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Republic of the Philippines

SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-36897 June 26, 1980

SPOUSES FLORENTINO S. TOMAS and FRANCISCA CARIO, plaintiffs-appellees,


vs.
EUSEBIA TOMAS, defendant, PHILIPPINE NATIONAL BANK, SANTIAGO, ISABELA
BRANCH, defendant-appellant.

DE CASTRO, J.:

Plaintiff spouses, Florentino S. Tomas and Francisca Cario, are the owners of a parcel of
land located in Malasian, Santiago, Isabela (now Saguday, Nueva Vizcaya) since 1929, which
they obtained through a homestead patent with Original Certificate of Title No. I-4620.
Through fraud and misrepresentation, one Eusebia Tomas succeeded in having OCT No. I-
4620 cancelled, and obtained in her name TCT No. 8779, Isabela now TCT-350 Nueva
Vizcaya, with which she obsessed a loan from the Philippine National Bank branch in
Santiago, Isabela, as a security, mortgaging the land with the bank for the load of P2,500.00.
Florentino Tomas discovered the fraudulent acts of Eusebia Tomas when he himself applied
for a loan from the Philippine National Bank, and offered as a collateral the same land already
mortgaged by Eusebia Tomas to the bank.

In the action plaintiffs filed on April 14, 1964 to declare TCT-350, Nueva Vizcaya, null and
void, against Eusebia Tomas, it was found by the court (Court of First Instance of Nueva
Vizcaya) that Eusebia Tomas succeeded in having plaintiffs' OCT No. I-4620
(Isabela) 1 cancelled and having TCT No. 8779 (Isabela) 2 issued in her name, by executing a
deed of extra-judicial settlement 3 in which she made it appear that she is the lone heir of the
registered owner, Florentino Tomas, to whom she was not even known before, and who was
at the time very much alive. She then petitioned for the issuance of another owner's duplicate
of OCT No. I-4620, alleging loss of said owner's duplicate. On Order of the court (Court of
First Instance of Isabela) where the petition was filed, a new owner's duplicate was issued to
Eusebia Tomas as the petitioner. Upon the registration of the deed of extra-judicial settlement
(Exhibit "J" OCT No. I-4620 was cancelled, and TCT No. 8779, now TCT-350 Nueva Vizcaya
was issued in the name of Eusebia Tomas on March 14,1957.

In the same action, the Philippine National Bank was made a co-defendant as the mortgagee
of the land, the plaintiffs alleging that the mortgage is null and void, the mortgagor not being
the owner of the property mortgaged. After trial in which Eusebia Tomas never appeared to
present any evidence, the court a quo rendered judgment dated June 9, 1967, the dispositive
portion 4 of which reads:

IN VIEW OF ALL THE FOREGOING CONSIDERATIONS, decision is hereby rendered in


favor of the plaintiffs and against the defendants: (a) declaring transfer Certificate of Title No.
T-8779, now Transfer Certificate of Title No. T-350 in the name of defendant Eusebia Tomas
null and void; (b) declaring the deed of extra-judicial settlement executed by defendant
Eusebia Tomas null and void, (c) declaring Original Certificate of Title No. I-4620 and its file
and owner's copy revived (d) condemning defendant Eusebia Tomas to pay the plaintiffs in
the amount of P950.00 as attorney's fee and P 55.80 representing the actual expenses of the
plaintiffs; (e) declaring the mortgage in favor of the Philippine National Bank without force and
effect against the plaintiffs, and ordering defendant Eusebia Tomas to pay the costs of this
proceedings.
From the portion of the foregoing judgment declaring the mortgage, in its favor without force
and effect, the Philippine National Bank appealed to the Court of Appeals, 5 which, however,
certified the appeal to this Court, this issue presented being purely legal. 6

The only issue to be resolved is whether the mortgage of the land in favor of the appellant
bank is valid or not as against appellees.

There is no dispute that the mortgagor Eusebia Tomas is not the owner of the land in
question, the true owner being the appellees, who had always been in possession of said
land since they applied for it by way of homestead patent. The owner's duplicate of OCT No.
I-4620 covering the land in favor of appellee Florentino Tomas had always been with the
latter, and was never lost as falsely and fraudulently misrepresented by Eusebia Tomas in her
petition for a new owner's duplicate of OCT No. I-4620. Alleging however, good faith so as to
invoke the protective provision of the Land Registration Act (Section 39, Act 496), pointing to
the fact that the certificate of title, TCT-350 Nueva Vizcaya presented by Eusebia Tomas as
mortgagor was in her name, and showed no encumbrance over the land, the appellant bank
contends that its right as mortgagee must be fully rated as a mortgagee in good faith.

Verily, the resolution of the issue raised in this appeal hinges on whether the appellant is a
mortgagee in good faith and for value, for if it is, and without anything to excite suspension as
it claims, it is protected in the same way as a purchaser in good faith and for value is
protected under Section 39 of Act 496, otherwise known as the Land Registration Act.

In claiming good faith as a mortgagee, and for value, appellant bank claims that no proof to
the contrary was presented by appellees in the trial court. 7 It is a fact, however, that
incontrovertible proofs have seen adduced showing that Eusebia Tomas, the mortgagor, was
not the owner of the property mortgaged. This is an that appellees had to prove that would
place appellant bank on obligation to show good faith, as in fact, it was the bank that alleged
good faith as its defense. 8 It would be more legally correct, therefore, to say that it was
incumbent on appellant to prove its affirmative allegation of good faith rather than appellee to
show the contrary. In any case, to the statement in appellees' brief that appellant bank "did
not object when appellees presented evidence in the lower court regarding negligence of
appellant, like their failure to send field inspector to the land to discover who is the real owner
of the land being offered as Atty. to the loan of impostor Eusebia Tomas," no denial was made
in a reply brief which appellant should have filed if it wanted to deny this assertion of
appellees. The allegation that appellate presented no proof of lack of good faith on the part of
appellant bank may, therefore, not altogether be accurate.

The facts as properly taken note of by the lower court would seem to bring the instant case
within the ruling of the case of Pichay vs. Celestino, 9 the essence of which is as between two
innocent persons, the mortgagee and the owner of the mortgaged property, one of whom
must suffer the consequence of a breach of trust, the one who made it possible by his act of
confidence must bear the loss. This is a principle that accords more with justice and equity, in
the light of the common practice of banking institution, which is a matter of public knowledge,
as observed by the trial court in the case aforecited, with which this Court agreed, before
approving a loan, to send representatives to the premises of the land offered as collateral and
investigate who are the true owners thereof. Incidentally, the ruling cited herein was against
the same appellant bank, the Philippine National Bank, with reference to a mortgage entered
into under solar circumstances. Banks, indeed, should exercise more care and prudence in
dealing even with registered lands, than private individuals, for their business is one affected
with public interest, keeping in trust money belonging to their depositors, which they should
guard against loss by not committing any act of negligence which amount to lack of good faith
by which they would be denied the protective mantle of the land registration statute, Act 496,
extended only to purchasers for value and in good faith, as well as to mortgagees of the same
character and description. This is evidently the rationale of the doctrine laid down in the case
of Pichay vs. Celestino, supra, which as in the instant suit, involved also a mortgage of a land
covered by a certificate of title, mortgaged by the defendant who was not the owner. The
latter, however, succeeded in cancelling the original certificate of title in the name of the real
owner, by forging a deed of sale, purportedly executed by the said registered owner in his
favor, upon the registration of which, he obtained a transfer certificate of title in his name,
presenting a new owner's duplicate certificate he obtained by falsely alleging that the first
owner's duplicate was burned in an ex-parte petition with prayer for the issuance of another
owner's duplicate which the court granted.

Thus, the facts of the instant case so closely resemble, if they are not exactly the same as,
those in the Pichay vs. Celestino case, as to make the application of the ruling in said case to
the one at bar unavoidable and compelling. There were only 12 days between the
cancellation of OCT No. I-4620 on March 14, 1957 and the constitution of the mortgage on
March 26, 1957, which shows that the application for the loan must have been filed within
days only from the receipt of the new TCT No. 8779 by Eusebia Tomas. This fact should have
aroused suspicion for appellant bank to send representative to the premises to ascertain who
the true owner is, considering that homestead patents are generally applied for by male
appellant applicants, and are very infrequently sold or alienated, the policy of the law being
against sale or alienation.

The decision of this Court in the aforecited case promulgated on May 30, 1967 preceded the
decision of the lower court in this case dated June 7, 1967, by only a few days. However, the
court a quo went along the doctrine as laid down in the Pichay vs. Celestino case even
perhaps without having actually read the decision, although a similar rule had earlier been laid
down in Blondeau, et al. vs. Nano, et al. 10 We, therefore, find no error in the holding of the
court a quo that the mortgage executed by Eusebia Tomas, appellant's codefendant in favor
of said appellant bank over the land in question which the former never owned, is without
effect as against appellees herein.

We, indeed, find more weight and vigor in a doctrine which recognizes a better right for the
innocent original registered owner who obtained his certificate of title through perfectly legal
and regular proceedings, than one who obtains his certificate from a totally void one, as to
prevail over judicial pronouncements to the effect that one dealing with a registered land,
such as a purchaser, is under no obligation to look beyond the certificate of title of the vendor,
for in the latter case, good faith has yet to be established by the vendee or transferee, being
the most essential condition, coupled with valuable consideration, to entitle him to respect for
his newly acquired title even as against the holder of an earlier and perfectly valid title. There
might be circumstances apparent on the face of the certificate of title which could excite
suspicion as to prompt inquiry, such as when the transfer is not by virtue of a voluntary act of
the original registered owner, as in the instant case, where it was by means of a self-executed
deed of extra-judicial settlement, a fact which should be noted on the face of Eusebia Tomas'
certificate of title. Failing to make such inquiry would hardly be consistent with any pretense of
good faith, which the appellant bank invokes to claim the right to be protected as a
mortgagee, and for the reversal of the judgment rendered against it by the lower court.

WHEREFORE, the judgement appealed from is hereby affirmed, without pronouncement to


cost.

SO ORDERED.

Teehankee (Chairman),Makasiar and Fernandez, JJ., concur.

Melencio-Herrera J., concurs in the result.

Guerrero, J., took no part.

Footnotes

1 Exhibit "A", p. 1, Records of Exhibits.


2 Exhibit "K", P. 14, Ibid.

3 Exhibit "J", p. 13, Ibid.

4 p. 37, Record on appeal p. 22, Rollo-

5 p. 64, Id., p. 22, Rollo.

6 p. 52, Rollo.

7 p. 8, Appellant's Brief, p. 46, Rollo.

8 p. 19, Record on Appeal p. 22, Rollo.

9 No. L-19292-94, May 30, l967, 20 SCRA 314,

10 61 Phil. 625; Notes, 20 SCRA 324.

THIRD DIVISION

[G.R. No. 123509. March 14, 2000]

LUCIO ROBLES, EMETERIA ROBLES, ALUDIA ROBLES and EMILIO


ROBLES, petitioners, vs. COURT OF APPEALS, Spouses VIRGILIO SANTOS and BABY
RUTH CRUZ, RURAL BANK OF CARDONA, Inc., HILARIO ROBLES, ALBERTO PALAD
JR. in his capacity as Director of Lands, and JOSE MAULEON in his capacity as
District Land Officer of the Bureau Of Lands, respondents.

