Katung Dugang Nga Mga Cases

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Amadora v. CAG.R. No. L-47745 April 15, 1988

CRUZ, J.:

Like any prospective graduate, AlfredoAmadora was looking forward to tecommencement e!ercises were e wouldascend te stage and in te presence of isrelatives and friends receive is ig scooldiploma. "ese ceremonies were sceduledon April #$, #%&'. As it turned out, toug,fate would intervene and deny im tatawaited e!perience. (n April #), #%&', wiletey were in te auditorium of teir scool,te Colegio de *an Jose+Recoletos, aclassmate, a-lito amon, /red a gun tatmortally it Alfredo, ending all ise!pectations and is life as well. "e victimwas only seventeen years old. #

a0on was convicted of omicide trureckless imprudence . ' Additionally, teerein petitioners, as te victim1s parents,/led a civil action for damages under Article'#23 of te Civil Code against te Colegio de*an Jose+Recoletos, its rector te ig scoolprincipal, te dean of -oys, and te pysicsteacer, togeter wit a0on and two oterstudents, troug teir respective parents.

"e complaint against te students was laterdropped. After trial, te Court of 4irst

5nstance of Ce-u eld te remainingdefendants lia-le to te plainti0s in te sumof '%6,%26.33, representing deatcompensation, loss of earning capacity, costsof litigation, funeral e!penses, moraldamages, e!emplary damages, andattorney1s fees . ) (n appeal to terespondent court, owever, te decision wasreversed and all te defendants werecompletely a-solved . 6

5n its decision, wic is now te su-7ect of

tis petition for certiorari under Rule 68 of te Rules of Court, te respondent courtfound tat Article '#23 was not applica-le aste Colegio de *an Jose+Recoletos was not ascool of arts and trades -ut an academicinstitution of learning. 5t also eld tat testudents were not in te custody of tescool at te time of te incident as tesemester ad already ended, tat tere wasno clear identi/cation of te fatal gun andtat in any event te defendant, ad

e!ercised te necessary diligence inpreventing te in7ury. 8

"e -asic undisputed facts are tat AlfredoAmadora went to te *an Jose+Recoletos onApril #), #%&', and wile in its auditoriumwas sot to deat -y a-lito a0on, aclassmate. (n te implications andconse9uences of tese facts, te partiessarply disagree.

"e petitioners contend tat teir son was inte scool to sow is pysics e!periment asa prere9uisite to is graduation ence, ewas ten under te custody of te privaterespondents. "e private respondents su-mittat Alfredo Amadora ad gone to te scooonly for te purpose of su-mitting ispysics report and tat e was no longer inteir custody -ecause te semester adalready ended.

"ere is also te 9uestion of te identity ofte gun used wic te petitioners considerimportant -ecause of an earlier incidentwic tey claim underscores te negligenceof te scool and at least one of te privaterespondents. 5t is not denied -y terespondents tat on April &, #%&', *ergioamaso, Jr., te dean of -oys, con/scatedfrom Jose ;um-an an unlicensed pistol -utlater returned it to im witout making a

report to te principal or taking any furteraction . $ As ;um-an was one of tecompanions of a0on wen te latter /redte gun tat killed Alfredo, te petitionerscontend tat tis was te same pistol tatad -een con/scated from ;um-an and tatteir son would not ave -een killed if it adnot -een returned -y amaso. "erespondents say, owever, tat tere is noproof tat te gun was te same /rearm tatkilled Alfredo.

Resolution of all tese disagreements wildepend on te interpretation of Article '#23wic, as it appens, is invoked -y -otparties in support of teir con


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"ree cases ave so far -een decided -y teCourt in connection wit te a-ove+9uotedprovision, to wit: =!conde v. Capuno &>ercado v. Court of Appeals, 2 and alisoc v.?rillantes. % "ese will -e -rie


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Unlike in =!conde and >ercado, te Colegiode *an Jose+Recoletos as -een directlyimpleaded and is sougt to -e eld lia-leunder Article '#23 and unlike in alisoc, it isnot a scool of arts and trades -ut anacademic institution of learning. "e partieserein ave also directly raised te 9uestionof weter or not Article '#23 covers evenesta-lisments wic are tecnically notscools of arts and trades, and, if so, wente o0ending student is supposed to -e inits custody.

After an e!austive e!amination of tepro-lem, te Court as come to teconclusion tat te provision in 9uestionsould apply to all scools, academic as wellas non+academic. Fere te scool isacademic rater tan tecnical or vocationalin nature, responsi-ility for te tortcommitted -y te student will attac to teteacer in carge of suc student, followingte /rst part of te provision. "is is tegeneral rule. 5n te case of esta-lisments of arts and trades, it is te ead tereof, andonly e, wo sall -e eld lia-le as ane!ception to te general rule. 5n oter words,teacers in general sall -e lia-le for teacts of teir students e!cept were tescool is tecnical in nature, in wic case itis te ead tereof wo sall -e answera-le.4ollowing te canon of reddendo singulasingulis teacers sould apply to te wordspupils and students and eads of esta-lisments of arts and trades to teword apprentices.

"e Court tus conforms to te dissentingopinion e!pressed -y Justice J.?.L. Reyes in=!conde were e said in part:

5 can see no sound reason for limiting Art.#%3) of te (ld Civil Code to teacers of artsand trades and not to academic ones. Fat

su-stantial di0erence is tere -etween teminsofar as concerns te proper supervisionand vice over teir pupilsG 5t cannot -eseriously contended tat an academicteacer is e!empt from te duty of watcingtat is pupils do not commit a tort to tedetriment of tird ersons, so long as teyare in a position to e!ercise autority and*upervision over te pupil. 5n my opinion, inte prase teacers or eads of esta-lisments of arts and trades used inArt. #%3) of te old Civil Code, te words

arts and trades does not 9ualify teacers-ut only eads of esta-lisments. "eprase is only an updated version of tee9uivalent terms preceptores y artesanosused in te 5talian and 4renc Civil Codes.

5f, as conceded -y all commentators, te-asis of te presumption of negligence ofArt. #%3) in some culpa in vigilando tat teparents, teacers, etc. are supposed to aveincurred in te e!ercise of teir autority, itwould seem clear tat were te parentplaces te cild under te e0ective autorityof te teacer, te latter, and not te parentsould -e te one answera-le for te tortscommitted wile under is custody, for tevery reasonHtat te parent is not supposedto interfere wit te discipline of te scoonor wit te autority and supervision of teteacer wile te cild is under instructionAnd if tere is no autority, tere can -e noresponsi-ility.

"ere is really no su-stantial distinction-etween te academic and te non+academic scools insofar as torts committed-y teir students are concerned. "e samevigilance is e!pected from te teacer overte students under is control andsupervision, watever te nature of tescool were e is teacing. "e suggestionin te =!conde and >ercado Cases is tatte provision would make te teacer oreven te ead of te scool of arts andtrades lia-le for an in7ury caused -y anystudent in its custody -ut if tat same tortwere committed in an academic scool, nolia-ility would attac to te teacer or tescool ead. All oter circumstances -eingte same, te teacer or te ead of teacademic scool would -e a-solved wereaste teacer and te ead of te non+academic scool would -e eld lia-le, andsimply -ecause te latter is a scool of arts

and trades.

"e Court cannot see wy di0erent degreesof vigilance sould -e e!ercised -y tescool autorities on te -asis only of tenature of teir respective scools. "eredoes not seem to -e any plausi-le reason forrela!ing tat vigilance simply -ecause tescool is academic in nature and forincreasing suc vigilance were te scool isnon+academic. Iota-ly, te in7ury su-7ect oflia-ility is caused -y te student and not -y


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te scool itself nor is it a result of teoperations of te scool or its e9uipment.

"e in7ury contemplated may -e caused -yany student regardless of te scool weree is registered. "e teacer certainly souldnot -e a-le to e!cuse imself -y simplysowing tat e is teacing in an academicscool were, on te oter and, te eadwould -e eld lia-le if te scool were non+academic.

"ese 9uestions, toug, may -e asked: 5f te teacer of te academic scool is to -eeld answera-le for te torts committed -yis students, wy is it te ead of te scoolonly wo is eld lia-le were te in7ury iscaused in a scool of arts and tradesG And inte case of te academic or non+ tecnicalscool, wy not apply te rule also to teead tereof instead of imposing te lia-ilityonly on te teacerG

"e reason for te disparity can -e traced tote fact tat istorically te ead of tescool of arts and trades e!ercised a closertutelage over is pupils tan te ead of teacademic scool. "e old scools of arts andtrades were engaged in te training of artisans apprenticed to teir master wopersonally and directly instructed tem onte tecni9ue and secrets of teir craft. "eead of te scool of arts and trades wassuc a master and so was personallyinvolved in te task of teacing is students,wo usually even -oarded wit im and socame under is constant control, supervisionand in


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As long as it can -e sown tat te studentis in te scool premises in pursuance of alegitimate student o-7ective, in te e!erciseof a legitimate student rigt, and even in teen7oyment of a legitimate student rigt, andeven in te en7oyment of a legitimatestudent privilege, te responsi-ility of tescool autorities over te studentcontinues. 5ndeed, even if te student sould-e doing noting more tan rela!ing in tecampus in te company of is classmatesand friends and en7oying te am-ience andatmospere of te scool, e is still witinte custody and su-7ect to te discipline of te scool autorities under te provisions of Article '#23.

uring all tese occasions, it is o-viously teteacer+in+carge wo must answer for isstudents1 torts, in practically te same waytat te parents are responsi-le for te cildwen e is in teir custody. "e teacer+in+carge is te one designated -y te dean,principal, or oter administrative superior toe!ercise supervision over te pupils in tespeci/c classes or sections to wic tey areassigned. 5t is not necessary tat at te timeof te in7ury, te teacer -e pysicallypresent and in a position to prevent it.Custody does not connote immediate andactual pysical control -ut refers more to teinakalintal in is dissenting opinion in alisoctat te scool may -e unduly e!posed tolia-ility under tis article in view of teincreasing activism among te students tatis likely to cause violence and resultingin7uries in te scool premises. "at is a validfear, to -e sure. Ieverteless, it sould -erepeated tat, under te present ruling, it isnot te scool tat will -e eld directly lia-le>oreover, te defense of due diligence isavaila-le to it in case it is sougt to -e eldanswera-le as principal for te acts oromission of its ead or te teacer in itsemploy.

"e scool can sow tat it e!ercised propermeasures in selecting te ead or itsteacers and te appropriate supervisionover tem in te custody and instruction ofte pupils pursuant to its rules andregulations for te maintenance of disciplineamong tem. 5n almost all cases now, in fact,tese measures are e0ected troug teassistance of an ade9uate security force toelp te teacer pysically enforce toserules upon te students. >s sould -olsterte claim of te scool tat it as taken


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ade9uate steps to prevent any in7ury tatmay -e committed -y its students.

