione! !aisin( the follo+in( issues:

A. 4E JCAK ERRE/ 3N R?)3NF 4A4 4E O)/-O?4 PROH33ON 3N 4E APP)3CA43ON AN/

AFREEMEN4 =OR /EPO34 ACCO?N4 /OE NO4 APP) 3N 43 CAE.

B. 4E JCAK ERRE/ >EN 34 R?)E/ 4A4 PE4343ONER EMP)OEE >ERE NEF)3FEN4 3N

RE)EA3NF )3? C3? =ANF =?N/.

C. 4E JCAK ERRE/ 3N A==3RM3NF 4E A>AR/ O= MORA) /AMAFE, EEMP)AR /AMAFE,

AN/ A44ORNE =EE.&

Petitione!s A!(u"ents

Petitione! contends that the CA e!!ed in not appl'in( the old Out clause stipulated in the Application and A(!ee"ent

fo! /eposit Account.&; 3t posits that the said clause applies to an' and all 6inds of obli(ation as it does not distin(uish

bet+een obli(ations a!isin( e7 cont!actu o! e7 delictu.& Petitione! also contends that the f!aud co""itted b' !espondent

Rosales +as clea!l' established b' evidence && thus, it +as 1ustified in issuin( the old-Out o!de!. &5 Petitione! li6e+ise

denies that its e"plo'ees +e!e ne(li(ent in !eleasin( the dolla!s. &8 3t clai"s that it +as the deception e"plo'ed b'

!espondent Rosales that caused petitione!s e"plo'ees to !elease )iu Chiu =an(s funds to the i"posto!.&$

)astl', petitione! puts in issue the a+a!d of "o!al and e7e"pla!' da"a(es and atto!ne's fees. 3t insists that !espondents

failed to p!ove that it acted in bad faith o! in a +anton, f!audulent, opp!essive o! "alevolent "anne!.5%

Respondents A!(u"ents

Respondents, on the othe! hand, a!(ue that the!e is no le(al basis fo! petitione! to +ithhold thei! deposits because the'

have no "oneta!' obli(ation to petitione!.5# 4he' insist that petitione! "ise!abl' failed to p!ove its accusations a(ainst

!espondent Rosales.52 3n fact, no docu"enta!' evidence +as p!esented to sho+ that !espondent Rosales pa!ticipated in the

unautho!i<ed +ithd!a+al.5 4he' also uestion the fact that the list of the se!ial nu"be!s of the dolla! notes f!audulentl'

+ithd!a+n on =eb!ua!' &, 2%%, +as not si(ned o! ac6no+led(ed b' the alle(ed i"posto!. 5; Respondents li6e+ise

"aintain that +hat +as established du!in( the t!ial +as the ne(li(ence of petitione!s e"plo'ees as the' allo+ed the

+ithd!a+al of the funds +ithout p!ope!l' ve!if'in( the identit' of the deposito!. 5 =u!the!"o!e, !espondents contend that









































thei! deposits a!e in the natu!e of a loan thus, petitione! had the obli(ation to !etu!n the deposits to the" upon

de"and.5& =ailin( to do so "a6es petitione! liable to pa' !espondents "o!al and e7e"pla!' da"a(es, as +ell as atto!ne's

fees.55

Ou! Rulin(

4he Petition is be!eft of "e!it.

At the outset, the !elevant issues in this case a!e 9# +hethe! petitione! b!eached its cont!act +ith !espondents, and 92 if

so, +hethe! it is liable fo! da"a(es. 4he issue of +hethe! petitione!s e"plo'ees +e!e ne(li(ent in allo+in( the

+ithd!a+al of )iu Chiu =an(s dolla! deposits has no bea!in( in the !esolution of this case. 4hus, +e find no need to

discuss the sa"e.

4he old Out clause does not appl'

to the instant case.

Petitione! clai"s that it did not b!each its cont!act +ith !espondents because it has a valid !eason fo! issuin( the old

Out o!de!. Petitione! ancho!s its !i(ht to +ithhold !espondents deposits on the Application and A(!ee"ent fo! /epositAccount, +hich !eads:

Autho!it' to >ithhold, ell andSo! et Off:

4he Ban6 is he!eb' autho!i<ed to +ithhold as secu!it' fo! an' and all obli(ations +ith the Ban6, all "onies, p!ope!ties o!

secu!ities of the /eposito! no+ in o! +hich "a' he!eafte! co"e into the possession o! unde! the cont!ol of the Ban6,

+hethe! left +ith the Ban6 fo! safe6eepin( o! othe!+ise, o! co"in( into the hands of the Ban6 in an' +a', fo! so "uch

the!eof as +ill be sufficient to pa' an' o! all obli(ations incu!!ed b' /eposito! unde! the Account o! b' !eason of an'

othe! t!ansactions bet+een the sa"e pa!ties no+ e7istin( o! he!eafte! cont!acted, to sell in an' public o! p!ivate sale an'

of such p!ope!ties o! secu!ities of /eposito!, and to appl' the p!oceeds to the pa'"ent of an' /eposito!s obli(ations

he!etofo!e "entioned.

7 7 7 7

*O3N4 ACCO?N4

7 7 7 7

4he Ban6 "a', at an' ti"e in its disc!etion and +ith o! +ithout notice to all of the /eposito!s, asse!t a lien on an' balance

of the Account and appl' all o! an' pa!t the!eof a(ainst an' indebtedness, "atu!ed o! un"atu!ed, that "a' then be o+in(

to the Ban6 b' an' o! all of the /eposito!s. 3t is unde!stood that if said indebtedness is onl' o+in( f!o" an' of the

/eposito!s, then this p!ovision constitutes the consent b' all of the deposito!s to have the Account ans+e! fo! the said

indebtedness to the e7tent of the eual sha!e of the debto! in the a"ount c!edited to the Account.58

Petitione!s !eliance on the old Out clause in the Application and A(!ee"ent fo! /eposit Account is "isplaced.

4he old Out clause applies onl' if the!e is a valid and e7istin( obli(ation a!isin( f!o" an' of the sou!ces of obli(ation

enu"e!ated in A!ticle ##55$ of the Civil Code, to +it: la+, cont!acts, uasi-cont!acts, delict, and uasi-delict. 3n this case,

petitione! failed to sho+ that !espondents have an obli(ation to it unde! an' la+, cont!act, uasi-cont!act, delict, o! uasi-

delict. And althou(h a c!i"inal case +as filed b' petitione! a(ainst !espondent Rosales, this is not enou(h !eason fo!

petitione! to issue a old Out o!de! as the case is still pendin( and no final 1ud("ent of conviction has been !ende!ed

a(ainst !espondent Rosales. 3n fact, it is si(nificant to note that at the ti"e petitione! issued the old Out o!de!, thec!i"inal co"plaint had not 'et been filed. 4hus, conside!in( that !espondent Rosales is not liable unde! an' of the five

sou!ces of obli(ation, the!e +as no le(al basis fo! petitione! to issue the old Out o!de!. Acco!din(l', +e a(!ee +ith the

findin(s of the R4C and the CA that the old Out clause does not appl' in the instant case.

3n vie+ of the fo!e(oin(, +e find that petitione! is (uilt' of b!each of cont!act +hen it un1ustifiabl' !efused to !elease

!espondents deposit despite de"and. avin( b!eached its cont!act +ith !espondents, petitione! is liable fo! da"a(es.

Respondents a!e entitled to "o!al and

e7e"pla!' da"a(es and atto!ne's fees./0%phi/














3n cases of b!each of cont!act, "o!al da"a(es "a' be !ecove!ed onl' if the defendant acted f!audulentl' o! in bad

faith,8% o! is (uilt' of (!oss ne(li(ence a"ountin( to bad faith, o! in +anton dis!e(a!d of his cont!actual obli(ations.8#

3n this case, a !evie+ of the ci!cu"stances su!!oundin( the issuance of the old Out o!de! !eveals that petitione! issued

the old Out o!de! in bad faith. =i!st of all, the o!de! +as issued +ithout an' le(al basis. econd, petitione! did not

info!" !espondents of the !eason fo! the old Out. 82 4hi!d, the o!de! +as issued p!io! to the filin( of the c!i"inal

co"plaint. Reco!ds sho+ that the old Out o!de! +as issued on *ul' #, 2%%, 8 +hile the c!i"inal co"plaint +as filed

onl' on epte"be! , 2%%.8; All these ta6en to(ethe! lead us to conclude that petitione! acted in bad faith +hen it

b!eached its cont!act +ith !espondents. As +e see it then, !espondents a!e entitled to "o!al da"a(es.

As to the a+a!d of e7e"pla!' da"a(es, A!ticle 222$8 of the Civil Code p!ovides that e7e"pla!' da"a(es "a' be

i"posed b' +a' of e7a"ple o! co!!ection fo! the public (ood, in addition to the "o!al, te"pe!ate, liuidated o!

co"pensato!' da"a(es. 4he' a!e a+a!ded onl' if the (uilt' pa!t' acted in a +anton, f!audulent, !ec6less, opp!essive o!

"alevolent "anne!.8&

3n this case, +e find that petitione! indeed acted in a +anton, f!audulent, !ec6less, opp!essive o! "alevolent "anne! +hen

it !efused to !elease the deposits of !espondents +ithout an' le(al basis. >e need not belabo! the fact that the ban6in(

indust!' is i"p!essed +ith public inte!est.85 As such, the hi(hest de(!ee of dili(ence is e7pected, and hi(h standa!ds of

inte(!it' and pe!fo!"ance a!e even !eui!ed of it.88

3t "ust the!efo!e t!eat the accounts of its deposito!s +ith "eticulousca!e and al+a's to have in "ind the fiducia!' natu!e of its !elationship +ith the". 8$ =o! failin( to do this, an a+a!d of

e7e"pla!' da"a(es is 1ustified to set an e7a"ple.

4he a+a!d of atto!ne'@s fees is li6e+ise p!ope! pu!suant to pa!a(!aph #, A!ticle 22%8$% of the Civil Code.

3n closin(, it "ust be st!essed that +hile +e !eco(ni<e that petitione! has the !i(ht to p!otect itself f!o" f!aud o! suspicions

of f!aud, the e7e!cise of his !i(ht should be done +ithin the bounds of the la+ and in acco!dance +ith due p!ocess, and not

in bad faith o! in a +anton dis!e(a!d of its cont!actual obli(ation to !espondents.

>ERE=ORE, the Petition is he!eb' /EN3E/. 4he assailed Ap!il 2, 2%%8 /ecision and the Ma' %, 2%%8 Resolution of

the Cou!t of Appeals in CA-F.R. CH No. 8$%8& a!e he!eb' A==3RME/. O OR/ERE/.

MAR'ANO C. (EL CAST'LLOAssociate *ustice


SUPREME COURTManila

ECON/ /3H33ON

G.R. No. 182! (356r 4, 201

(RA, LE'LA A (ELA LLANO, Petitione!,

vs.

RE%ECCA %'ONG, )o#n 6u/#n// un)r ? na5 an) /y$ o Pon@ay Tra)#n, Respondent.

/ E C 3 3 O N

%R'ON, J.:

He!' case essentiall' tu!ns on t+o basic uestions: uestions of fact and uestions of la+. uestions of fact a!e the pa!ties

and thei! counsel to !espond to, based on +hat suppo!tin( facts the le(al uestions !eui!e the cou!t can onl' d!a+

conclusion f!o" the facts o! evidence adduced. >hen the facts a!e lac6in( because of the deficienc' of p!esented

evidence, then the cou!t can onl' d!a+ one conclusion: that the cause "ust fail fo! lac6 of evidentia!' suppo!t.