DECISION

PANGANIBAN, J.:

To be entitled to the remedy of quieting of title, petitioners must show that they have title to
the real property at issue, and that some deed or proceeding beclouds its validity or efficacy.
Buyers of unregistered real property, especially banks, must exert due diligence in
ascertaining the titles of mortgagors and sellers, lest some innocent parties be prejudiced.
Failure to observe such diligence may amount to bad faith and may result in the nullity of the
mortgage, as well as of the subsequent foreclosure and/or auction sale. Unless the co-
ownership is clearly repudiated, a co-owner cannot, by prescription, acquire title to the shares
of the other co-owners. Mesm

The Case

Before us is a Petition for Review under Rule 45, assailing the June 15, 1995 Decision and
the January 15, 1996 Resolution of the Court of Appeals[1] (CA) in CA-GR CV No. 34213.[2] In
its Decision, the CA ruled:[3]

"WHEREFORE, the trial courts June 17, 1991 decision is REVERSED and
SET ASIDE, and in lieu thereof a new one is hereby entered ordering the
dismissal of the plaintiffs-appellees['] second amended complaint."

Earlier, the trial court had disposed as follows: Spped jo

"WHEREFORE, premises considered, judgment is hereby rendered as


follows:

1. Declaring free patent Title No. IV-1-010021 issued by the Bureau


of Lands as null and void;

2. Ordering the defendant spouses Vergel Santos and Ruth Santos to


deliver the property subject of this case to the plaintiff; and

3. Declaring the heirs of Silvino Robles as the absolute owner of the


land in controversy."

The January 15, 1996 CA Resolution denied petitioners' Motion for Reconsideration.

The Facts

The present Petition is rooted in a case for quieting of title before the Regional Trial Court of
Morong, Rizal, filed on March 14, 1988,[4] by Petitioners Lucio Robles, Emeteria Robles,
Aludia Robles and Emilio Robles. The facts were narrated by the trial court in this wise:

"There seems to be no dispute that Leon Robles primitively owned the land
situated in Kay Taga, Lagundi, Morong, Rizal with an area of 9,985 square
meters. He occupied the same openly and adversely. He also declared the
same in his name for taxation purposes as early as 1916 covered by Tax
Declaration No. 17865 (Exh. "I") and paid the corresponding taxes thereon
(Exh. "B"). When Leon Robles died, his son Silvino Robles inherited the land,
who took possession of the land, declared it in his name for taxation
purposes and paid the taxes thereon. Rtc-spped
"Upon the death of Silvino Robles in 1942, his widow Maria de la Cruz and
his children inherited the property. They took adverse possession of said
property and paid taxes thereon. The task of cultivat[ing] the land was
assigned to plaintiff Lucio Robles who planted trees and other crops. He also
built a nipa hut on the land. The plaintiffs entrusted the payment of the land
taxes to their co-heir and half-brother, Hilario Robles.

"In 1962, for unknown reasons, the tax declaration of the parcel of land in the
name of Silvino Robles was canceled and transferred to one Exequiel
Ballena (Exh. "19"), father of Andrea Robles who is the wife of defendant
Hilario Robles. Thereafter, Exequiel Ballena secured a loan from the Antipolo
Rural Bank, using the tax declaration as security. Somehow, the tax
declaration was transferred [to] the name of Antipolo Rural Bank (Exh. "17")
and later on, was transferred [to] the name of defendant Hilario Robles and
his wife (Exh. "16"). Calrky

"In 1996, Andrea Robles secured a loan from the Cardona Rural Bank, Inc.,
using the tax declaration as security. Andrea Robles testified without
contradiction that somebody else, not her husband Hilario Robles, signed the
loan papers because Hilario Robles was working in Marinduque at that time
as a carpenter.

"For failure to pay the mortgage debt, foreclosure proceedings were had and
defendant Rural Bank emerged as the highest bidder during the auction sale
in October 1968.

"The spouses Hilario Robles failed to redeem the property and so the tax
declaration was transferred in the name of defendant Rural Bank. On
September 25, 1987, defendant Rural Bank sold the same to the Spouses
Vergel Santos and Ruth Santos. Jo spped

"In September 1987, plaintiff discovered the mortgage and attempted to


redeem the property, but was unsuccessful. On May 10,1988, defendant
spouses Santos took possession of the property in question and was able to
secure Free Patent No. IV-1-010021 in their names." [5]

On the other hand, the Court of Appeals summarized the facts of the case as follows:

"The instant action for quieting of title concerns the parcel of land bounded
and more particularly described as follows: Sd-aad-sc

"A parcel of land located at Kay Taga, Lagundi, Morong, Rizal.


Bounded [i]n the north by the property of Venancio Ablay y Simeon
Ablay; [i]n the east by the property of Veronica Tulak y Dionisio Ablay;
[i]n the south by the property of Simeon Ablay y Dionisio Ablay; and
[i]n the west by the property of Dionisio Ablay y Simeon Ablay, with
an area of 9,985 square meters, more or less, assessed in the year
1935 at P60.00 under Tax Declaration No. 23219.

"As the heirs of Silvino Robles who, likewise inherited the above-described
parcel from Leon Robles, the siblings Lucio, Emeteria, Aludia and Emilio, all
surnamed Robles, commenced the instant suit with the filing of their March
14, 1988 complaint against Spouses Virgilio and Ruth Santos, as well as the
Rural Bank of Cardona, Inc. Contending that they had been in possession of
the land since 1942, the plaintiff alleged, among other matters, that it was
only in September of 1987 that they came to know of the foreclosure of the
real estate mortgage constituted thereon by the half-brother, Hilario Robles,
in favor of defendant Rural Bank; and that they likewise learned upon further
inquiry, that the latter had already sold the self-same parcel in favor of the
Santos spouses (pp. 1-3, orig. rec.). Twice amended to implead Hilario
Robles (pp. 76-80, orig. rec) and, upon subsequent discovery of the issuance
of Free Patent No. IV-I-010021 in favor of the defendant spouses, the
Director of Lands and the District Land Officer of the Bureau of Lands as
parties-defendants (pp. 117-121, orig. rec). The plaintiffs complaint sought
the following reliefs on the theory that the encumbrance of their half-brother,
constituted on the land, as well as all proceedings taken subsequent thereto,
were null and void, to wit:

"Wherefore, it is respectfully prayed that (a) a preliminary mandatory


injunction be issued forthwith restoring plaintiffs to their possession of
said parcel of land; (b) an order be issued annulling said Free Patent
No. IV-I-010021 in the name of defendants spouses Vergel Santos
and Ruth C. Santos, the deed of sale aforementioned and any tax
declaration which have been issued in the name of defendants; and
(c) ordering defendants jointly and severally, to pay plaintiffs the sum
of P10,000.00 as attorneys fees.

"Plaintiffs pray for other relief as [may be] just and equitable under
the premises." (pp. 120-121, orig. rec.)

xxxxxxxxx

"With the termination of the pre-trial stage upon the parties-litigants


agreement (p. 203, orig. rec.) the trial court proceeded to try the case on the
merits. It thereafter rendered the challenged June 17, 1991 decision upon the
following findings and conclusions:

"The real estate mortgage allegedly executed by Hilario Robles is not


valid because his signature in the mortgage deed was forged. This
fact, which remains unrebutted, was admitted by Andrea Robles.

"Inasmuch as the real estate mortgage executed allegedly by Hilario


Robles in favor of the defendant Cardona Rural Bank, Inc. was not
valid, it stands to reason that the foreclosure proceedings therein
were likewise not valid. Therefore, the defendant bank did not
acquire any right arising out of the foreclosure proceedings.
Consequently, defendant bank could not have transferred any right to
the spouses Santos.

"The fact that the land was covered by a free patent will not help the
defendant Santos any.

"There can be no question that the subject [property was held] in the
concept of owner by Leon Robles since 1916. Likewise, his
successor-in-interest, Silvino Robles, his wife Maria de la Cruz and
the plaintiffs occupied the property openly, continuously and
exclusively until they were ousted from their possession in 1988 by
the spouses Vergel and Ruth Santos.

"Under the circumstances, therefore, and considering that "open,


exclusive and undisputed possession of alienable public lands for the
period prescribed by law (30 years), creates the legal fiction whereby
the land, upon completion of the requisite period, ipso jure and
without the need of judicial or other action, ceases to be public land
and becomes private property. Possession of public land x x x which
is [of] the character and duration prescribed by the statute is the
equivalent of an express grant from the State, considering the dictum
of the statute itself[:]; "The possessor x x x shall be conclusively
presumed to have performed all the conditions essential to a
government grant and shall be entitled to a certificate of title x x x."
No proof is admissible to overcome a conclusive presumption[,] and
confirmation proceedings would be a little more than a formality, at
the most limited to ascertaining whether the possession claimed is of
the required character and length of time. Registration thereunder
would not confer title, but simply recognize a title already vested.
(Cruz v. IAC, G.R. No. 75042, November 29, 1988) The land in
question has become private land.

"Consequently, the issuance of [a] free patent title to the Spouses


Vergel Santos and Ruth C. Santos is not valid because at the time
the property subject of this case was already private land, the Bureau
of Lands having no jurisdiction to dispose of the same." (pp. 257-259,
orig. rec.)"

"Dissatisfied with the foregoing decision, the Santos spouses and the
defendant Rural Bank jointly filed their July 6, 1991 Notice of Appeal (p.260,
orig. rec.) x x x."[6]

Ruling of the Court of Appeals

In reversing the trial court, the Court of Appeals held that petitioners no longer had any title to
the subject property at the time they instituted the Complaint for quieting of title. The CA
ratiocinated as follows: Mis spped

"As correctly urged by the appellants, the plaintiff-appellees no longer had


any title to the property at the time of the institution of the instant complaint.
(pp. 25-27, rec.) The latters claim of continuous possession notwithstanding
(pp. 3-5, TSN, July 5, 1990; p. 12, TSN, July 12, 1990), the aforesaid loss of
title is amply evidenced by the subsequent declaration of the subject realty
for taxation purposes not only in the name of Exequiel Ballena (Exhibits "1"
and "2", pp. 23-24, orig. rec.) but also in the name of the Rural Bank of
Antipolo (Exhibit 17, vol. II, orig. rec.). On the theory that tax declarations can
be evincive of the transfer of a parcel of land or a portion thereof (Gacos v.
Court of Appeals, 212 SCRA 214), the court a quo clearly erred in simply
brushing aside the apparent transfers [which] the land in litigation had
undergone. Whether legal or equitable, it cannot, under the circumstances,
be gainsaid that the plaintiff-appellees no longer had any title to speak of
when Exequiel Ballena executed the November 7, 1966 Deed of Absolute
Sale transferring the land in favor of the spouses Hilario and Andrea Robles
(Exhibit "3", p. 25, orig. rec.)

