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G.R. No. 115129 February 12, 1997 IGNACIO BARZAGA, petitioner, vs. COURT OF APPEALS and ANGELITO ALVIAR, respondents.
BELLOSILLO, J.: The Fates ordained that Christmas 1990 be bleak for Ignacio Barzaga and his family. On the nineteenth of December Ignacio's wife succumbed to a debilitating ailment after prolonged pain and suffering. Forewarned by her attending physicians of her impending death, she expressed her wish to be laid to rest before Christmas day to spare her family from keeping lonely vigil over her remains while the whole of Christendom celebrate the Nativity of their Redeemer. Drained to the bone from the tragedy that befell his family yet preoccupied with overseeing the wake for his departed wife, Ignacio Barzaga set out to arrange for her interment on the twenty-fourth of December in obediencesemper fidelis to her dying wish. But her final entreaty, unfortunately, could not be carried out. Dire events conspired to block his plans that forthwith gave him and his family their gloomiest Christmas ever. This is Barzaga's story. On 21 December 1990, at about three o'clock in the afternoon, he went to the hardware store of respondent Angelito Alviar to inquire about the availability of certain materials to be used in the construction of a niche for his wife. He also asked if the materials could be delivered at once. Marina Boncales, Alviar's storekeeper, replied that she had yet to verify if the store had pending deliveries that afternoon because if there were then all subsequent purchases would have to be delivered the following day. With that reply petitioner left. At seven o'clock the following morning, 22 December, Barzaga returned to Alviar's hardware store to follow up his purchase of construction materials. He told the store employees that the materials he was buying would have to be delivered at the Memorial Cemetery in Dasmarinas, Cavite, by eight o'clock that morning since his hired workers were already at the burial site and time was of the essence. Marina Boncales agreed to deliver the items at the designated time, date and place. With this assurance, Barzaga purchased the materials and paid in full the amount of P2,110.00. Thereafter he joined his workers at the cemetery, which was only a kilometer away, to await the delivery. The construction materials did not arrive at eight o'clock as promised. At nine o'clock, the delivery was still nowhere in sight. Barzaga returned to the hardware store to inquire about the delay. Boncales assured him that although the delivery truck was not yet around it had already left the garage and that as soon as it arrived the materials would be brought over to the cemetery in no time at all. That left petitioner no choice but to rejoin his workers at the memorial park and wait for the materials.
By ten o'clock, there was still no delivery. This prompted petitioner to return to the store to inquire about the materials. But he received the same answer from respondent's employees who even cajoled him to go back to the burial place as they would just follow with his construction materials. After hours of waiting which seemed interminable to him Barzaga became extremely upset. He decided to dismiss his laborers for the day. He proceeded to the police station, which was just nearby, and lodged a complaint against Alviar. He had his complaint entered in the police blotter. When he returned again to the store he saw the delivery truck already there but the materials he purchased were not yet ready for loading. Distressed that Alviar's employees were not the least concerned, despite his impassioned pleas, Barzaga decided to cancel his transaction with the store and look for construction materials elsewhere. In the afternoon of that day, petitioner was able to buy from another store. But since darkness was already setting in and his workers had left, he made up his mind to start his project the following morning, 23 December. But he knew that the niche would not be finish in time for the scheduled burial the following day. His laborers had to take a break on Christmas Day and they could only resume in the morning of the twenty-sixth. The niche was completed in the afternoon and Barzaga's wife was finally laid to rest. However, it was two-and-a-half (2-1/2) days behind schedule. On 21 January 1991, tormented perhaps by his inability to fulfill his wife's dying wish, Barzaga wrote private respondent Alviar demanding recompense for the damage he suffered. Alviar did not respond. Consequently, petitioner sued him before the Regional Trial Court. 1 Resisting petitioner's claim, private respondent contended that legal delay could not be validly ascribed to him because no specific time of delivery was agreed upon between them. He pointed out that the invoices evidencing the sale did not contain any stipulation as to the exact time of delivery and that assuming that the materials were not delivered within the period desired by petitioner, the delivery truck suffered a flat tire on the way to the store to pick up the materials. Besides, his men were ready to make the delivery by ten-thirty in the morning of 22 December but petitioner refused to accept them. According to Alviar, it was this obstinate refusal of petitioner to accept delivery that caused the delay in the construction of the niche and the consequent failure of the family to inter their loved one on the twenty-fourth of December, and that, if at all, it was petitioner and no other who brought about all his personal woes. Upholding the proposition that respondent incurred in delay in the delivery of the construction materials resulting in undue prejudice to petitioner, the trial court ordered respondent Alviar to pay petitioner (a) P2,110.00 as refund for the purchase price of the materials with interest per annum computed at the legal rate from the date of the filing of the complaint, (b) P5,000.00 as temperate damages, (c) P20,000.00 as moral damages, (d) P5,000.00 as litigation expenses, and (e) P5,000.00 as attorney's fees. On appeal, respondent Court of Appeals reversed the lower court and ruled that there was no contractual commitment as to the exact time of delivery since this was not indicated in the invoice receipts covering the sale. 2 The arrangement to deliver the materials merely implied that delivery should be made within a reasonable time but that the conclusion that since petitioner's workers were already at the graveyard the delivery had to be made at that precise moment, is non-sequitur. The Court of Appeals also held that assuming that there was delay, petitioner still had sufficient time to construct the tomb and hold his wife's burial as she wished. We sustain the trial court. An assiduous scrutiny of the record convinces us that respondent Angelito Alviar was negligent and incurred in delay in the performance of his contractual obligation. This sufficiently entitles petitioner Ignacio Barzaga to be indemnified for the damage he suffered as a consequence of delay or a contractual breach. The law expressly provides that those who in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages. 3
Contrary to the appellate court's factual determination, there was a specific time agreed upon for the delivery of the materials to the cemetery. Petitioner went to private respondent's store on 21 December precisely to inquire if the materials he intended to purchase could be delivered immediately. But he was told by the storekeeper that if there were still deliveries to be made that afternoon his order would be delivered the following day. With this in mind Barzaga decided to buy the construction materials the following morning after he was assured of immediate delivery according to his time frame. The argument that the invoices never indicated a specific delivery time must fall in the face of the positive verbal commitment of respondent's storekeeper. Consequently it was no longer necessary to indicate in the invoices the exact time the purchased items were to be brought to the cemetery. In fact, storekeeper Boncales admitted that it was her custom not to indicate the time of delivery whenever she prepared invoices. 4 Private respondent invokes fortuitous event as his handy excuse for that "bit of delay" in the delivery of petitioner's purchases. He maintains that Barzaga should have allowed his delivery men a little more time to bring the construction materials over to the cemetery since a few hours more would not really matter and considering that his truck had a flat tire. Besides, according to him, Barzaga still had sufficient time to build the tomb for his wife. This is a gratuitous assertion that borders on callousness. Private respondent had no right to manipulate petitioner's timetable and substitute it with his own. Petitioner had a deadline to meet. A few hours of delay was no piddling matter to him who in his bereavement had yet to attend to other pressing family concerns. Despite this, respondent's employees still made light of his earnest importunings for an immediate delivery. As petitioner bitterly declared in court " . . . they (respondent's employees) were making a fool out of me." 5 We also find unacceptable respondent's justification that his truck had a flat tire, for this event, if indeed it happened, was forseeable according to the trial court, and as such should have been reasonably guarded against. The nature of private respondent's business requires that he should be ready at all times to meet contingencies of this kind. One piece of testimony by respondent's witness Marina Boncales has caught our attention - that the delivery truck arrived a little late than usual because it came from a delivery of materials in Langcaan, Dasmarinas, Cavite. 6 Significantly, this information was withheld by Boncales from petitioner when the latter was negotiating with her for the purchase of construction materials. Consequently, it is not unreasonable to suppose that had she told petitioner of this fact and that the delivery of the materials would consequently be delayed, petitioner would not have bought the materials from respondent's hardware store but elsewhere which could meet his time requirement. The deliberate suppression of this information by itself manifests a certain degree of bad faith on the part of respondent's storekeeper. The appellate court appears to have belittled petitioner's submission that under the prevailing circumstances time was of the essence in the delivery of the materials to the grave site. However, we find petitioner's assertion to be anchored on solid ground. The niche had to be constructed at the very least on the twenty-second of December considering that it would take about two (2) days to finish the job if the interment was to take place on the twentyfourth of the month. Respondent's delay in the delivery of the construction materials wasted so much time that construction of the tomb could start only on the twenty-third. It could not be ready for the scheduled burial of petitioner's wife. This undoubtedly prolonged the wake, in addition to the fact that work at the cemetery had to be put off on Christmas day. This case is clearly one of non-performance of a reciprocal obligation. In their contract of purchase and sale, petitioner had already complied fully with what was required of him as purchaser, i.e., the payment of the purchase price of P2,110.00. It was incumbent upon respondent to immediately fulfill his obligation to deliver the goods otherwise delay would attach. We therefore sustain the award of moral damages. It cannot be denied that petitioner and his family suffered wounded feelings, mental anguish and serious anxiety while keeping watch on Christmas day over the remains of their loved one who could not be laid to rest on the date she herself had chosen. There is no gainsaying the
cavalier behavior and bad faith of respondent and his employees in the performance of an obligation voluntarily entered into. Guerrero. and if such discretion be well exercised. except for the award of P5. Award of damages. and may be recovered when the court finds that some pecuniary loss has been suffered but the amount cannot. This is an erroneous application of the concept of temperate damages.110. The lackadaisical and feckless attitude of the employees of respondent over which he exercised supervisory authority indicates gross negligence in the fulfillment of his business obligations. 4 TSN. respondent and his employees contributed to petitioner's anguish by causing him to bear the agony resulting from his inability to fulfill his wife's dying wish. Footnotes 1 Assigned to RTC-Br.inexpressible pain and sorrow Ignacio Barzaga and his family bore at that moment caused no less by the ineptitude. as in this case. Instead of commiserating with him. Civil Code. the claim falls unequivocally within the realm of actual or compensatory damages.00 as attorney's fees.00 paid by petitioner for the construction materials. Cavite. SO ORDERED.00 as refund for the value of materials with interest computed at the legal rate per annum from the date of the filing of the case.000. Imus. Rollo. (c) P10. speculations. Consequently. from the nature of the case.00 as moral damages.00 as temperate damages which we delete.000. As such. 22-23. We delete however the award of temperate damages. Jr. 9 WHEREFORE.00 as litigation expenses. Herrera. the court cannot rely on mere assertions. is AFFIRMED. Kapunan and Hermosisima. 6 December 1991. 2224 of the Civil Code. 2 Decision penned by Justice Manuel C. 3 Art. (b) P20. Respondent Alviar and his employees should have exercised fairness and good judgment in dealing with petitioner who was then grieving over the loss of his wife.110. JJ. be proved with certainty. Rollo. In this case. pp. No costs. While petitioner may have indeed suffered pecuniary losses. the trial court found that plaintiff suffered damages in the form of wages for the hired workers for 22 December 1990 and expenses incurred during the extra two (2) days of the wake. 8 We affirm the award of attorney's fees and litigation expenses. Francisco and Buenaventura J.. Vitug.000. and (4) P5. concur. the decision of the Court of Appeals is REVERSED and SET ASIDE except insofar as it GRANTED on a motion for reconsideration the refund by private respondent of the amount of P2. del Rosario. the decision of the Regional Trial Court granting petitioner (a) P2.00 as exemplary damages. conjectures or guesswork but must depend on competent proof and on the best evidence obtainable regarding the actual amount of loss. The record however does not show that petitioner presented proof of the actual amount of expenses he incurred which seems to be the reason the trial court awarded to him temperate damages instead. p. attorney's fees and litigation costs is left to the sound discretion of the court. Under Art.000. 68. Petitioner's failure to prove actual expenditure consequently conduces to a failure of his claim. these by their very nature could be established with certainty by means of payment receipts. 4 . presided over by Judge Roy S.. concurred in by Justices Cezar D. For in determining actual damages. 21. Padilla.000. (d) P5. temperate damages are more than nominal but less than compensatory. We also affirm the grant of exemplary damages. it will not be disturbed on appeal. 1170. 38. p.
v. Makalintal & Barot for petitioner. 35. 246 SCRA 658.00 for unearned profits on the subject prepaid order of February 15. G. Civil Code. No. petitioner.R. occasioned by plaintiffs refusal to pay the price differentials. 10 December 1990. the dispositive part of which reads as follows: WHEREFORE. 19 September 1991. 55613. p. THE HONORABLE COURT OF APPEALS and FERNANDO A. 6 December 1991.R. J.5 TSN. P 2. De Guzman. Magno & Kare for respondent Pedrosa. last par. No. respondents. L-58122 December 29.470. 8 Dichoso v. judgment is hereby rendered sentencing defendant to pay plaintiff the following sums: P 3. No. 47. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G. vs. 108789. 50504-05. INC. 7 Art.00 for exemplary damages for moral damages. Nos. 1989 MOBIL OIL PHILIPPINES. Court of Appeals. Quiason.00 for loss of earnings due to the suspension of gasoline deliveries.000. Court of Appeals. People v. 192 SCRA 169. Rosario. PEDROSA.00 P 50. 9 Philippine Airlines. Inc. 188 SCRA 461.R. 13 August 1990. Q18580. G.R. PARAS...000. P 25.360. 1974.000. 1169.: Before us is a petition for review which questions the decision 1 of the Court of Appeals affirming in toto the 2 decision of the Court of First Instance of Quezon City in Civil Case No. 6 TSN. p.00 P 10. G. and for attorney's fees ---------------------------------------------- 5 . 18 July 1995.
.....P3. The contractual relationship between plaintiff and defendant is governed by a Retail Dealer Contract. p. Floro Marcella..00 TOTAL Defendant's counterclaim against plaintiff is hereby dismissed for lack of merit.. Exh.000 liters MR at P 0.. although he was no longer involved in its subsequent processing in fact. also Exh.. 9-3-75. Pedrosa against petitioner Mobil Oil Philippines alleging that the latter deliberately delayed the delivery of gasoline to him notwithstanding his pre-paid order dated February 14.000 liters MP at P 0...8-75. (Tsn. Metro Manila. the said order was not given back to him for reprocessing (Tsn. 9-375.... as the commodity became scarce while the demand therefore remained the same. In the later part of 1973..... p.. an international oil crisis came about by reason of the concerted action of principal oil producing countries to increase the oil prices.. 6 ....00 Delivery Freight Cargo..000 liters of regular gasoline paying therefore a PBTC Cashier's Check in the amount of P 4.00 The above computation is contained in a product order form.... 9. 1. 1974 (TSN. which was prepared and filled up by defendant's order clerk when plaintiff placed his order on Feb. P 4. explains the processing of an order. Mr... A.... The undisputed facts of the case as found by the lower court and affirmed by the appellate court are as follows: Plaintiffs is a dealer of defendant's petroleum products and accessories operating a Mobil gasoline service station under the name of Anne Marie Mobil Service Station located at Aurora Blvd.510. F.610.... 40. 1974-a Friday while there was still this oil crisis. 1. 3-A) and 12/15' and the delivery due date is 'Today'. San Juan.. then to the coupon clerk. plaintiff placed with defendant a pre-paid order for 8. 1974. 3... 89). defendant's credit man..830.610. 6) and it goes to him for checking then to the credit clerk for checking in their ledger.. 6 that the order was taken '2:20'(Exh... It is stated in Exh... thusly: The order clerk prepares the product order form (Exh... Alberto Latuno. Mr.85. then it goes back to him for final invoicing.. as in fact the handwritings thereon are those of the said order clerk. The Philippines was not spared of this economic scourge and to meet the emergency. 1974. even when there was a price differential which occurred after his approval was made... defendant's accounting analyst assigned on the order and billing section. who has all the necessary documents and the authority to cause the approval of the release of the order. 66). then to the volume comptroller. then to the credit man.00 2. On February 15.000 liters of premium gasoline and 2.. Marcella.. approved this order of February 15.00 was received at on the basis of the following computations: 8.53.. Exh.060. The original case was an action for damages filed by private respondent Fernando A.P 90..00 ---------------------Total.... 15... 135-144) Mr. pp....
Court of Appeals in its Decision of June 22. plaintiff disagreed by arguing that defendant committed a contractual breach and incurred in delay that should make it liable for damages when it did not deliver the gasoline to plaintiff on the agreed due date of delivery appearing on the prepaid order i.Mr. as mentioned earlier. the reason for the delay being that on February 18 there was a price increase and they had to give priority to the recall of invoices already with their warehouse and dispatcher for repricing. pp. 148-150). (pp. did not come back to him for invoicing that Friday afternoon (February 15.. Alberto Latuno further states that the order. it was on February 19.1) is merely a contract to buy and sell. there remained outstanding against plaintiff an obligation in the sum of P5. 3 back to the clerk assigned to the order and billing section. (Tsn.e. Both the trial court and the appellate court found in favor of plaintiff. 1974. However.00'.880. 9-8-75.1974 and that therefore defendant cannot claim benefits by reason of this breach. 1974 that he received again the order.00 including delivery and freight charges. To such contention. but this notwithstanding defendant delivered to plaintiff this February 15 order on March 5. the respondent. and is not a perfected contract to sell. he altered the computation therein and made the necessary changes. as reflected in Exhibit 3. and acted without jurisdiction and/or with grave abuse of discretion when it failed to make the finding that: 1. which he paid after the proper verification by his accountant. 1974. 7 .653. as buyer. It appears that due to a posting error committed by a defendant's employees in the preparation of plaintiff's monthly statement of account. or in the total sum of P7.34. 3. because the processing thereof by one coupon comptroller was completed only on that day. He also stated that since Exh. plaintiff refused to pay the price differential of P2. 2. Plaintiff was informed of the difference in price. 51-53. B. this. 151). The retail dealer agreement (Exh. Rollo) Thus it appears from the record that there was an increase in the price of gasoline on February 18. Exh. pp. 144-148). 9-8-75. defendant now comes to Us on a petition by certiorari submitting that the: Respondent Hon. and as the price differential was not paid by plaintiff. It was defendant's contention that since the gasoline was actually delivered on March 5.1981 (Annex "G") decided questions of substance contrary to law and evidence as well as the applicable decisions of the Honorable Court.. (Tsn. he gave Exh. 1974). he crossed out the old computation and refilled with a new one based on the new increased price. must make an order for the products covered. the then prevailing increased rates should be made to apply and not the price prevailing on February 14. 9-8-75. hence. 3) was merely an offer made by the respondent to purchase the goods listed therein and was not a perfected contract of sale. and the petitioner as seller has to approve the order. 8 was covered by the price increase.00 against plaintiff.880. Plaintiff was charged the cost of the gasoline under the increased rates. albeit on the basis of the new increased prices thus reflecting an outstanding obligation of P 2. 1974 the date when the order was made and paid by plaintiff with a cashier's check. and placed the words 'short P 2. before there can be a perfected sale. 1974.490. (Tsn. Under the retail dealer agreement..00 corresponding to the February 15 order. February 15.880. The product order form (Exh. 1981 (Annex "A) and its Resolution of September 3.
Rollo) Thus. We cannot sustain petitioner's contentions. which is Par. TERMS. "3") which listed down the gasoline ordered by respondent Pedrosa and its corresponding price which was approved by Mobil and paid for by respondent Pedrosa with his Cashier's check as 8 . Respondent did not suffer damages. the same was not deliberate. Since the said prepaid order was prepared on the same date by petitioner's Order Clerk and after being thus approved by petitioner's credit man. Granting for the sake of argument. petitioner Mobil became duty bound to deliver the gasoline to private respondent on February 15.. (pp. Petitioner contends that Exh. petitioner referred to the RTA dealership as merely a contract to buy and sell. The pertinent provision of the Retail Trade Agreement or Exh. 1974 shows that the delivery date was stated as "Today" or February 15. 7. 2 reads as follows: 2 PRICES. A scrutiny of the prepaid product order form dated February 15. In invoking that no contract of sale was existing.1974. Because of this. The proper price that should be paid by respondent is that prevailing at the time of actual delivery.. DELIVERIES SELLER agrees to sell and BUYER agrees to purchase at SELLER's current wholesale/dealer's prices and/or current dealer's discounts prevailing on date and at point of delivery and in such quantities as the BUYER may from time to time require and the SELLER may approve at SELLER'S option. Exhibit 3) became a perfected contract of sale only upon delivery of the products ordered. except to the extent credit is extended. "1". how the ensuing subsidiary contract orders for Mobil products were to be placed and delivered under said dealerhip agreement. it can be gathered clearly from the above quoted portion of the dealership agreement that "the price prevailing on date and at point of delivery should determine how respondent dealer should pay defendant (petitioner) on the order of February 15. 1974. Petitioner did not suspend gasoline deliveries from February 18 to February 23.. petitioner committed a contractual breach and incurred in delay that should make it liable for damages. actual or otherwise. 1974 and also the word "rush". 5. All prices are payable in cash at the time the order is placed. The offer (product order form. 172-173. 6. 53-54. Rollo) Simply stated. "A" or Exh. 1974. 9. petitioner contends that it did not commit a breach of contract since there was no perfected contract of sale with the private respondent and therefore petitioner cannot be made liable for any damage due to delay or breach of contract. 1974 and the price paid for by private respondent was that price then prevailing which was the amount indicated in private respondent's cashier's check given to petitioner. Petitioner was not guilty of delay in delivering gasoline. that there was delay on the part of petitioner. "A" or Exh. among other things. By actually delivering the gasoline on March 6. private respondent paid for the price therein indicated by tendering a Prudential Bank Cashier's Check #19972. "1" the Retail Trade Agreement is merely a contract to buy and sell. And one such contract order is that product order form (Exh.4. Private respondent agreed that the RTA dealership agreement is not a contract of sale but in the same vein argued that it is a mere trade agreement or contract governing the relationship between Mobil and respondent Pedrosa regarding the operation of a gasoline station and the marketing of Mobil petroleum products and prescribing in general terms. (pp. 8.