A fortiori, te teacer imself may invoketis defense as it would oterwise -e unfairto old im directly answera-le for tedamage caused -y is students as long astey are in te scool premises andpresuma-ly under is in


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matter to iger autorities. File tis wasclearly negligence on is part, for wic edeserves sanctions from te scool, it doesnot necessarily link im to te sooting of Amador as it as not -een sown tat econ/scated and returned pistol was te guntat killed te petitioners1 son.

8. 4inally, as previously o-served, teColegio de *an Jose+Recoletos cannot -e elddirectly lia-le under te article -ecause onlyte teacer or te ead of te scool of artsand trades is made responsi-le for tedamage caused -y te student orapprentice. Ieiter can it -e eld to answerfor te tort committed -y any of te oterprivate respondents for none of tem as-een found to ave -een carged wit tecustody of te o0ending student or as -eenremiss in te discarge of is duties inconnection wit suc custody.

5n sum, te Court /nds under te facts asdisclosed -y te record and in te ligt of teprinciples erein announced tat none of terespondents is lia-le for te in7ury ina. LourdesNalen@uela was driving a -lue >itsu-islancer wit late Io. 44U 86' from errestaurant at >arcos igway to er ome atalan@a *treet, Araneta Avenue. *e wastravelling along Aurora ?lvd. wit acompanion, Cecilia Ramon, eading towardste direction of >anila. ?efore reacing ALake *treet, se noticed someting wrongwit er tires se stopped at a ligted placewere tere were people, to verify weterse ad a >edical >emorial Center were sewas found to ave a Qtraumatic amputationleg, left up to distal tig a-ove kneeB. *ewas con/ned in te ospital for twenty '3Bdays and was eventually /tted wit anarti/cial leg. "e e!penses for te ospitacon/nement #'3,333.33B and te cost ofte arti/cial leg '&,333.33B were paid -ydefendants from te car insurance.


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5n er complaint, plainti0 prayed for moraldamages in te amount of # million,e!emplary damages in te amount of #33,333.33 and oter medical and relatede!penses amounting to a total of #23,333.33, including loss of e!pectedearnings.

efendant Ricard Li denied tat e wasnegligent. e was on is way ome,travelling at 88 kp considering tat it wasraining, visi-ility was a0ected and te roadwas wet. "raSc was ligt. e testi/ed tat ewas driving along te inner portion of terigt lane of Aurora ?lvd. towards tedirection of Araneta Avenue, wen e wassuddenly confronted, in te vicinity of A.Lake *treet, *an Juan, wit a car comingfrom te opposite direction, travelling at 23kp, wit Qfull -rigt ligts. "emporarily-linded, e instinctively swerved to te rigtto avoid colliding wit te oncoming veicle,and -umped plainti0Os car, wic e did notsee -ecause it was midnigt -lue in color,wit no parking ligts or early warningdevice, and te area was poorly ligted. ealleged in is defense tat te left rearportion of plainti0Os car was protruding as itwas ten Qat a standstill diagonally on teouter portion of te rigt lane towardsAraneta Avenue par. #2, AnswerB. econ/rmed te testimony of plainti0Os witnesstat after -eing -umped te car of teplainti0 swerved to te rigt and it anotercar parked on te sidewalk. efendantscounterclaimed for damages, alleging tatplainti0 was reckless or negligent, as sewas not a licensed driver.

"e police investigator, fc. 4elic Ramos, woprepared te veicular accident report andte sketc of te tree cars involved in teaccident, testi/ed tat te plainti0Os car wasQnear te sidewalk tis witness did not

remem-er weter te a@ard ligts of plainti0s car were on, and did not notice if tere was an early warning device tere wasa street ligt at te corner of Aurora ?lvd.and 4. Roman, a-out #33 meters away. 5t wasnot mostly dark, i.e. Qtings can -e seen p.#$, tsn, (ct. '2, #%%#B.

A witness for te plainti0, Rogelio Rodrigue@,testi/ed tat after plainti0 aligted from ercar and opened te trunk compartment,defendantOs car came approacing very fast

ten meters from te scene te car wasQ@ig@agging. "e rear left side of plainti0scar was -umped -y te front rigt portion ofdefendantOs car as a conse9uence, teplainti0s car swerved to te rigt and it teparked car on te sidewalk. lainti0 wastrown to te windsield of defendantOs carwic was destroyed, and landed under tecar. e stated tat defendant was under teinotion for Iew

"rial and for Reconsideration, citingtestimony in Criminal Case (.C. Io. 236)$&eople vs. Ricard LiB, tending to sow tatte point of impact, as depicted -y tepieces of glassHde-ris from te partiesO cars


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appeared to -e at te center of te rigt laneof Aurora ?lvd. "e trial court denied temotion. efendants fortwit /led an appealwit te respondent Court of Appeals. 5n aecision rendered >arc )3, #%%6, te Courtof Appeals found tat tere was Qample -asisfrom te evidence of record for te trialcourtOs /nding tat te plainti0Os car wasproperly parked at te rigt, -eside tesidewalk wen it was -umped -y defendantOscar.T# ismissing te defendantsOargument tat te plainti0Os car wasimproperly parked, almost at te center of te road, te respondent court noted tatevidence wic was supposed to prove tatte car was at or near center of te rigtlane was never presented during te trial of te case.T' "e respondent courtfurtermore o-served tat:

efendant LiOs testimony tat e was drivingat a safe speed of 88 km.Hour is self serving it was not corro-orated. 5t was infact contradicted -y eyewitness Rodrigue@wo stated tat e was outside is-eerouse located at Aurora ?oulevard afterA. Lake *treet, at or a-out ':33 a.m. of June'6, #%%3 wen is attention was caugt -y a-eautiful lady referring to te plainti0Baligting from er car and opening te trunkcompartment e noticed te car of RicardLi Qapproacing very fast ten #3B metersaway from te scene defendantOs car was@ig@agging, altoug tere were no olesand a@ards on te street, and Q-umped teleg of te plainti0O wo was trown againstte windsield of defendantOs car, causing itsdestruction. e came to te rescue of teplainti0, wo was pulled out from underdefendantOs car and was a-le to say Qurtingwords to Ricard Li -ecause e noticed tatte latter was under te inesa inte #%&3Os, -ut did not know eiter plainti0 or defendant Li -efore te accident.

5n agreeing wit te trial court tat tedefendant Li was lia-le for te in7uriessustained -y te plainti0, te Court of Appeals, in its decision, owever, a-solvedte LiOs employer, Ale!ander Commercial,5nc. from any lia-ility towards petitionerLourdes Nalen@uela and reduced te amountof moral damages to 833,333.33. 4inding

7usti/cation for e!emplary damages, terespondent court allowed an award of83,333.33 for te same, in addition to costsattorneyOs fees and te oter damages. "eCourt of Appeals, likewise, dismissed tedefendantsO counterclaims.T)

Conse9uently, -ot parties assail terespondent courtOs decision -y /ling twoseparate petitions -efore tis Court. RicardLi, in ;.R. Io. ##&%66, contends tat esould not -e eld lia-le for damages-ecause te pro!imate cause of te accidentwas >a. Lourdes Nalen@uelaOs ownnegligence. Alternatively, e argues tat inte event tat tis Court /nds im negligent,suc negligence ougt to -e mitigated -y tecontri-utory negligence of Nalen@uela.

(n te oter and, in ;.R. Io. ##83'6, >a.Lourdes Nalen@uela assails te respondentcourtOs decision insofar as it a-solvesAle!ander Commercial, 5nc. from lia-ility aste owner of te car driven -y Ricard Li andinsofar as it reduces te amount of teactual and moral damages awarded -y tetrial court.T6

As te issues are intimately related, -otpetitions are ere-y consolidated. 5t is plainlyevident tat te petition for review in ;.RIo. ##&%66 raises no su-stantial 9uestionsof law. Fat it, in e0ect, attempts to avetis Court review are factual /ndings of tetrial court, as sustained -y te Court ofAppeals /nding Ricard Li grossly negligentin driving te >itsu-isi Lancer provided -yis company in te early morning ours of

June '6, #%%3. "is we will not do. As ageneral rule, /ndings of fact of te Court ofAppeals are -inding and conclusive upon us,and tis Court will not normally distur- sucfactual /ndings unless te /ndings of fact ofte said court are palpa-ly unsupported -y

te evidence on record or unless te 7udgment itself is -ased on amisappreension of facts.T8

5n te /rst place, Nalen@uelaOs version of teincident was fully corro-orated -y anuninterested witness, Rogelio Rodrigue@, teowner+operator of an esta-lisment located

7ust across te scene of te accident. (ntrial, e testi/ed tat e o-served a car-eing driven at a Qvery fast speed, racingtowards te general direction of Araneta


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Avenue.T$ Rodrigue@ furter added tat ewas standing in front of is esta-lisment,

7ust ten to twenty feet away from te sceneof te accident, wen e saw te car itNalen@uela, urtling er against tewindsield of te defendantOs >itsu-isiLancer, from were se eventually fell underte defendantOs car. *pontaneously reactingto te incident, e crossed te street, notingtat a man reeking wit te smell of li9uorad aligted from te o0ending veicle inorder to survey te incident.T& =9uallyimportant, Rodrigue@ declared tat eo-served Nalen@uelaOs car parked paralleland very near te sidewalk,T2 contrary toLiOs allegation tat Nalen@uelaOs car wasclose to te center of te rigt lane. Feagree tat as -etween LiOs Qself+servingasseverations and te o-servations of awitness wo did not even know te accidentvictim personally and wo immediately gavea statement of te incident similar to istestimony to te investigator immediatelyafter te incident, te latterOs testimonydeserves greater weigt. As te courtempasi@ed:

"e issue is one of credi-ility and from (urown e!amination of te transcript, Fe arenot prepared to set aside te trial courtOsreliance on te testimony of Rodrigue@negating defendantOs assertion tat e wasdriving at a safe speed. File Rodrigue@drives only a motorcycle, is perception of speed is not necessarily impaired. e wassu-7ected to cross+e!amination and noattempt was made to 9uestion iscompetence or te accuracy of is statementtat defendant was driving Qvery fast. "iswas te same statement e gave to tepolice investigator after te incident, as toldto a newspaper report =!. QB. Fe see nocompelling -asis for disregarding istestimony.

"e alleged inconsistencies in Rodrigue@Otestimony are not -orne out -y ane!amination of te testimony. Rodrigue@testi/ed tat te scene of te accident wasacross te street were is -eerouse islocated a-out ten to twenty feet away pp.)8+)$, tsn, June #&, #%%#B. e did not statetat te accident transpired immediately infront of is esta-lisment. "e ownersip of te Lam-ingan sa Mam-ingan is not materialte -usiness is registered in te name of is

moter, -ut e e!plained tat e owns teesta-lisment p. 8, tsn., June '3, #%%#B.