"Even on the theory that the plaintiffs-appellees and their half-brother, Hilario
Robles, are co-owners of the land left behind by their common father, Silvino
Robles, such title would still be effectively discounted by what could well
serve as the latters acts of repudiation of the co-ownership, i.e., his
possession (p. 22, TSN, November 15, 1990) and declaration thereof for
taxation purposes in his own name (Exhibit "4", p. 26, orig. rec.). In view of
the plaintiffs-appellees inaction for more than twenty (20) years from the time
the subject realty was transferred in favor of Hilario Robles, the appellants
correctly maintain that prescription had already set in. While it may be readily
conceded that an action to quiet title to property in the possession of the
plaintiff is imprescriptible (Almanza vs. Arguelles, 156 SCRA 718; Coronel vs.
Intermediate Appellate Court, 155 SCRA 270; Caragay-Layno vs. Court of
Appeals, 133 SCRA 718; Charon Enterprises vs. Court of Appeals, 124
SCRA 784; Faja vs. Court of Appeals, 75 SCRA 441; Burton vs. Gabar, 55
SCRA 4999), it equally bears emphasis that a co-owner or, for that matter,
the said co-owner[']s successors-in-interest who occupy the community
property other than as co-owner[s] can claim prescription as against the other
co-owners (De Guzman vs. Austria, 148 SCRA 75; Ramos vs. Ramos, 45
Phil. 362; Africa vs. Africa, 42 Phil. 902; Bargayo vs. Camumot, 40 Phil. 857;
De Castro vs. Echarri, 20 Phil. 23). If only in this latter sense, the appellants
correctly argue that the plaintiffs-appellees have lost their cause of action by
prescription.

"Over and above the foregoing considerations, the court a quo gravely erred
in invalidating the real estate mortgage constituted on the land solely on the
basis of Andrea Robles testimony that her husbands signature thereon was
forged (p. 257, orig. rec.),

xxx xxx xxx

"In according to the foregoing testimony x x x credibility which, while


admittedly unrebutted, was altogether uncorroborated, the trial court lost sight
of the fact that the assailed deed of real estate mortgage (Exhibit "5", Vol. II,
orig. rec.) is a public document, the acknowledgment of which is a prima
facie evidence of its due execution (Chua vs. Court of Appeals, 206 SCRA
339). As such, it retains the presumption of validity in the absence of a full,
clear and convincing evidence to overcome such presumption (Agdeppa vs.
Ibe, 220 SCRA 584). Maniks

"The foregoing principles take even more greater [sic] when it is, moreover,
borne in mind that Hilario Robles made the following admissions in his March
8, 1989 answer, viz:

"3. The complaint filed against herein answering defendant has no


legal basis considering that as the lawful owner of the subject real
property, defendant Hilario Robles has the right to mortgage the said
real property and could dispose the same in whatever manner he
wishe[s] to do." (p. 96, orig. rec.)

"Appropriately underscored by the appellants, the foregoing admission is


binding against Hilario [Robles]. Judicial admissions, verbal or written, made
by the parties in the pleadings or in the course of the trial or other
proceedings in the same case are conclusive, no evidence being required to
prove the same. They cannot be contradicted unless shown to have been
made through [a] palpable mistake or [unless] no such admission was
actually made (Philippine American General Insurance, Inc. vs. Sweet Lines,
Inc., 212 SCRA 194).

"It does not help the plaintiffs-appellees cause any that, aside from complying
with the requirements for the foreclosure of the subject real estate mortgage
(Exhibits "6", "7", "8" and "10", Volume II[)], the appellant Rural Bank had not
only relented to the mortgagors request to postpone the (Exhibit "g", Vol. II,
orig. rec.) but had likewise granted the latters request for an extension of the
redemption period therefor (Exhibits "11" and "12", pp. 35-36, orig. rec.).
Without going into minute detail in discussing the Santos spouses rights as
purchasers for value and in good faith (Exhibit "21", Vol. II, orig. rec.), the
mortgagor and the plaintiffs-appellees cannot now be heard to challenge the
validity of the sale of the land after admittedly failing to redeem the same
within the extension the appellant Rural Bank granted (pp. 10-11, TSN,
November 15, 1990).
"Being dependent on the supposed invalidity of the constitution and
foreclosure of the subject real estate mortgage, the plaintiffs-appellees attack
upon x x x Free Patent No. IV-I must necessarily fail. The trial court,
therefore, misread, and ignored the evidence o[n] record, to come up with
erroneous conclusion." Manikx

Contending that such ruling was contrary to law and jurisprudence, Petitioners Lucio,
Emeteria, Aludia and Emilio -- all surnamed Robles -- filed this Petition for Review. [7]

The Assigned Error

Petitioners ascribe the following error to the respondent court:

"Respondent Court of Appeals grievously erred in ruling that with the


transfers of the tax declaration over the parcel of land in question from Silvino
Robles to Exequiel Ballena, then to the Rural Bank of Antipolo, then to
Respondent Hilario Robles, then to Respondent Rural Bank of Cardona Inc.,
and then finally to Respondent Spouses Santos, petitioners, who by
themselves and their predecessors in interest have been in open, actual and
adverse possession of said parcel of land since 1916 up to their forced
removal therefrom in 1988, have lost their title to said property by prescription
to their half-brother, Respondent Hilario Robles, and then finally, to
Respondent Spouses Santos."[8]

For a better understanding of the case, the above issue will be broken down into three
points: first, the nature of the remedy of quieting of title; second, the validity of the real estate
mortgage; and third, the efficacy of the free patent granted to the Santos spouses. Spped

First Issue: Quieting of Title

Article 476 of the Civil Code provides:

"Whenever there is cloud on title to real property or any interest therein, by


reason of any instrument, record, claim, encumbrance or proceeding which is
apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable or unenforceable, and may be prejudicial to said title, an action may
be brought to remove such cloud or to quiet title.

"An action may also be brought to prevent a cloud from being cast upon title
to real property or any interest therein."

Based on the above definition, an action to quiet title is a common-law remedy for the removal
of any cloud or doubt or uncertainty on the title to real property.[9] It is essential for the plaintiff
or complainant to have a legal or an equitable title to or interest in the real property which is
the subject matter of the action.[10] Also, the deed, claim, encumbrance or proceeding that is
being alleged as a cloud on plaintiffs title must be shown to be in fact invalid or inoperative
despite its prima facie appearance of validity or legal efficacy.[11]

That there is an instrument or a document which, on its face, is valid and efficacious is clear
in the present case. Petitioners allege that their title as owners and possessors of the
disputed property is clouded by the tax declaration and, subsequently, the free patent thereto
granted to Spouses Vergel and Ruth Santos. The more important question to be resolved,
however, is whether the petitioners have the appropriate title that will entitle them to avail
themselves of the remedy of quieting of title. Nexold

Petitioners anchor their claim to the disputed property on their continued and open occupation
and possession as owners thereof. They allege that they inherited it from their father, Silvino,
who in turn had inherited it from his father, Leon. They maintain that after their fathers death,
they agreed among themselves that Petitioner Lucio Robles would be tending and cultivating
it for everyone, and that their half-brother Hilario would be paying the land taxes.

Petitioners insist that they were not aware that from 1962 until 1987, the subject property had
been declared in the names of Exequiel Ballena, the Rural Bank of Antipolo, Hilario Robles,
the Rural Bank of Cardona, Inc., and finally, Spouses Vergel and Ruth Santos. Maintaining
that as co-owners of the subject property, they did not agree to the real estate mortgage
constituted on it, petitioners insist that their shares therein should not have been prejudiced
by Hilarios actions. Miso

On the other hand, Private Respondents Vergel and Ruth Santos trace their claim to the
subject property to Exequiel Ballena, who had purportedly sold it to Hilario and Andrea
Robles. According to private respondents, the Robles spouses then mortgaged it to the Rural
Bank of Cardona, Inc. -- not as co-owners but as absolute owners -- in order to secure an
agricultural loan worth P2,000. Upon their failure to pay their indebtedness, the mortgage was
foreclosed and the property sold to the bank as the highest bidder. Thereafter, private
respondents purchased the property from the bank. Sppedjo

Undisputed is the fact that the land had previously been occupied by Leon and later by Silvino
Robles, petitioners predecessors-in-interest, as evidenced by the different tax declarations
issued in their names. Also undisputed is the fact that the petitioners continued occupying and
possessing the land from the death of Silvino in 1942 until they were allegedly ousted
therefrom in 1988. In 1962, the subject property was declared in the name of Exequiel for
taxation purposes. On September 30, 1965, it was again declared in the same name; on
October 28, 1965, in the name of the Rural Bank of Antipolo; on November 7, 1966, in the
name of Hilario and Andrea; and thereafter, in the name of the Rural Bank of Cardona and,
finally, in the name of the Santos spouses.

Ostensibly, the Court of Appeals failed to consider irregularities in the transactions involving
the disputed property. First, while it was declared in the name of Exequiel in 1962, there was
no instrument or deed of conveyance evidencing its transfer from the heirs of Silvino to him.
This fact is important, considering that the petitioners are alleging continued possession of the
property. Second, Exequiel was the father-in-law of Hilario, to whom petitioners had entrusted
the payment of the land taxes. Third, considering that the subject property had been
mortgaged by Exequiel to the Rural Bank of Antipolo, and that it was foreclosed and in fact
declared in the banks name in 1965, why was he able to sell it to Spouses Hilario and Andrea
in 1966? Lastly, inasmuch as it was an unregistered parcel of land, the Rural Bank of
Cardona, Inc., did not observe due diligence in determining Hilarios title thereto. Jospped

The failure to show the indubitable title of Exequiel to the property in question is vital to the
resolution of the present Petition. It was from him that Hilario had allegedly derived his title
thereto as owner, an allegation which thereby enabled him to mortgage it to the Rural Bank of
Cardona. The occupation and the possession thereof by the petitioners and their
predecessors-in-interest until 1962 was not disputed, and Exequiels acquisition of the said
property by prescription was not alleged. Thus, the deed of conveyance purportedly
evidencing the transfer of ownership and possession from the heirs of Silvino to Exequiel
should have been presented as the best proof of that transfer. No such document was
presented, however. Scmis

Therefore, there is merit to the contention of the petitioners that Hilario mortgaged the
disputed property to the Rural Bank of Cardona in his capacity as a mere co-owner thereof.
Clearly, the said transaction did not divest them of title to the property at the time of the
institution of the Complaint for quieting of title.

Contrary to the disquisition of the Court of Appeals, Hilario effected no clear and evident
repudiation of the co-ownership. It is a fundamental principle that a co-owner cannot acquire
by prescription the share of the other co-owners, absent any clear repudiation of the co-
ownership. In order that the title may prescribe in favor of a co-owner, the following requisites
must concur: (1) the co-owner has performed unequivocal acts of repudiation amounting to an
ouster of the other co-owners; (2) such positive acts of repudiation have been made known to
the other co-owners; and (3) the evidence thereof is clear and convincing. [12]

In the present case, Hilario did not have possession of the subject property; neither did he
exclude the petitioners from the use and the enjoyment thereof, as they had indisputably
shared in its fruits.[13] Likewise, his act of entering into a mortgage contract with the bank
cannot be construed to be a repudiation of the co-ownership. As absolute owner of his
undivided interest in the land, he had the right to alienate his share, as he in fact did.
[14]
Neither should his payment of land taxes in his name, as agreed upon by the co-owners,
be construed as a repudiation of the co-ownership. The assertion that the declaration of
ownership was tantamount to repudiation was belied by the continued occupation and
possession of the disputed property by the petitioners as owners. Mis sc

Second Issue: Validity of the Real Estate Mortgage

In a real estate mortgage contract, it is essential that the mortgagor be the absolute owner of
the property to be mortgaged; otherwise, the mortgage is void. [15] In the present case, it is
apparent that Hilario Robles was not the absolute owner of the entire subject property; and
that the Rural Bank of Cardona, Inc., in not fully ascertaining his title thereto, failed to observe
due diligence and, as such, was a mortgagee in bad faith.