L & M Tsn.1974. On the part of Pedrosa it can even be said that the contract was consummated as far as he was concerned since he executed his part of the contract by his prepayment of the order.34 (on p. 4-22-76. The other assigned errors of petitioner question the finding of facts of the Court of Appeals affirming those of the trial court quoted as follows: The second issue to be resolved is whether or not the delay in the delivery was intentional. Thus. Besides. C-078355. Said prepaid order form was a perfected contract of sale the moment it was approved and accepted by Mobil through its proper representative on the same day and paid for by respondent Pedrosa likewise on the same day as evidenced by Mobil's Cash Receipt No. it has been proved that defendant has made gasoline deliveries on Saturday.1974 (Exh. another Mobil dealer. 32-33). 1974 until March 5 of the same year. 9-875. suffered the same fate.1974.1974 (Exhs. in the erroneous belief that thereby it could impose upon the defendant the increased new price that took effect on February 18. and defendant makes no delivery on Saturdays and Sundays. within the months of January and February 1974. 1974. There is evident bad faith in aforegoing actuations of defendant. Tsn. as shown by the very evidence of defendants. As heretofore discussed plaintiffs refusal to pay the price differential was justified. but it did not affect the gasoline deliveries for the same month of January and early part of February 1974. The argument pales vis a vis the fact. a Friday. (Tsn.1974. 1974. to wit: January 5. although his prepaid order was made earlier on February 14.m. could not be delivered until after February 18 because it was placed at 2:20 p. pp.. The Court finds and so holds that defendant deliberately delayed the delivery of the gasoline in question to a date subsequent to February 15. and 9 . J & K. aside from the fact that he had an outstanding account with defendant Mobil did not deliver the order of February 15. 4 of Memorandum of the Defendant). when defendant anticipated the February 18 increase in oil prices. And February 28. there was a price increase and they had to give priority to the recall of invoices already with their warehouse and dispatcher for re-pricing. 20 & 27). and therefore cannot be considered as a valid reason for the delay. 26-27. 144-176). plaintiff's witness Joaquin Coronel. a Friday. In view of the above findings a) that defendant committed a contractual breach and incurred in delay with respect to plaintiff's pre-paid order of February 15. 4-11-76. 3. The alleged outstanding account of plaintiff in favor of defendant is admittedly due to a posting error committed by defendant's employees. vis the due date of delivery is February 15. During the month of January 1974. 2. However. which upon proper verification by plaintiff's accountant was fully paid. this outstanding account already surfaced which the said posting error was discovered. pp.653.1974 because on February 18. a Thursday. by delivering the subject gasoline beyond the agreed due date of delivery. The delay in the delivery of the gasoline according to defendant's witness Mr. Defendant argues that plaintiffs pre-paid order of February 15. Defendant alleges that for "plaintiff's refusal to pay the price differential". pp.. it conveniently invoked this outstanding account to delay the plaintiff's pre-paid order of February 15. considering the following facts and circumstances to wit: 1. plaintiff having paid the day previously his indebtedness to Mobil in the sum of P5. Alberto Latuno was due to the fact that the processing of the subject order by the coupon comptroller was completed only on February 19.already mentioned earlier.
Defendant took unfair advantage of the anticipated oil increase on February 18. 2.00 per computation in Exh. I. a team from the Price Control Council accompanied by a Metrocom Sergeant. as follows: 1. And in fact some customers complained to the Metrocom that we are not giving gasoline as required by the President no less. so we showed them the contents of the tank which was empty. They insinuated that we were hoarding gasoline and in fact the empty oil cans in the gasoline station were brought out and 10 . you will recall that this time there was a very harsh demand for gasoline and there were about at least two hundred were or three hundred cars lined up waiting for their chance to get their twenty (20) liters fuel for the day and since we have been operating since 1966 we have developed a clientele which relied on us for their fuel supplies. by virtue of this failure to deliver by Mobil Oil. affect you personally and your clientele? A In the first place. my oil customers were highly disgusted with us. for the obvious purpose of profiting thereby. 1974. plaintiff testified as follows: ATTY. can you tell us in what way this particular incident you had with the Company regarding the withholding of the February 15 order and so on. These actuations of defendant are indeed oppressive and malevolent that should make it liable for exemplary damages.00. who demanded to know why we are not giving gasoline to the public and we could only explain we had no gasoline in the first place. the court holds liable to plaintiff for damages.000. Q What happened? A There was a Metrocom. such profits amount to P3. I believe it was a Lieutenant.470.b) that the delay in the delivery was intentional on the part of the defendant. 1974. visited us to demand from us why we were not supplying our customers. because of the fact that we were unable. 1974 was timely delivered to him. aside from this actual damages or compensatory damages that you were testifying to a while ago. In the second place.00 4. Now. On his moral damages claim. I. Due to the suspension in gasoline deliveries between the period from February 18 to 28.380. It threatened plaintiff and made good its threat to suspend gasoline deliveries. similarly situated as plaintiff. 3. in anticipation of the increase of oil prices on February 18. motivated by a desire to rake for itself substantial profits that legitimately belonged to its Mobil dealers. As reflected in Exh. plaintiff suffered loss of earnings amounting to P2. Q Were you visited by the Metrocom or any other Government Agency regarding your failure to sell gasoline to the public during this period? A Yes. sir. FERRER Q. They did not believe us. which this court assesses in the amount of P 25. 1974. to provide our clientele and the public in general with this allocation of ours. if plaintiff should not accede to its undue demand for the payment of the price differential. Plaintiff is entitled to the profits that would have accrued in his favor if the gasoline covered by the subject pre-paid order of February 15.
and to accommodate plaintiff.S. Inc. 1974. Pedrosa had an unpaid balance of P5.N. I felt that it was a matter of principle that I would have to stand for what I believe on.000.00. Your Honor. ATTY. with a final warning that no further delivery would be acted upon unless the outstanding balance of P5. p..8) and that the price differential of P 2. FERRER: Q Personally and emotionally? A As Mr.1975. and justifiably so. the said order was approved by the credit man before closing of the Mobil Terminal at 4:00 P.34 on his account as of December 31. 1974 (T. (Amended Record on Appeal.653. thru his representative.N. 1974 involved in this case is because appellee Fernando A.653. not to mention of course near fistheads (sic) during the day caused near fistfights with my boss in the station. (Paragraph 5. Amended Answer. Q How about you personally. Record on Appeal) Mobil's credit man.653. Oliveros. 66-80) One of the reasons why Mobil Oil Philippines. which is fixed at P10.34 is fully paid. In fact.they said there were prima facie evidence of hoarding. This clearly means that Mobil would deliver the order of February 15th although there was still an unpaid balance of P5. 1975. Estagle know I was very very upset over this matter. In fact I have to remind them that if I am hoarding I would have gasoline. 30. On the personal side I felt that as I explained to Mr. 70-76). 1975 p.. pp. 63). they should have considered that this price increase should have been handled with more objectivity. (Tsn. 25-27. placed a product order at 2:20 P. appellee's order of February 15. April 2. how did this incident affect you? ATTY. plaintiff. Floro Marcella testified that he did approve the order of February 15. for which reason this Court holds defendant liable to plaintiff for attorney's fees.000.34 because what would really be affected by the unpaid balance of P 5. p. the exact state of appellee's account balance with Mobil was really immaterial for the purpose of filling appellee's February 15th order was because as judicially represented by appellant in their answer.880. Considering the foregoing. p. did not deliver immediately the pre-paid order of February 15.34 are the orders subsequent to the order of 11 . 1-8-75.M. However. VENERACION: A That is what he has been answering. any due right to be delivered what I have paid for and that considering that our relationship with Mobil Oil had been such a long standing one. 28.00 had not yet been paid. 1974 involved in this case was duly approved by Mobil's credit man as follows: On February 15.00. pp. the Court holds defendant liable to plaintiff for moral damages which is assessed at P50. 1973 and it was company policy to require all dealers to liquidate all their outstanding balances at the end of 1973 before further delivery of oil products would be made to them (T.M. January 8. Q Plaintifff has been compelled to litigate in this instance. Affirmative and Special Defenses. Oliveros and Mr. September 3. pp. I was practically shouting over the telephone over this matter and I was deeply upset over this matter.653. Your Honor.S..
.000 and 12. April 22. Dioscoro Franco's orders Exhibits Q.00 that appellant was demanding. 1974 (a Saturday). Exhibits L and M-Sales Invoices Nos.s.000 liters of gasoline. pp. Dioscoro Franco were served on the day following the date of the invoice and the day of service was even a Saturday.s..000 liters of gasoline.n.February 15. 61-63). Mr. pp. The supposed laborious work involved in a dealer submitting these coupons to the oil company when placing an order unduly burdened the system of placement and processing of orders (T.1974 which are described as follows: Exhibit Mobil Sales Invoice Date of Invoice Date Shipped or No.1976. The evidence clearly shows that the coupon system could not be a reason for the delay in appellant's deliveries of appellee's pre-paid order. both dated February 22. another excuse given by Mobil was that the coupon system was a cause of the delay in the delivery of the fuel.n. April 23. 04295 and 04296 for 12. And that order of February 15 was delivered on March 5 even though appellee had not (and still up to the present has not) yet paid the price differential of P 2. This goes to show. 1974 was suspended was because Mobil does not make any delivery on Saturdays and Sundays effective September 8.n. Mr. 25-26) Mobil's witness. and Mobil complied (surprisingly in the face of its "supposed no Saturday delivery" rule). Q-1 to Q24 covering the period from January 14.s. pp.880.1975.. Franco testified that he actually requested that those particular orders be delivered that same day. but Mobil delivered them the following day instead. they do deliver orders even if the customer has unpaid balance on account. another Mobil dealer and witness for appellee. 35416 and 35417 for 6. 1974 (a Saturday). (a Friday) and both shipped or delivered on February 23. L. testified that he placed orders on Fridays which were delivered the following day. that contrary to appellants contention. Franco testified that he requested that those particular orders be delivered the following day. tried self-exonerating to justify and qualify these Saturday deliveries to Mr. 1973 (Exhibit 2). 1974 (a Friday) and both shipped or delivered on January 5. respectively. (Exhibits J. 62).n.) Also. 1974. 17-21). 1974. there are the rebuttal exhibits regarding Mr. p. April 22. and M show that the orders of Mr.1975. 1974. Appellant's witness Mario Oliveros stated that the coupon system of rationing gasoline among the consumers was another cause for the delay in delivery of plaintiff-appellee's pre-paid order of February 15. K. a Saturday (t. Still. Franco as being exceptions but he could not say who in Mobil decides on the exceptions (T. respectively. 2. to February 28. Another reason or excuse advanced by the appellant why the delivery of the pre-paid order of February 15. Friday. as evidenced by the following exhibits: 1. Mario Oliveros. April 23. 1976. (T.s. a Saturday.. 12 .000 and 14. both dated January 4. Saturday. Dioscoro Franco. Exhibits J and K-Sales Invoices Nos.
1974 Jan. 28. 28. 1974 Q-8 36586C Jan. 1974 Q-9 41453C Jan. 17. 21. 5. 5. 1974 Jan. 21. 1974 Q-6 36354C Jan. Q 36083C Jan. 1974 Jan. 28. 14. 1974 Jan.1974 Q-1 36084C Jan. 15. 17. 15. 15. 1974 Feb. 1974 Q-12 42347C Feb. 14. 1974 Jan. 1974 Jan. 17. 21. 1974 Q-2 36093 Jan. 5. 1974 Jan. 1974 Q-5 36353C Jan. 1974 Feb. 14. 28. 17. 21. 15. 1974 Q-7 36585C Jan.No.14. 1974 Q-10 41743C Jan. 1974 Q-3 36271C Jan. 1974 Q-4 36272C Jan. Delivered Jan. 14. 5. 23. 1974 Jan. 1974 Jan. 1974 Jan. 1974 Q-11 41744C Jan. 14. 23. 1974 Feb. Q-13 42348C 13 . 1974 Jan.
indisputably and conclusively shows that Mobil Oil Philippines. 21. 8. 14 . 1974 Feb. These invoices disprove the excuses of Mobil that it had a back-log of gasoline orders and that the coupon system of distribution then in force accounted for alleged delay in delivery of plaintiff's order. 1974 Q-18 86852B Feb. 27. 1974 Q-19 86853B Feb. 28. 25. 8. 20. 28. 1974 Feb. 20. 1974 Feb. 27. 20. 27. 21. 1974 Feb. 28. 1974 Feb. Dioscoro Franco's gasoline station on the same days as the date of the invoices in accordance with the request that the delivery be made "today". 1974 Feb.1974 Q-14 73691 Feb. 25. 1974 Q-22 04692D Feb. 1974 Q-17 01565D Feb. 13. 20. 1974 Q-15 00783D Q-16 01564D Feb. 21. 1974 Feb. Inc. 21. 1974 Feb. 1974 Q-21 04691D Feb. 27. 1974 Feb. 1974 1974 Feb. 1974 Feb. 1974 Feb. 1974 Q-24 06851D Feb. 1974 Q-20 04434D Feb. 1974 Q-23 06850D Feb. 13. 28.1974 The above rebuttal evidence clearly. made deliveries to Mr.
it is our considered view that the enticement of additional profit should not be allowed to prevail over the social and economic responsibility that the oil companies assumed the very moment they set out to manufacture and sell petroleum products in this country.00 for moral damages is reasonable or not. on pages 4 and 5 of the decision. however.00 for exemplary and P 50.Another Mobil dealer and witness for appellee.1974 and Mobil wanted him to pay the price differential. and motivated by a desire to realize more profit.000. What about the 18th. in the dispositive portion of the decision. and hereby sternly warns said respondent that any other similar act that it may commit in the future with respect to herein petitioner or to any of its other dealers shall be dealt with more severely.. why was it not proceeded on the 18th? 15 . was pushing through a campaign intended to make available to the consuming public as much product as possible by going against hoarders and black-marketers and conducting inventories of all kinds of petroleum products in refineries. Mr. Alberto Latuno. depots. But certainly 6. Joaquin Coronel. (Exhibit N. the whole country including the Metropolitan Manila Area. except that respondent had anticipated the grant of the increase in prices. (Exh. a Thursday. could see no reason (and no reason really was put forward by respondent) for withholding the delivery. through all the agencies concerned. the Oil Industry Commission said: On this. versus Mobil Oil Philippines. Coroner. the Oil Industry Commission declared: . This Commission. Coronel refused to pay the piece increase differential and filed an administrative case against Mobil with the Oil Industry Commission (OIC). The adverse effect on the jeepney drivers and operators and the commuting public of such ill-advised decision of respondent can only be imagined. 1974. When the incident subject matter of this case occurred. which was never delivered because the price increase took effect on February 18.000. was in the grip of an acute fuel shortage. N. Joaquin P. and gasoline stations.000 liters of diesel oil could have caused many jeepneys to ply their respective routes and carry passengers to their places of work and thereby afforded many segments of the community some form of benefit or another. This was precisely the reason why the government. p. declares respondent's act of unreasonably delaying delivery of petroleum products ordered and paid for in advance by petitoner to be violative of the directives and regulations on the matter. Hence. 193 entitled "In the Matter of the Refusal to Deliver Pre-paid Oil Products. 4 and 5) Therefore. pp.. OIC Case No.. In its decision. nonetheless found respondent Mobil definitely guilty of the charge imputed to it by complainant Coronel. while finding itself without the jurisdiction or power to grant the relief Mr.. Coronel prayed for. held on to its product instead of causing its immediate delivery to the petitioner. Petitioner.. Respondent. witness for defendant-appellant on direct examination testified as follows: Q. the Oil Industry Commission.7) We will now determine whether the award by the court a quo of P 25. testified in this case in connection with a pre-paid order he placed with the company on February 14. . Any act of withholding any quantity of petroleum product from the market then undermined to the same extent the efforts of the government to insure a continuous flow of supply. Inc.
1974 (T. 1 974. A. Yes. COURT: Proceed. So that was given priority? A. (T. They were recalled. pp. The above clearly indicates that defendant-appellant gave priority to the recall and reprocess of all invoices already with their warehouse and dispatcher for re-pacing because of the price increase which took effect on February 18. 61-63) Therefore. This means that all invoices covering orders already paid for as early as February 14 and 15. Mr.s.1976. 55-57). ATTY. (Rollo. pp. Your Honor.. witness for defendant-appellant. 145-147) Mr.appellant. also testified that they had to recall and reprocess all orders previously invoiced because of the pace increase which took effect on February 18. Latuno..pricing. but also allowed appellant to amass unreasonably huge profits which if it had exercised fairness. Q. 1975. p. 16 .s. unfair and high-handed actuations of the defendant. for re-pricing because of the price increase? A.A.1975. Coroner who refused to pay the price differential and their payments were just treated as payments on their respective accounts (T. malevolent. said profits should have gone to its dealers to whom it legitimately belonged. 14). honesty. Yes.N. VENERACION: And this invoice was already in the warehouse. September 3. Latuno. And bulk dispatcher. Q. sir. April 2. Because on the 18th. good faith.1974 were recalled and revised to reflect the price increase and said orders were not delivered unless the dealers pay the corresponding price differential.n. in order for your company to increase the price in accordance with the price increase which took effect in February 19? A. we had this price increase and we had to give priority to the invoices already with our warehouse and dispatcher which were recalled for re. sir.S. pp. and ordinary diligence in its business dealings. Defendant-appellant cancelled the orders of dealers like Dioscoro Franco and Joaquin P. Such awards are necessary retribution for the oppressive. defendant-appellant's act of unreasonably delaying delivery of petroleum products ordered and paid for in advance by its dealers is not only violative of the directives and regulations of the Oil Industry Commission.. sir. Yes. sir. April 22.n. COURT: Mr. Mario Oliveros.
Parenthetically.We find the above factual findings as a fair. to be varied by agreement that would find reason only in the supervention of extraordinary inflation or deflation. Moreover. (pp. 840. SO ORDERED.. the principle We laid down in the case of Commissioner of Public Highways vs. Burgos(96 SCRA 831) can be applied here. Justice Claudio Teehankee stated: I concur in the result with the observation that the statements in the main opinion re: the applicability or non-applicability of Article 1250 of the Civil Code should be taken as obiter dicta. As We found nothing capricious.took no part.. WHEREFORE. Moreover. Footnotes 17 . for the purpose of receiving all claims against the petitioner for settlement. Italics ours) In the case at bar. if any. speculative or arbitrary in the conclusions arrived at. J. whimsical. private respondent has no basis in contract or in law. is based on law since the same calls for the application of the Civil Code provisions on damages. 837-838 Emphasis supplied). Melencio-Herrera (Chairperson). in his concurring opinion in the same case. an agreement is needed for the effects of an extraordinary inflation to be taken into account to alter the value of the currency at the time of the establishment of the obligation which. as a rule. and b) the judgment award should be adjusted upward by at least 150% in keeping with the inflation that has supervened. there has been no official pronouncement or declaration of the existence of extraordinary inflation or deflation. JJ. the issue has already become moot and academic at this stage. the same cannot be disturbed on appeal.. is always the determinative element. Padilla.. finding lack of merit in the petition. Petitioner in their "Rejoinder and Opposition" assured this Court that "it has more than adequate assets or financial resources to pay any judgment that may be rendered against it. the obligation of the petitioner. the same is hereby DISMISSED and the appealed judgment of the appellate court is hereby AFFIRMED. Sarmiento and Regalado. it emphasized that "it has already taken sufficient steps for the protection of the interest of its creditors and has even appointed trustees. Finally. premises considered. On the second issue for adjustment claims. (p. reasonable and just conclusion well grounded on the documentary and testimonial evidence presented in court which were not convincingly disputed by petitioner Mobil Oil Philippines. since said article may not be invoked nor applied without a proper declaration of extraordinary inflation or deflation of currency by the competent authorities. We will consider private respondent's motion addressed to Us pending final judgment of this case a) to require petitioner to file a supersedeas bond or deposit with this Court the amount awarded to private respondent by the lower court. in fact. concur. to wit: . Aside from this.