4he p!esent case is one such case as /!a. )eila A dela )lanas9petitione! petition fo! !evie+ on ce!to!a!i #challen(in( the

=eb!ua!' ##, 2%%8 /ecision2 and the Ma!ch #, 2%%8 !esolution of the Cou!t of Appeals 9CA in CA-F.R. CH No. 8$#&.














http://www.lawphil.net/judjuris/juri2013/dec2013/gr_182356_2013.html#fnt1




















4he =actual Antecedents

On Ma!ch %, 2%%%, at a!ound ##:%% p."., *uan dela )lana +as d!ivin( a #$$5 4o'ota Co!olla ca! alon( No!th Avenue,

ue<on Cit'.;

is siste!, /!a. dela )lana, +as seated at the f!ont passen(e! seat +hile a ce!tain Cali"li" +as at the bac6seat.

*uan stopped the ca! ac!oss the Hete!ans Me"o!ial ospital +hen the si(nal li(ht tu!ned !ed. A fe+ seconds afte! the ca!

halted, a du"p t!uc6 containin( (!avel and sand suddenl' !a""ed the ca!s !ea! end, violentl' pushin( the ca! fo!+a!d.

/ue to the i"pact, the ca!s !ea! end collapsed and its !ea! +indshield +as shatte!ed. Flass splinte!s fle+, punctu!in( /!a.

dela )lana. Apa!t f!o" these "ino! +ounds, /!a. dela )lana did not appea! to have suffe!ed f!o" an' othe! visible

ph'sical in1u!ies.&

4he t!affic investi(ation !epo!t dated Ma!ch %, 2%%% identified the t!uc6 d!ive! as *oel P!i"e!o. 3t stated that *oel +as

!ec6lessl' i"p!udent in d!ivin( the t!uc6.5

*oel late! !evealed that his e"plo'e! +as !espondent Rebecca Bion(, doin( business unde! the na"e and st'le of

Pon(6a' 4!adin( and +as en(a(ed in a (!avel and sand business.8

3n the fi!st +ee6 of Ma' 2%%%, /!a. dela )lana be(an to feel "ild to "ode!ate pain on the left side of he! nec6 and

shoulde!. 4he pain beca"e "o!e intense as da's passed b'. e! in1u!' beca"e "o!e seve!e. e! health dete!io!ated to the

e7tent that she could no lon(e! "ove he! left a!". On *une $, 2%%%, she consulted +ith /!. Rosalinda Milla, a

!ehabilitation "edicine specialist, to e7a"ine he! condition. /!. Milla told he! that she suffe!ed f!o" a +hiplash in1u!', an

in1u!' caused b' the co"p!ession of the ne!ve !unnin( to he! left a!" and hand. /!. Milla !eui!ed he! to unde!(o ph'sical

the!ap' to alleviate he! condition. /!a. dela )lanas condition did not i"p!ove despite th!ee "onths of e7tensive ph'sical

the!ap'.$

he then consulted othe! docto!s, na"el', /!s. >illie )ope<, )eono! Cab!al-)i" and E!ic =lo!es, in sea!ch fo! a cu!e. /!.

=lo!es, a neu!o-su!(eon, finall' su((ested that she unde!(o a ce!vical spine su!(e!' to !elease the co"p!ession of he!

ne!ve. On Octobe! #$, 2%%%, /!. =lo!es ope!ated on he! spine and nec6, bet+een the C and the C& ve!teb!ae.#%

4he ope!ation !eleased the i"pin(e"ent of the ne!ve, but incapacitated /!a. dela )lana f!o" the p!actice of he! p!ofession

since *une 2%%% despite the su!(e!'.##

/!a. dela )lana, on Octobe! #&, 2%%%, de"anded f!o" Rebecca co"pensation fo! he! in1u!ies, but Rebecca !efused to

pa'.#2

4hus, on Ma' 8, 2%%#, /!a. dela )lana sued Rebecca fo! da"a(es befo!e the Re(ional 4!ial Cou!t of ue<on Cit' 9R4C.

he alle(ed that she lost the "obilit' of he! a!" as a !esult of the vehicula! accident and clai"edP#%,%%%.%% fo! he!

"edical e7penses 9as of the filin( of the co"plaint and an ave!a(e "onthl' inco"e ofP%,%%%.%% since *une 2%%%. he

fu!the! p!a'ed fo! actual, "o!al, and e7e"pla!' da"a(es as +ell as atto!ne's fees.#

3n defense, Rebecca "aintained that /!a. dela )lana had no cause of action a(ainst he! as no !easonable !elation e7isted

bet+een the vehicula! accident and /!a. dela )lanas in1u!'. he pointed out that /!a. dela )lanas illness beca"e

"anifest one "onth and one +ee6 f!o" the date of the vehicula! accident. As a counte!clai", she de"anded the pa'"ent

of atto!ne's fees and costs of the suit.#;

At the t!ial, /!a. dela )lana p!esented he!self as an o!dina!' +itness# and *oel as a hostile +itness.#&

/!a. dela )lana !eite!ated that she lost the "obilit' of he! a!" because of the vehicula! accident. 4o p!ove he! clai", she

identified and authenticated a "edical ce!tificate dated Nove"be! 2%, 2%%% issued b' /!. Milla. 4he "edical ce!tificatestated that /!a. dela )lana suffe!ed f!o" a +hiplash in1u!'. 3t also ch!onicled he! clinical histo!' and ph'sical

e7a"inations.#5

Mean+hile, *oel testified that his t!uc6 hit the ca! because the t!uc6s b!a6es (ot stuc6.#8

3n defense, Rebecca testified that /!a. dela )lana +as ph'sicall' fit and st!on( +hen the' "et seve!al da's afte! the

vehicula! accident. he also asse!ted that she obse!ved the dili(ence of a (ood fathe! of a fa"il' in the selection and

supe!vision of *oel. he pointed out that she !eui!ed *oel to sub"it a ce!tification of (ood "o!al cha!acte! as +ell as


































ba!an(a', police, and NB3 clea!ances p!io! to his e"plo'"ent. he also st!essed that she onl' hi!ed P!i"e!o afte! he

successfull' passed the d!ivin( s6ills test conducted b' Albe!to Ma!celo, a licensed d!ive!-"echanic.#$

Albe!to also too6 the +itness stand. e testified that he chec6ed the t!uc6 in the "o!nin( of Ma!ch %, 2%%%. e affi!"ed

that the t!uc6 +as in (ood condition p!io! to the vehicula! accident. e opined that the cause of the vehicula! accident +as

a da"a(ed co"p!esso!. Acco!din( to hi", the absence of ai! inside the tan6 da"a(ed the co"p!esso! .2%

R4C Rulin(

4he R4C !uled in favo! of /!a. dela )lana and held that the p!o7i"ate cause of /!a. dela )lanas +hiplash in1u!' to be

*oels !ec6less d!ivin(.2#

3t found that a +hiplash in1u!' is an in1u!' caused b' the sudden 1e!6in( of the spine in the nec6 a!ea. 3t pointed out that

the "assive da"a(e the ca! suffe!ed onl' "eant that the t!uc6 +as ove!-speedin(. 3t "aintained that *oel should have

d!iven at a slo+e! pace because !oad visibilit' di"inishes at ni(ht. e should have blo+n his ho!n and +a!ned the ca! that

his b!a6e +as stuc6 and could have p!evented the collision b' s+e!vin( the t!uc6 off the !oad. 3t also concluded that *oel

+as p!obabl' sleepin( +hen the collision occu!!ed as *oel had been d!ivin( fo! fifteen hou!s on that fateful da'. 4he R4C

fu!the! decla!ed that *oels ne(li(ence (ave !ise to the p!esu"ption that Rebecca did not e7e!cise the dili(ence of a (ood

fathe! of a fa"il' in *oel@s selection and supe!vision of *oel. Rebecca +as vica!iousl' liable because she +as the e"plo'e! and she pe!sonall' chose hi" to d!ive the t!uc6. On the da' of the collision, she o!de!ed hi" to delive! (!avel and sand to

Mu0o< Ma!6et, ue<on Cit'. 4he Cou!t concluded that the th!ee ele"ents necessa!' to establish Rebeccas liabilit' +e!e

p!esent: 9# that the e"plo'ee +as chosen b' the e"plo'e!, pe!sonall' o! th!ou(h anothe! 92 that the se!vices +e!e to be

!ende!ed in acco!dance +ith o!de!s +hich the e"plo'e! had the autho!it' to (ive at all ti"es and 9 that the illicit act of

the e"plo'ee +as on the occasion o! b' !eason of the functions ent!usted to hi". 4he R4C thus a+a!ded /!a. dela )lana

the a"ounts of P5%,%%%.%% as actual da"a(es, P2%,%%%.%% as "o!al da"a(es, and the cost of the suit.22

CA Rulin(

3n a decision dated =eb!ua!' ##, 2%%8, the CA !eve!sed the R4C !ulin(. 3t held that /!a. dela )lana failed to establish a

!easonable connection bet+een the vehicula! accident and he! +hiplash in1u!' b' p!eponde!ance of evidence. Citin( Nut!i"i7 =eeds Co!p. v. Cou!t of Appeals,2 it decla!ed that cou!ts +ill not hesitate to !ule in favo! of the othe! pa!t' if

the!e is no evidence o! the evidence is too sli(ht to +a!!ant an infe!ence establishin( the fact in issue. 3t noted that the

inte!val bet+een the date of the collision and the date +hen /!a. dela )lana be(an to suffe! the s'"pto"s of he! illness

+as len(th'. 3t concluded that this inte!val !aised doubts on +hethe! *oels !ec6less d!ivin( and the !esultin( collision in

fact caused /!a. dela )lanas in1u!'. 3t also decla!ed that cou!ts cannot ta6e 1udicial notice that vehicula! accidents cause

+hiplash in1u!ies. 3t obse!ved that /!a. dela )lana did not i""ediatel' visit a hospital to chec6 if she sustained inte!nal

in1u!ies afte! the accident. Mo!eove!, he! failu!e to p!esent e7pe!t +itnesses +as fatal to he! clai". 3t also (ave no +ei(ht

to the "edical ce!tificate. 4he "edical ce!tificate did not e7plain ho+ and +h' the vehicula! accident caused the in1u!'.2;

4he Petition

/!a. dela )lana points out in he! petition befo!e this Cou!t that Nut!i"i7 is inapplicable in the p!esent case. he st!esses

that Nut!i"i7 involved the application of A!ticle #&# and #&& of the Civil Code, p!ovisions (ove!nin( hidden defects.

=u!the!"o!e, the!e +as absolutel' no evidence in Nut!i"i7 that sho+ed that poisonous ani"al feeds +e!e sold to the

!espondents in that case. As opposed to the !espondents in Nut!i"i7, /!a. dela )lana asse!ts that she has established b'

p!eponde!ance of evidence that *oels e(li(ent act +as the p!o7i"ate cause of he! +hiplash in1u!'. First, pictu!es of he!

da"a(ed ca! sho+ that the collision +as st!on(. he posits that it can be !easonabl' infe!!ed f!o" these pictu!es that the

"assive i"pact !esulted in he! +hiplash in1u!'. Second, /!. Milla cate(o!icall' stated in the "edical ce!tificate that /!a.

dela )lana suffe!ed f!o" +hiplash in1u!'. Third, he! testi"on' that the vehicula! accident caused the in1u!' is c!edible

because she +as a su!(eon.