>oreover, te testimony tat te streetligtson is side of Aurora ?oulevard were on tenigt te accident transpired p. 2B is notnecessarily contradictory to te testimony offc. Ramos tat tere was a streetligt at tecorner of Aurora ?oulevard and 4. Roman*treet p. 68, tsn., (ct. '3, #%%#B.

Fit respect to te weater conditionRodrigue@ testi/ed tat tere was only adri@@le, not a eavy rain and te rain asstopped and e was outside isesta-lisment at te time te accidenttranspired pp. $6+$8, tsn., June #&, #%%#B

"is was consistent wit plainti0s testimonytat it was no longer raining wen se left?istro La Conga pp. #3+##, tsn., April '%#%%#B. 5t was defendant Li wo stated tat itwas raining all te way in an attempt toe!plain wy e was travelling at only 83+88kp. p. ##, tsn., (ct. #6, #%%#B. As to tetestimony of fc. Ramos tat it was raininge arrived at te scene only in response to atelepone call after te accident adtranspired pp. %+#3, tsn, (ct. '2, #%%#B. Fe/nd no su-stantial inconsistencies inRodrigue@Os testimony tat would impair teessential integrity of is testimony or re


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patently self+serving asseverations. "eaverage motorist alert to road conditions willave no diSculty applying te -rakes to acar traveling at te speed claimed -y Li.;iven a ligt rainfall, te visi-ility of testreet, and te road conditions on a principalmetropolitan torougfare like Aurora?oulevard, Li would ave ad ample time toreact to te canging conditions of te roadif e were alert + as every driver sould -e +to tose conditions. riving e!acts a moretan usual toll on te senses. ysiologicalQ/gt or anila and te on+coming car was also on itsrigt lane going to Cu-ao.T#)

aving come to te conclusion tat Li wasnegligent in driving is company+issued>itsu-isi Lancer, te ne!t 9uestion for us todetermine is weter or not Nalen@uela waslikewise guilty of contri-utory negligence inparking er car alongside Aurora ?oulevard,wic entire area Li points out, is a noparking @one.

Fe agree wit te respondent court tatNalen@uela was not guilty of contri-utory

negligence.

Contri-utory negligence is conduct on tepart of te in7ured party, contri-uting as alegal cause to te arm e as su0eredwic falls -elow te standard to wic e isre9uired to conform for is own protectionT#6 ?ased on te foregoing de/nition, testandard or act to wic, according topetitioner Li, Nalen@uela ougt to aveconformed for er own protection was not to


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park at all at any point of Aurora ?oulevard,a no parking @one. Fe cannot agree.

Courts ave traditionally -een compelled torecogni@e tat an actor wo is confrontedwit an emergency is not to -e eld up tote standard of conduct normally applied toan individual wo is in no suc situation. "elaw takes stock of impulses of umanitywen placed in treatening or dangeroussituations and does not re9uire te samestandard of tougtful and re


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Company,T'8 tat negligence is te want of care re9uired -y te circumstances.

"e circumstances esta-lised -y teevidence adduced in te court -elow plainlydemonstrate tat Li was grossly negligent indriving is >itsu-isi Lancer. 5t -earsempasis tat e was driving at a fast speedat a-out ':33 A.>. after a eavy downpourad settled into a dri@@le rendering te streetslippery. "ere is ample testimonial evidenceon record to sow tat e was under tein


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principle of respondeat superior, wic oldste master lia-le for acts of te servant, -uttat of pater familias, in wic te lia-ilityultimately falls upon te employer, for isfailure to e!ercise te diligence of a goodfater of te family in te selection andsupervision of is employees. 5t is up to tispoint, owever, tat our agreement wit terespondent court ends. Utili@ing te -onuspater familias standard e!pressed in Article'#23 of te Civil Code,T'2 we are of teopinion tat LiOs employer, Ale!anderCommercial, 5nc. is 7ointly and solidarilylia-le for te damage caused -y te accidentof June '6, #%%3.

4irst, te case of *t. 4rancis ig *cool vs.Court of AppealsT'% upon wic respondentcourt as placed undue reliance, dealt witte su-7ect of a scool and its teacerOssupervision of students during ane!tracurricular activity. "ese cases now fallunder te provision on special parentalautority found in Art. '#2 of te 4amilyCode wic generally encompasses allautori@ed scool activities, weter insideor outside scool premises.

*econd, te employerOs primary lia-ilityunder te concept of pater familiasem-odied -y Art. '#23 in relation to Art.'#&$B of te Civil Code is 9uasi+delictual ortortious in caracter. is lia-ility is relievedon a sowing tat e e!ercised te diligenceof a good fater of te family in te selectionand supervision of its employees. (nceevidence is introduced sowing tat teemployer e!ercised te re9uired amount of care in selecting its employees, alf of teemployerOs -urden is overcome. "e9uestion of diligent supervision, owever,depends on te circumstances of employment.

(rdinarily, evidence demonstrating tat teemployer as e!ercised diligent supervisionof its employee during te performance of te latterVs assigned tasks would -e enougto relieve im of te lia-ility imposed -yArticle '#23 in relation to Article '#&$ of teCivil Code. "e employer is not e!pected toe!ercise supervision over eiter teemployeeOs private activities or during teperformance of tasks eiter unsanctioned -yte former or unrelated to te employeeOstasks. "e case at -enc presents a situation

of a di0erent caracter, involving a practiceutili@ed -y large companies wit eiter teiremployees of managerial rank or teirrepresentatives.

5t is customary for large companies toprovide certain classes of teir employeeswit courtesy veicles. "ese company carsare eiter wolly owned and maintained -yte company itself or are su-7ect to variousplans troug wic employees eventuallyac9uire teir veicles after a given period ofservice, or after paying a token amount>any companies provide li-eral Qcar plansto ena-le teir managerial or oteremployees of rank to purcase cars, wicgiven te cost of veicles tese days, teywould not oterwise -e a-le to purcase onteir own.

Under te /rst e!ample, te companyactually owns and maintains te car up tote point of turnover of ownersip to teemployee in te second e!ample, te car isreally owned and maintained -y teemployee imself. 5n furnising veicles tosuc employees, are companies totallya-solved of responsi-ility wen an accidentinvolving a company+issued car occursduring private use after normal oSce oursG

>ost parmaceutical companies, forinstance, wic provide cars under te /rstplan, re9uire rigorous tests of roadwortiness from teir agents prior to turningover te car su-7ect of companymaintenanceB to teir representatives. 5noter words, like a good fater of a familytey entrust te company veicle only aftertey are satis/ed tat te employee towom te car as -een given full use of tesaid company car for company or privatepurposes will not -e a treat or menace toimself, te company or to oters. Fen a

company gives full use and en7oyment of acompany car to its employee, it in e0ectguarantees tat it is, like every good fatersatis/ed tat its employee will use teprivilege reasona-ly and responsively.

5n te ordinary course of -usiness, not alcompany employees are given te privilegeof using a company+issued car. 4or largecompanies oter tan tose cited in tee!ample of te preceding paragrap, teprivilege serves important -usiness purposes


15/78

eiter related to te image of success anentity intends to present to its clients and tote pu-lic in general, or for practical andutilitarian reasons + to ena-le its managerialand oter employees of rank or its salesagents to reac clients conveniently. 5n mostcases, providing a company car serves -otpurposes. *ince important -usinesstransactions and decisions may occur at allours in all sorts of situations and under allkinds of guises, te provision for teunlimited use of a company car tereforeprincipally serves te -usiness and goodwillof a company and only incidentally teprivate purposes of te individual woactually uses te car, te managerialemployee or company sales agent. As suc,in providing for a company car for -usinessuse andHor for te purpose of furtering tecompanyOs image, a company owes aresponsi-ility to te pu-lic to see to it tatte managerial or oter employees to womit entrusts virtually unlimited use of acompany issued car are a-le to use tecompany issue capa-ly and responsi-ly.

5n te instant case, Li was an Assistant>anager of Ale!ander Commercial, 5nc. 5n istestimony -efore te trial court, e admittedtat is functions as Assistant >anager didnot re9uire im to scrupulously keep normaloSce ours as e was re9uired 9uite often toperform work outside te oSce, visitingprospective -uyers and contacting andmeeting wit company clients.T)3 "esemeetings, clearly, were not strictly con/nedto routine ours -ecause, as a managerialemployee tasked wit te 7o- of representingis company wit its clients, meetings witclients were -ot social as well as work+related functions. "e service car assigned toLi -y Ale!ander Commercial, 5nc. tereforeena-led -ot Li + as well as te corporation +to put up te front of a igly successful

entity, increasing te latterOs goodwill -eforeits clientele. 5t also facilitated meeting-etween Li and its clients -y providing teformer wit a convenient mode of travel.

>oreover, LiOs claim tat e appened to -eon te road on te nigt of te accident-ecause e was coming from a social visitwit an oScemate in araa9ue was a -areallegation wic was never corro-orated inte court -elow. 5t was o-viously self+serving.Assuming e really came from is

oScemateOs place, te same could give riseto speculation tat e and is oScemate ad

7ust -een from a work+related function, ortey were togeter to discuss sales andoter work related strategies.

5n /ne, Ale!ander Commercial, 5nc. as notdemonstrated, to our satisfaction, tat ite!ercised te care and diligence of a goodfater of te family in entrusting its companycar to Li. Io allegations were made as toweter or not te company took te stepsnecessary to determine or ascertain tedriving pro/ciency and istory of Li, to womit gave full and unlimited use of a companycar.T)# Iot aving -een a-le to overcomete -urden of demonstrating tat it sould-e a-solved of lia-ility for entrusting itscompany car to Li, said company, -ased onte principle of -onus pater familias, ougtto -e 7ointly and severally lia-le wit teformer for te in7uries sustained -y >aLourdes Nalen@uela during te accident.

4inally, we /nd no reason to overturn teamount of damages awarded -y terespondent court, e!cept as to te amount ofmoral damages. 5n te case of moradamages, wile te said damages are notintended to enric te plainti0 at tee!pense of a defendant, te award souldnoneteless -e commensurate to tesu0ering ina. LourdesNalen@uela underwent a traumaticamputation of er left lower e!tremity at tedistal left tig 7ust a-ove te knee. ?ecause

of tis, Nalen@uela will forever -e deprived ofte full am-ulatory functions of er lefte!tremity, even wit te use of state of teart prostetic tecnology. Fell -eyond teperiod of ospitali@ation wic was paid for-y LiB, se will -e re9uired to undergoad7ustments in er prostetic devise due tote srinkage of te stump from te processof ealing.