: The present case comes by direct appeal from a decision of the Court of First Instance of Manila (Case No. 1967 REPUBLIC OF THE PHILIPPINES.V. 1960. that the damages to the bridge were caused by force majeure. Defendant appealed directly to this Court assigning the following errors allegedly committed by the court a quo. Melo. was swollen and the current swift. owned by the Luzon Stevedoring Corporation was being towed down the Pasig river by tugboats "Bangus" and "Barbero"1 also belonging to the same corporation. LUZON STEVEDORING CORPORATION. with legal interest thereon from the date of the filing of the complaint. In the early afternoon of August 17. 44562.561. Office of the Solicitor General for plaintiff-appellee. on the grounds that it had exercised due diligence in the selection and supervision of its employees. L-21749 September 29. Busran and Guillermo P. 2 Penned by Judge Ulpiano Sarmiento. San Luis and L.R. the court rendered judgment on June 11.72. holding the defendant liable for the damage caused by its employees and ordering it to pay to plaintiff the actual cost of the repair of the Nagtahan bailey bridge which amounted to P192. Luzon Stevedoring Corporation. when the barge rammed against one of the wooden piles of the Nagtahan bailey bridge. defendant-appellant. amounting to P200. J. defendant Luzon Stevedoring Corporation disclaimed liability therefor. that plaintiff has no capacity to sue. J. and that the Nagtahan bailey bridge is an obstruction to navigation. to wit: 18 . vs. 1960. REYES. After due trial.R. barge L-1892. 44572) adjudging the defendant-appellant. 1963. Villasor. CFI of Manila). liable in damages to the plaintiffappellee Republic of the Philippines..000 (Civil Case No. concurred in by Justices Mama D. at the time. on account of the heavy downpour of Manila and the surrounding provinces on August 15 and 16. plaintiff-appellee.B. H. Sued by the Republic of the Philippines for actual and consequential damage caused by its employees. The river. No. Simbulan for defendant-appellant. smashing the posts and causing the bridge to list. Republic of the Philippines SUPREME COURT Manila EN BANC G.L.1 Penned by Justice Jose A.
For in the ordinary course of events. Filipinas Compañia de Seguros) et al. and submits his case there for decision. The reason is that a contrary rule would encourage the undesirable practice of appellants' submitting their cases for decision to either court in expectation of favorable judgment. Gribsby vs. VI The lower court erred in finding the plaintiff entitled to the amount of P192. 1963. 130. Whitwell vs. July 31. 299. L-22236.. 127 Minn. Ed. it can be seen that the only reviewable issues in this appeal are reduced to two: 1) Whether or not the collision of appellant's barge with the supports or piers of the Nagtahan bridge was in law caused by fortuitous event or force majeure. April 30. 1965). 540.W. III The lower court erred in not holding that the Nagtahan bailey bridge is an obstruction.S. However. 56 L. exclusively controlled by appellant. Wolf. IV The lower court erred in not blaming the damage sustained by the Nagtahan bailey bridge to the improper placement of the dolphins. that it assigned to the task the more competent and 19 .nèt II The lower court erred in not holding that the ramming of the Nagtahan bailey bridge by barge L-1892 was caused by force majeure.I.S. to navigation in the Pasig river. if not a menace. As to the first question. Bryne vs.561. 1966). The appellant strongly stresses the precautions taken by it on the day in question: that it assigned two of its most powerful tugboats to tow down river its barge L-1892. In Anglo American Jurisprudence. 224 U. rammed the bridge supports raises a presumption of negligence on the part of appellant or its employees manning the barge or the tugs that towed it. Requena. on Motion to Reconsider.. including barges like of appellant's. we are limited in this appeal to the issues of law raised in the appellant's brief. San Juan Light & Transit Co. Taking the aforesaid rules into account. London Docks Co. the inference arises by what is known as the "res ipsa loquitur" rule (Scott vs. L-17441. a party who resorts to the Court of Appeals. The only questions that may be raised are those of law (Savellano vs. Diaz. 168 N. 680.S. Great Atlantic & Pacific Tea Co. Consequently. L-16307. Smith. vs. 2 H & C 596. Santiago. 1963. but with intent of attacking its jurisdiction should the decision be unfavorable (Tyson Tan. he is deemed to have waived the right to dispute any finding of fact made by the trial Court. June 22.72 for damages which is clearly exorbitant and without any factual basis. 89. and submits his case for decision there. considering that the Nagtahan bridge was an immovable and stationary object and uncontrovertedly provided with adequate openings for the passage of water craft. 529.E.I The lower court erred in not holding that the herein defendant-appellant had exercised the diligence required of it in the selection and supervision of its personnel to prevent damage or injury to others. Res. 269 Mass. 146 S. Cloribel.. such a thing does not happen if proper care is used. Aballe vs. is barred from contending later that his claim was beyond the jurisdiction of the aforesaid Court. 149 N. et al. V The lower court erred in granting plaintiff's motion to adduce further evidence in chief after it has rested its case. G.1awphîl. 2d 719). it is undeniable that the unusual event that the barge. it must be recalled that the established rule in this jurisdiction is that when a party appeals directly to the Supreme Court. vs. A converso. vs..W. L-10096. March 23. and 2) Whether or not it was error for the Court to have permitted the plaintiff-appellee to introduce additional evidence of damages after said party had rested its case.
Appellant. The appellant. whose barges and tugs travel up and down the river everyday. finding no error in the decision of the lower Court appealed from. 465. We find no merit in the contention. Otherwise stated. It avails the appellant naught to argue that the dolphins. the appellant. the same is hereby affirmed. There is an insinuation that the delay was deliberate to enable the manipulation of evidence to prejudice defendant-appellant. like the bridge. The mere difficulty to foresee the happening is not impossibility to foresee the same: "un hecho no constituye caso fortuito por la sola circunstancia de que su existencia haga mas dificil o mas onerosa la accion diligente del presento ofensor" (Peirano Facio. 1569). What was allowed to be introduced. had the towlines. and this discretion will not be reviewed except in clear case of abuse. are extraordinary events not foreseeable or avoidable. J. Whether or not further evidence will be allowed after a party offering the evidence has rested his case. it therefore assured the risk. allowing reception of additional evidence for the said defendant4 appellant. It is. C. that it instructed its patrons to take extra precautions. or which. Makalintal. "events that could not be foreseen. in fact.. Civ. and in place. upon written motion.3 In the present case. Mazeaud Trait de la Responsibilite Civil. Castro. however. as is commonly believed. For caso fortuito or force majeure (which in law are identical in so far as they exempt an obligor from liability)2 by definition. therefore. these circumstances would merely emphasize the need of even higher degree of care on appellant's part in the situation involved in the present case. 2. voluntarily entered into a situation involving obvious danger. JJ. On the second point: appellant charges the lower court with having abused its discretion in the admission of plaintiff's additional evidence after the latter had rested its case. The very measures adopted by appellant prove that the possibility of danger was not only foreseeable.J. were inevitable" (Art. but it must be one impossible to foresee or to avoid. Hence. concur. completely destroy the appellant's defense. J. has no reason to charge the trial court of being unfair. 1962. Code of the Philippines). Responsibilidad Extra-contractual. not enough that the event should not have been foreseen or anticipated. and can not shed responsibility merely because the precautions it adopted turned out to be insufficient. for years. and that the accident. and which item already appeared in Exhibit GG. no abuse of that discretion is shown. Bengzon.. therefore. Concepcion. because it was also able to secure.. should be held due to force majeure or fortuitous event. and concludes that it had done all it was called to do. p. Dizon. Costs against the defendant-appellant. sec. Luzon Stevedoring Corporation. a similar order dated November 24. Sanchez. knowing and appreciating the perils posed by the swollen stream and its swift current. engines and equipment double-checked and inspected. These very precautions. WHEREFORE.00 allegedly spent for the reinforcement of the panel of the bailey bridge. Vol. the lower Court committed no error in holding it negligent in not suspending operations and in holding it liable for the damages caused. Zaldivar. Angeles and Fernando. on leave. 1174.558. could not safely ignore the danger posed by these allegedly improper constructions that had been erected. lies within the sound discretion of the trial Judge. Even if true. after plaintiff had rested its evidence in chief. but actually foreseen.P. though foreseen.experienced among its patrons. Footnotes 20 . and was not caso fortuito. were improperly located. were vouchers and papers to support an item of P1. took no part.
referred to above. the arrastre operator and the customs broker. 81 Phil. Zapa Law Office for private respondent. Smith. Dala & Zaragoza for petitoner.382.: The issues. The shipment was insured under plaintiff's Marine Insurance Policy No. vs. 429. 661. arrastre operator and broker-forwarder for damages sustained by a shipment while in defendants' custody. Record on Appeal. p. albeit not completely novel.. (b) whether the payment of legal interest on an award for loss or damage is to be computed from the time the complaint is filed or from the date the decision appealed from is rendered. 81/01177 for P36..466. On December 4. 1994 EASTERN SHIPPING LINES. or joint and several. 45 Phil. 21 . petitioner. are: (a) whether or not a claim for damage sustained on a shipment of goods can be a solidary. INC.38. filed by the insurer-subrogee who paid the consignee the value of such losses/damages. 1981. 89. Lopez vs. HON. respondents. Liboro. adopted by the Court of Appeals.1 The lead-tugboat "Bangus" was pulling the barge. Alojada & Garcia and Jimenea. No. on the antecedent and undisputed facts that have led to the controversy are hereunder reproduced: This is an action against defendants shipping company. 2 Lasam vs. two fiber drums of riboflavin were shipped from Yokohama. YMA-8 (Exh. and (c) whether the applicable rate of interest. B). liability of the common carrier.R. is twelve percent (12%) or six percent (6%). VITUG. COURT OF APPEALS AND MERCANTILE INSURANCE COMPANY. Republic of the Philippines SUPREME COURT Manila EN BANC 3 4 G. The findings of the court a quo. 97412 July 12. Japan for delivery vessel "SS EASTERN COMET" owned by defendant Eastern Shipping Lines under Bill of Lading No. INC. J. while the tugboat "Barbero" was holding or restraining it at the back.
Whether or not the shipment sustained losses/damages. 1981. On January 8 and 14. Claims were presented against defendants who failed and refused to pay the same (Exhs.95. which damage was unknown to plaintiff. Records. Whether or not defendant(s) should be held liable for the losses/damages (see plaintiff's pre-Trial Brief. The latter excepted to one drum which contained spillages. Record). adopting plaintiff's Records. (pp. N. p.032. it still exercised extra ordinary care and diligence in the handling/delivery of the cargo to consignee in the same condition shipment was received by it. Inc. and O). if determinable). one drum opened and without seal (per "Request for Bad Order Survey. H.) There were. M. 38). The latter excepted to one drum. it was discharged unto the custody of defendant Metro Port Service. Exhs. there can be no doubt that the shipment sustained losses/damages. Metroport averred that although subject shipment was discharged unto its custody.95 under the aforestated marine insurance policy. As a consequence of the losses sustained. Rollo. due to the fault and negligence of defendants. Allied's pre-Trial Brief. said to be in bad order. The two drums were shipped in good order and condition.Upon arrival of the shipment in Manila on December 12. K. Exh. but nonetheless. Plaintiff contended that due to the losses/damage sustained by said drum. 10649. as clearly shown by the Bill of Lading and Commercial Invoice which do not 22 . to be sure. Allied Brokerage alleged that plaintiff has no cause of action against it. the appellate court said: Defendants filed their respective answers. As to the first issue. 17. other factual issues that confronted both courts. 1982. is no longer its liability (p. Here. 2. while the rest of the contents was adulterated/fake (per "Bad Order Waybill" No. Record). p.032. 85-86. traversing the material allegations of the complaint contending that: As for defendant Eastern Shipping it alleged that the shipment was discharged in good order from the vessel unto the custody of Metro Port Service so that any damage/losses incurred after the shipment was incurred after the shipment was turned over to the latter. Whether or not these losses/damages were sustained while in the custody of defendants (in whose respective custody. plaintiff was compelled to pay the consignee P19. 1982 defendant Allied Brokerage Corporation received the shipment from defendant Metro Port Service." Exh. the consignee suffered losses totaling P19. not having negligent or at fault for the shipment was already in damage and bad order condition when received by it. E).. I. so that it became subrogated to all the rights of action of said consignee against defendants (per "Form of Subrogation". J. 34. 3. portion of the same was already in bad order (p. "Release" and Philbanking check. L). defendant Allied Brokerage Corporation made deliveries of the shipment to the consignee's warehouse. 11. On January 7. D). From the evidence the court found the following: The issues are: 1. Inc.
1981. it excepted to one drum in bad order. But when on December 12. P3. Inc. 207.95. Correspondingly. shall be to the extent of the actual invoice value of each package.000. 2. 1982. the "TurnOver Survey of Bad Order Cargoes" (Exhs. Inc. This becomes evident when the Marine Cargo Survey Report (Exh. South Harbor. Costs. G). Record).00 as attorney's fees. It is obvious. while the liability of defendant Metro Port Service. B and C)..01 of the Management Contract)." The report further states that when defendant Allied Brokerage withdrew the shipment from defendant arrastre operator's custody on January 7. one drum was found with adulterated/faked contents. and thus held: WHEREFORE. 1981 the shipment was delivered to defendant Metro Port Service. one drum was found opened without seal. (p. PREMISES CONSIDERED. 1737 of the New Civil Code. Inc. the common carrier's duty to observe extraordinary diligence in the vigilance of goods remains in full force and effect even if the goods are temporarily unloaded and stored in transit in the warehouse of the carrier at the place of destination. shall not exceed US$500 per case or the CIF value of the loss. B. that these losses/damages occurred before the shipment reached the consignee while under the successive custodies of defendants. NCC). SO ORDERED.000. with its "Additional Survey Notes". In the latter notes. are considered. it was observed that "one (1) fiber drum (was) in damaged condition. covered by the vessel's Agent's Bad Order Tally Sheet No. Net unrecovered spillages was 15 kgs. 1981 one drum was found "open". 1738. cello bag partly torn but contents intact. Defendant Eastern Shipping's own exhibit.032. Dismissing the counterclaims and crossclaim of defendant/cross-claimant Allied Brokerage Corporation. whichever is lesser. Ordering defendants to pay plaintiff. as to the second issue. with the present legal interest of 12% per annum from October 1. The amount of P19. it is stated that when the shipment was "landed on vessel" to dock of Pier # 15. 1982. 23 . Manila on December 12.indicate any damages drum that was shipped (Exhs. The report went on to state that when the drums reached the consignee. pursuant to Section 6. judgment is hereby rendered: A. crate box or container in no case to exceed P5. 86427. and 3.00 each. 3-Eastern) states that on December 12. therefore. until fully paid (the liability of defendant Eastern Shipping. jointly and severally: 1. Under Art. until the consignee has been advised and has had reasonable opportunity to remove or dispose of the goods (Art. it follows that the losses/damages were sustained while in the respective and/or successive custody and possession of defendants carrier (Eastern). arrastre operator (Metro Port) and broker (Allied Brokerage). the date of filing of this complaints.
PRIVATE RESPONDENT'S CLAIM BEING INDISPUTABLY UNLIQUIDATED. 107 Phil. the carrier for transportation until delivered to. we have explained. 52 Phil. Civil Code. Metro Port Service vs.. Dollar Steamship Lines. enumerated in Article 1734 of the Civil Code. Eastern Shipping Lines. Kui Bai vs. The relationship between the consignee and the common carrier is similar to that of the consignee and the arrastre operator (Northern Motors. When the goods shipped either are lost or arrive in damaged condition. The petition is. Indeed. we do have a fairly good number of previous decisions this Court can merely tack to. Manila Railroad Co. IT HELD PETITIONER CARRIER JOINTLY AND SEVERALLY LIABLE WITH THE ARRASTRE OPERATOR AND CUSTOMS BROKER FOR THE CLAIM OF PRIVATE RESPONDENT AS GRANTED IN THE QUESTIONED DECISION. in part. are exclusive. We find that the conclusion drawn therefrom is correct. In this petition. a presumption arises against the carrier of its failure to observe that diligence. and therefore they are liable to the appellee. Since it is the duty of the ARRASTRE to take good care of the goods that are in its custody and to deliver them in good condition to the consignee. 19 SCRA 5 . 87-89. as subrogee for the amount it paid to the consignee. and there need not be an express finding of negligence to hold it liable (Art. 1736-1738. The common carrier's duty to observe the requisite diligence in the shipment of goods lasts from the time the articles are surrendered to or unconditionally placed in the possession of. Philippine National Railways vs. Rollo. After a careful scrutiny of the evidence on record. 253 ). defendant's recourse to US. of course. Court of Appeals. such responsibility also devolves upon the 24 . IT HELD THAT THE GRANT OF INTEREST ON THE CLAIM OF PRIVATE RESPONDENT SHOULD COMMENCE FROM THE DATE OF THE FILING OF THE COMPLAINT AT THE RATE OF TWELVE PERCENT PER ANNUM INSTEAD OF FROM THE DATE OF THE DECISION OF THE TRIAL COURT AND ONLY AT THE RATE OF SIX PERCENT PER ANNUM. As there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants. Inc.) The Court of Appeals thus affirmed in toto the judgment of the court a quo. not one of which can be applied to this case. in holding the carrier and the arrastre operator liable in solidum. There are. 139 SCRA 87. Court of Appeals. 863). too. (pp. and received by. the common carrier. or until the lapse of a reasonable time for their acceptance by. Metro Port Services (182 SCRA 455). In this decision. The appeal is devoid of merit.Dissatisfied. been passed upon by the Court. 1735. 131 SCRA 365). attributes error and grave abuse of discretion on the part of the appellate court when I. et al. Inc. Prince Line. we have begun by saying that the questions raised by petitioner carrier are not all that novel. In Fireman's Fund Insurance vs. Court of Appeals.. 161 SCRA 646. II. granted. the person entitled to receive them (Arts. The question of charging both the carrier and the arrastre operator with the obligation of properly delivering the goods to the consignee has. v. Civil Code.. exceptional cases when 1 such presumption of fault is not observed but these cases. Ganzon vs.thus: The legal relationship between the consignee and the arrastre operator is akin to that of a depositor and warehouseman (Lua Kian v.
Tomol. except when the demand can be established with 4 reasonable certainty. 1956. if the suit were for damages.. in any event. appellee Malayan Insurance (the plaintiff in the lower court) averred in its complaint that the total amount of its claim for the value of the undelivered goods amounted to P3. The trial court opted for judicial demand as the starting point. involved a suit for recovery of money arising out of short deliveries and pilferage of goods. The instant petition has been brought solely by Eastern Shipping Lines. we take note. decided on 15 May 1969. Agustinos.P." then. is inevitable regardless of whether there are others solidarily liable with it. But then upon the provisions of Article 2213 of the Civil Code. In sustaining the appellants. Guzman. being the carrier and not having been able to rebut the presumption of fault. In the stipulation of facts later entered into by the parties.447. 302). imply by the above pronouncement that the arrastre operator and the customs broker are themselves always and necessarily liable solidarily with the carrier. In this case." (Emphasis supplied) The case of Reformina vs. "unliquidated and not known until definitely ascertained. interest "cannot be recovered upon unliquidated claims or damages. 25 Phil. A factual finding of both the court a quo and the appellate court. the sole petitioner in this case. The trial court rendered judgment ordering the appellants (defendants) Manila Port Service and Manila Railroad Company to pay appellee Malayan Insurance the sum of P1. is.947. This demand." And as was held by this Court in Rivera vs.. or vice-versa. Let us first see a chronological recitation of the major rulings of this Court: The early case of Malayan Insurance Co." After trial.51 was agreed upon. Perez.447. interest "should be from the date of the decision. in lieu of proof. assessed and determined by the courts after proof (Montilla c. judgment is hereby rendered in favor of the plaintiffs and third party defendants and against the defendants and third party plaintiffs as follows: Ordering defendants and third party plaintiffs Shell and Michael. which.51 with legal interest thereon from the date the complaint was filed on 28 December 1962 until full payment thereof. is that "there is sufficient evidence that the shipment sustained damage while in the successive possession of appellants" (the herein petitioner among them). Manila Port 2 3 Service. We do not. the lower court decreed: WHEREFORE. absent a stipulation.20.Corporacion de P.. however.CARRIER. to be held liable in this particular case. The appellants then assailed. Inc. of course. this Court ruled: Interest upon an obligation which calls for the payment of money. 38 Phil. L-6998. Both the ARRASTRE and the CARRIER are therefore charged with the obligation to deliver the goods in good condition to the consignee. Incorporated to pay jointly and severally the following persons: xxx xxx xxx 25 . 5 rendered on 11 October 1985. 447. nor that attendant facts in a given case may not vary the rule. Accordingly. February 29. It is over the issue of legal interest adjudged by the appellate court that deserves more than just a passing remark. vs. was for "Recovery of Damages for Injury to Person and Loss of Property. the award of legal interest. was neither established in its totality nor definitely ascertained. is the legal rate. the amount of P1. Such interest normally is allowable from the date of demand. inter alia. judicial or extrajudicial. Lichauco v. the liability imposed on Eastern Shipping Lines. Inc.