/!a. dela )lana fu!the! asse!ts that the "edical ce!tificate has p!obative value. Citin( seve!al cases, she posits that an

unco!!obo!ated "edical ce!tificate is c!edible if uncont!ove!ted.2

he points out that e7pe!t opinion is unnecessa!' if the opinion "e!el' !elates to "atte!s of co""on 6no+led(e. he

"aintains that a 1ud(e is ualified as an e7pe!t to dete!"ine the causation bet+een *oels !ec6less d!ivin( and he!

+hiplash in1u!'. 4!ial 1ud(es a!e a+a!e of the fact that +hiplash in1u!ies a!e co""on in vehicula! collisions.

4he Respondents Position




















3n he! Co""ent,2& Rebecca points out that /!a. dela )lana !aises a factual issue +hich is be'ond the scope of a petition

fo! !evie+ on certiorari unde! Rule ; of the Rules of Cou!t. he "aintains that the CAs findin(s of fact a!e final and

conclusive. Mo!eove!, she st!esses that /!a. dela )lanas a!(u"ents a!e not substantial to "e!it this Cou!ts conside!ation.

4he 3ssue

4he sole issue fo! ou! conside!ation in this case is +hethe! *oels !ec6less d!ivin( is the p!o7i"ate cause of /!a. dela

)lanas +hiplash in1u!'.

Ou! Rulin( >e find the petition un"e!ito!ious.

4he up!e"e Cou!t "a' !evie+ uestions of fact in a petition fo! !evie+ on ce!tio!a!i +hen the findin(s of fact b' the

lo+e! cou!ts a!e conflictin(

4he issue befo!e us involves a uestion of fact and this Cou!t is not a t!ie! of facts. As a (ene!al !ule, the CAs findin(s of

fact a!e final and conclusive and this Cou!t +ill not !evie+ the" on appeal. 3t is not the function of this Cou!t to e7a"ine,

!evie+ o! evaluate the evidence in a petition fo! !evie+ on certiorari unde! Rule ; of the Rules of Cou!t. >e can onl'

!evie+ the p!esented evidence, b' +a' of e7ception, +hen the conflict e7ists in findin(s of the R4C and the CA.25

>e see this e7ceptional situation he!e and thus acco!din(l' e7a"ine the !elevant evidence p!esented befo!e the t!ial cou!t.

/!a. dela )lana failed to establish he! case b' p!eponde!ance of evidence

A!ticle 2#5& of the Civil Code p!ovides that J+Khoeve! b' act o! o"ission causes da"a(e to anothe!, the!e bein( fault o!

ne(li(ence, is obli(ed to pa' fo! the da"a(e done. uch fault o! ne(li(ence, if the!e is no p!e-e7istin( cont!actual !elation

bet+een the pa!ties, is a uasi-delict. ?nde! this p!ovision, the ele"ents necessa!' to establish a uasi-delict case a!e:

9# da"a(es to the plaintiff

92 ne(li(ence, b' act o! o"ission, of the defendant o! b' so"e pe!son fo! +hose acts the defendant "ust !espond, +as(uilt' and

9 the connection of cause and effect bet+een such ne(li(ence and the da"a(es.28

4hese ele"ents sho+ that the sou!ce of obli(ation in a uasi-delict case is the b!each o! o"ission of "utual duties that

civili<ed societ' i"poses upon its "e"be!s, o! +hich a!ise f!o" non-cont!actual !elations of ce!tain "e"be!s of societ'

to othe!s.2$

Based on these !euisites, /!a. dela )lana "ust fi!st establish b' p!eponde!ance of evidence the th!ee ele"ents of uasi-

delict befo!e +e dete!"ine Rebeccas liabilit' as *oels e"plo'e!.

he should sho+ the chain of causation bet+een *oels !ec6less d!ivin( and he! +hiplash in1u!'.

Onl' afte! she has laid this foundation can the p!esu"ption - that Rebecca did not e7e!cise the dili(ence of a (ood fathe!

of a fa"il' in the selection and supe!vision of *oel - a!ise.%

Once ne(li(ence, the da"a(es and the p!o7i"ate causation a!e established, this Cou!t can then p!oceed +ith the

application and the inte!p!etation of the fifth pa!a(!aph of A!ticle 2#8% of the Civil Code.#

?nde! A!ticle 2#5& of the Civil Code, in !elation +ith the fifth pa!a(!aph of A!ticle 2#8%, an action p!edicated on an

e"plo'ees act o! o"ission "a' be instituted a(ainst the e"plo'e! +ho is held liable fo! the ne(li(ent act o! o"issionco""itted b' his e"plo'ee.2

4he !ationale fo! these (!aduated levels of anal'ses is that it is essentiall' the +!on(ful o! ne(li(ent act o! o"ission itself

+hich c!eates the "inculum #uris in e7t!a-cont!actual obli(ations.

3n civil cases, a pa!t' +ho alle(es a fact has the bu!den of p!ovin( it.

e +ho alle(es has the bu!den of p!ovin( his alle(ation b' p!eponde!ance of evidence o! (!eate! +ei(ht of c!edible

evidence.;





















4he !eason fo! this !ule is that ba!e alle(ations, unsubstantiated b' evidence, a!e not euivalent to p!oof.

3n sho!t, "e!e alle(ations a!e not evidence.

3n the p!esent case, the bu!den of p!ovin( the p!o7i"ate causation bet+een *oels ne(li(ence and /!a. dela )lanas

+hiplash in1u!' !ests on /!a. dela )lana. he "ust establish b' p!eponde!ance of evidence that *oels ne(li(ence, in its

natu!al and continuous seuence, unb!o6en b' an' efficient inte!venin( cause, p!oduced he! +hiplash in1u!', and +ithout

+hich he! +hiplash in1u!' +ould not have occu!!ed.&

Notabl', /!a. dela )lana ancho!s he! clai" "ainl' on th!ee pieces of evidence:

9# the pictu!es of he! da"a(ed ca!,

92 the "edical ce!tificate dated Nove"be! 2%, 2%%%, and

9 he! testi"onial evidence. o+eve!, none of these pieces of evidence sho+ the causal !elation bet+een the vehicula!

accident and the +hiplash in1u!'. 3n othe! +o!ds,

/!a. dela )lana, du!in( t!ial, did not adduce the factu" p!obans o! the evidentia!' facts b' +hich the factu" p!obandu"o! the ulti"ate fact can be established, as full' discussed belo+.5

A.

The pictures of the damaged

car only demonstrate the

impact of the collision

/!a. dela )lana contends that the pictu!es of the da"a(ed ca! sho+ that the "assive i"pact of the collision caused he!

+hiplash in1u!'. >e a!e not pe!suaded b' this ba!e clai". e! insistence that these pictu!es sho+ the causation (!ossl'

belies co""on lo(ic. 4hese pictu!es indeed de"onst!ate the i"pact of the collision. o+eve!, it is a fa!-fetchedassu"ption that the +hiplash in1u!' can also be infe!!ed f!o" these pictu!es.

B.

The medical certificate cannot be

considered because it was

not admitted in evidence

=u!the!"o!e, the "edical ce!tificate, "a!6ed as E7hibit du!in( t!ial, should not be conside!ed in !esolvin( this case

fo! the !eason that it +as not ad"itted in evidence b' the R4C in an o!de! dated epte"be! 2, 2%%;.8

4hus, the CA e!!ed in even conside!in( this docu"enta!' evidence in its !esolution of the case. 3t is a basic !ule that

evidence +hich has not been ad"itted cannot be validl' conside!ed b' the cou!ts in a!!ivin( at thei! 1ud("ents.

o+eve!, even if +e conside! the "edical ce!tificate in the disposition of this case, the "edical ce!tificate has no

p!obative value fo! bein( hea!sa'. 3t is a basic !ule that evidence, +hethe! o!al o! docu"enta!', is hea!sa' if its p!obative

value is not based on the pe!sonal 6no+led(e of the +itness but on the 6no+led(e of anothe! pe!son +ho is not on the

+itness stand.$

ea!sa' evidence, +hethe! ob1ected to o! not, cannot be (iven c!edence;% e7cept in ve!' unusual ci!cu"stance that is not

found in the p!esent case. =u!the!"o!e, ad"issibilit' of evidence should not be euated +ith +ei(ht of evidence. 4head"issibilit' of evidence depends on its !elevance and co"petence, +hile the +ei(ht of evidence pe!tains to evidence

al!ead' ad"itted and its tendenc' to convince and pe!suade. 4hus, a pa!ticula! ite" of evidence "a' be ad"issible, but its

evidentia!' +ei(ht depends on 1udicial evaluation +ithin the (uidelines p!ovided b' the Rules of Cou!t.;#

/u!in( t!ial, /!a. dela )lana testified:

: /id 'ou! ph'sician tell 'ou, "o!e o! less, +hat +as the !eason +h' 'ou +e!e feelin( that pain in 'ou! left a!"


















A: >ell, 3 (ot a ce!tificate f!o" he! and in that ce!tificate, she stated that "' condition +as due to a co"p!ession of the

ne!ve, +hich supplied "' left a!" and "' left hand.

Cou!t: B' the +a', +hat is the na"e of this ph'sician, /!a.

>itness: e! na"e is /!a. Rosalinda Milla. he is a Rehabilitation Medicine pecialist. Att'. usin(co: ou "entioned

that this /!a. Rosalinda Milla "ade o! issued a "edical ce!tificate. >hat !elation does this "edical ce!tificate, "a!6ed as

E7hibit have to do +ith that ce!tificate, 'ou said +as "ade b' /!a. Milla

>itness: 4his is the "edical ce!tificate that /!a. Milla "ade out fo! "e.

Att'. usin(co: ou! ono!, this has been "a!6ed as E7hibit .

Att'. usin(co: >hat othe! "edical se!vices +e!e done on 'ou, /!a. dela )lana, as a !esult of that feelin(, that pain that

'ou felt in 'ou! left a!"

>itness: >ell, aside f!o" the "edications and ph'sical the!ap', a !e-evaluation of "' condition afte! th!ee "onths

indicated that 3 needed su!(e!'.

Att'. usin(co: /id 'ou unde!(o this su!(e!'

>itness: o, on Octobe! #$, 3 unde!+ent su!(e!' on "' nec6, on "' spine.

Att'. usin(co: And, +hat +as the !esult of that su!(ical ope!ation

>itness: >ell, the ope!ation +as to !elieve the co"p!ession on "' ne!ve, +hich did not !esolve b' the e7tensive and

p!olon(ed ph'sical the!ap' that 3 unde!+ent fo! "o!e than th!ee "onths.;29e"phasis ou!s

Evidentl', it +as /!. Milla +ho had pe!sonal 6no+led(e of the contents of the "edical ce!tificate. o+eve!, she +as not

p!esented to testif' in cou!t and +as not even able to identif' and affi!" the contents of the "edical ce!tificate.=u!the!"o!e, Rebecca +as dep!ived of the oppo!tunit' to c!oss-e7a"ine /!. Milla on the accu!ac' and ve!acit' of he!

findin(s. >e also point out in this !espect that the "edical ce!tificate nonetheless did not e7plain the chain of causation in

fact bet+een *oels !ec6less d!ivin( and /!a. dela )lanas +hiplash in1u!'. 3t did not cate(o!icall' state that the +hiplash

in1u!' +as a !esult of the vehicula! accident. A pe!usal of the "edical ce!tificate sho+s that it onl' attested to he! "edical

condition, i.e., that she +as suffe!in( f!o" +hiplash in1u!'. o+eve!, the "edical ce!tificate failed to substantiall' !elate

the vehicula! accident to /!a. dela )lanas +hiplash in1u!'. Rathe!, the "edical ce!tificate onl' 3?ron#3$)

he! "edical histo!' and ph'sical e7a"inations.