"ese ad7ustments entail costs, prosteticreplacements and monts of pysical and


16/78

occupational rea-ilitation and terapy.uring er lifetime, te prostetic devise willave to -e replaced and re+ad7usted tocanges in te si@e of er lower lim- e0ected-y te -iological canges of middle+age,menopause and aging. Assuming sereaces menopause, for e!ample, teprostetic will ave to -e ad7usted torespond to te canges in -one resultingfrom a precipitate decrease in calcium levelso-served in te -ones of all post+menopausalwomen. 5n oter words, te damage done toer would not only -e permanent andlasting, it would also -e permanentlycanging and ad7usting to te pysiologiccanges wic er -ody would normallyundergo troug te years. "ereplacements, canges, and ad7ustments willre9uire corresponding ad7ustive pysical andoccupational terapy. All of tesead7ustments, it as -een documented, arepainful.

"e foregoing discussion does not evenscratc te surface of te nature of teresulting damage -ecause it would -e iglyspeculative to estimate te amount of psycological pain, damage and in7ury wicgoes wit te sudden severing of a vitalportion of te uman -ody. A prosteticdevice, owever tecnologically advanced,will only allow a reasona-le amount of functional restoration of te motor functionsof te lower lim-. "e sensory functions areforever lost. "e resultant an!iety,sleeplessness, psycological in7ury, mentaland pysical pain are inestima-le.

As te amount of moral damages are su-7ectto tis CourtOs discretion, we are of teopinion tat te amount of #,333,333.33granted -y te trial court is in greater accordwit te e!tent and nature of te in7ury +.pysical and psycological + su0ered -y

Nalen@uela as a result of LiOs grosslynegligent driving of is >itsu-isi Lancer inte early morning ours of te accident.

F=R=4(R=, R=>5*=* C(I*5=R=, tedecision of te court of Appeals is modi/edwit te e0ect of R=5I*"A"5I; te 7udgmentof te Regional "rial Court.

*( (R=R=.

adilla, ?ellosillo, and ermosisima, Jr., JJ.concur.

Nitug., J., see concurring opinion

Arrie!a v. Na!"l Ri#e and CornCorpora!ionG.R. No. L-15$45 %anuar& '1,19$4

>AI5LA UI=RFR5"=R* 5I*URAIC= C(.5IC., defendant+appellee.

"eeankee and Carreon for plainti0s+appellees. "e ;overnment Corporate Counsel fordefendant+appellant. 5sidro A. Nera for defendant+appellee.

R=;ALA, J.:

"is is an appeal of te defendant+appellantIAR5C from te decision of te trial courtdated 4e-ruary '3, #%82, awarding to teplainti0s+appellees te amount ofW'2$,333.33 as damages for -reac ofcontract and dismissing te counterclaimand tird party complaint of te defendant+appellant IAR5C.

5n accordance wit *ection #) of Repu-lic ActIo. )68', te Iational Rice and CornAdministration IAR5CB is ere-y a-olisedand all its assets, lia-ilities, functionspowers wic are not inconsistent wit teprovisions of tis Act, and all personnel aretransferred to te Rice and CornAdministration RCAB.

All references, terefore, to te IAR5C in tisdecision must accordingly -e ad7usted andread as RCA pursuant to te aforementionedlaw.

(n >ay #%, #%8', plainti0+appelleeparticipated in te pu-lic -idding called -yte IAR5C for te supply of '3,333 metrictons of ?urmese rice. As er -id of W'3).33per metric ton was te lowest, se wasawarded te contract for te sameAccordingly, on July #, #%8', plainti0+appellee a@ . Arrieta and te appellantcorporation entered into a Contract of *ale ofRice, under te terms of wic te formero-ligated erself to deliver to te latter


17/78

'3,333 metric tons of ?urmess Rice atW'3).33 per metric ton, C54 >anila. 5n turn,te defendant corporation committed itself to pay for te imported rice -y means of anirrevoca-le, con/rmed and assigna-le letterof credit in U.*. currency in favor of teplainti0+appellee andHor supplier in ?urma,immediately. espite te commitment topay immediately -y means of anirrevoca-le, con/rmed and assigna-le Letterof Credit, owever, it was only on July )3,#%8', or a full mont from te e!ecution of te contract, tat te defendant corporation,tru its general manager, took te /rst toopen a letter of credit -y forwarding to teilippine Iational ?ank its Application forCommercial Letter Credit. "e applicationwas accompanied -y a transmittal letter, terelevant paragraps of wic read:

5n view of te fact tat we do not avesuScient deposit wit your institution witwic to cover te amount re9uired to -edeposited as a condition for te opening of letters of credit, we will appreciate it if tisapplication could -e considered special case.

Fe understand tat our supplier, >rs. a@ .Arrieta, as a deadline to meet wic isAugust 6, #%8', and in order to complyterewit, it is imperative tat te LHC -eopened prior to tat date. Fe wouldterefore re9uest your full cooperation ontis matter.

(n te same day, July )3, #%8', >rs. a@ .Arrieta tru counsel, advised te appellantcorporation of te e!treme necessity for teimmediate opening of te letter credit sincese ad -y ten made a tender to ersupplier in Rangoon, ?urma, e9uivalent to8X of te 4.(.?. price of '3,333 tons atW#23.&3 and in compliance wit teregulations in Rangoon tis 8X will -e

con/scated if te re9uired letter of credit isnot received -y tem -efore August 6,#%8'.

(n August 6, #%8', te ilippine Iational?ank informed te appellant corporation tatits application, for a letter of credit forW),$#6,333.33 in favor of "iri *etkya as-een approved -y te ?oard of irectors witte condition tat marginal cas deposit -epaid and tat drafts are to -e paid uponpresentment. =!. J+pl. =!. #3+def., p. #%,

4older of =!i-itsB. 4urtermore, te ?ankrepresented tat it will old your applicationin a-eyance pending compliance wit tea-ove stated re9uirement.

As it turned out, owever, te appellantcorporation not in any /nancial position tomeet te condition. As matter of fact, in aletter dated August ', #%8', te IAR5C-luntly confessed to te appellee itsdilemma: 5n tis connection, please -eadvised tat our application for opening ofte letter of credit as -een presented to te-ank since July )3t -ut te latter re9uirestat we /rst deposit 83X of te value of teletter amounting to apro!imatelyW),$#6,333.33 wic we are not in a positionto meet. =mpasis supplied. =!. %+ef.=!. #+e., p. #2, 4older of =!i-itsB

Conse9uently, te credit instrument appliedfor was opened only on *eptem-er 2, #%8'in favor of "iri *etkya, Rangoon, ?urmaandHor assignee for W),$#6,333.33, wic ismore tan two monts from te e!ecution ofte contractB te party named -y teappellee as -ene/ciary of te letter ofcredit.#Ywp#.[t

As a result of te delay, te allocation ofappellee1s supplier in Rangoon was cancelledand te 8X deposit, amounting to 8'6,333kyats or appro!imately '33,333.33 wasforfeited. 5n tis connection, it must -e madeof record tat altoug te ?urmeseautorities ad set August 6, #%8', as tedeadline for te remittance of te re9uiredletter of credit, te cancellation of teallocation and te con/scation of te 8Xdeposit were not e0ected until August '3#%8', or, a full alf mont after tee!piration of te deadline. And yet, evenwit te #8+day grace, appellant corporationwas una-le to make good its commitment to

open te disputed letter of credit.

"e appellee endeavored, -ut failed, torestore te cancelled ?urmese riceallocation. Fen te futility of reinstating tesame -ecame apparent, se o0ered tosu-stitute "ailand rice instead to tedefendant IAR5C, communicating at tesame time tat te o0er was a solutionwic sould -e -ene/cial to te IAR5C andto us at te same time. =!. \+e., =!. '8Eef., p. )2, 4older of =!i-itsB. "is o0er for


18/78

su-stitution, owever, was re7ected -y teappellant in a resolution dated Iovem-er #8,#%8'.

(n te foregoing, te appellee sent a letterto te appellant, demanding compensationfor te damages caused er in te sum of W'2$,333.33, U.*. currency, representingunreali@ed pro/t. "e demand aving -eenre7ected se instituted tis case now onappeal.

At te instance of te IAR5C, a counterclaimwas /led and te >anila Underwriters5nsurance Company was -rougt to te suitas a tird party defendant to old it lia-le onte performance -ond it e!ecuted in favor of te plainti0+appellee.

Fe /nd for te appellee.

5t is clear upon te records tat te sole andprincipal reason for te cancellation of teallocation contracted -y te appellee ereinin Rangoon, ?urma, was te failure of teletter of credit to -e opened wit tecontemplated period. "is failure must,terefore, -e taken as te immediate causefor te conse9uent damage wic resulted.As it is ten, te disposition of tis casedepends on a determination of wo wasresponsi-le for suc failure. *tateddi0erently, te issue is weter appellant1sfailure to open immediately te letter of credit in dispute amounted to a -reac of tecontract of July #, #%8' for wic it may -eeld lia-le in damages.

Appellant corporation disclaims responsi-ilityfor te delay in te opening of te letter of credit. (n te contrary, it insists tat tefault lies wit te appellee. Appellantcontends tat te disputed negotia-leinstrument was not promptly secured

-ecause te appellee , failed to seasona-lyfurnis data necessary and re9uired foropening te same, namely, #B te amountof te letter of credit, 'B te person,company or corporation in wose favor it isto -e opened, and )B te place and -ankwere it may -e negotiated. Appellantwould ave tis Court -elieve, terefore, tatad tese informations -een fortwitfurnised it, tere would ave -een no delayin securing te instrument.

Appellant1s e!planation as neiter force normerit. 5n te /rst place, te e!planationreaces into an area of te proceedings intowic Fe are not at li-erty to encroac. "ee!planation refers to a 9uestion of factIoting in te record suggests any ar-itraryor a-usive conduct on te part of te tria

7udge in te formulation of te ruling. isconclusion on te matter is suSciently -orneout -y te evidence presented. Fe aredenied, terefore, te prerogative to distur-tat /nding, consonant to te time+onoredtradition of tis "ri-unal to old trial 7udges-etter situated to make conclusions on9uestions of fact. 4or te record, Fe 9uoteereunder te lower court1s ruling on tepoint:

"e defense tat te delay, if any in openingte letter of credit was due to te failure ofplainti0 to name te supplier, te amountand te -ank is not tena-le. lainti0 statedin Court tat tese facts were known todefendant even -efore te contract wase!ecuted -ecause tese facts werenecessarily revealed to te defendant -eforese could 9ualify as a -idder. *e stated tootat se ad given te necessary dataimmediately after te e!ecution of =!. Ate contract of July #, #%8'B to >r. ;A?R5=L?=L>(I"=, ;eneral >anager of te IAR5C,-ot orally and in writing and tat se alsopressed for te opening of te letter of crediton tese occasions. "ese statements avenot -een controverted and defendant IAR5C,notwitstanding its previous intention to doso, failed to present >r. ?elmonte to testifyor refute tis. ...