. providing thus By virtue of the authority granted to it under Section 1 of Act 2655. and the debtor incurs in delay. Relying on the Reformina v.00 as of June 4. from the filing of the complaint until fully paid.000. been applied. Any other kind of monetary judgment which has nothing to do with. 1974. has prescribed that the rate of interest for the loan. there being no stipulation to the contrary. or credits and the rate allowed in judgments. 2209. v. goods.000. the legal interest which is six percent per annum. (Emphasis found in the text) should have. 26 . the indemnity for damages. and this was when the trial court issued its assailed resolution which applied the 6% interest per annum prescribed in Article 2209 of the Civil Code. The above rule was reiterated in Philippine Rabbit Bus Lines. The case was for damages occasioned by an injury to person and loss of property. Tomol case.00 with costs against defendants and third party plaintiffs. the petitioners contended that Central Bank Circular No. 1972 with legal interest from the filing of the complaint until paid and to pay attorney's fees of P5. xxx xxx xxx Coming to the case at bar.00 a month as the estimated monthly loss suffered by them as a result of the fire of May 6. the law applicable to the said case is Article 2209 of the New Civil Code which reads Art.00 which is the value of the boat F B Pacita III together with its accessories. nor involving loans or forbearance of any money. shall be twelve (12%) percent per annum. goods or credits does not fall within the coverage of the said law for it is not within the ambit of the authority granted to the Central Bank. shall be the payment of interest agreed upon. this 8 Court modified the interest award from 12% to 6% interest per annum but sustained the time computation thereof. This Circular shall take effect immediately. the decision herein sought to be executed is one rendered in an Action for Damages for injury to persons and loss of property and does not involve any loan.. As correctly argued by the private respondents. the latter modified the amount of damages awarded but sustained the trial court in adjudging legal interest from the filing of the complaint until fully paid.e. i. 1622 dated July 29. Inc. fishing gear and equipment minus P80.) On appeal to the Court of Appeals. and in the absence of stipulation. 1969 up to the time they are actually paid or already the total sum of P370.000. in the absence of express contract as to such rate of interest. or forbearance of any money. When the appellate court's decision became final. 416.(g) Plaintiffs Pacita F.000. In their petition for review on certiorari. the case was remanded to the lower court for execution. goods or credits. much less forbearances of any money. This Court 6 ruled: The judgments spoken of and referred to are judgments in litigations involving loans or forbearance of any money. Monetary Board in its Resolution No. Cruz. Reformina and Francisco Reformina the sum of P131.00 which is the value of the insurance recovered and the amount of P10. instead. as amended. If the obligation consists in the payment of a sum of money. The trial court awarded private respondent Pedro Manabat actual and compensatory damages in the amount of P72.500. goods or credits. 7 promulgated on 28 July 1986.00 with legal interest thereon from the filing of the complaint until fully paid. (Emphasis supplied.084.
later sustained by the IAC. . 1968. that will cause the imposition of the interest.00 and P100. Inc. with six (6%) percent interest thereon computed from the finality of this decision until paid. the Court of Appeals sustained the trial court's decision. was decided. P2.00) Pesos as moral damages. in other words.000.00) Pesos to cover all damages (with the exception to attorney's fees) occasioned by the loss of the building (including interest charges and lost rentals) and an additional ONE HUNDRED THOUSAND (P100.00) Pesos as and for attorney's fees. (2) forbearance of any money. plus costs of suit. Intermediate Appellate Court 11 was a petition for review on certiorari from the decision. from the filing of the complaint until paid. while recognizing the right of the private respondent to recover damages. Reformina v.00 as moral damages and P400. .. v. (Philippine Rabbit Bus Lines Inc.000. . the case. upon the defendant and the third-party defendants (with the exception of Roman Ozaeta) a solidary (Art. held the award. 143 SCRA 160-161 . goods or credit. dated 29 April 1985. When taken to this Court for review. respectively. Solidary costs against the defendant and third-party defendants (Except Roman Ozaeta). .00 as exemplary damages with interest thereon at 12% per annum from notice of judgment. the trial court. inter alia. It is true that in the instant case.000. Inc.00. Court of Appeals. In a decision of 09 November 1988. the date of the filing of the complaint until full payment . however. The Court 12 thus set aside the decision of the appellate court and rendered a new one. (one of the petitioners) . (Emphasis supplied) A motion for reconsideration was filed by United Construction.68 with interest at the legal rate from November 29. the decision appealed from is hereby MODIFIED and considering the special and environmental circumstances of this case. ordered. vs. the total sum being payable upon the finality of this decision. the "defendant United Construction Co. this Court. as part of the judgment for damages. there is neither a loan or a forbearance. it explained: There should be no dispute that the imposition of 12% interest pursuant to Central Bank Circular No." Save from the modification of the amount granted by the lower court. dated 27 February 1985. It is delay in the payment of such final judgment. . as We do hereby impose. Clearly.) The subsequent case of American Express International.335. Supra. and its resolution. thus: WHEREFORE. i. but then no interest is actually imposed provided the sums referred to in the judgment are paid upon the finality of the judgment.. Cruz. . restoring the amount of damages awarded by the trial court. is applicable only in the following: (1) loans.. 416 . the rate of interest is imposed on the total sum. to P240. (Emphasis supplied. Tomol. goods or credits. and (3) rate allowed in judgments (judgments spoken of refer to judgments involving loans or forbearance of any money.000. the sum of P989.000.e. . . . they are not applicable to the instant case. contending that "the interest of twelve (12%) per cent per annum imposed on the total amount of the monetary award was in contravention of law. p.. 10) indemnity in favor of the Philippine Bar Association of FIVE MILLION (P5. "ordering the petitioner to pay private respondent the sum of One Hundred Thousand (P100. . for moral damages by the trial court.In Nakpil and Sons vs. on 03 October 1986.000. in an action for the recovery of damages arising from the collapse of a building. 1723. in its resolution of 15 April 1988. It will be noted that in the cases already adverted to.000.000. twelve (12%) per cent interest per annum shall be imposed upon aforementioned amounts from finality until paid. . 139 SCRA 260 ). to be inconceivably large. Jr. of the then Intermediate Appellate Court reducing the amount of moral and exemplary damages awarded by the trial court. Civil Code. Upon failure to pay on such finality. (Emphasis supplied) 9 27 .000." The Court 10 ruled out the applicability of the Reformina and Philippine Rabbit Bus Lines cases and. we deem it reasonable to render a decision imposing. to pay the plaintiff.
Court of Appeals (1988). goods or credits but expropriation of certain parcels of land for a public purpose. Nakpil and Sons v. with interest at the legal rate from the date of the filing of the complaint until fully paid(Emphasis supplied. with the modification that defendants-appellants. Ascribing grave abuse of discretion on the part of the trial judge. The "first group" would consist of the cases of Reformina v. Cruz(1986). This Court said: . .Intermediate Appellate Court (1988). providing any legal interest thereon. and the interest adjudged by the trial court is in the nature of indemnity for damages. 416] does not apply to actions based on a breach of employment contract like the case at bar. (T)he transaction involved is clearly not a loan or forbearance of money. until fully paid. . the payment of which is without stipulation regarding interest. 13 28 . 1972 is affirmed in all respects. and American Express International v. The writ of execution issued by the trial court directed that only compensatory damages should earn interest at 6% per annum from the date of the filing of the complaint.Manila Port Service (1969). After conducting a hearing on the complaints for eminent domain. The records were thereupon transmitted to the trial court. In the "second group" would be Malayan Insurance Company v. except defendant-appellant Merton Munn. Philippine Rabbit Bus Lines v. a petition for certiorari assailed the said order. including the sum of P1. . the petitioner was awarded by the trial court moral and exemplary damages without. Florendo v. jointly and severally. however. The cases can perhaps be classified into two groups according to the similarity of the issues involved and the corresponding rulings rendered by the court. Tomol (1985). 14decided on 08 May 1992. the amounts stated in the dispositive portion of the decision. Quite recently. there have been seeming variances in the above holdings. Concededly. . the Court had another occasion to rule on the matter. National Power Corporation vs. Art.00 in concept of compensatory damages. are ordered to pay. Angas. (Emphasis supplied) The Court reiterated that the 6% interest per annum on the damages should be computed from the time the complaint was filed until the amount is fully paid. the latter held: WHEREFORE. since the kind of interest involved in the joint judgment of the lower court sought to be enforced in this case is interest by way of damages.Reformina came into fore again in the 21 February 1989 case of Florendo v. the trial court ordered the petitioner to pay the private respondents certain sums of money as just compensation for their lands so expropriated "with legal interest thereon . . When the decision was appealed to the Court of Appeals. .400. .) The petition for review to this Court was denied. Ruiz (1989) and National Power Corporation v. the 15 Court declared: . and not by way of earnings from loans. . 2209 of the Civil Code shall apply. and an entry of judgment was made. it is to be noted that the Court of Appeals ordered the payment of interest "at the legal rate" from the time of the filing of the complaint. etc. . Ruiz which arose from a breach of employment contract. Angas (1992). Said circular [Central Bank Circular No. Therefore. For having been illegally dismissed. in applying the 6% legal interest per annum under the Civil Code. . The legal interest required to be paid on the amount of just compensation for the properties expropriated is manifestly in the form of indemnity for damages for the delay in the payment thereof." Again. except as modified hereinabove the decision of the CFI of Negros Oriental dated October 31. involved the expropriation of certain parcels of land.
goods or credits. the interest due 22 shall itself earn legal interest from the time it is judicially demanded. 18 29 . it may not be unwise. 20 II. a loan or forbearance of 21 money. as well as to judgments involving such loan or forbearance of money. Unlike. on the award of interest. goods or credits. delicts or quasi-delicts is breached.' then. the rate of interest shall be 12% per annum to be computed from default. that in these cases. The actual base for the computation of legal interest shall. quasi-contracts. When the obligation is breached.explaining that "if the suit were for damages. law. however." The Nakpil and Sons case ruled that 12% interest per annum should be imposed from the finality of the decision until the judgment amount is paid.. 1169. Furthermore. the rate of interest. When an obligation. 17depending on whether or not the amount involved is a loan or forbearance. by way of clarification and reconciliation. 19 The provisions under Title XVIII on "Damages" of the Civil Code govern in determining the measure of recoverable damages. the "first group" which remained consistent in holding that the running of the legal interest should be from the time of the filing of the complaint until fully paid. as follows: 1. did not alter the pronounced rule on the application of the 6% or 12% interest per annum. Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made. on the other hand.'" American Express International v. an interest on the amount of 24 25 damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. assessed and determined by the courts after proof. the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). a common time frame in the computation of the 6% interest per annum has been applied. Malayan held that the amount awarded should bear legal interest from the date of the decision of the court a quo.. the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. where the demand is established with reasonable certainty. in any case. introduced a different time frame for reckoning the 6% interest by ordering it to be "computed from the finality of (the) decision until paid.e. shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. With regard particularly to an award of interest in the concept of actual and compensatory damages. the contravenor can be held liable for damages. Nonetheless. to suggest the following rules of thumb for future guidance. from the time the complaint is filed until the adjudged amount is fully paid. not constituting a loan or forbearance of money. The ostensible discord is not difficult to explain. and it consists in the payment of a sum of money.e.e. depending on the equities of each case. and that the 6% interest under the Civil Code governs when the transaction involves the payment of indemnities in the concept of damage arising from the breach or a delay in the performance of obligations in general. i. contracts. be on the amount finally adjudged. i.e. 'unliquidated and not known until definitely ascertained. from judicial or extrajudicial demand under and subject to the provisions of Article 1169 23 of the Civil Code. the basic issue focuses on the application of either the 6% (under the Civil Code) or 12% (under the Central Bank Circular) interest per annum. however. In the absence of stipulation. the "second group" varied on the commencement of the running of the legal interest. IAC. i. No interest. interest 'should be from the date of the decision. is imposed. It is easily discernible in these cases that there has been a consistent holding that the Central Bank Circular imposing the 12% interest per annum applies only to loans or forbearance 16 of money. 2. The "second group". or one of indemnity for damage. regardless of its source. on the one hand.. the interest due should be that which may have been stipulated in writing. i. When an obligation. is breached. The factual circumstances may have called for different applications. as well as the accrual thereof. Observe. I. 26 Accordingly.In the "first group". guided by the rule that the courts are vested with discretion.. too.
JJ. Francisco Capistrano. storm. Amadeo Matute. Hugo Gutierrez. Ameurfina Melencio-Herrera. (2) Act of the public enemy in war. of the court a quo. earthquake. or other natural disaster or calamity. #Footnotes 1 Art. Puno and Kapunan. 3 Penned by Justice Conrado Sanchez.. the rate of legal interest. Justice Efren Plana filed a concurring and dissenting opinion. Arsenio Dizon. 4 The correct caption of the case is "Claro Rivera vs. Jr.. C. Melo. Regalado. 265.. Jr. Cruz. (5) Order or act of competent public authority. in lieu of SIX PERCENT (6%). When the judgment of the court awarding a sum of money becomes final and executory. Vicente Abad Santos. Justice Ramon Aquino concurred in the result. Nestor Alampay and Lino Patajo. took no part. concurred in by Justices Jose B. 29 February 1956. Buenaventura de la Fuente. Enrique Fernando. concurred in by Justices Hermogenes Concepcion. The appealed decision is AFFIRMED with the MODIFICATION that the legal interest to be paid is SIX PERCENT (6%) on the amount due computed from the decision. dated 03 February 1988.. Narvasa. (3) Act or omission of the shipper or owner of the goods. Claudio Teehankee and Antonio Barredo.J. Reyes. Venicio Escolin. 5 139 SCRA 260. Mendoza. Lorenzo Relova. Romero.. 1734. Calixto Zaldivar. 2 28 SCRA 65. SO ORDERED. or deterioration of the goods. Bellosillo. whether international or civil. above.L. unless the same is due to any of the following causes only: (1) Flood." 98 Phil. L-6998. Common carriers are responsible for the loss.3. Chief Justice Roberto Concepcion and Justice Fred Ruiz Castro were on official leave. shall be imposed on such amount upon finality of this decision until the payment thereof. Feliciano. WHEREFORE. whether the case falls under paragraph 1 or paragraph 2. (4) The character of the goods or defects in the packing or in the containers. Jr. Davide. Padilla. lightning. A TWELVE PERCENT (12%) interest. 516. this interim period being deemed to be by then an equivalent to a forbearance of credit. concurred 30 . Querube Makalintal. J. concur.. Quiason. 6 Penned by Justice Serafin Cuevas. shall be 12% per annum from such finality until its satisfaction. destruction. the petition is partly GRANTED. Bidin.
10 Penned by Justice Edgardo Paras.. Teodoro Padilla. Justice Hugo Gutierrez. 17 In the case of Malayan Insurance. 2d 378. Cruz and Edgardo Paras. 22 Wash. 644) citing the case of Hafer v. 156 P. Justices Andres Narvasa. from requiring borrower or debtor to repay loan or debt then due and payable. Emilio Gancayco. Abraham Sarmiento.. 1157. within the context of usury law. and (5) Qausi-delicts. Abdulwahid Bidin. as a contractual obligation of lender or creditor to refrain. (1) Law." 31 . Irene Cortes. Isagani A. 12 Rendered per curiam with the concurrence of then Chief Justice Marcelo Fernan. Justices Edgardo Paras and Florentino Feliciano also took no part. Florenz Regalado and Rodolfo Nocon. with the concurrence of Justices Marcelo Fernan. took no part because he was the ponente in the Court of Appeals. Cruz. 8 Penned by then Justice. Jr. Jr. Leo Medialdea and Florenz Regalado. Abdulwahid Bidin. 9 160 SCRA 334. Ameurfina Melencio-Herrera. Teodoro Padilla. Spaeth. 7 143 SCRA 158. 15 Penned by Justice Edgardo Paras with the concurrence of Justices Ameurfina MelencioHerrera. concurred in by Justices Pedro Yap. Isagani A. (2) Contracts. took no part because they did not participate in the deliberations. 18 Art. 411 defines the word forbearance. Justices Ameurfina Melencio-Herrera and Hugo Gutierrez. 11 167 SCRA 209.. 13 170 SCRA 461.in by Justice Claudio Teehankee while Chief Justice Felix Makasiar concurred with the separate opinion of Justice Plana. (4) Acts or omissions punished by law. Andres Narvasa. 416 by the Central Bank. the application of the 6% and 12% interest per annum has no bearing considering that this case was decided upon before the issuance of Circular No. 16 Black's Law Dictionary (1990 ed. and Irene Cortes. now Chief Justice. Teodoro Padilla. Carolina Griño-Aquino. (3) Quasi-contracts. 14 208 SCRA 542. Obligations arise from. during given period of time.2d 408.
are liable for damages. and in the absence of stipulation. or (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. No interest shall be due unless it has been expressly stipulated in writing. although the obligation may be silent upon this point. neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. The provisions of this Title (on Damages) shall be respectively applicable to all obligations mentioned in article 1157. "However. and those who in any manner contravene the tenor thereof. or delay. Interest cannot be recovered upon unliquidated claims or damages. 21 Art." 24 Art.19 Art. 2210. If the obligation consists in the payment of a sum of money. be adjudicated in the discretion of the court. as when the obligor has rendered it beyond his power to perform. 1956. in a proper case. 1169. From the moment one of the parties fulfills his obligation. the indemnity for damages. or (3) When demand would be useless. Interest may. 23 Art. 20 Art. which is six per cent per annum. the legal interest. shall be the payment of the interest agreed upon. 2211. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. 25 Art. delay by the other begins. 22 Art. Those who in the performance of their obligations are guilty of fraud. negligence. be allowed upon damages awarded for breach of contract. and the debtor incurs in delay. except when the demand can be established with reasonable certainty. 1170. Art. the demand by the creditor shall not be necessary in order that delay may exist: (1) When the obligation or the law expressly so declare. Republic of the Philippines SUPREME COURT Manila EN BANC 32 . 2213. 2209. 2212. in the discretion of the court. 26 Art. "In reciprocal obligations. there being no stipulation to the contrary. Interest due shall earn legal interest from the time it is judicially demanded. interest as a part of the damages may. In crimes and quasi-delicts. 2195.
in this petition for review. plaintiffs were compelled to file the complaint to compel defendants to sell the property to them.: Assailed. that plaintiffs thereafter asked the defendants to put their offer in writing to which request defendants acceded. the lower court ruled that should the defendants subsequently offer their property for sale at a price of P11-million or below. THE HON.R. there was no contract of sale at all. Antonio M. plaintiffs will have the right of first refusal. that when plaintiffs did not receive any reply. Thus the dispositive portion of the decision states: 33 . 109125 December 2. 1987 a Second Amended Complaint for Specific Performance was filed by Ang Yu Asuncion and Keh Tiong. that on several occasions before October 9. respondents. defendants filed a motion for summary judgment which was granted by the lower court. Rose Cu Unjieng and Jose Tan before the Regional Trial Court. VITUG. Branch 31. vs. The trial court found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale. hence. that plaintiffs are tenants or lessees of residential and commercial spaces owned by defendants described as Nos. 1986. Binondo. Umali. Soriano & Associates for private respondent. J. that during the negotiations. dated 04 December 1991. plaintiffs wrote them on October 24. in CA-G. 1994 ANG YU ASUNCION. Manila in Civil Case No. After the issues were joined. that since defendants failed to specify the terms and conditions of the offer to sell and because of information received that defendants were about to sell the property. alleging. 87-41058. petitioners.R. in Civil Case No. 26345 setting aside and declaring without force and effect the orders of execution of the trial court. 1987 with the same request. 1986 asking that they specify the terms and conditions of the offer to sell. that in reply to defendant's letter. Nonetheless. that they have occupied said spaces since 1935 and have been religiously paying the rental and complying with all the conditions of the lease contract. they sent another letter dated January 28. SP No.G. is the decision of the Court of Appeals. 87-41058. et al. The antecedents are recited in good detail by the appellate court thusly: On July 29. defendants informed plaintiffs that they are offering to sell the premises and are giving them priority to acquire the same. Albano for petitioners. Manila. Bobby Cu Unjieng offered a price of P6-million while plaintiffs made a counter offer of P5-million. ARTHUR GO AND KEH TIONG. No. dated 30 August 1991 and 27 September 1991. COURT OF APPEALS and BUEN REALTY DEVELOPMENT CORPORATION. Defendants filed their answer denying the material allegations of the complaint and interposing a special defense of lack of cause of action. 630-638 Ongpin Street. among others.. against Bobby Cu Unjieng.