First, the bank was utterly remiss in its duty to establish who the true owners and possessors
of the subject property were. It acted with precipitate haste in approving the Robles spouses
loan application, as well as the real estate mortgage covering the disputed parcel of land.
[16]
Had it been more circumspect and assiduous, it would have discovered that the said
property was in fact being occupied by the petitioners, who were tending and cultivating it.

Second, the bank should not have relied solely on the Deed of Sale purportedly showing that
the ownership of the disputed property had been transferred from Exequiel Ballena to the
Robles spouses, or that it had subsequently been declared in the name of Hilario. Because it
was dealing with unregistered land, and the circumstances surrounding the transaction
between Hilario and his father-in-law Exequiel were suspicious, the bank should have exerted
more effort to fully determine the title of the Robleses. Rural Bank of Compostela v. Court of
Appeals[17] invalidated a real estate mortgage after a finding that the bank had not been in
good faith. The Court explained: "The rule that persons dealing with registered lands can rely
solely on the certificate of title does not apply to banks." In Tomas v. Tomas, the Court
held: Sc-slx

"x x x. Banks, indeed, should exercise more care and prudence in dealing
even with registered lands, than private individuals, for their business is one
affected with public interest, keeping in trust money belonging to their
depositors, which they should guard against loss by not committing any act of
negligence which amounts to lack of good faith by which they would be
denied the protective mantle of land registration statute, Act 496, extended
only to purchasers for value and in good faith, as well as to mortgagees of
the same character and description. x x x." [18]

Lastly, the Court likewise finds it unusual that, notwithstanding the banks insistence that it had
become the owner of the subject property and had paid the land taxes thereon, the petitioners
continued occupying it and harvesting the fruits therefrom. [19]

Considering that Hilario can be deemed to have mortgaged the disputed property not
as absolute owner but only as a co-owner, he can be adjudged to have disposed to the Rural
Bank of Cardona, Inc., only his undivided share therein. The said bank, being the immediate
predecessor of the Santos spouses, was a mortgagee in bad faith. Thus, justice and equity
mandate the entitlement of the Santos spouses, who merely stepped into the shoes of the
bank, only to what legally pertains to the latter -- Hilarios share in the disputed property. Missc
Third Issue: Efficacy of Free Patent Grant

Petitioners repeatedly insist that the disputed property belongs to them by private
ownership and, as such, it could not have been awarded to the Santos spouses by free
patent. They allege that they possessed it in the concept of owners -- openly, peacefully,
publicly and continuously as early as 1916 until they were forcibly ousted therefrom in 1988.
They likewise contend that they cultivated it and harvested its fruits. Lucio Robles testified:

"xxx xxx xxx

Q By the way, why do you know this parcel of land?

A Because before my father died, he showed me all the documents.

Q Before the death of your father, who was the owner of this parcel of land?

A My father, sir. Spped

Q How did your father acquire this parcel of land?

A My father knew that it [was] by inheritance, sir.

Q From whom?

A From his father, Leon Robles, sir.

Q And do you know also [from] whom Leon Robles acquired this land?

A It was inherited from his father, sir.

Q What is the nature of this parcel of land?

A Its an agricultural land, sir,

Q Now, at the time of the death of your father, this land was planted with what
crops?

A Mango trees, santol trees, and I was the one who planted those trees, sir.

Q When did you plant those trees?

A Before the death of my father, sir. M-issdaa

Q Now, after the death of your father, who cultivated this parcel of land?

A I took charge of the land after the death of my father, sir.

Q Up to when?

A Up to the present, sir, after this case was already filed." [20]

The preceding claim is an assertion that the subject property is private land. The petitioners
do not concede, and the records do not show, that it was ever an alienable land of the public
domain. They allege private ownership thereof, as evidenced by their testimonies and the tax
declarations issued in the names of their predecessors-in-interest. It must be noted that while
their claim was not corroborated by other witnesses, it was not controverted by the other
parties, either. Kycalr

Carlos Dolores insisted that the Rural Bank of Cardona, Inc., of which he was the manager,
had acquired and possessed the subject property. He did not, however, give any reason why
the petitioners had continued occupying it, even as he admitted on the stand that he had
visited it twice.[21]

In the light of their open, continuous, exclusive and notorious possession and occupation of
the land, petitioners are "deemed to have acquired, by operation of law, a right to a grant, a
government grant, without the necessity of a certificate of title being issued." [22] The land was
"segregated from the public domain." Accordingly, the director of lands had no authority to
issue a free patent thereto in favor of another person. Verily, jurisprudence holds that a free
patent covering private land is null and void.[23]

Worth quoting is the disquisition of the Court in Agne v. Director of Lands, [24] in which it held
that a riparian owner presently in possession had a better right over an abandoned river bed
than had a registered owner by virtue of a free patent.

"Under the provisions of Act 2874 pursuant to which the title of private
respondents predecessor-in-interest was issued, the President of the
Philippines, or his alter ego, the Director of Lands, has no authority to grant a
free patent for land that has ceased to be a public land and has passed to
private ownership and a title so issued is null and void.The nullity arises, not
from fraud or deceit, but from the fact that the land is not under the
jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is
limited only to public lands and does not cover lands publicly owned. The
purpose of the Legislature in adopting the former Public Land Act, Act No.
2874, was and is to limit its application to lands of the public domain, and
lands held in private ownership are not included therein and are not affected
in any manner whatsoever thereby. Land held in freehold or fee title, or of
private ownership, constitutes no part of the public domain, and cannot
possibly come within the purview of said act 2874, inasmuch as the subject of
such freehold or private land is not embraced in any manner in the title of the
Act and the same is excluded from the provisions of the text thereof. Kyle

"We reiterate that private ownership of land is not affected by the issuance of
the free patent over the same land because the Public Land Act applies only
to lands of the public domain. Only public land may be disposed of by the
Director of Lands. Since as early as 1920, the land in dispute was already
under the private ownership of herein petitioners and no longer a part of the
lands of the public domain, the same could not have been the subject matter
of a free patent. The patentee and his successors-in-interest acquired no
right or title to said land. Necessarily, Free Patent No. 23263 issued to
Herminigildo Agpoon is null and void and the subsequent titles issued
pursuant thereto cannot become final and indefeasible. Hence we ruled
in Director of Lands v. Sicsican, et al. that if at the time the free patents were
issued in 1953 the land covered therein were already private property of
another and, therefore, not part of the disposable land of the public domain,
then applicants patentees acquired no right or title to the land.

"Now, a certificate of title fraudulently secured is null and void ab initio if the
fraud consisted in misrepresenting that the land is part of the public domain,
although it is not. As earlier stated, the nullity arises, not from the fraud or
deceit, but from the fact that the land is not under the jurisdiction of the
Bureau of Lands. Being null and void, the free patent granted and the
subsequent titles produce no legal effect whatsoever. Quod nullum est,
nullum producit effectum.
"A free patent which purports to convey land to which the government did not
have any title at the time of its issuance does not vest any title in the patentee
as against the true owner. The Court has previously held that the Land
Registration Act and the Cadastral Act do not give anybody who resorts to the
provisions thereof a better title than what he really and lawfully has. Exsm

xxx xxx xxx

"We have, therefore, to arrive at the unavoidable conclusion that the title of
herein petitioners over the land in dispute is superior to the title of the
registered owner which is a total nullity. The long and continued possession
of petitioners under a valid claim of title cannot be defeated by the claim of a
registered owner whose title is defective from the beginning."

The Santos spouses argue that petitioners do not have the requisite personality to question
the free patent granted them, inasmuch as "it is a well-settled rule that actions to nullify free
patents should be filed by the Office of the Solicitor General at the behest of the Director of
Lands."[25]

Private respondents reliance on this doctrine is misplaced. Indeed, the Court held in Peltan
Development, Inc. v. Court of Appeals[26] that only the solicitor general could file an action for
the cancellation of a free patent. Ruling that the private respondents, who were applicants for
a free patent, were not the proper parties in an action to cancel the transfer certificates
covering the parcel of land that was the subject of their application, the Court ratiocinated
thus: Sl-xm-is

"The Court also holds that private respondents are not the proper parties to
initiate the present suit. The complaint, praying as it did for the cancellation of
the transfer certificates of title of petitioners on the ground that they were
derived from a "spurious" OCT No. 4216, assailed in effect the validity of said
title. While private respondents did not pray for the reversion of the land to
the government, we agree with the petitioners that the prayer in the complaint
will have the same result of reverting the land to the government under the
Regalian Doctrine. Gabila v. Barinaga[27] ruled that only the government is
entitled to this relief. x x x."

Because the cancellation of the free patent as prayed for by the private respondents
in Peltan would revert the property in question to the public domain, the ultimate beneficiary
would be the government, which can be represented by the solicitor general only. Therefore,
the real party-in-interest is the government, not the private respondents.

This ruling does not, however, apply to the present case. While the private respondents
in Peltan recognized that the disputed property was part of the public domain when they
applied for free patent,[28] herein petitioners asserted and proved private ownership over the
disputed parcel of land by virtue of their open, continued and exclusive possession thereof
since 1916. Msesm

Neither does the present case call for the reversion of the disputed property to the State. By
asking for the nullification of the free patent granted to the Santos spouses, the petitioners
are claiming the property which, they contend, rightfully belongs to them.

Indeed, the same issue was resolved by this Court in Heirs of Marciano Nagano v. Court of
Appeals.[29] In that case, the trial court dismissed a Complaint seeking the declaration of nullity
of an Original Certificate of Title issued pursuant to a free patent, reasoning that the action
should have been instituted by the solicitor general. In reversing the trial court, the Supreme
Court held: Sl-xsc
"It is settled that a Free Patent issued over private land is null and void, and
produces no legal effect whatsoever. Quod nullum est, nullum producit
effectum. Moreover, private respondents claim of open, peaceful, continuous
and adverse possession of the 2,250 square meter portion since 1920, and
its illegal inclusion in the Free Patent of petitioners and in their original
certificate of title, gave private respondents a cause of action for quieting of
title which is imprescriptible." Scmis

In any event, the Office of the Solicitor General was afforded an opportunity to express its
position in these proceedings. But it manifested that it would not file a memorandum, because
"this case involves purely private interests."[30]

The foregoing considered, we sustain the contention of petitioners that the free patent granted
to the Santos spouses is void. It is apparent that they are claiming ownership of the disputed
property on the basis of their possession thereof in the concept of owners -- openly,
peacefully, publicly, continuously and adversely since 1916. Because they and their
predecessors-in-interest have occupied, possessed and cultivated it as owners for more than
thirty years,[31] only one conclusion can be drawn -- it has become private land and is
therefore beyond the authority of the director of lands. Misspped

Epilogue

We recognize that both the petitioners and the Santos spouses fell victim to the dubious
transaction between Spouses Hilario and Andrea Robles and the Rural Bank of Cardona, Inc.
However, justice and equity mandate that we declare Petitioners Lucio, Emerita, Aludia and
Emilio Robles to have the requisite title essential to their suit for quieting of title. Considering
the circumstances peculiar to this complicated problem, the Court finds this conclusion the
logical and just solution. Sc

The claim that petitioners were guilty of laches in not asserting their rights as owners of the
property should be viewed in the light of the fact that they thought their brother was paying the
requisite taxes for them, and more important, the fact that they continued cultivating it and
harvesting and gaining from its fruits.