*econdly, from te correspondence andcommunications wic form part of terecord of tis case, it is clear tat watsingularly delayed te opening of testipulated letter of credit and wic, in turn

caused te cancellation of te allocation in?urma, was te ina-ility of te appellantcorporation to meet te conditionimportation -y te ?ank for granting tesame. Fe do not tink te appellantcorporation can refute te fact tat ad it-een a-le to put up te 83X marginal casdeposit demanded -y te -ank, ten teletter of credit would ave -een approved,opened and released as early as August 6#%8'. "e letter of te ilippine Iationa?ank to te IAR5C was plain and e!plicit tat


19/78

as of te said date, appellant1s applicationfor a letter of credit ... as -een approved -yte ?oard of irectors wit te condition tat83X marginal cas deposit -e paid and tatdrafts are to -e paid upon presentment.=mpasis suppliedB

"e lia-ility of te appellant, owever, stemsnot alone from tis failure or ina-ility tosatisfy te re9uirements of te -ank. 5tsculpa-ility arises from its willful anddeli-erate assumption of contractualo-ligations even as it was well aware of its/nancial incapacity to undertake teprestation. Fe -ase tis 7udgment upon teletter wic accompanied te application/led -y te appellant wit te -ank, a part of wic letter was 9uoted earlier in tisdecision. 5n te said accompanyingcorrespondence, appellant admitted andowned tat it did not ave suScient depositwit your institution te I?B wit wic tocover te amount re9uired to -e depositedas a condition for te opening of letters of credit. ... .

A num-er of logical inferences may -e drawnfrom te aforementioned admission. 4irst,tat te appellant knew te -ankre9uirements for opening letters of creditsecond, tat appellant also knew it could notmeet tose re9uirement. Fen, terefore,despite tis awareness tat was /nanciallyincompetent to open a letter of creditimmediately, appellant agreed in paragrap2 of te contract to pay immediately -ymeans of an irrevoca-le, con/rm andassigna-le letter of credit, it must -esimilarly eld to ave -ound itself to answerfor all and every conse9uences tat wouldresult from te representation. aptlyo-served -y te trial court:

... aving called for -ids for te importation

of rice involving millions, W6,'$3,333.33 to-e e!act, it sould ave a certained itsa-ility and capacity to comply wit teinevita-ly re9uirements in cas to pay forsuc importation. aving announced te -id,it must -e deemed to ave impliedly assuredsuppliers of its capacity and facility to/nance te importation witin te re9uiredperiod, especially since it ad imposed tesupplier te %3+day period witin wic tesipment of te rice must -e -rougt intote ilippines. aving entered in te

contract, it sould ave taken stepsimmediately to arrange for te letter ofcredit for te large amount involved andin9uired into te possi-ility of its issuance.

5n relation to te afore9uoted o-servation ofte trial court, Fe would like to makereference also to Article ## of te Civil Codewic provides:

"ose wo in te performance of teiro-ligation are guilty of fraud, negligence, ordelay, and tose wo in any mannercontravene te tenor tereof, are lia-le indamages.

Under tis provision, not only de-tors guiltyof fraud, negligence or default in teperformance of o-ligations a decreed lia-lein general, every de-tor wo fails inperformance of is o-ligations is -ound toindemnify for te losses and damagescaused tere-y e la Cru@ *eminary of>anila, #2 il. ))3 >unicipality of >oncadav. Ca7uigan, '# il. #26 e la Cavada via@, )& il. %2' >aluenda ] Co. v=nri9ue@, 6$ il. %#$ asumil v. Cong, 6%il. #33) ando v. ;imene@, 86 il. 68%Acme 4ilms v. "eaters *upply, $) il. $8&B.

"e prase any manner contravene tetenor of te o-ligation includes any illicit actwic impairs te strict and faitfuful/llment of te o-ligation or every kind ordefective performance. 5N "olentino, CiviCode of te ilippines, citing autorities, p#3).B

"e IAR5C would also ave tis Court oldtat te su-se9uent o0er to su-stitute

"ailand rice for te originally contracted?urmese rice amounted to a waiver -y teappellee of watever rigts se migt avederived from te -reac of te contract. Fedisagree. Faivers are not presumed, -ut

must -e clearly and convincingly sowneiter -y e!press stipulation or actsadmitting no oter reasona-le e!planationRamire@ v. Court of Appeals, 8' (.;. &&%.B 5nte case at -ar, no suc intent to waive as-een esta-lised.

Fe ave carefully e!amined and studied teoral and documentary evidence presented intis case and upon wic te lower court-ased its award. Under te contract, teIAR5C -ound itself to -uy '3,333 metric tons


20/78

of ?urmese rice at W'3).33 U.*. ollars permetric ton, all net sipped weigt, and all inU.*. currency, C.5.4. >anila ... (n te oterand, documentary and oter evidenceesta-lis wit e9ual certainty tat teplainti0+appellee was a-le to secure tecontracted commodity at te cost price of W#23.&3 per metric ton from er supplier in?urma. Considering freigts, insurance andcarges incident to its sipment ere and teforfeiture of te 8X deposit, te awardgranted -y te lower court is fair ande9uita-le. 4or a clearer view of te e9uity of te damages awarded, Fe reproduce -elowte testimony of te appellee, ade9uatelysupported -y te evidence and record:

D. Fill you please tell te court, ow muc iste damage you su0eredG

A. ?ecause te selling price of my rice isW'3).33 per metric ton, and te cost price of my rice is W#23.33 Fe ad to pay also W$.'8for sipping and a-out W#$6 for insurance.*o adding te cost of te rice, te freigt,te insurance, te total would -e a-outW#2&.%% tat would -e W#8.3# gross pro/tper metric ton, multiply -y '3,333 e9ualsW)33,'33, tat is my supposed pro/t if 5 wenttroug te contract.

"e a-ove testimony of te plainti0 was ageneral appro!imation of te actual /guresinvolved in te transaction. A precise andmore e!act demonstration of te e9uity of te award erein is provided -y =!i-it of te plainti0 and =!i-it )6 of te defendant,ereunder 9uoted so far as germane.

5t is e9ually of record now tat as sown iner re9uest dated July '%, #%8%, and otercommunications su-se9uent tereto for teopening -y your corporation of te re9uiredletter of credit, >rs. Arrieta was supposed to

pay er supplier in ?urma at te rate of (neundred =igty ollars and *eventy CentsW#23.&3B in U.*. Currency, per ton plus =igtollars W2.33B in te same currency per tonfor sipping and oter andling e!penses, sotat se is already assured of a net pro/t of 4ourteen ollars and "irty Cents W#6.)3B,U.*., Currency, per ton or a total of "woundred and =igty *i! "ousand ollarsW'2$,333.33B, U.*. Currency, in teaforesaid transaction. ...

Lastly, erein appellant /led a counterclaimasserting tat it as su0ered, likewise -yway of unreali@ed pro/t damages in te totasum of W63$,333.33 from te failure of tepro7ected contract to materiali@e. "iscounterclaim was supported -y a cost studymade and su-mitted -y te appellant itselfand werein it was illustrated ow indeedad te importation pused tru, IAR5Cwould ave reali@ed in pro/t te amountasserted in te counterclaim. And yet, tesaid amount of 63$,333.33 was reali@a-le-y appellant despite a num-er of e!penseswic te appellee under te contract, didnot ave to incur. "us, under te cost studysu-mitted -y te appellant, -anking andunloading carges were to -e souldered -yit, including an 5mport License 4ee of 'X andsuperintendence fee of W3.'8 per metric ton.5f te IAR5C stood to pro/t over 633 333.33from te disputed transaction inspite of tee!tra e!penditures from wic te ereinappellee was e!empt, we are convicted ofte fairness of te 7udgment presently underappeal.

5n te premises, owever, a minormodi/cation must -e e0ected in tedispositive portion of te decision appeafrom insofar as it e!presses te amount ofdamages in U.*. currency and not inilippine eso. Repu-lic Act 8'% speci/callyre9uires te discarge of o-ligations only inany coin or currency wic at te time ofpayment is legal tender for pu-lic andprivate de-ts. 5n view of tat law, terefore,te award sould -e converted into ande!pressed in ilippine eso.

"is -rings us to a consideration of wat rateof e!cange sould apply in te conversionere decreed. *ould it -e at te time of te-reac, at te time te o-ligation wasincurred or at te rate of e!cange prevailing

on te promulgation of tis decision.

5n te case of =ngel v. Nelasco ] Co., 6& il##8, Fe ruled tat in an action for recoveryof damages for -reac of contract, even ifte o-ligation assumed -y te defendantwas to pay te plainti0 a sum of moneye!pressed in American currency, teindemnity to -e allowed sould -e e!pressedin ilippine currency at te rate of e!cangeat te time of te 7udgment rater tan atte rate of e!cange prevailing on te date


21/78

of defendant1s -reac. "is ruling, owever,can neiter -e applied nor e!tended to tecase at -ar for te same was laid down wentere was no law against stipulating foreigncurrencies in ilippine contracts. ?ut nowwe ave Repu-lic Act Io. 8'% wice!pressly declares suc stipulations ascontrary to pu-lic policy, void and of noe0ect. And, as Fe already pronounced in tecase of =ast-oard Iavigation, Ltd. v. Juan

Ksmael ] Co., 5nc., ;.R. Io. L+%3%3,*eptem-er #3, #%8&, if tere is anyagreement to pay an o-ligation in a currencyoter tan ilippine legal tender, te sameis null and void as contrary to pu-lic policyRepu-lic Act 8'%B, and te most tat could-e demanded is to pay said o-ligation inilippine currency to -e measured in teprevailing rate of e!cange at te time teo-ligation was incurred *ec. #, idemB.

U(I ALL "= 4(R=;(5I;, te decisionappealed from is ere-y aSrmed, wit tesole modi/cation tat te award sould -econverted into te ilippine peso at te rateof e!cange prevailing at te time teo-ligation was incurred or on July #, #%8'wen te contract was e!ecuted. "eappellee insurance company, in te ligt of tis 7udgment, is relieved of any lia-ilityunder tis suit. Io pronouncement as tocosts.

?eng@on, C.J., adilla, Concepcion, aredes,i@on and >akalintal, JJ., concur. ?arrera, J., took no part. Reyes, J.?.L., J., reserves is vote.