C.

Dra. dela lana!s opinion that

Joel!s negligence caused her

whiplash in"ury has no probative value

3nte!estin(l', the p!esent case is peculia! in the sense that /!a. dela )lana, as the plaintiff in this uasi-delict case, +as the

lone ph'sician-+itness du!in( t!ial. i(nificantl', she "e!el' testified as an o!dina!' +itness befo!e the t!ial cou!t. /!a.

dela )lana essentiall' clai"ed in he! testi"on' that *oels !ec6less d!ivin( caused he! +hiplash in1u!'. /espite the fact

that /!a. dela )lana is a ph'sician and even assu"in( that she is an e7pe!t in neu!olo(', +e cannot (ive +ei(ht to he!

opinion that *oels !ec6less d!ivin( caused he! +hiplash in1u!' +ithout violatin( the !ules on evidence. ?nde! the Rules of

Cou!t, the!e is a substantial diffe!ence bet+een an o!dina!' +itness and an e7pe!t +itness. 4he opinion of an o!dina!'+itness "a' be !eceived in evidence !e(a!din(:

9a the identit' of a pe!son about +ho" he has adeuate 6no+led(e

9b a hand+!itin( +ith +hich he has sufficient fa"ilia!it' and

9c the "ental sanit' of a pe!son +ith +ho" he is sufficientl' acuainted. =u!the!"o!e, the +itness "a' also testif' on his

i"p!essions of the e"otion, behavio!, condition o! appea!ance of a pe!son.;







On the othe! hand, the opinion of an e7pe!t +itness "a' be !eceived in evidence on a "atte! !eui!in( special 6no+led(e,

s6ill, e7pe!ience o! t!ainin( +hich he sho+n to possess.;;

o+eve!, cou!ts do not i""ediatel' acco!d p!obative value to an ad"itted e7pe!t testi"on', "uch less to an unob1ected

o!dina!' testi"on' !espectin( special 6no+led(e. 4he !eason is that the p!obative value of an e7pe!t testi"on' does not

lie in a si"ple e7position of the e7pe!t@s opinion. Rathe!, its +ei(ht lies in the assistance that the e7pe!t +itness "a' affo!d

the cou!ts b' de"onst!atin( the facts +hich se!ve as a basis fo! his opinion and the !easons on +hich the lo(ic of his

conclusions is founded.;

3n the p!esent case, /!a. dela )lanas "edical opinion cannot be (iven p!obative value fo! the !eason that she +as not

p!esented as an e7pe!t +itness. As an o!dina!' +itness, she +as not co"petent to testif' on the natu!e, and the cause and

effects of +hiplash in1u!'. =u!the!"o!e, +e e"phasi<e that /!a. dela )lana, du!in( t!ial, nonetheless did not p!ovide a

"edical e7planation on the natu!e as +ell as the cause and effects of +hiplash in1u!' in he! testi"on'.

The Supreme Court cannot ta#e

"udicial notice that vehicular

accidents cause whiplash in"uries.

3ndeed, a pe!usal of the pieces of evidence p!esented b' the pa!ties befo!e the t!ial cou!t sho+s that (ra. ($a L$ana )#)no "r/n any /#5on#a$ or )o3u5nary #)n3 ?a )#r3$y /?oB/ ? 3au/a$ r$a#on 6Bn ? ?#3u$ara33#)n an) (ra. ($a L$ana/ #nury. e! clai" that *oels ne(li(ence causes he! +hiplash in1u!' +as not established

because of the deficienc' of the p!esented evidence du!in( t!ial. >e point out in this !espect that cou!ts cannot ta6e

1udicial notice that vehicula! ccidents cause +hiplash in1u!ies. 4his p!opo!tion is not public 6no+led(e, o! is capable of

unuestionable de"onst!ation, o! ou(ht to be 6no+n to 1ud(es because of thei! 1udicial functions.;& >e have no e7pe!tise

in the field of "edicine. *ustices and 1ud(es a!e onl' tas6ed to appl' and inte!p!et the la+ on the basis of the pa!ties

pieces of evidence and thei! co!!espondin( le(al a!(u"ents.

3n su", /!a. dela )lana "ise!abl' failed to establish he! cause b' p!eponde!ance of evidence. >hile +e co""ise!ate +ith

he!, ou! sole"n dut' to independentl' and i"pa!tiall' assess the "e!its of the case binds us to !ule a(ainst /!a. dela

)lanas favo!. e! clai", unsuppo!ted b' p!eponde!nace of evidence, is "e!el' a ba!e asse!tion and has no le( to stand on.

>ERE=ORE, p!es"ises conside!ed, the assailed /ecision dated =eb!ua!' ##, 2%%8 and Resolution dated Ma!ch #,

2%%8 of the Cou!t of Appeals a!e he!eb' A==3RME/ and the petition is he!eb' /EN3E/ fo! lac6 of "e!it.

O OR/ERE/.

ARTURO (. %R'ONAssociate *ustice


SUPREME COURTManila

43R/ /3H33ON

G.R. No. 11149 Auu/ 18, 200!

AGR'P'NO +'LLEGAS, ATANAC'O +'LLEGAS =)3a/)>, /u6/#u) 6y ?#/ B#

SOLE(A( OCAMPO +'LLEGAS, ROSA N. SANC*E;, an) CORA;ON SANC*E;, Petitione!s,

vs.

T*E COURT O APPEALS, +'CENTE M. REYES, JUL'TA R. MAYLA(, LOREN;O M. REYES, LY('A R.EL'C'ANO r"r/n) 6y Aorny-#n-a3 +'CTOR'A . *ARPST, RUPERTA A. REYES, ESTRELL'TACR'SOSTOMO, YOLAN(A R. C*'U, +'RG'L'O A. REYES, CARL'TO A. REYES, PAC'TA R. %AUT'STA,an) SPOUSES L'TA SY an) SY %ON SU, Respondents.

D- - - - - - - - - - - - - - - - - - - - - - - - - - - -D

G.R. No. 122404 Auu/ 18, 200!










T*E *E'RS O ATANAC'O +'LLEGAS a/ r"r/n) 6y SOLE(A( (E OCAMPO, AGR'P'NO +'LLEGAS,an) OEL'A R. TUNGOL, Petitione!s,

vs.

T*E COURT O APPEALS an) SPOUSES L'TA SY an) SY %ON SU, Respondents.

/ E C 3 3 O N

CARP'O, J.:

4he Case

Befo!e the Cou!t a!e the consolidated cases doc6eted as F.R. No. ###;$ and F.R. No. #22;%;. 4he consolidated cases

involve a pa!cel of land 9p!ope!t' located at Evan(elista t!eet, uiapo, Manila.

4he fi!st case, F.R. No. ###;$, is a petition fo! !evie+ of the /ecision # dated & *anua!' #$$ and Resolution dated #5

Au(ust #$$ of the Cou!t of Appeals in CA-F.R. CH No. 2$5;. 4he Cou!t of Appeals affi!"ed the /ecision of the

Re(ional 4!ial Cou!t of Manila, B!anch 2 9R4C B!anch 2, decla!in( valid the sale of 5 undivided inte!est in the

p!ope!t' to pouses )ita ' and ' Bon u 9pouses '. 2

4he second case, F.R. No. #22;%;, is a petition fo! !evie+ of the /ecision dated 2 Ap!il #$$ and Resolution dated 25

Octobe! #$$ of the Cou!t of Appeals in CA-F.R. CH No. ;#$#. 4he Cou!t of Appeals affi!"ed the /ecision of the

Re(ional 4!ial Cou!t of Manila, B!anch ; 9R4C B!anch ;, o!de!in( the hei!s of Atanacio Hille(as to accept f!o"

pouses ' the !ede"ption p!ice fo! the 2 po!tion of the p!ope!t'.

T? a3/

Hicente M. Re'es, *ulita R. Ma'lad, )o!en<o M. Re'es, )'dia R. =eliciano, Rupe!ta A. Re'es, Est!ellita C!isosto"o,

olanda R. Chiu, Hi!(ilio A. Re'es, Ca!lito A. Re'es and Pacita R. Bautista 9!espondent-hei!s, to(ethe! +ith )o!en<a

R. Ma!tine<, A"b!osio M. Re'es, Concepcion Re'es-Ancheta and the hei!s of Ma!io M. Re'es 9othe! hei!s, +e!e the

o+ne!s of the p!ope!t' located at Evan(elista t!eet, uiapo, Manila. 4he' inhe!ited the p!ope!t' f!o" thei! fathe!, /!.)o!en<o C. Re'es, +ho died on 2$ /ece"be! #$8. 4he p!ope!t', +hich has an a!ea of ;%&. sua!e "ete!s, +as cove!ed

b' 4!ansfe! Ce!tificate of 4itle No. #82582.

A(!ipino Hille(as, Atanacio Hille(as, Rosa N. anche< and Co!a<on anche< 9petitione!-lessees +e!e the lessees of the

p!ope!t' since #$$. Petitione!-lessees o+ned the buildin( and i"p!ove"ents const!ucted on the p!ope!t'.

3n a lette! ; dated #$ Ma' #$88, the Ad"inist!ative Co""ittee of the hei!s of /!. )o!en<o C. Re'es 9Ad"inist!ative

Co""ittee, co"posed of /!. Hicente Re'es, *ulita R. Ma'lad and Ca!lito A. Re'es, info!"ed petitione!-lessees that the

hei!s have decided to sell the p!ope!t'. 4he content of the lette! !eads:

4his is to info!" 'ou that b' vi!tue of the Pa!tial Co"p!o"ise A(!ee"ent of the Estate belon(in( to the late )o!en<o C.