From another viewpoint, it can even be said that it was the Rural Bank of Cardona, Inc., which
was guilty of laches because, granting that it had acquired the subject property legally, it failed
to enforce its rights as owner. It was oblivious to the petitioners continued occupation,
cultivation and possession thereof. Considering that they had possessed the property in good
faith for more than ten years, it can even be argued that they thus regained it by acquisitive
prescription. In any case, laches is a remedy in equity, and considering the circumstances in
this case, the petitioners cannot be held guilty of it. Jurismis

In sum, the real estate mortgage contract covering the disputed property a contract executed
between Spouses Hilario and Andrea on the one hand and the Rural Bank of Cardona, Inc.,
on the other -- is hereby declared null and void insofar as it prejudiced the shares of
Petitioners Lucio, Emerita, Aludia and Emilio Robles; it is valid as to Hilario Robles share
therein.Consequently, the sale of the subject property to the Santos spouses is valid insofar
as it pertained to his share only. Likewise declared null and void is Free Patent No. IV-1-
010021 issued by the Bureau of Lands covering the subject property. Jjjuris

WHEREFORE, the Petition is hereby GRANTED. The assailed Decision


is REVERSED and SET ASIDE. Except as modified by the last paragraph of this Decision,
the trial courts Decision is REINSTATED. No costs.

SO ORDERED.

Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.


[1]
First Division composed of Justice Nathanael P. De Pano Jr., Division chairman
and ponente; concurred in by Justices Salome A. Montoya and Hector L. Hofilea.

[2]
Entitled "Lucio Robles, et al. v. Spouses Virgilio Santos and Baby Ruth Cruz, et. al."

[3]
CA Decision, p. 12; rollo, p. 32.

[4]
Docketed as Civil Case No. 250-M.

[5]
RTC Decision, pp. 2-3; Original Records, pp. 256-257.

[6]
CA Decision, pp. 3-7; rollo, pp. 23-27.

[7]
The case was deemed submitted for decision on November 15, 1999, upon the receipt by
the Court of the solicitor generals Manifestation and Motion in lieu of Memorandum signed by
Solicitor General Ricardo P. Galvez, Assistant Solicitor General Amparo M. Cabotaje-Tang
and Associate Solicitor Christopher B. Arpon. Private respondents Memorandum, signed by
Atty. Mariano H.G. Cervo, was filed on June 19, 1998; while petitioners Memorandum, signed
by Atty. Remigio D. Saladero, was received by the Court on August 5, 1997.

[8]
Rollo, pp. 13-14.

[9]
Vitug, Compendium of Civil Law and Jurisprudence, 1993 rev. ed., p. 295, as quoted in
Vda. de Aviles v. Court of Appeals, 264 SCRA 473, November 21, 1996.

[10]
Art. 477, Civil Code. "The plaintiff must have legal or equitable title to, or an interest in the
real property which is the subject matter of the action. He need not be in possession of said
property." See also Amagan v. Marayag, GR No. 138377, February 28, 2000.

[11]
Tolentino, Civil Code of the Philippines, Vol. II, 1992 ed., p. 150.

[12]
Deiparine et al. v. Court of Appeals, 299 SCRA 668, December 4, 1998; Heirs of
Salamat v. Tamayo, 298 SCRA 313, October 30, 1998; Trinidad v. Court of Appeals, 289
SCRA 188, April 20, 1998.

[13]
TSN, Nov. 15, 1990, p. 22. Andrea Robles testified:

"Q And who planted the trees planted [o]n the land?

A My children were going to that land and planted trees.

Q And who took care of those trees?

A They and us, sir.

Q When you said they, to whom [we]re you referring?

A Plaintiffs in this case, sir.

xxx xxx xxx

Q And you and the plaintiffs participated in the harvest of these plants, is that correct?
A Yes sir, and I was giving them their share.

xxx xxx xxx"

[14]
Art. 493, Civil Code. "Each co-owner shall have the full ownership of his part and of the
fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it,
and even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall
be limited to the portion which may be allotted to him in the division upon the termination of
the co-ownership."

[15]
Article 2085, Civil Code. "The following requisites are essential to the contracts of pledge
and mortgage:

(1) That they be constituted to secure the fulfillment of a principal obligation;

(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or mortgaged.

(3) That the persons constituting the pledge or mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose." (Italics
supplied).

[16]
Hilario and Andrea Robles, who had declared the disputed property under their names on
November 7, 1966, following the alleged sale to them by Exequiel Ballena of the said property
on the same day, applied for an agricultural loan on November 19, 1966. On November 24,
1966, the Robles spouses executed a real estate mortgage upon the said property. On
November 29, 1966, the loan was released to them. (RTC Records, Vol. III, exhibits for the
plaintiffs and the defendants.)

[17]
271 SCRA 76, April 8, 1997, per Davide, J. (Now CJ). See also GSIS v. Court of Appeals,
287 SCRA 204, March 6, 1998.

[18]
98 SCRA 280, 286, June 25, 1980, per De Castro, J. See also Rural Bank of Sariaya v.
Yacon, 175 SCRA 62, July 5, 1989; Gonzales v. Intermediate Appellate Court, 157 SCRA
587, January 29, 1988. Pichay v. Celestino, 20 SCRA 314, May 30, 1967.

[19]
TSN, July 5, 1990, pp. 4-5; TSN, July 12, 1990, pp. 6-12.

[20]
TSN, July 5, 1990, pp. 4-5. Emeteria Robles testimony supports her brother Lucio Robles
assertions regarding the fact of possession, occupation and cultivation of the property in
question. See TSN, July 12, 1990, pp. 6-12.

[21]
TSN, August 16, 1990, p. 21. Carlos Dolores testified:

"Q By the way, have you visited these properties from the time that your bank acquired the
same from the auction sale?

A I went there after the foreclosure, sir.

Q And after that date, have you ever gone to these properties?

A Yes, sir.

Q When?

A 1987, sir."
[22]
Herico v. Dar, 95 SCRA 437,443, January 22, 1980, per De Castro, J.

[23]
Mesina v. Vda. de Sonza et al., 108 Phil. 251, May 25, 1960; Herico v. Dar, 95 SCRA 437,
January 22, 1980; Azarcon v. Vallarta, 100 SCRA 450, October 28, 1980; Mendoza v.
Navarette, 214 SCRA 337, September 30, 1992; Heirs of Marciano Nagao v. Court of
Appeals, 282 SCRA 43, November 17, 1997.

[24]
181 SCRA 793, February 6, 1990, per Regalado, J.; italics supplied.

[25]
Memorandum of the Santos spouses, p. 6; rollo, p. 81.

[26]
270 SCRA 82, March 19, 1997, per Panganiban, J. In this case, the private respondents,
as plaintiffs before the trial court, filed a Complaint for Cancellation of Titles and Damages,
alleging that they had been in possession of the disputed property for many years, occupying
and cultivating it until they were forcibly ousted therefrom by one of the defendants. They
maintained that the processing and the eventual approval of their free patent application were
held in abeyance because of the alleged existence of several certificates of title, which had
been derived from a fictitious or spurious original certificate of title.

[27]
41 SCRA 131, September 30, 1971.

[28]
The private respondents even averred in their Complaint before the trial court that "as
citizens and taxpayers of this country, they [also] have a legitimate interest in the disposition
of alienable lands of the State xxx." (Peltan, supra, at p. 87).

[29]
282 SCRA 43, November 17, 1997, per Davide, J. (Now CJ).

[30]
Manifestation and Motion in lieu of Memorandum, p. 1; rollo, p. 101.

[31]
Art. 1137 of the Civil Code provides:

"Ownership and other real rights over immovables also prescribe through uninterrupted
adverse possession thereof for thirty years, without need of title or good faith."
THIRD DIVISION

[G.R. No. 112160. February 28, 2000]

OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner, vs. COURT OF APPEALS,


ASIAN SAVINGS BANK, MAXIMO C. CONTRERAS and VICENTE
MAOSCA, respondents.

DECISION

PURISIMA, J.: Mi-so

At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to
review and set aside the Decision[1] of the Court of Appeals in CA-G.R. CV No. 25242, which
reversed the Decision[2] of Branch 59 of the Regional Trial Court of Makati City in Civil Case
No. M-028; the dispositive portion of which reads:

"WHEREFORE, the decision appealed from is hereby REVERSED and SET


ASIDE and a new one is hereby entered DISMISSING the complaint of the
spouses Osmundo and Angelina Canlas. On the counterclaim of defendant
Asian Savings Bank, the plaintiffs Canlas spouses are hereby ordered to pay
the defendant Asian Savings Bank the amount of P50,000.00 as moral and
exemplary damages plus P15,000.00 as and for attorney's fees.

With costs against appellees.

SO ORDERED."[3]

The facts that matter:

Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private respondent,
Vicente Maosca, decided to venture in business and to raise the capital needed therefor. The
former then executed a Special Power of Attorney authorizing the latter to mortgage two
parcels of land situated in San Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with
semi-concrete residential house existing thereon, and respectively covered by Transfer
Certificate of Title No. 54366 in his (Osmundo's) name and Transfer Certificate of Title No. S-
78498 in the name of his wife Angelina Canlas.

Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Manosca,
for and in consideration of P850,000.00, P500,000.00 of which payable within one week, and
the balance of P350,000.00 to serve as his (Osmundo's) investment in the business. Thus,
Osmundo Canlas delivered to Vicente Maosca the transfer certificates of title of the parcels of
land involved. Vicente Maosca, as his part of the transaction, issued two postdated checks in
favor of Osmundo Canlas in the amounts of P40,000.00 and P460,000.00, respectively, but it
turned out that the check covering the bigger amount was not sufficiently funded. [4]Ne-xold

On September 3, 1982, Vicente Maosca was able to mortgage the same parcels of land
for P100,000.00 to a certain Attorney Manuel Magno, with the help of impostors who
misrepresented themselves as the spouses, Osmundo Canlas and Angelina Canlas. [5]

On September 29, 1982, private respondent Vicente Maosca was granted a loan by the
respondent Asian Savings Bank (ASB) in the amount of P500,000.00, with the use of subject
parcels of land as security, and with the involvement of the same impostors who again
introduced themselves as the Canlas spouses.[6] When the loan it extended was not paid,
respondent bank extrajudicially foreclosed the mortgaged.