176 SCRA 815). the above-described property with all the improvements found therein including all the rights and interest in 34 . executors. CV No. Summary judgment for defendants was properly granted. the Cu Unjieng spouses executed a Deed of Sale (Annex D. Aggrieved by the decision. On November 15. subject to the following terms and conditions: 1. 1991 "for insufficiency in form and substances" (Annex H. there was no meeting of the minds between the parties concerning the sale of the property. then the plaintiffs has the option to purchase the property or of first refusal. WHEREFORE. The decision of this Court was brought to the Supreme Court by petition for review on certiorari. receipt of which in full is hereby acknowledged. Santiago). but subject to the following modification: The court a quo in the aforestated decision gave the plaintiffs-appellants the right of first refusal only if the property is sold for a purchase price of Eleven Million pesos or lower. considering the mercurial and uncertain forces in our market economy today. otherwise. We find no reason not to grant the same right of first refusal to herein appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos. Chua and concurred in by Justices Vicente V. Petition) transferring the property in question to herein petitioner Buen Realty and Development Corporation. No pronouncement as to costs. CV No. Appellants' demand for actual. the judgment appealed from is hereby AFFIRMED. All requisites obtaining. the decision of the court a quo is legally justifiable. SO ORDERED.R. SO ORDERED. his heirs. plaintiffs appealed to this Court in CA-G. Courts may render summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law (Garcia vs.00). defendants need not offer the property to the plaintiffs if the purchase price is higher than Eleven Million Pesos. The Supreme Court denied the appeal on May 6. Petition). 1990 (penned by Justice Segundino G. while CA-G. In a decision promulgated on September 21. administrators or assigns. however. 21123 was pending consideration by this Court. 21123. moral and exemplary damages will likewise fail as there exists no justifiable ground for its award.000. 1990.R. That for and in consideration of the sum of FIFTEEN MILLION PESOS (P15. this Court affirmed with modification the lower court's judgment. holding: In resume. the VENDORS hereby sells. Mendoza and Fernando A.WHEREFORE. Court of Appeals. finding the appeal unmeritorious.000. judgment is hereby rendered in favor of the defendants and against the plaintiffs summarily dismissing the complaint subject to the aforementioned condition that if the defendants subsequently decide to offer their property for sale for a purchase price of Eleven Million Pesos or lower. transfers and conveys for and in favor of the VENDEE. the claim for specific performance will not lie. Absent such requirement.
As a consequence. stating that the aforesaid modified decision had already become final and executory. Antonio Albano. 87-41058 as modified by the Court of Appeals in CA-G. the same right of first refusal to herein plaintiffs/appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos or more. The lessees filed a Motion for Execution dated August 27.R. 1990 as modified by the Court of Appeals in its decision in CA G. the lessees wrote a reply to petitioner stating that petitioner brought the property subject to the notice of lis pendens regarding Civil Case No. and considering the mercurial and uncertain forces in our market economy today. 105254/T-881 in the name of the Cu Unjiengs. CV No. there was an Entry of Judgment by the Supreme Court as of June 6. except the pending ejectment proceeding. 1991. WHEREFORE. 1991.the said property free from all liens and encumbrances of whatever nature. 1991. 87-41058 annotated on TCT No. respondent Judge issued an order (Annex A. 1990. 195816 was issued in the name of petitioner on December 3. 2. L-97276. 1991. TCT No. in lieu thereof. defendants are hereby ordered to execute the necessary Deed of Sale of the property in litigation in favor of plaintiffs Ang Yu Asuncion.R. registration fees for the transfer of title in his favor and other expenses incidental to the sale of above-described property including capital gains tax and accrued real estate taxes. Both defendants Bobby Cu Unjieng and Rose Cu Unjieng represented by Atty. The gist of the motion is that the Decision of the Court dated September 21. 21123. No. On July 16. Petition) quoted as follows: Presented before the Court is a Motion for Execution filed by plaintiff represented by Atty. Keh 35 . It is the observation of the Court that this property in dispute was the subject of theNotice of Lis Pendens and that the modified decision of this Court promulgated by the Court of Appeals which had become final to the effect that should the defendants decide to offer the property for sale for a price of P11 Million or lower. On August 30. As a consequence of the sale. and elevated to the Supreme Court upon the petition for review and that the same was denied by the highest tribunal in its resolution dated May 6. 1991 of the Decision in Civil Case No. had now become final and executory. 1991 in G. Vicente Sison and Atty.R. 105254/T-881 in the name of the Cu Unjieng spouses was cancelled and. That the VENDEE shall pay the Documentary Stamp Tax. Anacleto Magno respectively were duly notified in today's consideration of the motion as evidenced by the rubber stamp and signatures upon the copy of the Motion for Execution. On July 1. petitioner as the new owner of the subject property wrote a letter to the lessees demanding that the latter vacate the premises. CV-21123. TCT No.
000. let there be Writ of Execution issue in the above-entitled case directing the Deputy Sheriff Ramon Enriquez of this Court to implement said Writ of Execution ordering the defendants among others to comply with the aforesaid Order of this Court within a period of one (1) week from receipt of this Order and for defendants to execute the necessary Deed of Sale of the property in litigation in favor of the plaintiffs Ang Yu Asuncion. 1991 the corresponding writ of execution (Annex C. set aside and declared without force and effect the above questioned orders of the court a quo. contracts.000. and (c) the subject-persons who. On September 22. to do or not to do (Art. the dispositive portion of which reads: WHEREFORE. is hereby set aside as having been executed in bad faith. September 27. (b) the object which is the prestation or conduct. On the same day. On 04 December 1991. quasi-contracts. petitioners contend that Buen Realty can be held bound by the writ of execution by virtue of the notice of lis pendens. All previous transactions involving the same property notwithstanding the issuance of another title to Buen Realty Corporation. on appeal to it by private respondent.00 and ordering the Register of Deeds of the City of Manila. 1991 respondent Judge issued another order. a purchase option and a contract to sell. required to be observed (to give. are the active (obligee) and the passive (obligor) subjects. viewed from the demandability of the obligation. We affirm the decision of the appellate court. 195816 issued in the name of Buen Realty. delicts and quasidelicts). An obligation is a juridical necessity to give. we might point out some fundamental precepts that may find some relevance to this discussion. the appellate court. For ready reference. 1156. The obligation is constituted upon the concurrence of the essential elements thereof.Tiong and Arthur Go for the consideration of P15 Million pesos in recognition of plaintiffs' right of first refusal and that a new Transfer Certificate of Title be issued in favor of the buyer. Keh Tiong and Arthur Go. to do or not to do). SO ORDERED. at the time of the latter's purchase of the property on 15 November 1991 from the Cu Unjiengs. carried over on TCT No. A not too recent development in real estate transactions is the adoption of such arrangements as the right of first refusal. 36 . Keh Tiong and Arthur Go for the consideration of P15. SO ORDERED. Petition) 1 was issued. to cancel and set aside the title already issued in favor of Buen Realty Corporation which was previously executed between the latter and defendants and to register the new title in favor of the aforesaid plaintiffs Ang Yu Asuncion. Civil Code). In this petition for review on certiorari. viz: (a) The vinculum juris or juridical tie which is the efficient cause established by the various sources of obligations (law.
The perfection of the contract takes place upon the concurrence of the essential elements thereof. and the other to pay therefor a price certain in money or its equivalent. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. its perfection and. e. is what may properly be termed a perfected contract ofoption.. until or unless the price is paid. to give something or to render some service (Art. can be obligatory on the parties. obligates himself. although denominated a "Deed of Conditional Sale. 1157. Article 1458 of the Civil Code provides: Art.g. 1479." a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated. which is a meeting of minds between two persons whereby one binds himself.e. the breach of the condition will prevent the obligation to convey title from acquiring an obligatory 2 force. 5 An accepted unilateral promise which specifies the thing to be sold and the price to be paid. . 3 If the condition is imposed on the obligation of a party which is not fulfilled. as long as the object is made determinate and the price is fixed. Until the contract is perfected. . 1458. on the object and on the cause thereof. A contract which is consensual as to perfection is so established upon a mere meeting of minds. Ownership will then be transferred to the buyer upon actual or constructive delivery (e. .. to which the topic for discussion about the case at bench belongs. Civil Code).. A contract which requires. A contract of sale may be absolute or conditional. 1305. 4 An unconditional mutual promise to buy and sell. for a price certain. we have said that. Negotiation covers the period from the time the prospective contracting parties indicate interest in the contract to the time the contract is concluded (perfected). In sales. Where the condition is imposed upon the perfection of the contract itself. In a solemn contract. Civil Code).Among the sources of an obligation is a contract (Art. 6 (1451a) 37 . in addition to the above. such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally. as an independent source of obligation. and in sales. called the seller. This contract is legally binding. such as in a donation of real property. the full payment of the purchase price). the failure of the condition would prevent such perfection. When the sale is not absolute but conditional. is essential in order to make the act valid. it conforms with the second paragraph of Article 1479 of the Civil Code. finally. over which the latter agrees. The stage of consummationbegins when the parties perform their respective undertakings under the contract culminating in the extinguishment thereof. the other party may either waive the condition or refuse to proceed with the sale (Art. the delivery of the object of the agreement. the concurrence of offer and acceptance.g. with respect to the other. i. serve as a binding juridical relation. Court of Appeals (158 SCRA 375). the prescribed form being thereby an essential element thereof. by the execution of a public document) of the property sold. Civil Code). In Dignos vs. compliance with certain formalities prescribed by law. the contract is perfected when a person. particularly. it cannot. its consummation. when coupled with a valuable consideration distinct and separate from the price. to deliver and to transfer ownership of a thing or right to another. as in a pledge or commodatum. and compliance therewith may accordingly be exacted. A contract undergoes various stages that include its negotiation or preparation. 1545. By the contract of sale one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing. called the buyer. is commonly referred to as a real contract. viz: Art.
An option or 10 an offer would require. or. otherwise. The right to withdraw. including the price. the offer is accepted before a breach of the option. In these cases. Atlantic Gulf. the exercise of the right. vs. in fact. Civil Code. however. 45 SCRA 368).Observe. however. Once the option is exercised timely. the optioner-offeror withdraws the offer before its acceptance(exercise of the option) by the optionee-offeree. per se be brought within the purview of an option under the second paragraph of Article 1479.. 948. but not the obligation. the following rules generally govern: (1) If the period is not itself founded upon or supported by a consideration. modifying the previous decision in South Western Sugar vs. Inc.e. the so-called "right of first refusal" is an innovative juridical relation. Sanchez vs. for if. vs. Needless to point out. however. see also Art. to buy. A negotiation is formally initiated by an offer. in fact. until a contract is perfected. before the offeror's coming to know of such fact. The option. is an independent contract by itself. a contract of "option" is deemed perfected. act with justice. It is not to say. 1319. i. understood in its normal concept. a clear certainty on both the object and the cause or consideration of the envisioned contract. An imperfect promise (policitacion) is merely an offer. holding that this rule is applicable to a unilateral promise to sell under Art. nor would it sanction an action for specific performance without thereby negating the indispensable 11 element of consensuality in the perfection of contracts. 270). may be withdrawn. and it would be a breach of that contract to withdraw the offer during the agreed period. Civil Code. would be dependent not only on the grantor's eventual intention to enter into a binding juridical relation with another but also on terms. see also Atkins. 249. among other laws of general application. that obviously are yet to be later firmed up. In the law on sales. 1479. while the object might be made determinate. by communicating that withdrawal to the offeree (see Art. These relations. are not considered binding commitments. Where a period is given to the offeree within which to accept the offer. or possibly of an offer under Article 1319 9 of the same Code. the offeror is still free and has the right to withdraw the offer before its acceptance. must not be exercised whimsically or arbitrarily. Neither can the right of first refusal. 97 Phil. at this stage. either negotiating party may stop the negotiation. 8 Let us elucidate a little. 1482. The optionee has the right. the pertinent scattered provisions of the Civil Code on human conduct. and observe honesty and good faith. give everyone his due. aforequoted. and it is to be distinguished from the projected main agreement (subject matter of the option) which is obviously yet to be concluded. among other things. it cannot be deemed a perfected contract of sale under Article 1458 of the Civil Code. the main contract could be deemed perfected. its breach cannot justify correspondingly an issuance of a writ of execution under a judgment that merely recognizes its existence. such as by its mailing and not necessarily when the offeree learns of the withdrawal (Laudico vs. if an acceptance has been made. The offer. Civil Code). Cua. Prior thereto. Arias. however. that the right of first refusal 7 38 . Remolado. a similar instance would be an "earnest money" in a contract of sale that can evidence its perfection (Art. 135 SCRA 409. Rural Bank of Parañaque. like here. however. Kroll & Co. care should be taken of the real nature of the consideration given. a bilateral promise to sell and to buy ensues and both parties are then reciprocally bound to comply with their respective undertakings. it can at best be so described as merely belonging to a class of preparatory juridical relations governed not by contracts (since the essential elements to establish the vinculum juris would still be indefinite and inconclusive) but by. at any time prior to the perfection of the contract. In a right of first refusal. it has been intended to be part of the consideration for the main contract with a right of withdrawal on the part of the optionee. the withdrawal is effective immediately after its manifestation. Thus. that the option is not the contract of sale itself.. 102 Phil. Rigos. renders himself liable for damages for breach of the option. the latter may not sue for specific performance on the proposed contract ("object" of the option) since it has failed to reach its own stage of perfection. The optioner-offeror. however. it could give rise to a damage claim under Article 19 of the Civil Code which ordains that "every person must. Even on the premise that such right of first refusal has been decreed under a final judgment. If. in the exercise of his rights and in the performance of his duties. 1324. 43 Phil. Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals." (2) If the period has a separate consideration.
The Court of Appeals. has merely accorded a "right of first refusal" in favor of petitioners. let alone ousted from the ownership and possession of the property. 87-41058. the questioned writ of execution is in variance with the decision of the trial court as 13 modified by this Court. 137 SCRA 730.. Puno and Mendoza. CV-21123. dated 30 August 1991 and 27 September 1991. 32-38. The final judgment in Civil Case No. in this regard. Costs against petitioners. since there is none to execute. Pamantasan ng Lungsod ng Maynila vs. C. petitioners are aggrieved by the failure of private respondents to honor the right of first refusal. 87-41058. As already stated. in any case. can warrant a recovery for damages. or the cancellation of title in the name of petitioner (Limpin vs. 96 SCRA 741. It is likewise quite obvious to us that the decision in Civil Case No. but an action for damages in a proper forum for the purpose. IAC. 87-41058 could not have decreed at the time the execution of any deed of sale between the Cu Unjiengs and petitioners. Padilla. 122 SCRA 885). Kapunan. Narvasa.J. took no part. Bidin.. the remedy is not a writ of execution on the judgment.. Agustin vs. #Footnotes 1 Rollo. is on leave. given. J. JJ.. We are also unable to agree with petitioners that the Court of Appeals has erred in holding that the writ of execution varies the terms of the judgment in Civil Case No. Quiason. SO ORDERED.would be inconsequential for. whether private respondent Buen Realty Development Corporation. The consequence of such a declaration entails no more than what has heretofore been said. Melo.R. as it is here so conveyed to us. Pastor vs. for 12 instance. not having been impleaded in Civil Case No. In fine. we UPHOLD the Court of Appeals in ultimately setting aside the questioned Orders. 2 Roque vs. cannot be held subject to the writ of execution issued by respondent Judge. 147 SCRA 516. there was nothing in said decision that decreed the execution of a deed of sale between the Cu Unjiengs and respondent lessees. such as already intimated above. Davide. or the fixing of the price of the sale. it must be stressed. Bellosillo. has observed: Finally.. 186 SCRA 375. WHEREFORE. the alleged purchaser of the property. 87-41058. 39 . Regalado. Furthermore. IAC. an unjustified disregard thereof. concur. Buen Realty. of the court a quo. Lapuz. CA. Romero. 87-41058 are matters that must be independently addressed in appropriate proceedings. CA. Jr. has acted in good faith or bad faith and whether or not it should. De Guzman vs. J. 143 SCRA 311. Feliciano. later affirmed in CA-G. CA. without first being duly afforded its day in court. be considered bound to respect the registration of the lis pendens in Civil Case No. if. the circumstances expressed in Article 19 of the Civil Code. pp.
provides: Art. Natino vs. We find no reason not to grant the same right of first refusal to herein appellants in the event that the subject property is sold for a price in excess of Eleven Million pesos.. 982. give everyone his due. (Emphasis supplied. Cronico vs. Stevenson & Co.. 176 SCRA 815). Sps.3 See People's Homesite and Housing Corp. 8 Atkins. 102 Phil. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. IAC. Civil Code.. but subject to the following modification: The court a quo in the aforestated decision. 948. 13 The decision referred to reads: In resume. moral and exemplary damages will likewise fail as there exists no justifiable ground for its award. partakes the nature in reality of a part payment of the purchase price (termed as "earnest money" and considered as an initial payment thereof). the decision of the court a quo is legally justifiable. 6 It is well to note that when the consideration given. 105 SCRA 359). A qualified acceptance constitutes a counter-offer. 161 SCRA 167. 12 Art. 170 SCRA 29. WHEREFORE. Kroll and Co. All requisites obtaining. Every person must.. 5 See Art. 4 Delta Motor Corporation vs. 78 SCRA 331). Kroll & Co. Cua Hian Tek. Summary judgment for defendants was properly granted.M. vs. 197 SCRA 323. the judgment appealed from is hereby AFFIRMED. 19. 7 Enriquez de la Cavada vs. Republic of the Philippines SUPREME COURT Manila 40 .) 10 It is also essential for an option to be binding that valuable consideration distinct from the price should be given (see Montilla vs. Civil Code. an actual contract of sale is deemed entered into and enforceable as such. 133 SCRA 777. Appellants' demand for actual. Diaz. 948. Salonga vs. Genuino. Cua Hian Tek. Ferrales. 37 Phil. gave the plaintiffs considering the mercurial and uncertain forces in our market economy today. 11 See Article 1315 and 1318. for what otherwise would have been an option. 1319. 9 Article 1319. No pronouncement as to costs. Inc. Inc. Inc. vs. Atkins. Court of Appeals. Court of Appeals. in the exercise of his rights and in the performance of his duties.. vs. 15 Phil. and observe honesty and good faith. the claim for specific performance will not lie. finding the appeal unmeritorious. act with justice. 38. J. vs. The offer must be certain and the acceptance absolute.. Court of Appeals. Madrigal & Co. there was no meeting of the minds between the parties concerning the sale of the property. Absent such requirement. Courts may render summary judgment when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law (Garcia vs. 1459. Tuason & Co. 102 Phil.
its chairman. 1986. and fixed its term of existence to be "coterminous with the investigation of the seized assets by the Presidential Commission on Good Government and 41 . 11 provided that the Board of Administrators shall "function in all respects like a board of directors of a corporation under the Corporation Code. 87710 March 31. When the PCGG was created in February 1986. After the February Revolution in 1986. vs. 1992 ROBERTO S. the properties." exercise "all the powers imposed on trustees under the principles of the general law on trust and officious managers under the law on extra-contractual obligations" (Sec. 96087 March 31. requested the Ministry of National Defense and the Ministry of Information. as well as its legal and beneficial ownership. PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT. Benedicto. BBC and IBC A petition for prohibition and mandamus with prayer for preliminary injunction and/or restraining order. BENEDICTO. 11 creating a Board of Administrators "to manage and operate the business and affairs of Broadcast City. asprovided in an Agreement between the petitioner and the Presidential Commission on Good Government (PCGG).R. Benedicto vs. In compliance with the PCGG' s recommendation. (1) the Inter-Continental Broadcasting Corporation (IBC-13). G. assets.EN BANC G. JR. 1992 TEOFISTO T. GRIÑO-AQUINO. President Corazon C. 87710 Roberto S.R. BBC AND IBC. Jovito Salonga. Marcos. operation.. petitioner. Board of Administrators of Television Stations RPN. On April 8. J. No. No. petitioner. and control of three (3) television stations. 3). G." Executive Order No. in the interest of national security. THE BOARD OF ADMINISTRATORS OF TELEVISION STATIONS RPN. collectively called "Broadcast City. and business of Broadcast City were abandoned. the Ministry of National Defense on March 6. respondents. and (3) Banahaw Broadcasting Corporation (BBC-2).: These two cases were consolidated for the reason that they involve the sequestered television and broadcast stations of Roberto S. 1986. requested the Minister of Information to immediately undertake the management and administration of the sequestered facilities. vs. GUINGONA. Aquino issued Executive Order No. namely. leaving no one to look after them. was filed by Benedicto in 1989 to prohibit the respondent Board of Administrators from exercising management. respondents.R. to sequester Broadcast City pending clarification of its uncertain financial condition. (2) Radio Philippines Network (RPN-9). now Senator. No." and to compel the respondent Board to turn them over to their respective Boards of Directors. well-known friend and classmate of the late President Ferdinand E.