Re'es, as app!oved b' *ud(e Pe!lita 4!ia-4i!ona, Re(ional 4!ial *ud(e, National Capital *udicial Re(ions, ue<on Cit'

B!anch No. #%2, Ap!il #8, #$88, !espectivel', he!eunde! a!e the e7clusive o+ne!s of the lot +hich 'ou a!e p!esentl'

occup'in( unde! lease:

ei!s of the =i!st Ma!!ia(e ei!s of the econd Ma!!ia(e

#. Hicente M. Re'es #. Rupe!ta A. Re'es

2. )o!en<a R. Ma!tine< 2. Ca!lito A. Re'es

. A"b!osio M. Re'es . Est!ellita A. Re'es

;. Concepcion Re'es-Ancheta ;. olanda JR.K Chiu

. *ulita R. Ma'lad . Hi!(ilio A. Re'es

&. )o!en<o M. Re'es, *!. &. Pacita R. Bautista

5. )'dia R. =eliciano












8. ei!s of Ma!io M. Re'es

7 7 7 7

'n ?#/ 3onn3#on, B B#/? o #nor5 you ?a B ar /$$#n ? $o un)r $a/ B#? you. A33or)#n$y, B ar##n you ? o""orun#y o Dr3#/ your r#?/ o "r-5"#on, 5a) #n Br##n B#?#n ?#ry =0> )ay/ u"onr3#" o ?#/ $r. ' ?oBr, B )o no ?ar ro5 you ar ? $a"/ o ? /a#) "r#o), B /?a$$ a@ # o 5an?a you ar no #nr/) o "ur3?a/ ? /u63 $o, B?#3? ?r6y # u/ ? $#6ry o or # o o?r

#nr/) "ar#/. 9E"phasis supplied

Petitione!-lessees !eplied to the Ad"inist!ative Co""ittee on #; *une #$88, !euestin( fo! an e7tension of % da's to

sub"it thei! bid fo! the p!ope!t'. &

On # *ul' #$88, petitione!-lessees sub"itted thei! bid fo! the p!ope!t' to the Ad"inist!ative Co""ittee unde! the

follo+in( te!"s and conditions:

#. Bid P!ice - - - - - - - - P;,%%%,%%%.%%

2. ?pon the si(nin( of the

Absolute /eed of ale,

+e +ill pa' 'ou 8% of the

Bid P!ice a"ountin( to - - - - - - - - P,2%%,%%%.%%

. ?pon delive!' of the

4!ansfe! Ce!tificate of

4itle to each of us, +e

+ill pa' 'ou the 2%

balance a"ountin( to - - - - - - - - - 8%%,%%%.%%. 5

3n a lette! 8 dated *ul' #$88, the Ad"inist!ative Co""ittee info!"ed petitione!-lessees of thei! !eceipt of notice of

the P;,%%%,%%% bid p!ice. 4he Ad"inist!ative Co""ittee +!ote that the' !euested petitione!-lessees to inc!ease thei! bid

fo! the p!ope!t' but the latte! failed to "a6e anothe! offe! so the hei!s have decided to sell to anothe! bu'e! +ho offe!ed a

hi(he! p!ice. Neve!theless, the Ad"inist!ative Co""ittee indicated in the lette! that the' +ould +ait fo! a !epl' +ithin #

da's and that should the pe!iod lapse +ithout an' !epl' f!o" petitione!-lessees, it +ould "ean that petitione!-lessees +e!e

no lon(e! inte!ested in bu'in( the p!ope!t'.

On 2 Au(ust #$88, petitione!-lessees sent a !epl', $ advisin( the Ad"inist!ative Co""ittee that the' +e!e +illin( to "a6e

a no"inal inc!ease to thei! bid p!ice of P;,%%%,%%%. Petitione!-lessees !euested the Ad"inist!ative Co""ittee to state in

+!itin( thei! as6in( p!ice fo! the p!ope!t'.

On Au(ust #$88, the Ad"inist!ative Co""ittee sent a lette! to petitione!-lessees +hich !eads:

/ea! i!s:

>e a!e so!!' fo! the ove!si(ht of the date of ou! last lette!. 3nas"uch as 'ou !eceived it on the 2&th of *ul', let us then

conside! it as the official date of the lette!.

3t is the custo"a!' a(!ee"ent +ith the late /!. )o!en<o C. Re'es that # 'ea!s afte! the i"p!ove"ent +as put up in the

p!ope!t', the said i"p!ove"ent !eve!ts to the o+ne! of the lot. ince 'ou have put up the e7istin( i"p!ove"ent in #$5#,

+e feel that the said i"p!ove"ent +as al!ead' o+ned b' the late )o!en<o C. Re'es befo!e his death.

As ea!l' as #$8 the said /!. Re'es has been pa'in( !eal p!ope!t' ta7es on the i"p!ove"ent +hich sho+s that he +as

al!ead' the !i(htful o+ne! of said i"p!ove"ent.
















ince the st!uctu!e is not of st!on( "ate!ials, +ith the len(th of ti"e of #5 '!s., +e feel that sa"e is no+ full' dep!eciated.

>e a!e also desi!ous of 'ou! bu'in( the p!ope!t'. 7 ?a an or o P M#$$#on B?#3? Ba/ /u65#) o u/ $a/5on?. ' you 3ou$) or ? /a5 a5oun B B#$$ 6 ry ?a""y o a33o5o)a you.

>e a!e sendin( 'ou a 7e!o7 cop' of 4C4 No. ;$85, 4a7 /ecla!ation of Real P!ope!t' and the latest ta7 !eceipts.

May B r3# yourF or on or 6or Au. 11, 1988. P$a/ 6 u#)) a33or)#n$y. #% 9E"phasis supplied

3n thei! lette!-!epl' ## dated ## Au(ust #$88, petitione!-lessees insisted that the' o+n the i"p!ove"ents on the p!ope!t'.

Petitione!-lessees +!ote that the' +e!e +illin( to !ei"bu!se the !ealt' ta7 paid on the i"p!ove"ents b' the late /!.

)o!en<o C. Re'es. Petitione!-lessees !euested fo! a "eetin( +ith all the hei!s to ne(otatiate the sale of the p!ope!t', and

info!"ed the Ad"inist!ative Co""ittee that thei! final bid p!ice +ill be sub"itted du!in( the "eetin(.

Petitione!-lessees sent thei! accountant, Ben1a"in C. Mi!anda 9Mi!anda, to !ep!esent the" in the confe!ence to

ne(otiate the sale of the p!ope!t'. On the othe! hand, not all the hei!s of /!. )o!en<o C. Re'es attended the confe!ence.

/u!in( the confe!ence, the pa!ties failed to a(!ee on the p!ice and te!"s fo! the sale of the p!ope!t'.

On #8 Octobe! #$88, petitione!-lessees, e7cludin( Rosa N. anche<, +!ote anothe! lette! to the Ad"inist!ative Co""ittee+hich !eads:

4he Ad"inist!ative Co""ittee

ei!s of /!. )o!en<o C. Re'es

X22 #8th t!eet, Ne+ Manila

ue<on Cit'

/ea! i!s:

>e +aited fo! &8 da's fo! 'ou! ans+e! to ou! lette! dated Au(ust ##, #$88 +hich did not co"e.

Conside!in( va!ious econo"ic !easons, 'ou +ill be happ' to hea! f!o" us 9)essees that B ?a #na$$y a33") youra/@#n "r#3 o P,000,000.00 fo! 'ou! p!ope!t' located at Evan(elista t!eet, dist!ict of ta. C!u<, Manila cove!ed b'

4.C.4. No. ;$85 issued to /!. )o!en<o C. Re'es on epte"be! , #$&.

Please p!epa!e all the necessa!' pape!s and docu"ents to "a6e the sale le(al fo! all intent and pu!poses.

Any un"a#) aD/ /u3? a/ #n3o5, /a, ra$y an) /3#n3 )u3a#on un) an) )o3u5nary /a5"/ /?a$$ 6 or

? a33oun o ? *#r/ #n3$u)#n )o3u5na#on D"n//.

Tr5/ o Pay5n 9 u"on /#n#n o ? )o3u5n/H an) u"on )$#ry o ? Tran/r Cr##3a o T#$#n ? na5 o #/ #n)##)ua$ L///.

ED"3#n o ?ar your #na$ 3on#r5a#on /oon/. #2 9E"phasis supplied

On Nove"be! #$88, the Ad"inist!ative Co""ittee !eplied:

M!. Atanacio M. Hille(as

M!. A(!ipino M. Hille(as

M!s. Co!a<on anche<

&; Evan(elista, uiapo, Manila

/ea! i!s:

4his is +ith !efe!ence to 'ou! lette! dated Octobe! #8, #$88.












Sra$ #5/ #n ? "a/ Bo 5on?/, Mr. Car$#o A. Ry/ an) our o?r 6ro?r/ an) /#/r/ ?a #nor5) you?a /o5 o ? 3o-oBnr/ o our "ro"ry a ? a6o-#n a))r// ar no $onr ara6$ o /$$#n ? /a#)"ro"ryH ?oBr, o?r 3o-oBnr/, r"r/n#n a /?ar ?ro, Br /#$$ #nr/) #n /$$#n ?#r /?ar/.' #/, ?ror, ry 3$ar ro5 ? oro#n ?a our or o /$$ ? n#r "ro"ry o you Ba/ no $onr 3#.

Moror, our or Ba/ or ? "r#3 o P,000,000.00 n o ? 3o-oBnr/. Your $r o O3o6r 18, 1988 #5"o//? 3on)##on ?a un"a#) aD/ /?a$$ /#$$ 6 6orn 6y u/, B?#3? #/ una33"a6$.

>e the!efo!e, leave it up to so"e of the co-o+ne!s to ne(otiate fo! the sale of thei! sha!es +ith 'ou. # 9E"phasis supplied

Respondent-hei!s, collectivel' o+nin( 5 of the p!ope!t', also sent a lette! dated Nove"be! #$88 to petitione!-lessees:

M!. Atanacio M. Hille(as

M!. A(!ipino M. Hille(as

M!s. Co!a<on anche<

&; Evan(elista, uiapo, Manila

/ea! i!s:

4his is +ith !efe!ence to 'ou! lette! dated Octobe! #8, #$88 to the Ad"inist!ative Co""ittee of the p!ope!ties o+ned b'

the hei!s of /!. )o!en<o C. Re'es.

ou +ill !ecall that in the past t+o "onths, so"e of us sa+ 'ou andSo! 'ou! !ep!esentative, M!. Ben Mi!anda and

e7plained to 'ou that so"e of the co-o+ne!s of the p!ope!t' at Evan(elista t!eet, ta. C!u<, Manila, cove!ed b' 4C4 No.

;$85, +e!e no lon(e! inte!ested in sellin( the said p!ope!t'. On the othe! hand, B ? un)r/#n) 3o-oBnr/ ?o$)#na /?ar o ? /a#) "ro"ry, Br or#n o /$$ our /?ar/ o you a ? "r#3 o o P,000,000.00,

or P,0,000,000.00. Moror, ? /a#) "r#3 Ba/ o 6 n o u/, ?a #/, a$$ a""$#3a6$ aD/ - 3a"#a$ a#n/ aD,)o3u5nary /a5" aD, 5un#3#"a$ ran/r aD an) r#/ra#on D"n// - /?ou$) 6 6orn 6y you.

3t +as obvious that ou! said offe! supe!seded that of ou! Ad"inist!ative Co""ittee, +hich cannot conve' the p!ope!t' to

'ou +ithout the unani"ous consent of all the co-o+ne!s.

7 ar r#ra#n our or o /$$ our /?ar o you. *oBr, /#n3 ?r #/ a nB or o "ur3?a/ ? n#r"ro"ry a P,100,000.00, B ar noB or#n our /a#) /?ar or ? "r#3 oP,82,000.00, n o u/.

' B )o no ?ar ro5 you B#?#n on B@ ro5 your r3#" ?ro, B /?a$$ $ r o or our /a#) /?ar oo?r 6uyr/. #; 9E"phasis supplied

On 28 Nove"be! #$88, !espondent-hei!s sold thei! 5 undivided inte!est in the p!ope!t' fo! P,82,%%% to )ita

'. # )ita ' also issued a chec6 fo! P

;#2,%% to Hicente M. Re'es as pa'"ent fo! ta7es, a(ents co""ission and

"iscellaneous e7penses. #& 4he co!!espondin( title, 4!ansfe! Ce!tificate of 4itle No. #85#8 #5 +as issued on 28 /ece"be!