Nie!e( v(. CAG.R. No. L-'87' Au)u(! 18, 197

C(IC=C5(I, C.J.:p

etitioner A9uilino Iietes seeks a review on

certiorari of a decision of te Court of Appeals.

5t appears tat, on (cto-er #%, #%8%, saidpetitioner and respondent r. a-lo C. ;arciaentered into a Contract of Lease wit (ptionto ?uy, pursuant to te terms andconditions set fort in te deed =!i-its Aand A+#, also, marked as =!i-it 'B namely:

"at te L=**(R is an owner of te AI;=L=*=UCA"5(IAL 5I*"5"U"= situated at

Angeles, ampanga, a scool wic is dulyrecogni@ed -y te ;overnment

"at te lessor agrees to lease te a-ovestated scool to te L=**== under tefollowing terms and conditions:

#. "at te term will -e for a period of /ve8B years

'. "at te price of te rent is 45N= "(U*AI =*(* 8,333B per year paya-lein te following manners:

a. "at te amount of 45N= "(U*AI 45N=UIR= =*(* 8,833B will -e paid uponte e!ecution of tis Contract of Lease

-. "at te amount of 4(UR "(U*AI 45N=UIR= =*(* 6,833B is paya-le on or-efore te )3t day of (cto-er, #%8%

c. "at te remaining -alance of 454"==I "(U*AI =*(* #8,333B will -e paid onor -efore >arc )3, #%$3

). "at all improvements made during telease -y te L=**== will -e owned -y teL=**(R after te e!piration of te term oftis Contract of Lease

6. "at te L=**(R agrees to give teL=**== an option to -uy te land and tescool -uilding, for a price of (I= UIR=

"(U*AI =*(* #33,333B witin teperiod of te Contract of Lease

8. "at sould te L=**== -uy te lot, landand te scool -uilding witin te stipulatedperiod, te unused payment for te Contractof Lease will -e considered as part paymentfor te sale of te land and scool

$. "at an inventory of all properties in te

scool will -e made on >arc )#, #%$3

$A. "at te term of tis Contract wilcommence in June #%$3 and will terminate in

June #%$8

&. "at te L=**== will -e given full controland responsi-ilities over all te properties ofte scool and over all te supervisions andadministrations of te scool


22/78

2. "at te L=**== agrees to elp teL=**(R to collect te -ack accounts of students incurred -efore te e!ecution of tiscontract.

5nstead of paying te lessor in te mannerset fort in paragrap ' of said contract,Iietes ad, as of August 6, #%$#, madepayments as follows:

(cto-er $,#%$3 .......................................#2,%8&.33 =!. B

Iovem-er '), #%$3 .................................)33.33 =!. =B

ecem-er '#, #%$3 .................................'33.33 =!. 4B

January #6, #%$# .....................................833.33 =!. ;B

4e-ruary #$, #%$# ...................................),333.33 =!. B

>arc #', #%$# .......................................#,333.33 =!. 5B

>arc #), #%$# .......................................&33.33 =!. JB

August 6, #%$# ........................................#33.33 =!. MB ^^^^^^^^^

"("AL ..................................... '6,&8&.33

>oreover, Iietes maintains tat, on*eptem-er 6, #%$#, and ecem-er #), #%$',e paid ;arcia te additional sums of ),333and ','33, respectively, for wic ;arciaissued receipts =!i-it ? and C, reading:

Received te amount of ),333.33B "ree "ousand esos from >rs. Iietes as per

advance pay for te scool, te contract of lease -eing paid.

*gd.B A?L( ;ARC5A =!. ?B

"o Fom it >ay Concern:

"is is to certify tat 5 received te sum of "wo "ousand "wo undred esos, ilippineCurrency, from >rs. Caterine R. Iietes aste partial payment on te purcase of teproperty as speci/ed on te original contract

of Contract of Lease wit te 4irst (ption to?uy originally contracted and duly signed.

*gd.B R. A?L( ;ARC5A =!. CB

(n or a-out July )#, #%$6, r. ;arcia1scounsel wrote to Iietes te letter =!i-it #also =!i-it NB stating:

"e irectorilippine 5nstitute of =lectronicsAngeles, ampanga

*ir:

5 regret to inform you tat our client, ra-lo ;arcia, desires to rescind yourcontract, dated #% (cto-er #%8% -ecause ofte following:

#. "at you ad not maintained te -uildingsu-7ect of te lease contract in goodcondition.

'. "at you ad not -een using te originalname of te scool E Angeles 5nstitutetere-y e!tinguising its e!istence in teeyes of te pu-lic and in7uring its prestige.

). "at troug your fault, no inventory as-een made of all properties of te scool.

6. "at up to tis time, you ad not collectedor muc less elped in te collection of -ackaccounts of former students.

"is is to remind you tat te foregoingo-ligations ad -een one, if not, te principamoving factors wic ad induced te lessoin agreeing wit te terms em-odied in yourcontract of lease, witout wic ful/llmentsaid contract could not ave come intoe!istence. 5t is not simply one of tosereminders tat we make mention, tat our

client under te circumstances, is not onlyentitled to a rescission of te contract. e islikewise entitled to damages E actualcompensatory and e!emplary.

5n view of te serious nature of te -reacwic warrant and sanction drastic legaremedies against you, we earnestly re9uestyou to please see te undersigned at tea-ove+named address two days from receiptereof. (terwise, if we sall not ear fromyou, te foregoing will serve notice on your


23/78

part to vacate te premises witin /ve 8Bdays to -e counted from date of notice.

Nery truly yours,*gd.B N5C"(R ". LLA>A*, JR.

to wic counsel for Iietes replied in tefollowing language:

Atty. Nictor ". Llamas, Jr.Nictor Llamas Law (SceCorner Rivera+Zamora *treetsagupan City

ear *ir:

Kour letter dated July )#, #%$6 addressed tomy client, te irector of te ilippine5nstitute of =lectronics, Angeles City, as-een referred to me and in reply, please, -einformed tat my client as not violated anyprovision of te C(I"RAC" (4 L=A*= F5"("5(I "( ?UK, e!ecuted -y im as L=**==and r. a-lo ;arcia as L=**(R. 4or tisreason, tere is no -asis for rescission of tecontract nor of te demands contained inyour letter.

5n tis connection, 5 am also serving tisformal notice upon your client r. a-lo;arcia, tru you, tat my client >r. ADU5L5I(

". I5="=* will e!ercise is ("5(I to -uy teland and -uilding su-7ect matter of te leaseand tat my said client is ready to pay te-alance of te purcase price in accordancewit te contract. lease, inform r. a-lo;arcia to make availa-le te land title ande!ecute te corresponding eed of *alepursuant to tis notice, and tat if e fails todo so witin /fteen #8B days from tereceipt of tis letter, we sall take tecorresponding action to enforce teagreement.

"ruly yours,

*gd.B C(IRA( N. =L R(*AR5(Counsel for >r. A9uilino ". IietesAngeles City

(n July '$, #%$8, Iietes deposited wit te-ranc oSce of te Agro+5ndustrial ?ank inAngeles City cecks amounting to26,2$3.83, as -alance of te purcase priceof te property, -ut e witdrew said sum of 26,2$3.83 on August #', #%$8, after te

cecks ad -een cleared. (n August ', #%$8,e commenced te present action, in teCourt of 4irst 5nstance of ampanga, forspeci/c performance of r. ;arcia1s allegedo-ligation to e!ecute in is Iietes1B favor adeed of a-solute sale of te leased property,free from any lien or encum-rancewatsoever, e aving meanwilemortgaged it to te eople1s ?ank and "rustCompany, and to compel im ;arciaB toaccept watever -alance of te purcaseprice is due im, as well as to recover fromim te aggregate sum of %3,333 -y way ofdamages, apart from attorney1s fees and tecosts.

r. ;arcia /led an answer admitting someallegations of te complaint and denyingoter allegations tereof, as well as settingup a counterclaim for damages in te sum of#83,333.

After due trial, said court rendered itsdecision, te dispositive part of wic reads:

F=R=4(R=, in view of te preponderanceof evidence in favor of te plainti0 andagainst te defendant, 7udgment is ere-yrendered ordering te latter to e!ecute teeed of A-solute *ale of property originallyleased togeter wit te scool -uilding andoter improvements tereon wic arecovered -y te contract, Anne! A, uponpayment of te former of te -alancewatever -e te amountB of te stipulatedpurcase price to free te said propertyfrom any mortgage or encum-rance anddeliver te title tereto to te plainti0 freefrom any lien or encum-rance, and souldsaid defendant fail to do so, te proceedsfrom te purcase price -e applied to tepayment of te encum-rance so tat tetitle may -e conveyed to te plainti0 to payte plainti0 te sum of #,333.33 as

attorney1s fees, and te cost of tis suit.

?ot parties appealed to te Court ofAppeals, r. ;arcia insofar as te trial courtad neiter dismissed te complaint norupeld is counterclaim and failed to orderIietes to vacate te property in 9uestionand Iietes insofar as te trial court adgranted im no more tan nominal damagesin te sum of #,333, as attorney1s fees.


24/78

After appropriate proceedings, a specialdivision of Court of Appeals rendered itsdecision, on (cto-er #2, #%$%, aSrming, ine0ect, tat of te trial court, e!cept asregards said attorney1s fees, wic wereeliminated. "e dispositive part of saiddecision of te Court of Appeals reads:

F=R=4(R=, wit te modi/cation tat teattorney1s fees awarded -y te trial court infavor of te plainti0 is eliminated, teappealed 7udgment is ere-y aSrmed in alloter respects, and te defendant is orderedto e!ecute te corresponding deed of sale forte scool -uilding and lot in 9uestion infavor of te plainti0 upon te latter1s fullpayment of te -alance of te purcaseprice. "e costs of tis proceedings sall -eta!ed against te defendant+appellant.

(n motion for reconsideration of defendant;arcia, said special division set aside itsaforementioned decision and renderedanoter one, promulgated on >arc #3, #%&3reversing te appealed decision of te courtof /rst instance, and dismissing tecomplaint of Iietes, wit costs again im.ence, te present petition of Iietes forreview certiorari of te second decision of te Court of Appeals, dated >arc #3, #%&3,to wic petition Fe gave due course.