Spouses Ferdinand and Imelda Marcos. "Roberto S. the PCGG. Guingona. This case was transferred to. 1986. 74974 entitled.. the petitioner and the PCGG allegedly entered into an agreement to reorganize and reinstate the Boards of Directors of RPN. of Broadcast City (G. Benedicto) their ill-gotten wealth consisting of funds and other property which they amassed through breach of trust and abuse of the prerogatives of public office. the compromise agreement was submitted by the parties to the Sandiganbayan for approval. Benedicto ceding to the latter a substantial part of his ill-gotten assets and granting him immunity from further prosecution. Said boards of directors would "exercise all powers of administration and management of the sequestered companies. On November 25. et al. No. 1987. No. 96087 Teofisto T. On November 3. any ill-gotten assets of the past discredited dictator. the PCGG filed in the Sandiganbayan Civil Case No." to recover from the defendants (including Roberto s. Jr. a reorganized Board of Directors was elected for each of the Broadcast City corporations. and ceded to the 42 . Castro. Benedicto vs. 1990. Roberto S. the petitioner. 7. his family. However. Two-thirds (2/3) of the members of the reorganized Boards of Directors would be nominees of the PCGG and one-third (1/3) would be nominees of the petitioner. Jr. The PCGG has no power and authority to cede and release. The immunity-authority vested in the PCGG under Executive Order No. vs. and control of Broadcast City to the reorganized Boards of Directors." (Sec. 3. 1990. as controlling stockholder of the "Broadcast City" corporations. and to recover the management. David M. On December 18. G. 11.until final disposition of the seized assets in accordance with the findings of the Commission.R. Presidential Commission on Good Government On June 30. the respondent Board of Administrators refused to relinquish the management. with zero-retention by the Marcos cronies. relatives and political and business cronies. 2. et al. PCGG. the Sandiganbayan. entitled "Republic of the Philippines vs.R. by compromise or otherwise. By this petition for certiorari and prohibition with prayer for a preliminary injunction and/or restraining order. 14. Senator Teofisto Guingona. as amended. This petition for prohibition and mandamus was filed against the Board of Administrators by Benedicto. 1986.) The members of the board were to hold office "at the pleasure of the President. and is now pending in. Benedicto. operation. Its charter tasks it to recover all ill-gotten wealth." Pursuant to Section 1 of Executive Order No. through its chairman. is limited granting immunity from criminal prosecution under the conditions set forth thereunder. 0034. IBC and other related media corporations. the Minister of Information appointed the members of the Board of Administrators on April 11. executed a Compromise Agreement with Roberto S. Previous compromise agreements entered into by the PCGG adhered to the statutory norm of totalrecovery of ill-gotten wealth."). seeks to invalidate the compromise agreement on the grounds that: 1. BBC." Pursuant to that agreement. and in violation of the Constitution and the laws of the land. The petitioner filed in the Supreme Court an action against the PCGG to annul the sequestration.
et al. Title I. PCGG (150 SCRA 181). the court directed the PCGG to comment on the petition and issued a Temporary Restraining Order to cease and desist from implementing and enforcing the assailed Compromise Agreement. No. 14. this Court granted the PCGG's motion to suspend consideration by the Sandiganbayan of the "Joint Motion to Approve Compromise Agreement" filed in that court by the PCGG and Benedicto. On November 29. the Compromise Agreement requires for its validity prior approval of Congress upon the recommendation of the Commission on Audit and the President. the PCGG alleged that the rationale for the Compromise Agreement was the Government's desire to immediately accomplish its recovery mission and Mr. 2. vs. andPCGG vs. 1990.R. The Benedicto Compromise Agreement requires for its validity an amendment by Congress of the PCGG's mandate by authorizing it to settle for less than total recovery of ill-gotten wealth. Azcuna. 173 SCRA 72). the parties decided to withdraw and/or dismiss their mutual claims and counterclaims in the cases pending in the Philippines.) After considering the petition in G. but it was sustained by this Court in "Republic of the Philippines and Jose Campos. The petitioner filed a reply to the comment stating that the issue in this case is not the basic authority of the Commission to enter into a compromise settlement of the liabilities and accountabilities of the Marcoses. May 4. pursuant to Section 20. Book V of the Revised Administrative Code 1987. including the more recent rulings in Cojuangco. . (b) that Benedicto should disclose information "establish[ing] the unlawful manner in which [former President Marcos and his family have] acquired or accumulated the property or properties in question. Executive Order No. vs. et al. 2. 181-183. 6. The PCGG's authority to enter into compromises involving illgotten wealth and to grant immunity in civil and criminal cases had been challenged before. No. but the legality of the Compromise Agreement with Benedicto which. whether located in the Philippines or abroad. Commenting on the petition. 43 . Roxas. sans compliance with the specific conditions imposed therefor by Section 5 of Executive Order No. and irrevocable immunity from criminal prosecution. Sandiganbayan. in relation to Executive Order No. .R." and the comments of the Solicitor General.. 84895. agent or trustee . (BASECO) vs. The Compromise Agreement grants Benedicto immunity from criminal prosecution without requiring compliance with the conditions enumerated in Executive Order No. Board of Administrators of Television Stations RPN. et al. Chapter 4. BBC and IBC. Subtitle B. 14. as amended." G. following its earlier rulings in Bataan Shipyard and Engineering Co. Benedicto's desire to lead a peaceful and normal life. Jr. et al. in [his] name as nominee. the Court. Toward this end. as amended. 4. vs. (pp. according to the petitioner. 1989.000 against Benedicto. for its grants Benedicto final.latter only those assets which had been substantiated and verified as legitimately and lawfully acquired by them. in relation to Executive Order No. and (c) that Benedicto should promise to testify before the Sandiganbayan when so required. and succeeding cases. Rollo. On January 15. to wit: (a) that Benedicto should make a "full disclosure" of all "ill-gotten assets" or properties. 292. Being a settlement of the Government's claim exceeding P100. 1991. et al. 5. (195 SCRA 797). and Conjuangco. 87710 "Benedicto vs. total. was entered into by the Commission without and beyond its lawful authority and with grave abuse of discretion.
1986 and March. "watchdog" or overseer. vs. the authority of the Board of Administrators as "trustee and officious manager" of the same corporations. 1991)." it may be returned to its rightful owner as far as possible in the same condition as it was at the time of sequestration. receive rents. running. but Floirendo was one of the defendants in the U. This view is bolstered by the fact that Broadcast City is not a purely commercial venture but a media enterprise covered by the freedom of the press provision of the Constitution. No. the rule on amicable settlements and/or compromises on civil cases under the Civil Code is applicable to PCGG cases. which is "to prevent the disposal or dissipation" of the business enterprise. The PCGG may thus exercise only powers administration over the property or business sequestered or provisionally taken over. Inc. 96087 has no merit. frozen or provisionally taken over property so that if it is not proven that the business enterprise was "ill-gotten. which we reiterated in the Conjuangco cases. this Court ruled that the PCGG is a conservator. much like a court-appointed receiver.Sandiganbayan and Olivares (G.S. case in New York against the Marcoses. this Court held in Republic vs. the Campos/Floirendo agreements were made in May.e. the PCGG may in this case exercise some measure of control in the operation. IBC and BBC television stations to administer and manage those sequestered Broadcast City companies. or business enterprises in operation. The settlement of civil cases in court is authorized and even encouraged by law (Arts. 236. In Baseco vs." (150 SCRA 181. Civil Code). In negotiorum gestio. pay outstanding debts." There is no basis for comparison between the compromise agreements which the PCGG made with Campos and Floirendo and is agreement with Benedicto. has become functus oficio. resolved to grant the petition for prohibition and mandamus. much less an owner. the Government. the Board of Administrators has become a supernumerary. it behooves the PCGG exercise "the least possible interference with business operations or activities" of sequestered. . where PCGG controls 2/3 of the board membership. going concerns. .R. The reason for its existence has ceased. collect debts due. Civil Code). In the case of sequestered businesses generally (i. 2153. The right of parties in a civil action to enter into a compromise for the purpose of avoiding litigation or putting an end to are already commenced is indisputable. et al. in the special instance of a business enterprise shown by evidence to have been "taken over by the government of the Marcos Administration or by entitles or persons close to former President Marcos. and that under our ruling inLiwayway Publishing. 150 SCRA 181. PCGG. 92376. As pointed out by the PCGG. The petition in G. PCGG. or innovator. something more than mere physical custody is connotated. as already adverted to. to "provisionally take [it] over in the public interest or to prevent [its] disposal or dissipation. 11. the authority of the officious manager of a property or business is extinguished when the owner demands the return of the same (Art. 1987 Constitution). 1987 when no case had been filed yet against Campos and Floirendo in the Sandiganbayan. as in the case of sequestered objects. 2028 and 2029. as already discussed. No. its essential role.R. XVI.) In the light of this ruling. Hence. . It is not that of manager. is that of conservator. not an owner.. But even in this special situation. the intrusion into management should be restricted to the minimum degree necessary to accomplished the legislative will. et al. or management of the business itself. Since 44 ." and since the term is obviously employed in reference to going concerns." the PCGG is given power and authority.. and generally do such other acts and things as may be necessary to fulfill its mission as conservator and administrator. caretaker. 236-237. August 12. through the PCGG. and in view of the reorganization of the Boards of Directors of the RPN. such as to bring and defend actions in its own name. With the reorganization of the respective Boards of Directors of the Broadcast City companies. Sec. may not lawfully intervene and participate in the management and operations of a private mass media maintain its freedom and independence as guaranteed by the Constitution (Art. Sandiganbayan 173 SCRA 72 (1989) that "in the absence of an express prohibition. businesses in current operation). (160 SCRA 716). Now. Although there is no similar general rule in criminal prosecutions.
1990 in G. No. Gutierrez. Power to Compromise Claims. No. Subtitle B. board or person whether exercising functions judicial or ministerial. Cruz. 96087 is hereby set aside. Medialdea. The compromise agreement with Benedicto was submitted to the Sandiganbayan for approval for the simple reason that the PCGG had filed a civil case against him in the Sandiganbayan. and with the written approval of the President. or with grave abuse of discretion. the PCGG's Compromise Agreement with Benedicto need not be submitted to the Congress for approval. the petition for prohibition and mandamus in G. any settled claim or liability to any government agency not exceeding ten thousand pesos arising out of any matter or case before it our within its jurisdiction.R. J. Regalado. 96087 is hereby dismissed. Title I.R. 20. Jr. the Commission may compromise or release in whole or in part. Davide. No.. No costs in both cases. with their recommendation.. 2.there was as yet no case against Campos and Floirendo in the Philippines. Melencio-Herrera. of the Revised Administrative Code of 1987 (E. Book V. The respondent Board of Administrators is ordered to cease and desist from further exercising management. through the Commission and the President. concur. corporation. Feliciano. and there is no appeal nor other plain. is on leave...) The Government's claim against Benedicto is not yet settled. 45 . The provision reads: Sec. 292) cited by Senator Guingona is inapplicable as it refers to a settled claim or liability. this petition to prohibit its implementation and enforcement is premature. (1) When the interest of the Government so requires. Jr. The petition for prohibition against the PCGG in G. and adequate remedy in the ordinary course of the law (Sec. Padilla. WHEREFORE. The temporary restraining order which this Court issued on November 29. no Philippine court had acquired jurisdiction to review and approve the PCGG's compromise agreements with them. Paras. hence. Romero and Nocon. Settled is the rule that the writ of the prohibition will issue only when it is shown that a tribunal. operation and control of Broadcast City and is hereby directed to surrender the management. the application for relief therefrom shall be submitted.. xxx xxx xxx (Emphasis supplied. JJ. Narvasa.O. speedy. Bidin. has acted without or in excess of its or his jurisdiction.J. operation and control of Broadcast City to the reorganized Board of Directors of each of the Broadcast City television stations. Rule 65 of the Rule of Court). Since the PCGG's compromise agreement with Benedicto has been submitted to the Sandiganbayan for approval and is still pending determination therein. 87710 is granted. and the ownership of the alleged ill-gotten assets is still being litigated in the Sandiganbayan. C. it may likewise compromise or release any similar claim or liability not exceeding one hundred thousand pesos. to the Congress. Prior congressional approval is not required for the PCGG to enter into a compromise agreement with persons against whom it has filed actions for recovery of ill-gotten wealth. Chapter 4. in case the claim or liability exceeds one hundred thousand pesos. SO ORDERED.R. No. Section 20.
On November 10. petitioner.. vs.041. Section 3(f) of Commonwealth Act No. Petitioner submitted a reply on August 1. and in his indorsement dated July 22. No. 470. 1967. submitted to the Provincial Treasurer. Office of the Solicitor General for respondent.Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G. J: This is an appeal by way of certiorari from the decision of the Auditor General contained in his 9th indorsement dated January 14. 1969 to the Auditor General the Secretary stated he had no objection to the grant of the claim for refund of petitioner whether or not such payments have been made under protest. L-32364 April 30. however. later. Valenzula Bulacan. in his capacity as Auditor General respondent. a domestic corporation. a claim for refund of taxes erroneously paid or illegally collected or assessed should be presented within two (2) years from date of payment. INC.17 as real estate taxes on its plant machinery and equipment used by its general mill at Bagbagin. The undisputed facts of the case are as follows: Petitioner Ramie Textiles. disallowing the chum of petitioner for refund of real estate taxes. ISMAEL MATHAY. SR. HON. commenced its operation in 1959. 1979 RAMIE TEXTILES. 1967 the Provincial Treasurer.. Inc. or on May 19. It is neither a tax collected through the municipal ordinance nor a tax y assessed and collected but real estate taxes voluntarily paid by petitioner. 1967 said petitioner . But since the amount involved is very significant. 1970 reiterating the aforesaid decision. subject to the application of the statutory prescriptive period of six (6) years under Article 1145 of the New Civil Code of the Philippines. 1970 and his resolution dated July 28. 46 . DE CASTRO. denied the chum for refund on the ground that under Section 359 of the Revised Manual of Instructions to Treasurers. The matter also appeared to have been referred to the Secretary of Finance for comment. the Office of the Auditor General of B indorsed petitioner's claim to the Auditor General at Quezon City with the information that the former concurs with the opinion of the Provincial Treasurer and the Provincial Assessor of Bulacan that the claim for refund may not be in order considering that the payment of real estate taxes was made voluntarily by petitioner without protest. the matter was submitted to the Central Office for decision and/or instruction.041. it voluntarily paid the amount of P78.17 which it paid as real estate taxes for the said five (5) years on its plant machinery and equipment.. During the first five (5) years of operation. 1967 to the said opinion of the Provincial Treasurer alleging that Section 359 is inapplicable because said provision refers specifically to municipal ordinances which were subsequently declared illegal and taxes illegally assessed and collected under such ordinances. Lichauco Picazo & Agcaoili for petitioner. On July 11. through the Provincial Assesor of Bulacan a claim for refund of P78. that 1 under Article 1.R. said machineries are exempt from realty tax. otherwise known as the Assessment Law.
088. the obligation to return it arises. 23 SCRA 286-291. Quezon City.R. and therefore could not have been made under protest. this appeal concerns only the taxes paid for 1958 to 1962 (total amount. The same refers only to the case where the taxpayer.The Auditor General in his 9th indorsement dated January 14. 1970. We agree with petitioner. 470 which provides: Section 54. Hence. 470.No court shall entertain any suit assailing the validity of a tax assessed under this Act until the taxpayer shall have paid. L-25310. Restriction upon power of court to impeach tax ." There is. created a tie or juridical relation in the nature of solutio indebitiexpressly classified as quasi. that 47 . therefore. despite his knowledge of the erroneous or illegal assessment. save rise to the application of the principle of solutio indebiti under Article 2154 of the New Civil Code. what is the prescriptive period. Payment was made through error or mistake. The quasi-contract of solutio indebiti is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the expense of another. should have paid the rest of the taxes from 1957 to 1962 under protest . Chapter I of Title XVII of the New Civil Code. cannot be said to have waived his right. cited by respondent.46). petitioner. a taxpayer should not be held to suffer loss by his good intention to comply with what he believes is his legal obligation. Petitioner claims that protest is not a sine qua non requirement in order that taxes mistakenly paid may be refunded it alleges that Section 54 is not applicable since it contemplates a situation where the taxpayer disagrees with an assessment because it is illegal or erroneous. G... he should manifest an unwillingness to pay. still pays and fails to make the proper protest. 1959. the taxpayer is deemed to have waived his right to claim a refund. which provides that "if something is received when there is no right to demand it. test.. The case of National Waterworks and Sewerage Authority vs. In the case at bar. and then again in 1961.. 470 does not apply to petitioner which could conceivably not have been expected to protest a payment it honestly believed to be due. but with complete voluntariness.. under pro. NWSA therefore. and the government accepted the payment. Protest is not a requirement in order that a taxpayer who paid under a mistaken belief that it is required by law. to the effect that prior protest of realty tax payments is necessary for recovery. It is not disputed that petitioner is exempt from the payment of realty taxes during the first five (5) years of its operation The fact that petitioner paid thru error or Mistake. NWSA already knew it was exempt. The question at issue. this Court ruled: Stated otherwise. 1968. and failing so. for in such case. 1960 and 1962. Section 54 of Commonwealth Act No. Starting from 1957 up to 1962. and it was unduly delivered through mistake. may claim for a refund. therefore. as shown by its payment in 1957 under protest. et al. is whether or not protest is a condition precedent or a sine qua non requirement for the recover of real estate taxes paid under the erroneous belief that the. it would seem unedifying for the government. where such obligation does not really exist. the taxes assessed against him . claimant was liable therefor.' Hence. ruled that the claim for refund of real estate taxes paid by petitioner having been voluntarily made without pro. reiterated in 1961. and if so.contract under Section 2. in the honest belief that petitioner was liable. But despite the fact that it knew already that it was exempt. In any case. April 26. is not in point. The facts of said case are different because there was already prior knowledge on the part of NWSA of its exemption from payment of its taxes which dated back to 1957 when it paid under protest. P449. therefore. He had no knowledge of the fact that it was exempted from payment of the realty tax under Commonwealth Act No.. test may not be allowed pursuant to Section 54 of Commonwealth Act No. it still paid without protest the taxes for 1958. No.
knowing it has no right at all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant 3 to return the same. Solutio indebiti is a quasi-contract, and the instant case being in the nature of solutio indebiti the claim for refund must be commenced within six (6) years from date of payment pursuant to Article 1145(2) of the New Civil Code. 4 Respondent's contention that petitioner's right to recover real estate taxes has prescribed in accordance with Section 359 of the Revised Manual of Instructions to Treasurers which reads: Section 359. Refund of taxes paid under ordinance subsequently declared illegal and taxes illegally assessed and collected. To encourage prompt and voluntary payment of taxes and to maintain the principle that the government should not, at the expense of the taxpayer, retain what is not legally due it, for refund of taxes erroneously paid or illegally collected or assessed may be presented within two (2) years from date of payment. Claim for refund presented thereafter will no longer be entertained. All claims for recovery of taxes illegally and erroneously as shall be filed with the treasurer who collected the tax. The treasurer may... decide the protest or he may forward the same to the corresponding authority for decision. His comment and recommendation shall be stated by him together with the protest. This procedure shall be strictly followed in order to determine as to whether or not a formal or written claim was filed within the two (2) years from date of payment. is without merit. The said provision applies to taxes paid under ordinance subsequently declared illegal or taxes illegally assessed and collected under such ordinance, but not to payments of real estate taxes mistakenly made, as in the present case. Furthermore, the Revised Manual of Instructions to Treasurers is a mere compilation of existing accounting instructions affecting the finance and administration of local government. Section 359, particularly, has no force and effect of a law, and the same can not prevail over the provisions of the New Civil Code. Equally not applicable is Section 17 of Commonwealth Act No. 470 cited by respondent in relation to the right of a property owner to contest the validity of assessment. Said provision provides: Section 17. Appeal by owner to the Board of Tax Appeals (Now Board of Assessment Appeals, R. A. No. 1125). Any owner who is not satisfied with the action of a provincial assessor in the assessment of his property may, within sixty (60) days from the date of receipt by him of the written notice of assessment as provided in Section 16 hereof, appeal to the Board of Tax Appeals, which is created in each province, by filing with it or with the municipal Treasurer of the municipality where the property assessed is situated who is duty bound to transmit it to the Board of Tax Appeals, a petitioner to that effect stating the grounds of his appeal Petitioner is not unsatisfied in the assessment of its property. Assessment having been made, it paid the real estate taxes without knowing that it is exempt. It appears from the records that petitioner has paid the following real estate taxes from 1959 to 1963. 5 Date Paid Official Receipt No. July 24,1959 1636654 Amount Paid For the Year 1959
Feb. 29,1060 Mar. 27,1961 Oct. 31, 1961 May 8, 1963 June 11, 1965 September 9, 1965
As already stated the claim for refund must be made within six (6) years from date of payment. Since petitioner demanded the refund of real estate taxes mistakenly paid only on May 23, 1967, it can recover only those paid during the period from October 31, 1961 to September 9, 1965 or a total amount of P61,007.33. Petitioner has, by reason of the six (6) years prescriptive period, lost its right to recover the amount of P17,033.84 paid during the period from July 24, 1959 to March 27,1961. IN VIEW OF THE FOREGOING, the appealed judgment is hereby set aside, and petitioner Ramie Textiles, Inc. is allowed to recover the real estate taxes paid during the period from October 31, 1961 to September 9, 1965, in the total amount of P61,00733. No costs. SO ORDERED. Teehankee (Chairman), Makasiar, Fernandez, Guerrero and Melencio-Herrera, JJ., concur. #Footnotes 1 Article 1, Section 3(f) of Commonwealth Act No. 470 provides: Section 3. Property exempt from tax. The exemptions shall be as follows: xxx xxx xxx (f) Machinery, which term shall embrace machines, mechanical contrivances instruments, appliances, and apparatus attached to the real estate, used for industry agricultural or manufacturing purposes, during the first five (5) years of operation of the machinery. 2 Velez vs. B , et al 73 Phil 630. 3 Gonzalo Payat & Sons, Inc. vs- City of Manila 7 SCRA 970.