#$88. 4he Ad"inist!ative Co""ittee info!"ed petitione!-lessees of the sale in a lette! dated 5 /ece"be! #$88. #8

On # =eb!ua!' #$8$, the othe! hei!s sold the !e"ainin( 2 po!tion of the p!ope!t' to Atanacio M. Hille(as and A(!ipino

M. Hille(as 9Hille(as b!othe!s fo! P#,2%,%%%. #$

$.%. &o. '''()*

On #% =eb!ua!' #$8$, petitione!-lessees filed an action a(ainst !espondent-hei!s and pouses ' fo! Annul"ent of /eed

of aleS4itle, pecific Pe!fo!"ance, and Consi(nation of Rentals +ith /a"a(es.

On 2& =eb!ua!' #$$%, the R4C B!anch 2 !ende!ed a decision, the dispositive po!tion of +hich !eads:

>ERE=ORE, fo! all of the fo!e(oin(, 1ud("ent is he!eb' !ende!ed in favo! of the defendants and a(ainst the plaintiffs:

#. /is"issin( the co"plaint






















2. /ecla!in( the deed of sale e7ecuted b' defendants in favo! of spouses )ita ' and ' Bon u and 4!ansfe! Ce!tificate

of 4itle No. #85#8 issued as a conseuence of the deed of sale, valid

. O!de!in( the plaintiffs to vacate the p!e"ises and su!!ende! the possession the!eof to the defendants

;. O!de!in( the plaintiffs, 1ointl' and seve!all', to pa' the defendants the su" of P#,%%%.%% as e7penses of

liti(ation P2,%%%.%% as atto!ne's fees, and to pa' the costs.

O OR/ERE/. 2%

On appeal, the Cou!t of Appeals affi!"ed the decision of the R4C B!anch 2.

?pon "otion fo! !econside!ation, the Cou!t of Appeals affi!"ed its decision +ith "odification. 4he dispositive po!tion

!eads:

3n vie+ of the fo!e(oin(, this Cou!ts decision dated *anua!' &, #$$, is A==3RME/ +ith the "odification that the !eco!d

of this case is o!de!ed !e"anded to the cou!t a uo fo! the pa!ties to co"e into an a(!ee"ent befo!e the said cou!t as to

+hat po!tion and ph'sical pa!t of the buildin( shall be occupied b' the appellants and the appellees, in p!opo!tion to thei!

!espective sha!es in the p!ope!t' involved and fo! othe! a!!an(e"ents !e(a!din( the "atte!.

O OR/ERE/. 2#

$.%. &o. '++((

On #8 Ma' #$$%, pouses ' filed a co"plaint fo! pecific Pe!fo!"ance a(ainst the hei!s of Atanacio Hille(as, as

!ep!esented b' oledad de Oca"po, 22 A(!ipino Hille(as, and Ofelia R. 4un(ol. 2

On #% Ma' #$$, the R4C B!anch ; !ende!ed a decision, the dispositive po!tion of +hich !eads:

>ERE=ORE, 1ud("ent is he!eb' !ende!ed o!de!in( defendants hei!s of Atanacio Hille(as to:

a accept the !ede"ption p!ice of P#,2%,%%%.%%, includin( inte!est the!eon f!o" =eb!ua!' #, #$8$ until the plaintiffs

e7e!cised thei! !i(ht of !ede"ption

b to pa' the su" of P#%,%%%.%% as atto!ne's fees to the plaintiffs

c and to pa' the costs of suit.

O OR/ERE/. 2;

On appeal, the Cou!t of Appeals affi!"ed the decision of the R4C B!anch ;.

3n a !esolution dated $ *une #$$$, this Cou!t consolidated the t+o cases doc6eted as F.R. Nos. ###;$ and #22;%;. 2

T? '//u/

4he issues in these consolidated cases can be su""a!i<ed as follo+s:

#. >hethe! the cont!act of sale bet+een !espondent-hei!s and )ita ' violated the !i(ht of fi!st !efusal of petitione!-

lessees and

2. >hethe! )ita ', as co-o+ne! of the p!ope!t', validl' and seasonabl' e7e!cised he! !i(ht to !edee" the 2 undivided

inte!est in the p!ope!t', +hich undivided inte!est the othe! co-o+ne!s had sold to Atanacio M. Hille(as and A(!ipino M.

Hille(as.

T? Ru$#n o ? Cour

%ight of First %efusal

















A !i(ht of fi!st !efusal is a cont!actual (!ant, not of the sale of a p!ope!t', but of the fi!st p!io!it' to bu' the p!ope!t' in the

event the o+ne! sells the sa"e. 2& 4he e7e!cise of the !i(ht of fi!st !efusal is dependent not onl' on the o+ne!s eventual

intention to sell the p!ope!t' but also on the final decision of the o+ne! as !e(a!ds the te!"s of the sale includin( the

p!ice. 25

>hen a lease contains a !i(ht of fi!st !efusal, the lesso! has the le(al dut' to the lessee not to sell the leased p!ope!t' to

an'one at an' p!ice until afte! the lesso! has "ade an offe! to sell the p!ope!t' to the lessee and the lessee has failed to

accept it. Onl' afte! the lessee has failed to e7e!cise his !i(ht of fi!st p!io!it' could the lesso! sell the p!ope!t' to othe!

bu'e!s unde! the sa"e te!"s and conditions offe!ed to the lessee, 28 o! unde! te!"s and conditions "o!e favo!able to the

lesso!.

4he !eco!ds sho+ that the hei!s of /!. )o!en<o C. Re'es did !eco(ni<e the !i(ht of fi!st !efusal of petitione!-lessees ove!

the p!ope!t'. 2$ 4his is clea! f!o" the lette! dated #$ Ma' #$88 info!"in( petitione!-lessees that the p!ope!t' the' +e!e

leasin( is fo! sale. 4he!e +as an e7chan(e of lette!s bet+een the Ad"inist!ative Co""ittee and petitione!-lessees

evidencin( the offe! and counte!-offe! of both pa!ties.

Petitione!-lessees insist that the!e +as al!ead' a pe!fected cont!act of sale +hen the' accepted the P,%%%,%%% offe! fo! the

p!ope!t' in thei! lette! dated #8 Octobe! #$88. Petitione!-lessees alle(e that the cont!act of sale bet+een !espondent-hei!s

and )ita ' should be annuled since it violated the !i(ht of fi!st !efusal of petitione!-lessees.

On the othe! hand, !espondent-hei!s "aintain that the P,%%%,%%% offe! in thei! lette! dated Au(ust #$88 al!ead' lapsed

because petitione!-lessees did not accept the offe! +ithin the pe!iod (!anted. 3nstead, petitione!-lessees opted fo! a

confe!ence du!in( +hich the pa!ties failed to a(!ee on the p!ice. 4he!e +as the!efo!e no pe!fected cont!act of sale because

the!e +as no "eetin( of "inds bet+een the pa!ties.

>e a(!ee +ith !espondent-hei!s that the!e +as no "eetin( of the "inds bet+een the pa!ties.

>he!e a ti"e is stated in an offe! fo! its acceptance, the offe! is te!"inated at the e7pi!ation of the ti"e (iven fo! its

acceptance. 4he offe! "a' also be te!"inated +hen the pe!son to +ho" the offe! is "ade eithe! !e1ects the offe! out!i(ht

o! "a6es a counte!-offe! of his o+n. %

4he offe! of P,%%%,%%% in the lette! dated Au(ust #$88 al!ead' lapsed +hen petitione!-lessees failed to accept it +ithin

the pe!iod (!anted. 4he offe! +as supe!seded b' the ne+ offe! of !espondent-hei!s du!in( the confe!ence. o+eve!, it

appea!s f!o" the !eco!ds that no settle"ent +as !eached bet+een the pa!ties du!in( thei! confe!ence. En(!. A!iel Re'es,

son of Hicente M. Re'es, +ho +as p!esent in the confe!ence testified:

: 3 a" sho+in( to 'ou he!e a lette! dated Au(ust ##, #$88 "a!6ed as E7hibit &, +ill 'ou loo6 at this docu"ent M!.

>itness and tell us +hat !elation has this lette! to that +hich 'ou "entioned

A: es, si!, this is the lette! that the' +e!e as6in( fo! a confe!ence, si!.

: No+, in connection +ith that confe!ence bein( !euested b' the plaintiff, did 'ou have a confe!ence +ith the plaintiffs,

M!. >itness

A: es, si!, and 3 +as in that confe!ence.

: All !i(ht, +ho +e!e p!esent in that confe!ence, M!. >itness

A: 4+o of the ad"inist!ative co""ittee M!s. Ma'lad, M!. Ca!lito Re'es, "'self, the b!othe!s and siste!s of M!. Ca!lito

Re'es, si!. >e had a "eetin( +ith a !ep!esentative of thei!s.

: All !i(ht, +e!e the plaintiffs p!esent du!in( that confe!ence

A: No, the' +e!e not. 4he plaintiffs +e!e not p!esent at that ti"e.

: And +ho +as p!esent du!in( that "eetin(

A: e int!oduced hi"self as M!. Mi!anda, si!.

: And did 'ou as6 M!. Mi!anda +h' the plaintiffs +e!e not a!ound in that confe!ence
















A: 3 believe his ans+e! +as M!. Hille(as, the old Hille(as +as in the hospital at that ti"e.

CO?R4:

: All !i(ht, +hat +as the capacit' of M!. Mi!anda in that confe!ence

A: e said he !ep!esents the Hille(ases and includin( the anche<es. 4he othe! tenants of the p!ope!t' because the!e a!e

t+o tenants, Hille(as and anche<, 'ou! hono!.

CO?R4:

All !i(ht continue.

A44. /E)A CR?Y:

: All !i(ht M!. >itness, +ill 'ou please tell this ono!able Cou!t B?a ran/"#r) )ur#n your 5#n B#? Mr.%na5#n M#ran)aI

A: 7 )#/3u//) ? "r#3 ?a B Ban) 63au/ ?r Ba/ an or 5u3? 6r ?an B?a ?y Br or#n an)# /5/ ?a B )#) no noB?r B#? ?#r )#/3u//#on/, /#r.

: >h'

A: T?y 3anno 3o5 u" B#? ? "r#3 ?a ? o?r/ ar or#n, /#r.

: >ould 'ou "ention specificall' the p!ice M!. >itness

A: 7 Ban) P.1 M#$$#on or ? "ro"ry, a$$ n o ry?#n. Man#n, o a$$ o?r D"n// /?a$$ 6 6orn 6y? 6uyr $#@ 3a"#a$ a#n/ aD, )o3u5nary /a5"/, 3ra.

CO?R4:

: A$$ r#?, B?a Ba/ ? $a/ or 6or ?a 3onrn3I

A: ' ?#n@ # Ba/ P

4 M#$$#on, your *onor.

A44. /E)A CR?Y:

: M!. >itness. . .

CO?R4:

: '/ # no a a3 ?a you 5a) an ar$#r or. . . '/ # no a a3 ?a you 5a) an or ar ? P

4-M#$$#on #n ?a5oun o P-M#$$#onI

A: Y/, your *onor.

: o, befo!e 'ou "ade the offe! of P-Million # hund!ed thousand pesos, 'ou! offe! +as P-Million

A: 3 believe +hat +as in the lette! +as bette! than P-Million, 'ou! ono!.

: ' a5 a/@#n you # you ar) B#? ? "$a#n# ?a you 5a) an or o ? "$a#n#/ #n ? a5oun o P-M#$$#on 6or you 5a) an or o P.1 M#$$#on #n ?a 3onrn3I

A: ' ?#n@ /o. ' 3anno r556r 63au/ # Ba/ a $on #5 a$ra)y.