On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent bank that the
execution of subject mortgage over the two parcels of land in question was without
their (Canlas spouses) authority, and request that steps be taken to annul and/or revoke the
questioned mortgage. On January 18, 1983, petitioner Osmundo Canlas also wrote the office
of Sheriff Maximo C. Contreras, asking that the auction sale scheduled on February 3, 1983
be cancelled or held in abeyance. But respondents Maximo C. Contreras and Asian Savings
Bank refused to heed petitioner Canlas' stance and proceeded with the scheduled auction
sale.[7]

Consequently, on February 3, 1983 the herein petitioners instituted the present case for
annulment of deed of real estate mortgage with prayer for the issuance of a writ of preliminary
injunction; and on May 23, 1983, the trial court issued an Order restraining the respondent
sheriff from issuing the corresponding Certificate of Sheriffs Sale. [8]

For failure to file his answer, despite several motions for extension of time for the filing
thereof, Vicente Maosca was declared in default.[9]

On June 1, 1989, the lower court a quo came out with a decision annulling subject deed of
mortgage and disposing, thus:

"Premises considered, judgment is hereby rendered as follows:

1. Declaring the deed of real estate mortgage (Exhibit 'L) involving the
properties of the plaintiffs as null and void; Man-ikx

2. Declaring the public auction sale conducted by the defendant Sheriff,


involving the same properties as illegal and without binding effect;

3. Ordering the defendants, jointly and severally, to pay the plaintiffs the sum
of P20,000.00 representing attorney's fees;

4. On defendant ASB's crossclaim: ordering the cross-defendant Vicente


Maosca to pay the defendant ASB the sum of P350,000.00, representing the
amount which he received as proceeds of the loan secured by the void
mortgage, plus interest at the legal rate, starting February 3, 1983, the date
when the original complaint was filed, until the amount is fully paid;
5. With costs against the defendants.

SO ORDERED."[10]

From such Decision below, Asian Savings Bank appealed to the Court of Appeals, which
handed down the assailed judgment of reversal, dated September 30, 1983, in CA-G.R. CV
No. 25242. Dissatisfied therewith, the petitioners found their way to this Court via the present
Petition; theorizing that:

"I

RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE


MORTGAGE OF THE PROPERTIES SUBJECT OF THIS CASE WAS VALID.

II

RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT PETITIONERS


ARE NOT ENTITLED TO RELIEF BECAUSE THEY WERE NEGLIGENT AND
THEREFORE MUST BEAR THE LOSS.

III

RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT


ASB EXERCISED DUE DILIGENCE IN GRANTING THE LOAN APPLICATION OF
RESPONDENT. Manik-s

IV

RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT


ASB DID NOT ACT WITH BAD FAITH IN PROCEEDING WITH THE
FORECLOSURE SALE OF THE PROPERTIES.

RESPONDENT COURT OF APPEALS ERRED IN AWARDING RESPONDENT ASB


MORAL DAMAGES."[11]

The Petition is impressed with merit.

Article 1173 of the Civil Code, provides:

"Article 1173. The fault or negligence of the obligor consist in the omission of
that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of articles 1171 and
2201, paragraph 2, shall apply.

If the law or contract does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family shall be
required. (1104)"

The degree of diligence required of banks is more than that of a good father of a family; [12] in
keeping with their responsibility to exercise the necessary care and prudence in dealing even
on a register or titled property. The business of a bank is affected with public interest, holding
in trust the money of the depositors, which bank deposits the bank should guard against loss
due to negligence or bad faith, by reason of which the bank would be denied the protective
mantle of the land registration law, accorded only to purchases or mortgagees for value and in
good faith.[13]Man-ikan

In the case under consideration, from the evidence on hand it can be gleaned unerringly that
respondent bank did not observe the requisite diligence in ascertaining or verifying the real
identity of the couple who introduced themselves as the spouses Osmundo Canlas and
Angelina Canlas. It is worthy to note that not even a single identification card was exhibited by
the said impostors to show their true identity; and yet, the bank acted on their representations
simply on the basis of the residence certificates bearing signatures which tended to match the
signatures affixed on a previous deed of mortgage to a certain Atty. Magno, covering the
same parcels of land in question. Felizado Mangubat, Assistant Vice President of Asian
Savings Bank, thus testified inter alia:

"x x x

Q:.....According to you, the basis for your having recommended for the
approval of MANASCO's (sic) loan particularly that one involving the property
of plaintiff in this case, the spouses OSMUNDO CANLAS and ANGELINA
CANLAS, the basis for such approval was that according to you all the
signatures and other things taken into account matches with that of the
document previously executed by the spouses CANLAS?

A:.....That is the only basis for accepting the signature on the mortgage, the
basis for the recommendation of the approval of the loan are the financial
statement of MAOSCA?

A:.....Yes, among others the signature and TAX Account Number, Residence
Certificate appearing on the previous loan executed by the spouses
CANLAS, I am referring to EXHIBIT 5, mortgage to ATTY. MAGNO, those
were made the basis.

A:.....That is just the basis of accepting the signature, because at that time
the loan have been approved already on the basis of the financial statement
of the client the Bank Statement. Wneh (sic) it was approved we have to
base it on the Financial statement of the client, the signatures were accepted
only for the purpose of signing the mortgage not for the approval, we don't
(sic) approve loans on the signature.

ATTY. CLAROS:

.....Would you agree that as part of ascertaining the identify of the parties
particularly the mortgage, you don't consider also the signature, the
Residence Certificate, the particular address of the parties involved.

A:.....I think the question defers (sic) from what you asked a while ago.

Q:.....Among others?

A:.....We have to accept the signature on the basis of the other signatures
given to us it being a public instrument. Ol-dmiso

ATTY. CARLOS:

.....You mean to say the criteria of ascertaining the identity of the mortgagor
does not depend so much on the signature on the residence certificate they
have presented.
A:.....We have to accept that

xxx.....xxx.....xxx

A:.....We accepted the signature on the basis of the mortgage in favor of


ATTY. MAGNO duly notarized which I have been reiterrting (sic) entitled to
full faith considering that it is a public instrument.

ATTY. CARLOS:

.....What other requirement did you take into account in ascertaining the
identification of the parties particularly the mortgagor in this case.

A:.....Residence Certificate.

Q:.....Is that all, is that the only requirement?

A:.....We requested for others but they could not produce, and because they
presented to us the Residence Certificate which matches on the signature on
the Residence Certificate in favor of Atty. Magno." [14]M-isjuris

Evidently, the efforts exerted by the bank to verify the identity of the couple posing as
Osmundo Canlas and Angelina Canlas fell short of the responsibility of the bank to observe
more than the diligence of a good father of a family. The negligence of respondent bank was
magnified by the fact that the previous deed of mortgage (which was used as the basis for
checking the genuineness of the signatures of the suppose Canlas spouses) did not bear the
tax account number of the spouses,[15] as well as the Community Tax Certificate of Angelina
Canlas.[16] But such fact notwithstanding, the bank did not require the impostors to submit
additional proof of their true identity.

Under the doctrine of last clear chance, which is applicable here, the respondent bank must
suffer the resulting loss. In essence, the doctrine of last clear chance is to the effect that
where both parties are negligent but the negligent act of one is appreciably later in point of
time than that of the other, or where it is impossible to determine whose fault or negligence
brought about the occurrence of the incident, the one who had the last clear opportunity to
avoid the impending harm but failed to do so, is chargeable with the consequences arising
therefrom. Stated differently, the rule is that the antecedent negligence of a person does not
preclude recovery of damages caused by the supervening negligence of the latter, who had
the last fair chance to prevent the impending harm by the exercise of due diligence. [17]

Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the opportunity to
perpetrate the fraud, by entrusting to latter the owner's copy of the transfer certificates of title
of subject parcels of land, it cannot be denied that the bank had the last clear chance to
prevent the fraud, by the simple expedient of faithfully complying with the requirements for
banks to ascertain the identity of the persons transacting with them.

For not observing the degree of diligence required of banking institutions, whose business is
impressed with public interest, respondent Asian Savings Bank has to bear the loss sued
upon.

In ruling for respondent bank, the Court of Appeals concluded that the petitioner Osmundo
Canlas was a party to the fraudulent scheme of Maosca and therefore, estopped from
impugning the validity of subject deed of mortgage; ratiocinating thus: Sd-aamiso

"x x x
Thus, armed with the titles and the special power of attorney, Manosca went
to the defendant bank and applied for a loan. And when Maosca came over
to the bank to submit additional documents pertinent to his loan application,
Osmundo Canlas was with him, together with a certain Rogelio Viray. At that
time, Osmundo Canlas was introduced to the bank personnel as 'Leonardo
Rey.

When he was introduced as 'Leonardo Rey for the first time Osmundo should
have corrected Maosca right away. But he did not. Instead, he even allowed
Maosca to avail of his (Osmundo's) membership privileges at the
Metropolitan Club when Maosca invited two officers of the defendant bank to
a luncheon meeting which Osmundo also attended. And during that meeting,
Osmundo did not say who he really is, but even let Maosca introduced him
again as 'Leonardo Rey, which all the more indicates that he connived with
Maosca in deceiving the defendant bank.

Finally after the loan was finally approved, Osmundo accompanied Maosca
to the bank when the loan was released. At that time a manger's check
for P200,000.00 was issued in the name of Oscar Motorworks, which
Osmundo admits he owns and operates.

Collectively, the foregoing circumstances cannot but conjure to a single


conclusion that Osmundo actively participated in the loan application of
defendant Asian Savings Bank, which culminated in his receiving a portion of
the process thereof."[18]

A meticulous and painstaking scrutiny of the Records on hand, reveals, however, that the
findings arrived at by the Court of Appeals are barren of any sustainable basis. For instance,
the execution of the deeds of mortgages constituted by Maosca on subject pieces of property
of petitioners were made possible not by the Special Power of Attorney executed by
Osmundo Canlas in favor of Maosca but through the use of impostors who misrepresented
themselves as the spouses Angelina Canlas and Osmundo Canlas. It cannot be said
therefore, that the petitioners authorized Vicente Maosca to constitute the mortgage on their
parcels of land.

What is more, Osmundo Canlas was introduced as "Leonardo Rey" by Vicente Maosca, only
on the occasion of the luncheon meeting at the Metropolitan Club. [19] Thereat, the failure of
Osmundo Canlas to rectify Maosca's misrepresentations could not be taken as a fraudulent
act. As well explained by the former, he just did not want to embarrass Maosca, so that he
waited for the end of the meeting to correct Maosca. [20]

Then, too, Osmundo Canlas recounted that during the said luncheon meeting, they did not
talk about the security or collateral for the loan of Maosca with ASB. [21] So also, Mrs. Josefina
Rojo, who was the Account Officer of Asian Savings Bank when Maosca applied for subject
loan, corroborated the testimony of Osmundo Canlas, she testified: S-daad

"xxx.....xxx.....xxx

QUESTION:.....Now could you please describe out the lunch


conference at the Metro Club in Makati?

ANSWER:.....Mr. Mangubat, Mr. Maosca and I did not


discuss with respect to the loan application and discuss
primarily his business.

xxx.....xxx.....xxx

xxx.....xxx.....xxx
QUESTION:..... So, what is the main topic of your discussion during the
meeting?

ANSWER:..... The main topic was then, about his business although, Mr,
Leonardo Rey, who actually turned out as Mr. Canlas, supplier of Mr.
Maosca.

QUESTION:..... I see ... other than the business of Mr. Maosca, were there
any other topic discussed?

ANSWER:..... YES.

QUESTION:..... And what was the topic?