4 Article 1145. The following actions must be commenced within 6 yearn 1. x x x 2. Upon a quasi-contract. 5 Rollo, pp. 12, 40. Republic of the Philippines SUPREME COURT Manila SECOND DIVISION
G.R. No. 73345. April 7, 1993. SOCIAL SECURITY SYSTEM, petitioner, vs. MOONWALK DEVELOPMENT & HOUSING CORPORATION, ROSITA U. ALBERTO, ROSITA U. ALBERTO, JMA HOUSE, INC., MILAGROS SANCHEZ SANTIAGO, in her capacity as Register of Deeds for the Province of Cavite, ARTURO SOLITO, in his capacity as Register of Deeds for Metro Manila District IV, Makati, Metro Manila and the INTERMEDIATE APPELLATE COURT, respondents. The Solicitor General for petitioner. K.V. Faylona & Associates for private respondents. SYLLABUS 1. CIVIL LAW; OBLIGATIONS; PENAL DEFINED. A penal clause has been defined as "an accessory obligation which the parties attach to a principal obligation for the purpose of insuring the performance thereof by imposing on the debtor a special presentation (generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled" (3 Castan 8th Ed. p. 118). 2. ID.; ID.; ACCESSORY OBLIGATION, DEFINED. An accessory obligation has been defined as that attached to a principal obligation in order to complete the same or take its place in the case of breach (4 Puig Peña Part 1 p. 76). Note therefore that an accessory obligation is dependent for its existence on the existence of a principal obligation. A principal obligation may exist without an accessory obligation but an accessory obligation cannot exist without a principal obligation. For example, the contract of mortgage is an accessory obligation to enforce the performance of the main obligation of indebtedness. An indebtedness can exist without the mortgage but a mortgage cannot exist without the indebtedness, which is the principal obligation. In the present case, the principal obligation is the loan between the parties. The accessory obligation of a penal clause is to enforce the main obligation of payment of the loan. If therefore the principal obligation does not exist the penalty being accessory cannot exist. 3. ID.; ID.; PENALTY; WHEN DEMANDABLE. A penalty is demandable in case of non performance or late performance of the main obligation. In other words in order that the penalty may arise there must be a breach of
. Since there was no default in the performance of the main obligation payment of the loan SSS was never entitled to recover any penalty. the penalty may be enforced. What is clear. no delay occurred and there was. Moonwalk paid its loan in full. Now. 4.. SSS itself desisted from doing so upon the entreaties of Moonwalk. With regard to obligations which are positive (to give and to do). (2) that the debtor delays performance. . Hence. despite the provision in the promissory note that "(a)ll amortization payments shall be made every first five (5) days of the calendar month until the principal and interest on the loan or any portion thereof actually released has been fully paid. because it involves the beginning of a special condition or status which has its own peculiar effects or results. NOT APPLICABLE IN CASE AT BAR." 4 E.. ID. DEFAULT. WHEN DEMAND NOT NECESSARY. It is noteworthy that in the present case during all the period when the principal obligation was still subsisting. (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. ID.. NOT PRESENT IN CASE AT BAR. hence. But this foreclosure did not push through upon Moonwalk's requests and promises to pay in full. These are the following: "(1) When the obligation or the law expressly so declares. 1977 by foreclosing the real estate mortgages executed by Moonwalk in favor of SSS. A penal clause is an accessory undertaking to assume greater liability in case of breach. Default generally begins from the moment the creditor demands the performance of the obligation. is different from mere delay in the grammatical sense. And in accordance with said statement. there is no mora or delay unless there is a demand. Therefore up to the time of the letter of plaintiffappellant there was no demand for the payment of the penalty. 1977. it is clear that a penal clause is intended to prevent the obligor from defaulting in the performance of his obligation. ID. is that Moonwalk was never in default because SSS never compelled performance. If the Statement of Account could properly be considered as demand for payment. 6. ID. Though it tried to foreclose the mortgages. Hence. From the foregoing. Neither did it show that petitioner demanded the payment of the stipulated penalty upon the failure of Moonwalk to meet its monthly amortization. REQUISITES. or (3) When the demand would be useless. . One commentator of the Civil Code wrote. . plaintiff-appellant for the payment of the penalty.. delay begins from the time the obligee judicially or extrajudicially demands from the obligor the performance of the obligation. the necessity of demand by the debtor unless the same is excused . and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach. Nowhere in this case did it appear that SSS demanded from Moonwalk the payment of its monthly amortizations. ID. ID. not at the time it made the 51 ." In order that the debtor may be in default it is necessary that the following requisites be present: (1) that the obligation be demandable and already liquidated. WHEN INCURRED. the penalty is demandable when the debtor is in mora. ID. Caguioa. Comments and Cases on Civil Law 280 (1983 ed. ID. the demand was complied with on time. "Now when is the penalty deemed demandable in accordance with the provisions of the Civil Code? We must make a distinction between a positive and a negative obligation.. But mere delinquency in payment does not necessarily mean delay in the legal concept. Art. 1169) This case does not fall within any of the established exceptions. The debtor therefore violates the obligation in point of time if there is mora or delay. There are only three instances when demand is not necessary to render the obligor in default. therefore. 1979 when SSS issued a Statement of Account to Moonwalk.. Under the Civil Code. Thus. 6 It has a double function: (1) to provide for liquidated damages.the obligation either by total or partial non fulfillment or there is non fulfillment in point of time which is called mora or delay. What the complaint itself showed was that SSS tried to enforce the obligation sometime in September..P.) 5. hence the debtor was no in mora in the payment of the penalty. and (3) that the creditor requires the performance judicially and extrajudicially. no occasion when the penalty became demandable and enforceable." petitioner is not excused from making a demand. as when the obligor has rendered it beyond his power to perform. if there should be default. It has been established that at the time of payment of the full obligation. therefore. The next demand for payment happened on October 1. ." (Civil Code. DUAL FUNCTION OF A PENAL CLAUSE. although there were late amortizations there was no demand made by the creditor. To be in default ". private respondent Moonwalk has long been delinquent in meeting its monthly arrears and in paying the full amount of the loan itself as the obligation matured sometime in January.
defendant Moonwalk delivered to the plaintiff a promissory note for TWELVE MILLION TWO HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED PESOS (P12. "5. Ramos. The Order of October 6. Alberto and Rosita U. The facts as found by the Appellate Court are as follows: "On February 20. On July 23.. the sum of P9. "4. all the more that SSS had no reason to ask for the penalties. Defendants Rosita U. Seventh Judicial District.77 and.21 as of October 10. Velarde and Eusebio T.00. Ramos. the court issued an order giving both parties thirty (30) days within which to submit a stipulation of facts. Pasay City. The trial court set the case for pre-trial at which pre-trial conference. SSS for brevity. J p: Before Us is a petition for review on certiorari of decision 1 of the then Intermediate Appellate Court affirming in toto the decision of the former Court of First Instance of Rizal. under paragraph 5 of the aforesaid Third Amended Deed of First Mortgage substituted Associated Construction and Surveys Corporation.00) Annex `E'. Philippine Model Homes Development Corporation. and the said Rosita U. made to defendant Moonwalk. after considering additional releases in the amount of P2. 1980 dismissing the complaint followed the submission by the parties on September 19.178. the Social Security System. 1971. Alberto. filed a complaint in the Court of First Instance of Rizal against Moonwalk Development & Housing Corporation.00). 1973 Annex `D' providing for restructuring of the payment of the released amount of P9.700.00) for the purpose of developing and constructing a housing project in the provinces of Rizal and Cavite. DECISION CAMPOS. "3.517.000. 1980 of the following stipulation of Facts: "1. On October 6.595. mother and daughter respectively.Statement of Account and certainly.053. Branch XXIX.00 was released to defendant Moonwalk as of November 28.659. 1973. 52 .000.595. Thus. 1980. Moonwalk answered denying SSS' claims and asserting that SSS had the opportunity to ascertain the truth but failed to do so. Alberto and Rosita U. alleging that the former had committed an error in failing to compute the 12% interest due on delayed payments on the loan of Moonwalk resulting in a chain of errors in the application of payments made by Moonwalk and.000. Mariano Z. signed by Eusebio T. as solidary obligors. Out of the approved loan of THIRTY MILLION PESOS (P30. in an unpaid balance on the principal loan agreement in the amount of P7. there could never be any occasion for waiver or even mistake in the application for payment because there was nothing for SSS to waive as its right to enforce the penalty did not arise.000.000. "2.000. not after the extinguishment of the principal obligation because then. 1974. 1979. JR. also in not reflecting in its statement or account an unpaid balance on the said penalties for delayed payments in the amount of P7. Moonwalk for short. Alberto.00.254. A third Amended Deed of First Mortgage was executed on December 18.700. plaintiff approved the application of defendant Moonwalk for an interim loan in the amount of THIRTY MILLION PESOS (P30.
The genuineness and due execution of the documents marked as Annex (sic) 'A' to 'O' inclusive." the appellate court disregarded the basic tenet that waiver of a right must be express. defendant's counsel told plaintiff that it had completely paid its obligations to SSS. "8. Moonwalk made a total payment of P23.84 to SSS for the loan principal of P12. 1979 respectively. is not inequitable.700. Caguioa. . The last payment made by Moonwalk in the amount of P15."6. being a mere trustee. cannot perform acts affecting the same. Alberto. that would diminish property rights of the owners and beneficiaries thereof. These orders were appealed to the Intermediate Appellate Court. dated November 28. 1980. 30 SCRA 982. made with full knowledge of the circumstances.a. this Petition wherein SSS raises the following grounds for review: "First.74 were based on the Statement of Account." 2 On October 6. (United Christian Missionary Society v.004. 1979. 1990. are defendants-appellees. Social Security Commission. through Justice Eduard P. it misconstrued the ruling that SSS funds are trust funds." 4 The same problem which confronted the respondent court is presented before Us: Is the penalty demandable even after the extinguishment of the principal obligation? The former Intermediate Appellate Court. "7. September 2. JMA House. Inc. thus: 53 . Alberto. held in the negative. the respondent Court held that Moonwalk's obligation was extinguished and affirmed the trial court. it ignored the fact that penalty at the rate of 12% p.00 released to it. in concluding that the penalties due from Moonwalk are "deemed waived and/or barred. "9. 1979 and October 11. including condonation of penalties.901. and SSS. In letters to defendant Moonwalk. 1979 of the defendant's counsel to the plaintiff are admitted. "Manila for Pasay City. 1979 and followed up by another letter dated December 17. made in a clear and unequivocal manner.657.905. It reasoned. the trial court issued an order dismissing the complaint on the ground that the obligation was already extinguished by the payment by Moonwalk of its indebtedness to SSS and by the latter's act of cancelling the real estate mortgages executed in its favor by defendant Moonwalk. 1979.254. 988 ). Annex "F" prepared by plaintiff SSS for defendant. "10. of the Complaint and the letter dated December 21. Rosita U. Moonwalk Development and Housing Corporation. Rosita U. Respondent Court reduced the errors assigned by the SSS into this issue: ". . plaintiff alleged that it committed an honest mistake in releasing defendant. After settlement of the account stated in Annex 'F' plaintiff issued to defendant Moonwalk the Release of Mortgage for Moonwalk's mortgaged properties in Cavite and Rizal. Hence. namely. The Motion for Reconsideration filed by SSS with the trial court was likewise dismissed by the latter. Fourth. In a letter dated December 21. still liable for the unpaid penalties as claimed by plaintiff-appellant or is their obligation extinguished?" 3 As We have stated earlier. Second. Third. Annexes 'G' and 'H' on October 9. positive waiver of the penalties. it ignored the principle that equity will cancel a release on the ground of mistake of fact. There is no evidence in the case at bar to show that SSS made a clear.
Moonwalk would be in mora and therefore liable for the penalty. An indebtedness can exist without the mortgage but a mortgage cannot exist without the indebtedness.74. For example. What is sought to be enforced therefore is the penal clause of the contract entered into between the parties. 1. which is the principal obligation. and the penal clause being an accessory obligation. all in all totalling P15. 1979 respectively. 76). Now an accessory obligation has been defined as that attached to a principal obligation in order to complete the same or take its place in the case of breach (4 Puig Peña Part 1 p. on October 1. It is noteworthy that in the present case during all the period when the principal obligation was still subsisting. Now. Because of this payment the obligation of Moonwalk was considered extinguished.905. Therefore up to the time of the letter of plaintiffappellant there was no demand for the payment of the penalty. the principal obligation is the loan between the parties. It would be otherwise. p. 1979 and October 10. For all purposes therefore the principal obligation of defendant-appellee was deemed extinguished as well as the accessory obligation of real estate mortgage. Note therefore that an accessory obligation is dependent for its existence on the existence of a principal obligation. plaintiff-appellant for the payment of the penalty. In the present case. and that is the reason for the release of all the Real Estate Mortgages on October 9 and 10. If therefore the principal obligation does not exist the penalty being accessory cannot exist. A penal clause has been defined as "an accessory obligation which the parties attach to a principal obligation for the purpose of insuring the performance thereof by imposing on the debtor a special presentation (generally consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly or inadequately fulfilled" (3 Castan 8th Ed. In other words in order that the penalty may arise there must be a breach of the obligation either by total or partial non fulfillment or there is non fulfillment in point of time which is called mora or delay. 118). the contract of mortgage is an accessory obligation to enforce the performance of the main obligation of indebtedness. 1979 (Exhibits G and H). what is a penal clause.905. what is sought to be recovered in this case is not the 12% interest on the loan but the 12% penalty for failure to pay on time the amortization.74 which was a complete payment of its obligation as stated in Exhibit F. Now. The accessory obligation of a penal clause is to enforce the main obligation of payment of the loan. 1979 and its follow up letter dated December 17. hence the debtor was no in mora in the payment of the penalty. 1979. there is no mora or delay unless there is a demand. The debtor therefore violates the obligation in point of time if there is mora or delay. As we have explained under No. 1979 (which parenthetically are the only demands for payment of the penalties) are therefore ineffective as there was nothing to demand. A principal obligation may exist without an accessory obligation but an accessory obligation cannot exist without a principal obligation. 1979 respectively.004. Because of the demand for payment. Now. if the demand for the payment of the penalty was made prior to the extinguishment of the obligation because then the obligation of Moonwalk would consist of: 1) the principal obligation 2) the interest of 12% on the principal obligation and 3) the penalty of 12% for late payment for after demand. contrary to what the plaintiff-appellant states in its Brief. the real estate mortgages given by Moonwalk were released on October 9. However. plaintiff-appellant issued its statement of account (Exhibit F) showing the total obligation of Moonwalk as P15. the penal clause which is also an accessory obligation must also be deemed extinguished considering that the principal obligation was considered extinguished. although there were late amortizations there was no demand made by the creditor. That being the case. Moonwalk made several payments on September 29. 54 .004. and pursuant to said extinguishment. Now then when is the penalty demandable? A penalty is demandable in case of non performance or late performance of the main obligation. besides the Real Estate Mortgages. and forthwith demanded payment from defendant-appellee."2. the demand for payment of the penal clause made by plaintiffappellant in its demand letter dated November 28. October 9 and 19.
damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation.Let it be emphasized that at the time of the demand made in the letters of November 28. 1229. with more reason the penal clause is not demandable when full obligation has been complied with since in that case there is no breach of the obligation. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. 6 It has a double function: (1) to provide for liquidated damages. the defendant-appellee was not in default since there was no mora prior to the demand. he penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance. 1234 authorizes the Court to consider it as complete performance minus damages. Art. which is nonetheless a breach of the obligation. The penalty may be enforced only when it is demandable in accordance with the provisions of this Code. Now." 5 We find no reason to depart from the appellate court's decision. 1229 Civil Code of the Philippines provides: "ART. if there is no stipulation to the contrary. Thus. In obligations with a penal clause. for then the penal clause.) A penal clause is an accessory undertaking to assume greater liability in case of breach. the penalty may be enforced. Now. In the present case. was an exercise in futility. 3. there is no basis for demanding the penal clause since the obligation has been extinguished. Even substantial performance under Art. That being the case. At the time of the payment made of the full obligation on October 10. It being extinguished. the penalty may also be reduced by the courts if it is iniquitous or unconscionable. emphasis must be made on the fact that plaintiff-appellant has not lost anything under the contract since in got back in full the amount loan (sic) as well as the interest thereof. 7 From the foregoing. 1226. there was no more need for the penal clause." If the penalty can be reduced after the principal obligation has been partly or irregularly complied with by the debtor. The same thing would have happened if the obligation was paid on time. Here there has been a waiver of the penal clause as it was not demanded before the full obligation was fully paid and extinguished." (Emphasis Ours. its obligation was extinguished. advance the following reasons for the denial of this petition. Article 1226 of the Civil Code provides: "Art. 1979 together with the 12% interest by defendant-appellee Moonwalk. under the terms of the contract would not apply. if there should be default. the amount loaned together with the 12% interest has been fully paid by the appellee. That being so. there has been as yet no demand for payment of the penalty at the time of the extinguishment of the obligation. that is. 1979 as far as the penalty is concerned. Let Us emphasize that the obligation of defendant-appellee was fully complied with by the debtor. however. One commentator of the Civil Code wrote: 55 . Nevertheless. Payment of the penalty does not mean gain or loss of plaintiff-appellant since it is merely for the purpose of enforcing the performance of the main obligation has been fully complied with and extinguished. Again. 1979 and December 17. it is clear that a penal clause is intended to prevent the obligor from defaulting in the performance of his obligation. hence there was likewise an extinguishment of the penalty. the penal clause has lost its raison d' entre. Even if there has been no performance. We. it is to be noted that penalty at anytime can be modified by the Court. the demand made after the extinguishment of the principal obligation which carried with it the extinguishment of the penal clause being merely an accessory obligation. and (2) to strengthen the coercive force of the obligation by the threat of greater responsibility in the event of breach. therefore.
not at the time it made the Statement of Account and certainly. hence." 11 In order that the debtor may be in default it is necessary that the following requisites be present: (1) that the obligation be demandable and already liquidated. 13 Nowhere in this case did it appear that SSS demanded from Moonwalk the payment of its monthly amortizations. But mere delinquency in payment does not necessarily mean delay in the legal concept. "Art. despite the provision in the promissory note that "(a)ll amortization payments shall be made every first five (5) days of the calendar month until the principal and interest on the loan or any portion thereof actually released has been fully paid. . therefore. 1169. To be in default ". 1977 by foreclosing the real estate mortgages executed by Moonwalk in favor of SSS. 1979 when SSS issued a Statement of Account to Moonwalk. there could never be any occasion for waiver or even mistake in the application for payment because there was nothing for SSS to waive as its right to enforce the penalty did not arise. the penalty is demandable when the debtor is in mora." 8 When does delay arise? Under the Civil Code. the necessity of demand by the debtor unless the same is excused . . With regard to obligations which are positive (to give and to do). The next demand for payment happened on October 1. SSS itself desisted from doing so upon the entreaties of Moonwalk. What is clear. delay begins from the time the obligee judicially or extrajudicially demands from the obligor the performance of the obligation. (2) When from the nature and the circumstances of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract. Since there was no default in the performance of the main obligation payment of the loan SSS was never entitled to recover any penalty. not after the extinguishment of the principal obligation because then. all the more that SSS had no reason to ask for the penalties. Hence. is different from mere delay in the grammatical sense. therefore. Neither did it show that petitioner demanded the payment of the stipulated penalty upon the failure of Moonwalk to meet its monthly amortization. If the Statement of Account could properly be considered as demand for payment. Moonwalk paid its loan in full."Now when is the penalty deemed demandable in accordance with the provisions of the Civil Code? We must make a distinction between a positive and a negative obligation." There are only three instances when demand is not necessary to render the obligor in default. or (3) When the demand would be useless. Though it tried to foreclose the mortgages. is that Moonwalk was never in default because SSS never compelled performance. 12 Default generally begins from the moment the creditor demands the performance of the obligation. Those obliged to deliver or to do something incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. as when the obligor has rendered it beyond his power to perform. It has been established that at the time of payment of the full obligation. because it involves the beginning of a special condition or status which has its own peculiar effects or results. But this foreclosure did not push through upon Moonwalk's requests and promises to pay in full. Thus. the demand was complied with on time. 56 . . no occasion when the penalty became demandable and enforceable." 10 petitioner is not excused from making a demand. What the complaint itself showed was that SSS tried to enforce the obligation sometime in September. And in accordance with said statement. (2) that the debtor delays performance. no delay occurred and there was. and (3) that the creditor requires the performance judicially and extrajudicially. . These are the following: "(1) When the obligation or the law expressly so declares. Hence. private respondent Moonwalk has long been delinquent in meeting its monthly arrears and in paying the full amount of the loan itself as the obligation matured sometime in January. 1977." 9 This case does not fall within any of the established exceptions.