7 7 7 7

A44. /E)A CR?Y:



: 7#$$ you u/ $$ ?#/ *onora6$ Cour Mr. 7#n// B?a ?a""n) o ?a 3onrn3 B?#3? you /a#) you ?a)B#? Mr. M#ran)aI

A: 7 )#) no ar on ? "r#3 an) r5/ o ? "ro"ry ?a ?y or).

: 7$$, ?oB 5u3? Ba/ ? "r#3 B?#3? you a$@) a6ou #n ?a 3onrn3I

A: 7 #nor5) ? nan/ ?a ?r Ba/ ano?r or #n o u/ an) B ra#/) our "r#3 o P.1-M#$$#on n. '

Ba/ or) 6y ano?r 6uyr.

: 7ou$) you D"$a#n o ?#/ *onora6$ Cour B?a you 5an 6y P.1-M#$$#on nI

A: ' #/ n o ? 3a"#a$ a#n/ an) o?r aD/, orn5n aD/.

CO?R4:

: >h' did 'ou "a6e anothe! offe! of P.#-Million +hen 'ou! fo!"e! offe! of P-Million +as al!ead' accepted

A: Can 3 e7plain to 'ou, +ith due !espect, 'ou! ono!. 4he!e +as a lette! (iven to the" that the!e should be an

acceptance on o! befo!e Au(ust ##, #$88. >hat the' !eplied is not acceptance but a confe!ence. o, since that +as not

"et, o! since that +as not accepted, "eanin(, +e did not accept thei! offe!, +hat +e said on Au(ust ## is that, the' should

co"e up +ith the "one' o! the pa'"ent of the p!ope!t' and +e +ill p!epa!e fo! the /eed of ale and docu"ents

pe!tainin( to the sale.

7 7 7 7

: All !i(ht M!. >itness. Afte! that confe!ence, 'ou had +ith M!. Mi!anda, did 'ou !eceive an' co""unication f!o" the

plaintiffs

A: es, si!, that +as the ti"e +e !eceived that E7hibit .

: All !i(ht, 3 a" sho+in( to 'ou he!e a lette! dated Octobe! #8, #$88 +hich +as "a!6ed as E7hibit A, +ill 'ou loo6 at

this docu"ent and tell us +hat !elation has this docu"ent to that +hich 'ou said 'ou !eceived afte! the confe!ence

A: es, si!, this is the lette!, si!, that the' sent.

: No+, +hat did 'ou do afte! !eceivin( this lette! co"in( f!o" the plaintiffs

A: 4he!e +as a !epl' lette!, si!.

: ou !eplied to this lette!

A: es, si!, +e !eplied to that lette!.

: 3f that !epl' lette! to this Octobe! #8, #$88 lette! +ill be sho+n to 'ou, +ould 'ou be able to identif' the sa"e

A: es, si!.

: 3 a" sho+in( to 'ou he!e a $r )a) No56r , 1988 p!eviousl' "a!6ed as E7hibit $, and E7hibit #%, +ill 'ou

loo6 at this lette! M!. >itness and tell us +hat !elation has this lette! to that +hich 'ou "entioned

A: es, si!, ?#/ #/ ? $r #nor5#n ?5 ?a /o5 o ? ?#r/ ?a /o$) ?#r /?ar/ o ano?r #nr/)"ary, /?ar o ? "ro"ry on$y, /#r.

CO?R4:

: And one of the hei!s co"posin( the 5 sha!e of the vendo!s included 'ou! fathe!

A: es, 'ou! ono!.



CO?R4:

: All !i(ht, let "e see E7hibit $. 9E7hibits $ and #% +as sho+n to the Cou!t.

CO?R4:

: A$$ r#?, 6or ? /a$ o ? /?ar, )#) you #nor5 ? "$a#n#/ ?a you ar /$$#n ? o ?B?o$ "ro"ryI

A: (ur#n ? 3onrn3, your *onor, 63au/ )ur#n ? 3onrn3. . . T?a&/ B?y B )#) no ar.

: *ust ans+e! the uestion.

A: es, 'ou! ono!, +e did.

: 3s it not a fact that 'ou onl' info!"ed the plaintiffs, th!u 'ou! lette! of Nove"be! , #$88, E7hibit $, that the vendo!s

sold 5

A: A!e sellin( es, si!.

: Man#n, ?a B?n you /n ED?#6# 9, ? "ro"ry Ba/ no y /o$)I

A: Y/, your *onor. # 9E"phasis supplied

Even petitione!-lessees +itness Mi!anda, +ho +as thei! accountant since #$$, testified that petitione!-lessees did not

indicate thei! offe! fo! the p!ope!t' in thei! lette! dated ## Au(ust #$88 but instead !euested fo! a confe!ence +ith all the

hei!s of /!. )o!en<o C. Re'es. Mi!anda ad"itted that the "ain !eason fo! thei! !euest fo! a confe!ence +as because the'

6ne+ that not all the hei!s of /!. )o!en<o C. Re'es +e!e inte!ested in sellin( the p!ope!t'. Mi!anda testified:

A44. /E)A CR?Y:

: All !i(ht, in this lette! M!. >itness, the!e is in the dispositive po!tion of this lette! the follo+in( state"ent and +hich 3

uote fo! the !eco!ds: May B r3#) /#3F your or on or 6or Auu/ 11, 1988. P$a/ 6 u#)) a33or)#n$y.You ra) ?#/ "or#onI

A: Y/ /#r. =rrr#n o Auu/ , 1988 $r>

7 7 7 7

: And as !epl' to this co""unication M!. >itness, 'ou p!epa!ed anothe! lette! dated Au(ust ##, #$88 add!essed to the

Ad"inist!ative Co""ittee and +hich +as al!ead' "a!6ed as E7hibit F fo! the plaintiffs and E7hibit & fo! the defendants

Could 'ou loo6 at this lette! if 'ou a!e fa"ilia! +ith this

A: es, si!.

: An) you B#$$ ar B#? 5 Mr. 7#n// ?a #n your Auu/ 11, 1988 $r, you )#) no 5a@ any or or a3ounr or or B?a no o ? $r o ? )n)an/-?#r/ on Auu/ , 1988I

A: You ar rrr#n o ? a5ounI

: Y/, you )#) no 5n#on anyI

A: ' )#) no 5n#on ? or 6u ' rKu/) ?5 o ?a a 100 an)an3 63au/ ' @noB ?a ? "ro"ry6#n /o$) ?a) a "ro6$5 n a5on ? a5#$y ?#r/, ?r #/ a "ro6$5 ?a #/ B?y ' Ban) ?5 o 6 "r/n/o ?a # r B?o B#$$ 6uy ? "ro"ry B B#$$ @noB B?r ? $/// /?ou$) 6 "$a3) ou o ? our )oor/63au/ ?y ar a$$ /$$#n ?r )oor/. Anothe! thin(, that is an inhe!ited p!ope!t'. 3 !euested the" to sho+ "e a cop'

of thei! estate ta7 because unde! the inte!nal !evenue code, 'ou cannot have a clean title unless the co!!espondin( estate

ta7 on the p!ope!t' is paid. 4hat is +h' 3 "ade also that !euest, si!.

7 7 7 7





: NoB, #n ?#/ Auu/ 11, 1988 $r, B?#3? #/ ED?#6# G "$a#n#/, you /a) ?a you rKu#r) 3o5"$an)an3 o ? ?#r/ an) you )#) no 5n#on y a "r#3I

A: T? 6#) "r#3.

: 7?a Ba/ your ra/on or )o#n ?a 3o5"$ an)an3I

A: %3au/ ' Ban o #n) ou B??r ? our ar no #nr/) #n /$$#n, /#r.

: 7?n you /a#) our, ar ?y ? on r"r/n#n ? oBnr/?#" o ? 2I

A: Y/, /#r. 2 9E"phasis supplied

Petitione!-lessees ad"it that the!e +as an on(oin( ne(otiation fo! the sale of the p!ope!t'. P!ecisel', theP,%%%,%%% p!ice

fo! the p!ope!t' indicated b' the Ad"inist!ative Co""ittee in the lette! dated Au(ust #$88 +as supe!seded b' the

subseuent offe! of !espondent-hei!s du!in( the confe!ence. 4hus, the lette! dated #8 Octobe! #$88 of petitione!-lessees is

"e!el' anothe! counte!-offe! fo! the p!ope!t' in thei! continuin( ne(otiation fo! the p!ope!t'. 4he latest offe! of

!espondent-hei!s +as contained in thei! lette! dated Nove"be! #$88 +he!ein onl' the 5 undivided inte!est of the

p!ope!t' +as fo! sale at P,82,%%%. >hen petitione!-lessees opted not to !espond to this offe!, !espondent-hei!s had the!i(ht to sell the p!ope!t' to othe! bu'e!s.

Petitione!-lessees al!ead' e7e!cised thei! !i(ht of fi!st !efusal +hen the' !efused to !espond to the latest offe! of

!espondent-hei!s, +hich a"ounted to a !e1ection of the offe!. ?pon petitione!-lessees failu!e to !espond to this latest offe!

of !espondent-hei!s, the latte! could validl' sell the p!ope!t' to othe! bu'e!s unde! the sa"e te!"s and conditions offe!ed

to petitione!-lessees. ; 4hus, +hen !espondent-hei!s sold the p!ope!t' to )ita ', !espondent-hei!s did not violate the !i(ht

of fi!st !efusal of petitione!-lessees. 3ndeed, petitione!-lessees +e!e (iven "o!e than a"ple oppo!tunit' to pu!chase the

p!ope!t'.

Petitione!-lessees alle(e that the p!ice offe!ed to )ita ' +as lo+e! than the p!ice offe!ed to the". 4he !eco!ds of the case

!eveal othe!+ise.

4he last p!ice +hich !espondent-hei!s offe!ed to petitione!-lessees +as

P,82,%%% fo! the 5 undivided inte!est in the p!ope!t'. 4he p!ice of P,82,%%% +as co"puted based on the p!ice

of P,#%%,%%% fo! the enti!e p!ope!t'. Mo!eove!, capital (ains ta7, docu"enta!' sta"p ta7, "unicipal t!ansfe! ta7 and

!e(ist!ation e7penses should be paid b' petitione!-lessees. o+eve!, petitione!-lessees +e!e onl' +illin( to

pa' P,%%%,%%% fo! the enti!e p!ope!t'. Petitione!-lessees also indicated in thei! lette! dated 8 Octobe! #$88 that unpaid

ta7es such as inco"e, estate, !ealt' D science education fund and docu"enta!' sta"ps should be bo!ne b' the hei!s of /!.

)o!en<o C. Re'es.

On the othe! hand, )ita ' paid P,82,%%% fo! the 5 undivided inte!est in the p!ope!t'. 4his is e7clusive of

theP;#2,%% +hich )ita ' paid to Hicente M. Re'es fo! ta7es, a(ents co""ission and "iscellaneous e7penses. 4hus,

)ita ' paid a total of P;,25,%%. Clea!l', this a"ount is not lo+e! than the p!ice offe!ed to petitione!-lessees.

egal %edemption

4he Hille(as b!othe!s "aintain that )ita ' failed to e7e!cise he! !i(ht of !ede"ption +ithin the %-da' pe!iod p!esc!ibed

unde! A!ticle #&2 of the Civil Code. Acco!din( to the Hille(as b!othe!s, )ita ' !eceived on #5 =eb!ua!' #$8$ a cop' of

the /eed of ale evidencin( the sale of the 2 po!tion of the p!ope!t' to the Hille(as b!othe!s. o+eve!, it +as onl' in a

de"and lette! dated 2$ Ma!ch #$$% that )ita ' invo6ed he! !i(ht of !ede"ption.