*aid decision of te Court of Appeals,reversing tat of te Court of 4irst 5nstance,is mainly predicated upon te teory tat,under te contract -etween te parties, tefull purcase price must -e paid -efore teoption counsel -e e!ercised, -ecause terewas no need nor sense providing tat teunused payment for te Contract Lease will-e considered as part payment for te salete land and scool1 inasmuc as oterwisetere is su-stantial amount from wic sucunused rental could -e deducted tat te

statement in te letter, =!i-it L, of Iietes,dated August &, #%$6, to te e0ect tat ewill e!ercise is ("5(I to -uy te land and-uilding, indication tat e did not considerte receipts, =!i-its ? and for ),333 and','33, respectively, as an e0ectivee!ercise of is option to -uy tat tececks for 26,2$3.83 deposited -y Iieteswit te Agro+5ndustrial evelopment ?ank,did not constitute a proper tender of payment, wic, at any rate, was made-eyond te stipulated 8+year period tat

suc deposit was not seriously made-ecause on August #', #%$8, te same waswitdrawn from te ?ank and ostensi-lyremains in te lessee1s and and tat tefact tat suc deposit was made -y telessee sows tat e imself -elieved tate sould ave paid te entire amount of tepurcase price -efore e could avail of teoption to -uy, oterwise, te deposit was asenseless gesture ... .

r. ;arcia, in turn, maintained in is answertat te sums paid to im were part of teprice of te contract of lease -etween teparties wic were paid late and not witinte periods andHor scedules /!ed -y tecontract Anne! A.B. Fat is more, on tewitness stand, ;arcia claimed tat e didnot know weter te signatures on=!i-its ? and C E te receipt for ),333and ','33, respectively E were is, andeven said tat e was dou-tful a-out it.

"is testimony is manifestly incredi-le, for aman of is intelligence E a octor of>edicine and te owner of an educationainstitution E could not possi-ly not knowor entertain dou-ts as to weter or not teaforementioned signatures are is and tepayments terein acknowledged ad -eenreceived -y im. is du-ious veracity-ecomes even more apparent wen weconsider te allegations in paragrap 6B ofis answer E referring to paragraps 8 and $of te complaint alleging, inter alia, teaforementioned partial payments of ),333and ','33, on account of te stipulated saleprice E to te e0ect tat said sums paid tote erein defendant were part of te priceof te contract of lease. 5n oter wordspayment of said sums of ),333 and ','33is admitted in said answer. ?esides, terentals for te wole period of te leaseaggregated '8,333 only, wereas said sums

of ),333 and ','33, wen added to tepayments previously made -y Iietes, give agrand total of '%,%8&.33, or 6,%8& ine!cess of te agreed rentals for te entireperiod of /ve years. "us, r. ;arcia was lesstan trutful wen e tried to cast dou-tupon te fact of payment of said sums of),333 and ','33, as well as wen eclaimed tat te same were part of terentals collecti-le -y im.


25/78

Fe, likewise, /nd ourselves una-le to sarete view taken -y te Court of Appeals.Ieiter te tenor of te contract =!i-its Aand A+# also =!i-it 'B nor te -eaviour of r. ;arcia E as rearc )3#%$3, so tat Iietes may -e considered asaving complied su-stantially wit te termsagreed upon. 5ndeed, r. ;arcia seems toave eiter agreed tereto or not consideredtat Iietes ad tere-y violated tecontract, -ecause te letter of te formerdated July )#, #%$6, demanding rescission ofte contract, did not mention said acts oromissions of Iietes among is allegedviolations tereof enumerated in said


26/78

communication. 5n fact, wen, on *eptem-er6, #%$#, >rs. Iietes turned over te sum of ),333 to r. ;arcia, e issued te receipt=!i-it ?, stating tat said payment ad-een made as per advance pay for tescool, te Contract of Lease -eing paid Ein oter words, in accordance or conformitywit said contract. ?esides, wen, onecem-er #), #%$', >rs. Iietes deliveredte additional sum of ','33, r. ;arciaissued a receipt accepting said amount aste partial payment on te purcase price of te property as speci/ed on te originalcontract, tus furter indicating tat tepayment, in is opinion, conformed wit saidcontract, and tat, accordingly, te samewas in full force and e0ect.

5n any event, it is undisputed tat, as of *eptem-er 6, #%$#, r. ;arcia ad receivedte total sum of '&,&8&, or ',&8& in e!cessof te '8,333 representing te rentals forte entire period of te lease, and over'#,'33 in e!cess of te rentals for teune!pired portion of te lease, from*eptem-er 6, #%$# to June #%$8. "iscircumstance indicates clearly tat Iietesad, on *eptem-er 6, #%$#, cosen toe!ercise and did e!ercise ten is option to-uy. Fat is more, tis is -orne out -y tereceipt issued -y r. ;arcia for te paymentof ','33, on ecem-er #), #%$', to wice referred terein as a partial payment onte purcase of te property as speci/ed onte original contract of 1Contract of Leasewit te 4irst (ption to ?uy1 ... .

4urter con/rmation is furnised -y teletter of Iietes, =!i-it L, of August #%$6 Ealso, witin te period of te lease E statingtat e will e!ercise is ("5(I to -uy teland and -uilding su-7ect matter of telease. 5t is not correct to construe tise!pression E as did te appealed decision E

as implying tat te option ad not -een orwas not yet -eing e!ercised, or as a mereannouncement of te intent to avail of it atsome future time. "is interpretation takessaid e!pression out of te conte!t of =!i-itL, wic positively states, also, tat Iietesis ready to pay te -alance of te purcaseprice in accordance wit te contract, andre9uests counsel for r. ;arcia to inform oradvise im to make availa-le te land titleand e!ecute te corresponding eed of *alepursuant to tis notice, and tat if e fails to

do so witin /fteen #8B days ... we sall takete corresponding action to enforce teagreement. *uc demand and saidreadiness to pay te -alance of te purcaseprice leave no room for dou-t tat, as statedin =!i-it L, te same is a formal noticetat Iietes ad e!ercised is option, ande!pected r. ;arcia to comply, witin /fteen#8B days, wit is part of te -argain*urely, tere would ave -een no point forsaid demand and readiness to pay, if Iietesad not yet e!ercised is option to -uy.

"e provision in paragrap 8 of te Contractto te e0ect tat sould te L=**==coose to make use of is option to -uy teunused payment for te Contract of Leasewill -e considered as payment for te sale ofte land and scool, simply means tat terental paid for te unused portion of telease sall -e applied to and deducted fromte sale price of #33,333 to -e paid -yIietes at te proper time E in oter words,simultaneously wit te delivery to im ofte corresponding deed of sale, dulye!ecuted -y r. ;arcia.

5t is, conse9uently, (ur considered opiniontat Iietes ad validly and e0ectivelye!ercised is option to -uy te property ofr. ;arcia, at least, on ecem-er #), #%$',wen e acknowledged receipt from >rsIietes of te sum of ','33 ten delivered-y er in partial payment on te purcaseof te property descri-ed in te Contract ofLease wit (ption to ?uy tat from teaggregate sum of '%,%8&.33 paid to im upto tat time, te sum of #',&32.)) sould-e deducted as rental for te period from

June #%$3 to ecem-er #), #%$', or rouglytirty )3B monts and a alf, tere-yleaving a -alance of #&,'62.$&, consistingof #','%#.$&, representing te rentals forte unused period of te lease, plus

6,%8&.33 paid in e!cess of said rental andadvanced solely on account of te purcaseprice tat deducting said sum of #&,'62.$&from te agreed price of #33,333.33, tereresults a -alance of 2',&8#.)) wic sould-e paid -y Iietes to r. ;arcia, upone!ecution -y te latter of te correspondingdeed of a-solute sale of te property in9uestion, free from any lien or encum-rancewatsoever, in favor of Iietes, and tedelivery to im of said deed of sale, as welas of te owner1s duplicate of te certi/cate


27/78

of title to said property and tat r. ;arciasould indemnify Iietes in te sum of ',833as and for attorney1s fees.

"us modi/ed, te decision of te Court of 4irst 5nstance of ampanga is ere-yaSrmed in all oter respects, and tat of teCourt of Appeals reversed, wit costs againstrespondent erein, r. a-lo C. ;arcia. 5t isso ordered.

Reyes, J.?.L., >akalintal, Zaldivar, 4ernando, "eeankee, ?arredo, >akasiar Antonio and=sguerra, JJ., concur.

Castro, J., took no part.

*ulue!a v(. +arianoG.R. No. L-9'$0 %anuar& '0, 198

>=L=IC5(+=RR=RA, J.:

5n tis action for mandamus and roi-ition,petitioner seeks to compel respondent Judgeto assume appellate, not original 7urisdictionover an =7ectment case appealed from te>unicipal Court of asig CC Io. ##%3entitled Jose C. Zulueta vs. Lam-ertoAvellanaB, and to issue a Frit of =!ecution insaid case.

"e antecedental facts follow:

etitioner Jose C. Zulueta is te registeredowner of a residential ouse and lot situatedwitin te Antonio *u-division, asig, Ri@al.

(n Iovem-er $, #%$6, petitioner Zuluetaand private respondent Lam-erto Avellana, amovie director, entered into a Contract to*ell te aforementioned property for&8,333.33 paya-le in twenty years witrespondent -uyer assuming to pay a down

payment of 8,333.33 and a montlyinstallment of $)3.33 paya-le in advance-efore te 8t day of te correspondingmont, starting wit ecem-er, #%$6.

5t was furter stipulated:

#'B "at upon failure of te ?UK=R to ful/llany of te conditions erein stipulated,?UK=R automatically and irrevoca-lyautori@es (FI=R to recover e!tra+7udicially,pysical possession of te land, -uilding and

oter improvements wic are te su-7ect oftis contract, and to take possession alsoe!tra+7udicially watever personal propertiesmay -e found witin te aforesaid premisesfrom te date of said failure to answer forwatever unful/lled monetary o-ligations?UK=R may ave wit (FI=R and tiscontract sall -e considered as witout forceand e0ect also from said date all paymentsmade -y te ?UK=R to (FI=R sall -edeemed as rental payments witoutpre7udice to (FI=R1s rigt to collect from?UK=R watever oter montly installmentsand oter money o-ligations wic mayave -een paid until ?UK=R vacates teaforesaid premises upon is failure tocomply wit any of te erein conditions?UK=R forfeits all money claims against(FI=R and sall pay a montly rentae9uivalent to is montly installment underCondition # of tis Contract from te date ofte said failure to te date of recovery ofpysical possession -y (FI=R of te land,-uilding and oter improvements wic arete su-7ect of tis Contract ?UK=R sall notremove is personal properties witout teprevious written consent of (FI=R, wosould e take possession of suc propertiesfollowing te aforesaid failure of ?UK=R, salreturn te same to ?UK=R only after telatter sall ave ful/lled all money claimsagainst im -y (FI=R in all cases erein,demand is waived

Respondent Avellana occupied te propertyfrom ecem-er, #%$6, -ut title remainedwit petitioner Zulueta.