Social Security Commission which plaintiff-appellant relies is not applicable in this case. sickness. the Social Security Commission. . The case at bar does not refer to any penalty provided for by law nor does it refer to the non remittance of premium. therefore. In other words. The present case refers to a contract of loan payable in installments not provided for by law but by agreement of the parties. . ." Thus. . provided by the legislature to assure that employers do not take lightly the State's exercise of the police power in the implementation of the Republic's declared policy "to develop. xxx xxx xxx It is admitted that when a government created corporation enters into a contract with private party concerning a loan. First.SSS. clearly. The life of the Social Security Act is in the premiums because these are the funds from which the Social Security Act gets the money for its purposes and the non-remittance of the premiums is penalized not by the Social Security Commission but by law. nor is there any penalty imposed by law nor a case about non-remittance of premium required by law. Secondly. what is sought to be condoned or waived are penalties not imposed by law for failure to remit premiums required by law. 14 We looked into the case and found out that it is not applicable to the present case as it dealt not with the right of the SSS to collect penalties which were provided for in contracts which it entered into but with its right to collect premiums and its duty to collect the penalty for delayed payment or non-payment of premiums. Social Security Commission. in buttressing its claim that it never waived the penalties. The prescribed penalty is evidently of a punitive character. in that case. in view of the foregoing. The Supreme Court. the rules on contract applicable to private parties are applicable to it. old age and death . but a penalty for non payment provided for by the agreement of the parties in the contract between them . establish gradually and perfect a social security system which shall be suitable to the needs of the people throughout the Philippines and (to) provide protection to employers against the hazards of disability. SSS cited the case of United Christian Missionary Society v. the petitioner could not perform acts affecting the funds that would diminish property rights of the owners and beneficiaries thereof. however. We agree with the decision of the respondent court on the matter which We quote. the petition is DISMISSED and the decision of the respondent court is AFFIRMED. Note. stated: "No discretion or alternative is granted respondent Commission in the enforcement of the law's mandate that the employer who fails to comply with his legal obligation to remit the premiums to the System within the prescribed period shall pay a penalty of three (3%) per month. The case at bar refers to a contract of loan entered into between plaintiff and defendant Moonwalk Development and Housing Corporation. what was sought to be condoned was the penalty provided for by law for non remittance of premium for coverage under the Social Security Act. that no provision of law is involved in this case. argued that the funds it held were trust funds and as trustee. which is a creature of the Social Security Act cannot condone a mandatory provision of law providing for the payment of premiums and for penalties for non remittance. because what was not paid were installments on a loan but premiums required by law to be paid by the parties covered by the Social Security Act. it descends to the level of a private person. to wit: "Note that the above case refers to the condonation of the penalty for the non remittance of the premium which is provided for by Section 22(a) of the Social Security Act . ." 15 WHEREFORE. . Therefore. LLpr SO ORDERED. To support its claim. Hence. 57 . The argument therefore that the Social Security Commission cannot waive or condone the penalties which was applied in the United Christian Missionary Society cannot apply in this case. the ratio decidendi of the case of United Christian Missionary Society vs.
PAREDES.00 is thirty (30) days.R. with the exception of plaintiffs Mariano Rodriguez and his wife Marina Rodriguez who were represented by their son.(To defendant Mr. No. Atty.Narvasa. 1955. PORFIRIO BELGICA and EMMA BELGICA. we wish to inform this Honorable Court that with regards to paragraph 1-A wherein the length of time given to the defendants to pay the plaintiffs of P35. defendants-appellants. Regalado and Nocon. After a series of pleadings filed by the parties. Atty. the plaintiffs. Fineza: If your Honor please. the defendants made a verbal offer to compromise.." What transpired afterwards is best depicted in the following judgment of the lower court: . on August 27. Jose Rodriguez.. L-10801 February 28. 1955. and on one of the hearings held. "The above-entitled case was scheduled in the calendar of this Court today to consider the "Motion re Offer of Compromise" as a result of the pre-trial held by the parties and their respective Attorneys in this case.: This was originally a partition case. Any objection to the said counter proposal of the defendants? . 1955. Republic of the Philippines SUPREME COURT Manila EN BANC G. vs. August 30. Orendain for plaintiffs-appellees. the terms of which were dictated in open court by the attorneys of both parties in the presence of their clients. concur. The parties have discussed and considered the terms and conditions set forth in said Offer of Compromise submitted by the attorney for the plaintiffs and as a result thereof they have arrived at an amicable settlement. we are agreeable to the terms and conditions therein stated: Court: . The terms and conditions of said Compromise Agreement are as follows: . instituted in the Court of First Instance of Rizal. Orendain: . Padilla. C . as regards the Motion Re Offer of Compromise presented by the plaintiffs dated August 26. plaintiffs-appellees. Court: . Porfirio Belgica).J . 1961 MARIANO RODRIGUEZ and MARINA RODRIGUEZ. Ignacio M. 58 . Atty. Fineza for defendants-appellants.000. We have no objection. J. Quezon City Branch. Cabrera and Jose S. JJ . we request that said period be seventy (70) days counted from today. Arsenio M. Your Honor. Pursuant to the said offer. filed a "Motion re Offer to Compromise. With regard to Paragraphs 1-B and 1-C.
Fineza: . Parties respectfully pray this Honorable Court to render judgment in accordance therewith without costs. as modified. Orendain.000. Jose S.000.00. The transcript of the notes taken by the Stenographer of the proceedings taken by the parties before they arrived at an amicable settlement was signed by the parties and their respective attorneys and submitted to this Court for corresponding decision. in other words. Atty. Ignacio M. or more particularly in the portion encircled in blue pencil. Jose Rodriguez. Your Honor. Your Honor. Atty. subject to the survey and relocation of a surveyor. 59 . Yes. Court: . According to my clients. IN VIEW OF THE FOREGOING. Porfirio Belgica. the portion in the bigger lot which is the Southern portion as appears in Exhibit E and which is encircled in red pencil. Make of record that this Compromise Agreement was made in open court in the presence of Atty. the plaintiffs will automatically be the owners of the 36% of the two parcels of land. Inasmuch as defendant Porfirio Belgica will have to negotiate a portion of the part pertaining to him to raise the amount of P35. I was instructed to choose the portion which is nearest to Quezon City. That the Motion re Offer of Compromise is hereby made a part and parcel of the Compromise Agreement. their attorney Mr. Parties agree that in the event the defendants fail to pay to the plaintiffs said amount of P35. your lawyer.000. judgment is hereby rendered approving en toto the foregoing Compromise Agreement and the parties are hereby ordered to abide by and comply with the terms and conditions contained in said Compromise Agreement. we request that the plaintiffs make new selection of the portion they desire as per plan Exhibit E.00 with which he will pay the plaintiffs. without pronouncement as to costs.00 to be paid to the plaintiffs. Fineza.000.00 within the period above fixed or stipulated. That the plaintiffs agree to grant authority to defendant Porfirio Belgica to negotiate the sale or mortgage of the 36% which is proposed to be conveyed to him. have you heard what Atty. who is the son of the plaintiff Mariano Rodriguez. Porfirio Belgica and his counsel Atty. for the purpose of raising the P35. Orendain:. That the plaintiffs will sign the necessary transfer of the 36% in favor of the defendants upon payment of the P35. Defendant Porfirio Belgica: . have proposed to the Court and are you agreeable to the same? . subject to relocation or readjustment after a survey is made. and that the 14% pertaining to the defendants will be taken from the portion towards Caloocan. Fineza. the defendant Mr.Mr.
". because in the compromise. Said defendant.00 due to them would be paid within 70 days from the August 30. particularly the Certificates of Titles covering the lands.On September 3. subject matter of the present controversy. 1955. 1955. In the opposition. Whether the denial of the motion of compel the plaintiffs to grant the authority is proper and legal. 1955 (to compel the plaintiffs to grant the authority). incumbent upon the plaintiffs "to grant authority" to defendants to negotiate the sale or mortgage of the 36% of the property. IN VIEW OF THE FOREGOING. On the plaintiffs-appellees was impose the obligation of granting to defendants-appellants the requisite authority to negotiate either the sale or mortgage of the 36% interest in the property. The above ordered is now the subject to the present appeal. on the ground that because of the failure of defendants-appelants to pay the plaintiffs-appelees the amount P35. the decision rendered in this case has already become final and executory under the terms and conditions stipulated by the parties and upon which said decision was based. Without such authority executed by plaintiffs in favor of the defendants. In the opinion of the Court. after the lapse of the seventy (70) day period stipulated in the compromise agreement. has not done anything. which delimitation has to be effected in order that defendants may have the opportunity of negotiating their half or any portion thereof to raise the P35. the judgment of August 30. while plaintiffs owned 86%. This is understandable. and that since the decision had created reciprocal obligations. it was difficult. and upon the failure of the defendants to pay. On November 19. 1955. the defendants filed a Motion for Withdrawal of Exhibits. 1955. Among the reasons given in the motion was "the defendants have already taken steps to effect that partition of the property for the purpose of delimiting the respectively portion which would appertain to each. appellants contending in their lone assignment of error that the lower court erred "in denying the motion of December 1. they acknowledged that the amount of P35. 1955.000.00 which he undertook to pay to plaintiffs. the refusal or failure on the part of one to comply did not make the other in default.1955. An opposition was registered by the defendants. It was. the sequence in 60 . because on the face of the two certificates of the title covering the properties. nor has filed any petition with the Court regarding the alleged refusal of the plaintiff Rodriguez to grant such authority before the expiration of the 70-day period fixed by the parties within which to pay the said amount of P35. This the plaintiffs the fully knew. or after the expiration of 90 days. 1953. The petition to compel the plaintiffs to comply with the conditions of the judgment.000. ordered the defendants to surrender to the Court the TCT's they withdrew.000.. The above motion bore the conformity of counsel for the plaintiffs.00 within the period of seventy days. not to say impossible for the latter to affect a negotiation. not latter than December 1.". On December 15. the plaintiffs presented a motion praying that the defendants be ordered to deliver to the plaintiffs the Certificates of the Titles so that 14% of the property pertaining to the defendant could be segregated. defendants owned only 14%.00. the defendants prayed that the plaintiffs be ordered to grant defendant Porfirio Belgica the authority to negotiate the sale or mortgage of the 36%. reiterating in substance. On this date the defendants filed a "Motion to Compel Plaintiffs to Comply with the Conditions of the Judgment".00 was due to the deliberate refusal of the plaintiffs to grant the authority to defendant Porfirio Belgica to negotiate the sale or mortgage of the 36%. Considering that the reciprocal obligation has been established by the compromise agreement. contending that the inability to meet the obligation to pay the P35. the reason they invoked in their previous oppositions. to wit: "defendant Belgica's contention is that the plaintiffs Mariano Rodriguez has refused to grant the authority adverted to. the trial court acting on the motion of the defendants. 1955. On November 26.000. would seem to be the dominant issue. therefore. however.000. the lower court. has already become due and executory. the said motion to compel the plaintiffs to comply with the condition embodied in the judgment is hereby DENIED. handed down the following order. namely to command said plaintiffs to grant the authority above referred to was only filed on December 1. with money to be delivered from the sale of mortgage of the property.
would work injustice to the defendants-appellants.". like manna from Heaven. 1955. had long been accomplished. 1955. as stated by them in their motion to withdraw. The giving of the authority to sell or mortgage precedes the obligation of the defendants to pay P35. It is true that defendants' petition to compel the plaintiffs to grant the authority repeatedly mentioned. par.J. To show that defendants had not abandoned their obligation to pay the sum of P35. 1955). This is clear from the words of appellees' counsel when he said. 1955.L. I was instructed to choose the portion which is nearest to Quezon City . on September 3.000. is quite clear. from the very nature of the obligation assumed by plaintiffs. Without the authority in question the obligation of the defendants to pay the plaintiffs the sum of P35. however the statement or allegation by the defendants to the effects that they made verbal request for such authority but plaintiffs refused to give.00(Martinez vs.which the reciprocal obligations of the parties are to be performed. But even without a request. on November 19. the defendants were surprised to receive. concur..00. L8253. While waiting for the grant of authority to descend. et al. Your Honor. they filed a motion to withdraw documents and certificates of title to delimit the respective portions.000.. . It should. as they (plaintiffs) wanted to remain with the 86% of the properties.. the plaintiffs-appellees had indulged in fine technicalities which in this particular case.R.B. No. after the expiration of the 70-day period. Bengzon. a statement or allegation discredited by the lower court. The lower court and with it. within the 70-day period which expired on November 8. J. Inc. ordering the plaintiffs-appellees to execute in favor of the defendants-appellants the proper authority to sell or mortgage 36% of the properties in litigation within 30 days from notice of this decision and further directing the defendants-appellants to pay unto the plaintiffs-appellees the sum of P35. JJ. The compromise agreement being onerous the doubt should be settled in favor of the greatest reciprocity of interests. however. Until this authority is granted by the plaintiff.000. 581). Actg. 1955. L-11328 January 15.00 to which motion the plaintiffs agreed.000. v. Civil Code). C. "According to my clients. Concepcion. is reversed. Bautista Angelo. There was. as to the scope and extent of the terms and conditions of the compromise.00 cannot be considered as having matured. be observed that the actuations or acts of the defendants have always been lulled by a sense of an honest but insecure misunderstanding. plaintiffs' motion to have the titles returned so that the defendants' 14% could be segregated. Without special pronouncement as to costs. Cavives. is not supported by the evidence. Barrera and Dizon. 25 Phil.. the 70 day period for payment will not commence to run. Republic of the Philippines SUPREME COURT Manila EN BANC G. 2. Rilloraza. In view hereof. demand by defendants that it be performed. was not necessary (Article 1169. The delimitation or segregation of the property to be sold or mortgaged which appellants should have done first so that the authority could have been granted.00 within 30 days from the date such authority is granted. The plaintiffs insinuated that defendant did not ask for the authority. more than anything else. was only filed on December 1. Padilla. and the lapse of the 70-day period fixed in the decision can not be adjudged as having resulted in the forfeiture of their right to repurchase their 36% interest in the properties (Price.000. in order that they (defendants) might have an opportunity of negotiating one-half or any portion to raise P35. 1918 61 . Reyes. No. 1955. and another entered. The claim of the appellees that the appellants failed to comply with their initial obligation to delimit the property. May 25. the resolution of the lower court dated December 15. .
defendant-appellee. to annul a contract for the sale of a parcel of land and to recover the property itself from Alfonso Bencer as follows: A parcel of land for rice and sugar cane in the barrio of Bokbokay. Ignacio Balleza. as no steps had been taken to get judicial approval for the sale of the shares belonging to the minors. The property meanwhile increased in value-a circumstance possibly due in part to improvements which the defendant claims to have made on property. I. within which to pay the balance. M. but when he learned that the minors had an interest in the property. with the understanding that he was to pay the balance later and that meanwhile she would take steps to procure judicial approval of the sale as regards the interests of the minors. in the Court of First Instance of Iloilo. STREET. the parties repaired to the office of her relative. Salas Rodriguez for appellant. However this may be. he informed them that the conveyance could not be legalized without judicial sanction. P. It appears that in years gone by this land had been owned by the plaintiff.a Arroyo for appellee. it is evident that the plaintiff was not yet in a position to execute a deed conveying the entire interest in the property. together with the sum of P3. 62 . Casiano Causing. Province of Iloilo. Vista Alegre. and the heirs of Jorge Lachica. on the South by those of Esteban Navarro. In the year 1909 negotiations were begun between her and the defendant with a view to the sale of this land to him. and an agreement was effected by which she undertook to convey the property to him for the sum of P1.200.. or it may have been due as he claims. Maria Salome Causing. attorney. Bencer's failure to pay may have been due in part. to his lack of ready money. the plaintiff appears to have become desirous of rescinding the contract. but Bencer paid her P800 of the purchase price upon August 14. and Maria Salome Causing. 1911. as the plaintiff alleges. In 1910 a new engagement was made in regard to the price to be paid. and took possession of the land.400 in all. Time went on and neither party performed the engagement. bounded on the North by lands belonging to Pacifico Bencer. 1914. The plaintiff also prayed for general relief. vs. and on the West by those of Alfonso Bencer. ALFONSO BENCER. and before the action in this case was instituted she had become the possessor of all their shares.RUFINA CAUSING. Maria Salome Causing. on the East by the Barotac Viejo River. J. in common with certain nieces of hers who were then minors and over whom she seems to have exercised an informal guardianship. Needing legal assistance in order to get the conveyance drawn up properly. to the fact that the plaintiff had become reluctant to carry out the engagement and did not appear to collect the money at the place stipulated as the place of payment. 1909. having an area of about 70 hectares. However. The efforts to effect the transfer of title by deed was then abandoned for the time being. as these heirs reached majority the plaintiff successively acquired their respective interests by purchase.: This action was instituted by Rufina Causing upon November 14. provided the plaintiff would give him an extension of time to May. Perfecto J. plaintiff-appellant. district of Barotac Viejo municipality of Banate. which was to the effect that Bencer should pay P600 in addition to what he had already paid or P1. and accordingly brought this suit to annul the contract and recover the property. Alfonso Balleza. a single woman of full legal age. De leon and Magalona and J. and that of Alfonso Balleza. In view of the changed conditions.850 alleged to be due as damages for the use and occupation of the land by the defendant during the time he has been in possession.
until paid.. Of course if she had never acquired these interests an action for damages would have been Bencer's only remedy. It is evidently a case where the contract entailed mutual obligation. and Malcolm. J. and is not entitled to rescind the contract and recover the property from the person to whom she contracted to convey it. In article 1100 of the Civil Code it is declared that in mutual obligations neither party shall be deemed to be in default if the other does not fulfill. with costs against the appellant. We find that the contract contemplated a conveyance of the entire interest in the land. but the justice of allowing it is evident. or offer to fulfill his own obligation. The right of the plaintiff to recover interest for the period prior to the institution of the suit is questionable in point of law. One of several owners of a piece of property pro indiviso has made a valid contract for the sale thereof with the understanding that she should convey the interest of her coowners or procure the same to be conveyed. Torres. Arellano. and if either party can be said to have been in default it was the plaintiff. and from this it is argued that it was understood that the negotiations were merely provisional and that the sale could be abandoned. From this action of the court the plaintiff has appealed.. In this situation either party is entitled to enforce performance. concur. 63 . under a legal obligation to transfer the estate. acquiring title to the thing sold. and that from the time one person obligated fulfills his obligation the default begins for the other party. and neither will be relieved from his obligation without the consent of the other. We can see no valid reason why the plaintiff should be permitted to rescind this contract. but gave judgment in plaintiff's favor for P600 with interest at 6 per cent from August 14. Carson. Bencer. At the time the plaintiff accepted the payment of P800 in 1909. JJ. in our opinion. The most reasonable interpretation of the action of the plaintiff in buying out the minor heirs as they reached majority was that she thereby intended to place herself in a position to comply with the contract which she had made with the defendant Bencer. It results that she is. She was therefore not in a position to compel the defendant to pay until she could offer to him a deed sufficient to pass the whole legal estate. from an agent of the defendant. or complained of the action of the court. There can be no question of the power of a person to bind himself to sell something which he does not yet possess. The court also allowed interest on this sum from August 14. Johnson. who has been continuously in possession claiming as owner by virtue of the original contract. Rufina Causing. and it was evidently not so interpreted by the defendant Bencer. As the defendant has not appealed. and the plaintiff clearly obligated herself to that extent.At the hearing the court below dismissed the action in so far as it sought the recovery of the land and damages for use and occupation. Under the prayer for general relief the court gave judgment in favor of the plaintiff for the sum of P600 the unpaid balance of the purchase money. Since the contract was executed she has acquired the interest of the coowners by purchase and is now in a position fully to perform the contract. the judgment will be affirmed in all respects. So ordered. We do not so interpret the transaction. This was proper. she executed a receipt in which it was said that this was an advance payment for the land in case the sale that should be effected (anticipo del terreno en caso se effective la venta). Araullo. in view of the fact that the defendant has had continuous use of the property. she cannot now be permitted to rescind the contract on the ground that the defendant has heretofore failed to pay the purchase price. and for the same reason. Reduced to its simplest terms the case presented is this. 1910. C. rather than the defendant. 1910.
This action might not be possible to undo. Are you sure you want to continue?