ANSWER:..... General Economy then.

x x x"[22]

Verily, Osmundo Canlas was left unaware of the illicit plan of Maosca, explaining thus why
he (Osmundo) did not bother to correct what Maosca misrepresented and to assert ownership
over the two parcels of land in question. Scs-daad

Not only that; while it is true that Osmundo Canlas was with Vicente Maosca when the latter
submitted the documents needed for his loan application, and when the check
of P200,000.000was released, the former did not know that the collateral used by Maosca for
the said loan were their (Canlas spouses) properties. Osmundo happened to be with Maosca
at the time because he wanted to make sure that Maosca would make good his promise to
pay the balance of the purchase price of the said lots out of the proceeds of the loan. [23]

The receipt by Osmundo Canlas of the P200,000.00 check from ASB could not estop him
from assailing the validity of the mortgage because the said amount was in payment of the
parcels of land he sold to Maosca.[24]

What is decisively clear on record is that Maosca managed to keep Osmundo Canlas
uninformed of his (Maosca's) intention to use the parcels of land of the Canlas spouses as
security for the loan obtained from Asian Savings Bank. Since Vicente Maosca showed
Osmundo Canlas several certificates of title of lots which, according to Maosca were the
collaterals, Osmundo Canlas was confident that their (Canlases) parcels of land were not
involved in the loan transaction with the Asian Savings Bank. [25] Under the attendant facts and
circumstances, Osmundo Canlas was undoubtedly negligent, which negligence made
them (petitioners) undeserving of an award of Attorneys fees.

Settled is the rule that a contract of mortgage must be constituted only by the absolute owner
on the property mortgaged;[26] a mortgage, constituted by an impostor is void.[27] Considering
that it was established indubitably that the contract of mortgage sued upon was entered into
and signed by impostors who misrepresented themselves as the spouses Osmundo Canlas
and Angelina Canlas, the Court is of the ineluctible conclusion and finding that subject
contract of mortgage is a complete nullity.

WHEREFORE, the Petition is GRANTED and the Decision of the Court of Appeals, dated
September 30, 1993, in CA-G.R. CV No. 25242 SET ASIDE. The Decision of Branch 59 of the
Regional Trial Court of Makati City in Civil Case No. M-028 is hereby REINSTATED. No
pronouncement as to costs.

SO ORDERED.

Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur.


Panganiban, J., in the result. Scnc-m

[1]
Annex "C", Rollo, pp. 64-73.

[2]
Penned by Judge Lucia Violago Isnani.

[3]
Decision, Annex "D", Rollo, p. 84.

[4]
Id., p. 67-68.

[5]
Id., p. 68.

[6]
Id., p. 68.

[7]
Id., p. 67, Rollo, p. 77.

[8]
Decision, Rollo, p. 67; Rollo, pp. 78-79.

[9]
Decision, Rollo, p. 65.

[10]
Decision, Annex "C", Rollo, p. 73.

[11]
Petition, Rollo, pp. 18.

[12]
Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695, 708.

[13]
Rural Bank of Sariaya, Inc. vs. Yacon, 175 SCRA 62, p. 68.

[14]
TSN, Direct Examination of Felizardo Mangubat, March 7, 1983; TSN, pp. 57-61.

[15]
Original Records, p. 88; Exhibit "5-A" and "5-B".

[16]
O.R. p. 11; Annex "C".

[17]
Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695, p. 708; citing: LBC Air
Cargo, Inc. vs. Court of Appeals, 241 SCRA 619, 624; Picart vs. Smith, 37 Phil. 809;
Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384; Glan Peoples Lumber and
Hardware vs. Intermediate Appellate Court, 173 SCRA 464.

[18]
Decision, Rollo, pp. 81-82.

[19]
Direct Examination of Felizardo Mangubat, May 7, 1983, TSN, pp. 10, 14 and 17.

[20]
Direct Examination of Osmundo Canlas, May 17, 1983, TSN, p. 40.

[21]
Ibid., p. 41.

[22]
Direct Examination of Josefina Rojo, May 23, 1985, TSN, pp. 37, 42-43.

[23]
Direct Examination of Osmundo Canlas, May 17, 1983, TSN, pp. 30-36.

[24]
Direct Examination of Osmundo Canlas, May 17, 1983, T.S.N. p. 63-65.
[25]
Ibid., p. 51.

[26]
Article 2085 of the Civil Code

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-40517 January 31, 1984

LUZON SURETY COMPANY, INC., plaintiff-appellee,


vs.
PASTOR T. QUEBRAR and FRANCISCO KILAYKO, defendants-appellants.

Tolentino & Garcia & D. R. Cruz for plaintiff-appellee.

Zoilo V. dela Cruz, Jr. for defendants-appellants.

MAKASIAR, J.:

This is an appeal from the judgement of the Court of First Instance of Manila in Civil Case No.
52790 dated November 3, 1964 which was certified to this Court by the Court of Appeals in its
resolution dated March 20, 1975.

On August 9, 1954, plaintiff-appellee issued two administrator's bond in the amount of


P15,000.00 each, in behalf of the defendant-appellant Pastor T. Quebrar, as administrator in
Special Proceedings Nos. 3075 and 3076 of the Court of First Instance of Negros Occidental,
entitled " Re Testate Estate of A. B. Chinsuy," and Re Testate Estate of Cresenciana Lipa,"
respectively, (pp. 8-12, 17-21, ROA; p. 9 rec.). In consideration of the suretyship wherein the
plaintiff-appellee Luzon Surety Company, Inc. was bound jointly and severally with the
defendant appellant Pastor T. Quebrar, the latter, together with Francisco Kilayko, executed
two indemnity agreements, where among other things, they agreed jointly and severally to
pay the plaintiff-appellee "the sum of Three Hundred Pesos (P300.00) in advance as premium
thereof for every 12 months or fraction thereof, this ... or any renewal or substitution thereof is
in effect" and to indemnify plaintiff-appellee against any and all damages, losses, costs,
stamps taxes, penalties, charges and expenses, whatsoever, including the 15% of the amount
involved in any litigation, for attomey's fees (pp. 12-16, 21-25. ROA; p. 9, rec.).

For the first year, from August 9, 1954 to August 9, 1955, the defendants-appellants paid
P304.50 under each indemnity agreement or a total of P609.00 for premiums and
documentary stamps.

On June 6, 1957, the Court of First Instance of Negros Occidental approved the amended
Project of Partition and Accounts of defendant-appellant (p. 87, ROA; p. 9, rec.).

On May 8, 1962, the plaintiff-appellee demanded from the defendants-appellants the payment
of the premiums and documentary stamps from August 9,1955.

On October 17, 1962, the defendants-appellants ordered a motion for cancellation and/or
reduction of executor's bonds on the ground that "the heirs of these testate estates have
already received their respective shares" (pp. 69-70, ROA, p. 9, rec.).
On October 20, 1962, the Court of First Instance of Negros Occidental acting on the motions
filed by the defendants-appellants ordered the bonds cancelled.

Plaintiff-appellee's demand amounted to P2,436.00 in each case, hence, a total of P4,872.00


for the period of August 9, 1955 to October 20, 1962. The defendants-appellants to pay the
said amount of P4,872.00.

On January 8, 1963, the plaintiff-appellee filed the case with the Court of First Instance of
Manila During the pre-trial the parties presented their documentary evidences and agreed on
the ultimate issue - "whether or not the administrator's bonds were in force and effect from
and after the year that they were filed and approved by the court up to 1962, when they were
cancelled." The defendants-appellants offered P1,800.00 by way of amicable settlement
which the plaintiff-appellee refused.

The lower court allowed the plaintiff to recover from the defendants-appellants, holding that:

We find for the plaintiff it is clear from the terms of the Order of the Court in which these bond
were filed, that the same were in force and effect from and after filling thereof up to and
including 20 October, 1962, when the same werecancelled. It follows that the defendants are
liable under the terms of the Indemnity Agreements, notwithstanding that they have not
expressly sought the renewal of these bonds bemuse the same were in force and effect until
they were cancelled by order of the Court. The renewal of said bonds is presumed from the
fact that the defendants did not ask for the cancellation of the same; and their liability springs
from the fact that defendant Administrator Pastor Quebrar, benefited from the bonds during
their lifetime.

We find no merit in defendants' claim that the Administrator's bonds in question are not
judicial bonds but legal or conventional bonds only, since they were constituted by virtue of
Rule 82, Sec. 1 of the Old Rule of Court. Neither is there merit in defendants, claim that
payments of premiums and documentary stamps were conditions precedent to the effectivity
of the bonds, since it was the defendants' duty to pay for the premiums as long as the bonds
were in force and effect. Finally, defendants' claim that they are not liable under the Indemnity
Agreements is also without merit since the under of defendants under said Indemnity
Agreements; includes the payment of yearly pre for the bonds.

WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the
defendants, ordering the tsn the defendant to pay the plaintiff, jointly and severally, the
amount of P6,649.36 plus interest at the legal rate from 27 July 1964 until fully paid and the
sum equivalent to 10% of the total amount due as and or attorney's fees, and costs (pp. 92-
94, ROA; p. 9, rec.).

Defendants-appellants appealed to the Court of Appeals. On March 20, 1975, the Court of
Appeals in a resolution certified the herein case to this Court after finding that this case
involves only errors or questions of law.

1. The proper determination of the liability of the surety and of the principal on the bond must
depend primarily upon the language of the bond itself. The bonds herein were required by
Section 1 of Rule 81 of the Rules of Court. While a bond is nonetheless a contract because it
is required by statute (Midland Co. vs. Broat 52 NW 972), said statutory bonds are construed
in the light of the statute creating the obligation secured and the purposes for which the bond
is required, as expressed in the statute (Michael vs. Logan, 52 NW 972; Squires vs. Miller,
138 NW 1062). The statute which requires the giving of a bond becomes a part of the bond
and imparts into the bond any conditions prescribed by the statute (Scott vs. United States
Fidelity Co., 252 Ala 373, 41 So 2d 298; Employer's Liability Assurance Corp. vs. Lunt, 82 Ariz
320, 313 P2d 393).

The bonds in question herein contain practically the very same conditions in Sec. 1, Rule 81
of the Rules of Court. Pertinent provision of the administrator's bonds is as follows:
Therefore, if the said Pastor T. Quebrar faithfully prepares and presents to the Court, within
three months from the date of his appointment, a correct inventory of all the property of the
deceased which may have come into his possession or into the possession of any other
person representing him according to law, if he administers all the property of the deceased
which at any time comes into his possession or into the possession of any other person
representing him; faithfully pays all the debts, legacies, and bequests which encumber said
estate, pays whatever dividends which the Court may decide should be paid, and renders a
just and true account of his administrations to the Court within a year or at any other date that
he may be required so to do, and faithfully executes all orders and decrees of said Court, then
in this case this obligation shall be void, otherwise it shall remain full force and effect (p. 9, 18,
ROA p. 9, rec.).

Section 1 of Rule 81 of the Rules of Court requires the administrator/executor to put up a


bond for the purpose of indemnifying the creditors, heirs, legatees and the estate. It is
conditioned upon the faithful performance of the administrator's trust (Mendoza vs. Pacheco,
64 Phil. 134).