Upon te allegation tat respondent Avellanaad failed to comply wit te montlyamorti@ations stipulated in te contractdespite demands to pay and to vacate tepremises, and tat tere-y te contract wasconverted into one of lease, petitioner, on

June '', #%$$, commenced an =7ectment suitagainst respondent -efore te >unicipaCourt of asig CC Io. ##%3B, praying tat

7udgment -e rendered ordering respondent#B to vacate te premises 'B to paypetitioner te sum of ##,&8#.)3representing respondent1s -alance owing asof >ay, #%$$ )B to pay petitioner te sum of $)3.33 every mont after >ay, #%$$, andcosts.


28/78

Respondent controverted -y contending tatte >unicipal Court ad no 7urisdiction overte nature of te action as it involved teinterpretation andHor rescission of tecontract tat prior to te e!ecution of tecontract to sell, petitioner was alreadyinde-ted to im in te sum of )#,'$%.33representing te cost of two moviesrespondent made for petitioner and used -yte latter in is political campaign in #%$6wen petitioner ran for Congressman, as wellas te cost of one #$ millimeter pro7ectorpetitioner -orrowed from respondent andwic ad never -een returned, wicamounts, according to teir understanding,would -e applied as down payment for teproperty and to watever o-ligationsrespondent ad wit petitioner. "e latterstrongly denied suc an understanding.Respondent1s total counterclaim againstpetitioner was in te amount of 6',$'%.%%representing petitioner1s pleadedinde-tedness to private respondent, claimfor moral damages, and attorney1s fees.

"e counterclaim was dismissed -y te>unicipal Court for -eing in an amount-eyond its 7urisdiction. owever, as a specialdefense, private respondent sougt to o0sette sum of )#,'$%.33 against iso-ligations to petitioner.

eciding te case on >ay #3, #%$&, te>unicipal Court found tat respondentAvellana ad failed to comply wit is/nancial o-ligations under te contract andordered im to vacate te premises anddeliver possession tereof to petitioner topay petitioner te sum of '#,3%).22representing arrearages as of April, #%$&,and $)3.33 as montly rental from andafter >ay, #%$& until delivery of possessionof tat premises to petitioner. "atconclusion was premised on title /nding tat

-reac of any of te conditions -y privaterespondent converted te agreement into alease contractual and upon te followingconsiderations:

"e 9uestion involved erein is tat of possession, tat wo of te contendingparties as te -etter rigt to possession of te properly in 9uestion. "e issue in tiscase -eing tat of possession, te claim of defendant against plainti0 or )#,'$%.33inde-tedness, as no place as a defense

ere. 5t sould -e te su-7ect+ matter of aseparate action against, plainti0 Jose CZulueta. As it is, said inde-tedness is only aclaim still de-ata-le and controversial andnot a /nal 7udgment. 15t is our consideredopinion tat to admit and to allow suc adefense would -e tantamount to pre7udingte claim on its merits prematurely in favorof defendant. "is court can not do witoutviolating some rules of law. "is is not teproper court and tis is not te proper casein wic to ventilate te claim.

Respondent Avellana appealed to te Courtof 4irst 5nstance of Ri@al presided -yrespondent Judge. "ereat, petitionersummoned for e!ecution alleging privaterespondent1s failure to deposit in accordancete montly rentals, wic te latter deniedRespondent Judge eld resolution tereof ina-eyance.

(n 4e-ruary #%, #%$2, respondent Avellana/led a >otion to ismiss Appeal allegingtat, inasmuc as te defense set up in isAnswer was tat e ad not -reaced iscontract wit petitioner, te case necessarilyinvolved te interpretation andHor rescissionof te contract and, terefore, -eyond te

7urisdiction of te >unicipal Court. etitioneropposed claiming tat te Complaint ad setout a clear case of unlawful detainerconsidering tat 7udicial action for terescission of te contract was unnecessarydue to te automatic rescission clauseterein and te fact tat petitioner adcancelled said contract so tat respondent1srigt to remain in te premises ad ceased.

(n >arc '#, #%$2, respondent Judgedismissed te case on te ground of lack of

7urisdiction of te >unicipal Courte!plaining:

"e decision of te lower court declared saidContract to *ell to ave -een converted intoa contract of lease. 5t is te contention of tedefendant tat te lower court ad no

7urisdiction to entertain te case as te sameinvolves te interpretation of contract as toweter or not te same as -een convertedto lease contract. Altoug te contract tosell o-7ect of tis case states tat te samemay -e converted into a lease contract uponte failure of te defendant to pay teamorti@ation of te property in 9uestion


29/78

tere is no sowing tat -efore /ling tiscase in te lower court, te plainti0 ase!ercised or as pursued is rigt pursuantto te contract wic sould -e te -asis of te action in te lower court.

etitioner1s >otion for Reconsideration wasdenied -y respondent Judge as follows:

"e plainti0 aving /led a motion forreconsideration of tis Court1s (rderdismissing te appeal, te Court, wilestanding pat on its (rder dismissing tis casefor lack of 7urisdiction of te lower court overte su-7ect matter, ere-y takes cogni@anceof te case and will try te case as if it as-een /led originally in tis Court.

F=R=4(R=, let tis case -e set for pre+trialon July #', #%$2 at 2:)3 a.m. wit notice toan parties.

etitioner ten availed of te instantrecourse.

Fas te action -efore te >unicipal Court of asig essentially for detainer and, terefore,witin its e!clusive original 7urisdiction, orone for rescission or annulment of a contract,wic sould -e litigated -efore a Court of 4irst 5nstanceG

Upon a review of te attendantcircumstances, we upold te ruling of respondent Judge tat te >unicipal Court of asig was -ereft of 7urisdiction to takecogni@ance of te case /led -efore it. 5n isComplaint, petitioner ad alleged violation-y respondent Avellana of te stipulations of teir agreement to sell and tus unilaterallyconsidered te contract rescinded.Respondent Avellana denied any -reac onis part and argued tat te principal issuewas one of interpretation andHor rescission of

te contract as well as of set+o0. Under tosecircumstances, proof of violation is acondition precedent to resolution orrescission. 5t is only wen te violation as-een esta-lised tat te contract can -edeclared resolved or rescinded. Upon sucrescission, in turn, inges a pronouncementtat possession of te realty as -ecomeunlawful. "us, te -asic issue is notpossession -ut one of rescission orannulment of a contract. wic is -eyond te

7urisdiction of te >unicipal Court to earand determine.

A violation -y a party of any of testipulations of a contract on agreement tosell real property would entitle te oteparty to resolved or rescind it. An allegationof suc violation in a detainer suit may -eproved -y competent evidence. And ifproved a 7ustice of te peace court migtmake a /nding to tat e0ect, -ut it certainlycannot declare and old tat te contract isresolved or rescinded. 5t is -eyond its powerso to do. And as te illegality of tepossession of realty -y a party to a contractto sell is premised upon te resolution of tecontract, it follows tat an allegation andproof of suc violation, a condition precedentto suc resolution or rescission, to rendeunlawful te possession of te land o-uilding erected tereon -y te party woas violated te contract, cannot -e takencogni@ance of -y a 7ustice of te peace court... #

"rue, te contract -etween te partiesprovided for e!tra7udicial rescission. "is aslegal e0ect, owever, were te oter partydoes not oppose it. ' Fere it is o-7ected toa 7udicial determination of te issue is stilnecessary.

A stipulation entitling one party to takepossession of te land and -uilding if teoter party violates te contract does not e!proprio vigore confer upon te former terigt to take possession tereof if o-7ected towitout 7udicial intervention anddetermination. )

?ut wile respondent Judge correctly ruledtat te >unicipal Court ad no 7urisdictionover te case and correctly dismissed teappeal, e erred in assuming origina

7urisdiction, in te face of te o-7ectioninterposed -y petitioner. *ection ##, Rule 63,leaves no room for dou-t on tis point:

*ection ##. Lack of 7urisdiction EA case tried-y an inferior court witout 7urisdiction overte su-7ect matter sall -e dismiss on appeal-y te Court of 4irst 5nstance. ?ut instead ofdismissing te case, te Court of 4irst5nstance may try te case on te merits, ifte parties terein /le teir pleadings and go


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to trial witout any o-7ection to suc 7urisdiction.

"ere was no oter recourse left forrespondent Judge, terefore, e!cept todismiss te appeal.

5f an inferior court tries a case witout 7urisdiction over te su-7ect+matter onappeal, te only autority of te C45 is todeclare te inferior court to ave actedwitout 7urisdiction and dismiss te case,unless te parties agree to te e!ercise -yte C45 of its original 7urisdiction to try tecase on te merits. 6

"e foregoing premises considered,petitioner1s prayer for a Frit of =!ecution of te 7udgment of te >unicipal Court of asigmust perforce -e denied.

F=R=4(R=, te Frit of mandamus isdenied, -ut te Frit of roi-ition is grantedand respondent Court ere-y permanentlyen7oined from taking cogni@ance of Civil CaseIo. #38%8 in te e!ercise of its original

7urisdiction. Io costs.

*( (R=R=.

>akasiar, 4ernande@, ;uerrero and lana, JJ.,concur.

"eeankee, J., concur in te result.

An)ele( v. Cala(anzG.R. No. L-48' +ar# 18, 198

;U"5=RR=Z, JR., J.:

"is is an appeal from te decision of teCourt of 4irst 5nstance of Ri@al, *event

Judicial istrict, ?ranc \, declaring te

contract to sell as not aving -een validlycancelled and ordering te defendants+appellants to e!ecute a /nal deed of sale infavor of te plainti0s+appellees, to pay833.33 attorney1s fees and costs.

"e facts -eing undisputed, te Court of Appeals certi/ed te case to us since onlypure 9uestions of law ave -een raised forappellate review.

(n ecem-er #%, #%8&, defendants+appellants Ursula "orres Calasan@ and "omasCalasan@ and plainti0s+appellees?uenaventura Angeles and "eo/la Juanentered into a contract to sell a piece of landlocated in Cainta, Ri@al for te amount of),%'3.33 plus &X interest per annum.

"e plainti0s+appellees made adownpayment of )%'.33 upon te e!ecutionof te contract. "ey promised to pay te-alance in montly installments of 6#.'3until fully paid, te installments -eing dueand paya-le on te #%t day of eac mont

"e plainti0s+appellees paid te montlyinstallments until July #%$$, wen teiraggregate payment already amounted to6,8)).)2. (n numerous occasions, tedefendants+appellants accepted andreceived delayed installment payments fromte plainti0s+appellees.

(n ecem-er &, #%$$, te defendants+appellants wrote te plainti0s+appellees aletter re9uesting te remittance of past dueaccounts.

(n January '2, #%$&, te defendantsappellants cancelled te said contract-ecause te plainti0s+appellees failed tomeet su-se9uent payments. "e plainti0sletter wit teir plea for reconsideration ofte said cancellation was denied -y tedefendants+appellants.

"e plainti0s+appellees /led Civil Case Io

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