A!ticles #&2% and #&2 of the Civil Code p!ovide:

A!t. #&2%. A co-o+ne! of a thin( "a' e7e!cise the !i(ht of !ede"ption in case the sha!es of all the othe! co-o+ne!s o! of

an' of the", a!e sold to a thi!d pe!son. 3f the p!ice of the alienation is (!ossl' e7cessive, the !ede"ptione! shall pa' onl' a

!easonable one.

hould t+o o! "o!e co-o+ne!s desi!e to e7e!cise the !i(ht of !ede"ption, the' "a' onl' do so in p!opo!tion to the sha!e

the' "a' !espectivel' have in the thin( o+ned in co""on.











A!t. #&2. 4he !i(ht of le(al p!e-e"ption o! !ede"ption shall not be e7e!cised e7cept +ithin thi!t' da's f!o" the notice in

+!itin( b' the p!ospective vendo!, o! b' the vendo!, as the case "a' be. 4he deed of sale shall not be !eco!ded in the

Re(ist!' of P!ope!t', unless acco"panied b' an affidavit of the vendo! that he has (iven +!itten notice the!eof to all

possible !ede"ptione!s.

4he !i(ht of !ede"ption of co-o+ne!s e7cludes that of ad1oinin( o+ne!s.

4he !eco!ds !eveal that on #5 =eb!ua!' #$8$, )ita ' !eceived the co"plaint fo! Annul"ent of /eed of aleS4itle,

pecific Pe!fo!"ance, and Consi(nation of Rentals +ith /a"a(es filed b' petitione!-lessees. On the sa"e date, )ita '

also !eceived to(ethe! +ith the co"plaint the /eed of ale of the 2 po!tion of the p!ope!t'.

)ita ' and the othe! defendants in that case filed thei! ans+e! on #& Ma!ch #$8$. 3n thei! ans+e!, )ita ' invo6ed he!

!i(ht to !edee" the p!ope!t':

7 7 7 7

#. 4hat the /eed of ale 9Anne7 N in favo! of the plaintiffs +as based on a 4!ansfe! Ce!tificate of 4itle No. #85#8

9Anne7 M +he!e defendant )ita ' is al!ead' a co-o+ne! to the e7tent of &S;8 po!tion on the sub1ect p!ope!t', +hich

ci!cu"stance i"pliedl' ad"its that defendants hei!s have validl' and le(all' disposed the 5 po!tion to defendant )ita' and plaintiffs a!e the!efo!e estopped to den' it

#;. T?a a/ a 3o-oBnr B#? ? /$$r/ o ? 2 "or#on o ? /u63 $o, )n)an L#a Sy ?a/ ? r#? or)5 ? /?ar/ )#/"o/) 6y ? o?r 3o-oBnr/ #n a33or)an3 B#? Ar. 1!20 o ? NB C##$ Co) an) ?r6yDr3#/ ? /a5

#. 4hat the /eed of ale 9Anne7 N Q Co"plaint alle(edl' e7ecuted b' the othe! hei!s constitutin( t+ent' five 92

pe!cent of the sub1ect p!ope!t' cannot as 'et vest full o+ne!ship ove! the sa"e until the co-o+ne! defendant )ita ' shall

have failed o! +aived he! !i(hts to !edee" the afo!esaid 2 of the sub1ect p!ope!t' in uestion

7 7 7 7

P R A E R

>ERE=ORE, p!e"ises conside!ed, it is !espectfull' p!a'ed that afte! hea!in( a 1ud("ent be !ende!ed dis"issin( the

instant co"plaint fo! lac6 of "e!it and o!de! the plaintiffs 1ointl' and seve!all':

7 7 7 7

e To /$$ or D3u a () o Sa$ #n aor o )n)an L#a Sy 3or#n ? r5a#n#n 2 "or#on o ? /u63"ro"ry #n u$$ Dr3#/ o ? r#? o r)5"#on un)r ? $aB .

7 7 7 7

)ita ' clai"s that the ans+e! filed +ith the R4C B!anch 2 is euivalent to a fo!"al offe! to !edee" the 2 undivided

inte!est in the p!ope!t' sold to the Hille(as b!othe!s. )ita ' also clai"s that since she offe!ed to !edee" the p!ope!t' on

#& Ma!ch #$8$, +hich is +ithin % da's f!o" he! !eceipt of the notice of the sale on #5 =eb!ua!' #$8$, she has co"plied

+ith the condition fi7ed b' la+ and "a' b!in( an action to enfo!ce the !ede"ption.

>e hold that the!e +as no valid and effective offe! to !edee" the 2 undivided inte!est in the p!ope!t'. Althou(h )ita '

invo6ed he! !i(ht to !edee" the p!ope!t' in the ans+e! filed +ith the R4C B!anch 2, she failed to consi(n in cou!t the

!ede"ption p!ice. >ell-settled is the !ule that a fo!"al offe! to !edee" "ust be acco"panied b' a valid tende! of the!ede"ption p!ice and that the filin( of a 1udicial action, plus the consi(nation of the !ede"ption p!ice +ithin the pe!iod of

!ede"ption, is euivalent to a fo!"al offe! to !edee". &

As held b' this Cou!t in Tolentino ". (ourt of Appeals:

JAK fo!"al offe! to !edee", acco"panied b' a $ona fide tende! of the !ede"ption p!ice, althou(h p!ope!, is not essential

+he!e, as in the instant case, the !i(ht to !edee" is e7e!cised th!u the filin( of a 1udicial action, +hich as noted ea!lie! +as

"ade si"ultaneousl' +ith the deposit of the !ede"ption p!ice +ith the he!iff, +ithin the pe!iod of !ede"ption. 4he

fo!"al offe! to !edee", acco"panied b' a $ona fide tende! of the !ede"ption p!ice +ithin the pe!iod of !ede"ption









p!esc!ibed b' la+, is onl' essential to p!ese!ve the !i(ht of !ede"ption fo! futu!e enfo!ce"ent even be'ond such pe!iod of

!ede"ption. 4he filin( of the action itself, +ithin the pe!iod of !ede"ption, is euivalent to a fo!"al offe! to !edee".

hould the cou!t allo+ !ede"ption, the !ede"ptione!s should then pa' the a"ount al!ead' adve!ted to. 5

4he i"po!tance of a valid tende! o! consi(nation of the !ede"ption p!ice +as sufficientl' e7plained b' *ustice *.B.).

Re'es in (one#ero ". (ourt of Appeals:

3t is not difficult to disce!n +h' the !ede"ption p!ice should eithe! be full' offe!ed in le(al tende! o! else validl'

consi(ned in cou!t. Onl' b' such "eans can the bu'e! beco"e ce!tain that the offe! to !edee" is one "ade se!iousl' and

in (ood faith. A bu'e! can not be e7pected to ente!tain an offe! of !ede"ption +ithout attendant evidence that the

!ede"ptione! can, and is +illin( to, acco"plish the !epu!chase i""ediatel'. A diffe!ent !ule +ould leave the bu'e! open

to ha!!ass"ent b' speculato!s o! c!ac6pots, as +ell as to unnecessa!' p!olon(ation of the !ede"ption pe!iod, cont!a!' to

the polic' of the la+. >hile consi(nation of the tende!ed p!ice is not al+a's necessa!' because le(al !ede"ption is not

"ade to discha!(e a p!e-e7istin( debt 9Astu!ias u(a! Cent!al ve!sus Cane Molasses Co., &% Phil 2, a valid tende! is

indispensable, fo! the !easons al!ead' stated. Of cou!se, consi(nation of the p!ice +ould !e"ove all cont!ove!s' as to the

petitione!@s abilit' to pa' at the p!ope! ti"e. 8

3n (one#ero, the Cou!t held that to effectivel' e7e!cise the !i(ht of !ede"ption, the offe! to !edee" the p!ope!t' +ithin the

%-da' pe!iod "ust be acco"panied b' a !easonable and valid tende! of the enti!e !epu!chase p!ice. 4he Cou!t held:

JCone1e!oK failed to "a6e a valid tende! of the p!ice of the sale paid b' the Raffi0ans +ithin the pe!iod fi7ed b' la+.

Cone1e!o "e!el' offe!ed a chec6 fo! P#%,%%%, +hich +as not even le(al tende! and +hich the Raffi0ans !e1ected, in lieu of

the p!ice of P28,%%% !ecited in the deed of sale. 4he factual findin( of the Cou!t of Appeals to this effect is final and

conclusive. No! +e!e the vendees obli(ated to accept Cone1e!os p!o"ise to pa' the balance b' "eans of a loan to be

obtained in futuro f!o" a ban6. 2ona fide !ede"ption necessa!il' i"po!ts a !easonable and valid tende! of the enti!e

!epu!chase p!ice, and this +as not done. 4he!e is no co(ent !eason fo! !eui!in( the vendee to accept pa'"ent b'

install"ents f!o" a !ede"ptione!, as it +ould ulti"atel' !esult in an indefinite e7tension of the %-da' !ede"ption pe!iod,

+hen the pu!pose of the la+ in fi7in( a sho!t and definite te!" is clea!l' to avoid p!olon(ed and anti-econo"ic

unce!taint' as to o+ne!ship of the thin( sold 9cf 4o!!i1os "s.C!isolo(o, et al., F.R. No. )-#55, ept. 2$, #$&2. $

3n this case, )ita ' failed to consi(n in cou!t the !ede"ption p!ice +hen she invo6ed he! !i(ht to !edee" the 2 po!tion

of the p!ope!t' in the ans+e! filed +ith the R4C B!anch 2. 4he evidence does not sho+ that )ita ' eve! tende!ed the

!ede"ption p!ice to the Hille(as b!othe!s. Even +hen )ita 's la+'e! sent a lette! dated 2$ Ma!ch #$$% !eite!atin( the

de"and fo! the Hille(as b!othe!s to !esell the 2 inte!est in the p!ope!t', still no tende! of the !ede"ption p!ice +as

"ade. 4he!e is li6e+ise no evidence that )ita ' consi(ned the !ede"ption p!ice in cou!t +hen she filed on #8 Ma' #$$%

a co"plaint fo! pecific Pe!fo!"ance a(ainst the hei!s of Atanacio Hille(as, as !ep!esented b' oledad de Oca"po,

A(!ipino Hille(as, and Ofelia R. 4un(ol.

Conside!in( that the!e +as no tende! of the !ede"ption p!ice, no! +as the!e consi(nation of the !ede"ption p!ice, +e hold

that the!e +as no valid e7e!cise of the !i(ht of !ede"ption.

7*EREORE, +e (ENY the petition in F.R. No. ###;$. >e A'RM the /ecision dated & *anua!' #$$ of the

Cou!t of Appeals in CA-F.R. CH No. 2$5;, as "odified b' its Resolution dated #5 Au(ust #$$.

>e GRANT the petition in F.R. No. #22;%;. >e SET AS'(E the /ecision and Resolution of the Cou!t of Appeals in

CA-F.R. CH No. ;#$#, and REN(ER a ne+ one:

#. ?pholdin( the !i(ht of Atanacio M. Hille(as and A(!ipino M. Hille(as ove! the 2 undivided inte!est in the p!ope!t'

and

2. /en'in( the de"and fo! le(al !ede"ption b' pouses )ita ' and ' Bon u.

No p!onounce"ent on costs.

SO OR(ERE(










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Chapter 1 Cases