Having in mind the purpose and intent of the law, the surety is then liable under the
administrator's bond, for as long as the administrator has duties to do as such
administrator/executor. Since the liability of the sureties is co-extensive with that of the
administrator and embraces the performance of every duty he is called upon to perform in the
course of administration (Deobold vs. Oppermann, 111 NY 531, 19 NE 94), it follows that the
administrator is still duty bound to respect the indemnity agreements entered into by him in
consideration of the suretyship

It is shown that the defendant-appellant Pastor T. Quebrar, still had something to do as an


administrator/executor even after the approval of the amended project of partition and
accounts on June 6, 1957.

The contention of the defendants-appellants that the administrator's bond ceased to be of


legal force and effect with the approval of the project of partition and statement of accounts on
June 6, 1957 is without merit. The defendant-appellant Pastor T. Quebrar did not cease as
administrator after June 6, 1957, for administration is for the purpose of liquidation of the
estate and distribution of the residue among the heirs and legatees. And liquidation means
the determination of all the assets of the estate and payment of all the debts and
expenses (Flores vs. Flores, 48 Phil. 982). It appears that there were still debts and expenses
to be paid after June 6, 1957.

And in the case of Montemayor vs. Gutierrez (114 Phil. 95), an estate may be partitioned
even before the termination of the administration proceedings. Hence, the approval of the
project of partition did not necessarily terminate the administration proceedings.
Notwithstanding the approval of the partition, the Court of First Instance of Negros Occidental
still had jurisdiction over the administration proceedings of the estate of A.B. Chinsuy and
Cresenciana Lipa.

2. The sureties of an administration bond are liable only as a rule, for matters occurring during
the term covered by the bond. And the term of a bond does not usually expire until the
administration has been closed and terminated in the manner directed by law (Hartford
Accident and Indemnity Co. vs. White, 115 SW 2d 249). Thus, as long as the probate court
retains jurisdiction of the estate, the bond contemplates a continuing liability (Deobold vs.
Oppermann, supra) notwithstanding the non-renewal of the bond by the defendants-
appellants.

It must be remembered that the probate court possesses an all-embracing power over the
administrator's bond and over the administration proceedings and it cannot be devoid of legal
authority to execute and make that bond answerable for the every purpose for which it was
filed (Mendoza vs. Pacheco, 64 Phil. 1-05). It is the duty of the courts of probate jurisdiction to
guard jealously the estate of the deceased persons by intervening in the administration
thereof in order to remedy or repair any injury that may be done thereto (Dariano vs.
Fernandez Fidalgo, 14 Phil. 62, 67; Sison vs. Azarraga, 30 Phil. 129, 134).

3. In cases like these where the pivotal point is the interpretation of the contracts entered into,
it is essential to scrutinize the very language used in the contracts. The two Indemnity
Agreements provided that:

The undersigned, Pastor T. Quebrar and Dr. Francisco Kilayko, jointly and severally, bind
ourselves unto the Luzon Surety Co., Inc. ... in consideration of it having become SURETY
upon Civil Bond in the sum of Fifteen Thousand Pesos (P15,000.00) ... in favor of the
Republic of the Philippines in Special Proceeding ... dated August 9, 1954, a copy of which is
hereto attached and made an integral part hereof (emphasis supplied; pp. 12-13, 21, ROA p.
9, rec.),

To separately consider these two agreements would then be contrary to the intent of the
parties in making them integrated as a whole.

The contention then of the defendants-appellants that both the Administrator's Bonds and the
Indemnity Agreements ceased to have any force and effect, the former since June 6, 1957
with the approval of the project of partition and the latter since August 9, 1955 with the non-
payment of the stated premiums, is without merit. Such construction of the said contracts
entered into would render futile the purpose for which they were made.

To allow the defendants-appellants to evade their liability under the Indemnity Agreements by
non-payment of the premiums would ultimately lead to giving the administrator the power to
diminish or reduce and altogether nullify his liability under the Administrator's Bonds. As
already stated, this is contrary to the intent and purpose of the law in providing for the
administrator's bonds for the protection of the creditors, heirs, legatees, and the estate.

4. Moreover, the lower court was correct in holding that there is no merit in the defendants'
claim that payments of premiums and documentary stamps are conditions precedent to the
effectivity of the bonds.

It is worthy to note that there is no provision or condition in the bond to the effect that it will
terminate at the end of the first year if the premium for continuation thereafter is not paid. And
there is no clause by which its obligation is avoided or even suspended by the failure of the
obligee to pay an annual premium (U.S. vs. Maryland Casualty Co. DCMD 129 F. Supp; Dale
vs. Continental Insurance Co., 31 SW 266; Equitable Insurance C. vs. Harvey, 40 SW 1092).

It was held in the case of Fourth and First Bank and Trust Co. vs. Fidelity and Deposit Co.
(281 SW 785), that "at the end of the first year, the bond went on, whether or not the premium
was paid or not ... Even on a failure to pay an annual premium, the contract ran on until
affirmative action was taken to avoid it. The obligation of the bond was therefore continuous."
And in United States vs. American Surety Co. of New York (172 F2d 135), it was held that
"under a surety bond securing faithful performance of duties by postal employee, liability for
default of employee occurring in any one year would continue, whether or not a renewal
premium was paid for a later year."

The payment of the annual premium is to be enforced as part of the consideration, and not as
a condition Woodfin vs. Asheville Mutual Insurance Co., 51 N.C. 558); for the payment was
not made a condition to the attaching or continuing of the contract (National Bank vs. National
Surety Co., 144 A 576). The premium is the consideration for furnishing the bonds and the
obligation to pay the same subsists for as long as the liability of the surety shall exist
(Reparations Commission vs. Universal Deep-Sea Fishing Corp., L-21996, 83 SCRA 764,
June 27, 1978). And in Arranz vs. Manila Fidelity and Surety Co., Inc. (101 Phil. 272), the
"premium is the consideration for furnishing the bond or the guaranty. While the liability of the
surety subsists the premium is collectible from the principal. Lastly, in Manila Surety
and Fidelity Co., Inc. vs. Villarama (107 Phil. 891), it was held that "the one-year period
mentioned therein refers not to the duration or lifetime of the bond, but merely to the payment
of premiums, and, consequently, does not affect at all the effectivity or efficacy of such bond.
But such non- payment alone of the premiums for the succeeding years ... does not
necessarily extinguish or terminate the effectivity of the counter-bond in the absence of an
express stipulation in the contract making such non-payment of premiums a cause for the
extinguishment or termination of the undertaking. ...There is no necessity for an extension or
renewal of the agreement because by specific provision thereof, the duration of the counter-
bond was made dependent upon the existence of the original bond."

5. It is true that in construing the liability of sureties, the principle of strictissimi juris applies
(Asiatic Petroleum Co. vs, De Pio, 46 Phil. 167; Standard Oil Co. of N.Y. vs. Cho Siong, 53
Phil. 205); but with the advent of corporate surety, suretyship became regarded as insurance
where, usually, provisions are interpreted most favorably to the insured and against the
insurer because ordinarily the bond is prepared by the insurer who then has the opportunity to
state plainly the term of its obligation (Surety Co. vs. Pauly, 170 US 133, 18 S. Ct. 552.,42 L.
Ed. 972).

This rule of construction is not applicable in the herein case because there is no ambiguity in
the language of the bond and more so when the bond is read in connection with the statutory
provision referred to.

With the payment of the premium for the first year, the surety already assumed the risk
involved, that is, in case defendant-appellant Pastor T. Quebrar defaults in his administrative
duties. The surety became liable under the bond for the faithful administration of the estate by
the administrator/executor. Hence, for as long as defendant-appellant Pastor T. Quebrar was
administrator of the estates, the bond was held liable and inevitably, the plaintiff-appellee's
liability subsists since the liability of the sureties is co-extensive with that of the administrator.

WHEREFORE, THE DECISION OF THE COURT OF FIRST INSTANCE OF MANILA DATED


NOVEMBER 3, 1964 IS HEREBY AFFIRMED. WITH COSTS AGAINST DEFENDANTS-
APPELLANTS.

Concepcion, Jr., Guerrero, Abad Santos, De Castro and Escolin, JJ., concur.

Aquino, J., took no part.

Republic of the Philippines


SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 88050 January 30, 1992


STRONGHOLD INSURANCE COMPANY, INC., petitioner,
vs.
HON. COURT OF APPEALS and ADRIANO URTESUELA, respondents.

T.J. Sumawang & Associates for petitioner.

Linsangan Law Office for private respondent.

CRUZ, J.:

The petitioner invokes due process to escape liability on a surety bond executed for the
protection of a Filipino seaman. It is a familiar argument that will be denied, in light of the
following findings.

Acting on behalf of its foreign principal, Qatar National Fishing Co., Pan Asian Logistics and
Trading, a domestic recruiting and placement agency, hired Adriano Urtesuela as captain of
the vessel M/V Oryx for the stipulated period of twelve months. The required surety bond, in
the amount of P50,000.00, was submitted by Pan Asian and Stronghold Insurance Co., Inc.,
the herein petitioner, to answer for the liabilities of the employer. Urtesuela assumed his
duties on April 18, 1982, but three months later his services were terminated and he was
repatriated to Manila. He thereupon filed a complaint against Pan Asian and his former
employer with the Philippine Overseas Employment Administration for breach of contract and
damages.

In due time, the POEA rendered a decision in his favor for the amount of P6,374.94,
representing his salaries for the unexpired portion of his contract and the cash value of his
unused vacation leave, plus attorney's fees and costs, which the respondents were required
to pay. The judgment eventually became final and executory, not having been appealed on
time. Pursuant thereto, a writ of execution was issued against Pan Asian but could be
enforced only against its cash bond of P10,000.00, the company having ceased to operate.
Urtesuela then filed a complaint with the Insurance Commission against Stronghold on the
basis of the aforementioned surety bond and prayed for the value thereof plus attorney's fees
and litigation costs.

Under the bond, the petitioner and Pan Asian undertook

To answer for all liabilities which the Philippine Overseas Employment Administration may
adjudge/impose against the Principal in connection with the recruitment of Filipino seamen.

It is understood that notice to the Principal is notice to the surety. (Exh. "I-2").

WHEREAS, the liability of the surety under this Bond shall in no case exceed the sum of
PESOS: FIFTY THOUSAND ONLY (P50,000.00) Philippine Currency.

After hearing, the Insurance Commission held that the complaint should be reformed because
the provisions in the surety bond were not stipulations pour autrui to entitle Urtesuela to bring
the suit himself. It held that the proper party was the POEA. 1 This ruling was reversed on
appeal by the respondent court in its decision dated April 20, 1989. 2 It was there declared
that, as the actual beneficiary of the surety bond, Urtesuela was competent to sue Stronghold,
which as surety was solidarily liable with Pan Asian for the judgment rendered against the
latter by the POEA.

The petitioner asks for reversal of the Court of Appeals. It submits that the decision of the
POEA is not binding upon it because it was not impleaded in the complaint; it was not notified
thereof nor did it participate in the hearing; and it was not specifically directed to pay the
damages awarded to the complainant.

In support of its posture, the petitioner cites abundant jurisprudence, particularly Aguasin
v. Velasquez, 3 where the Court held:

If the surety is to be bound by his undertaking, it is essential according to Section 10 of Rule


62 in connection with Section 20 of Rule 59 of the Rules of Court that the damages be
awarded upon application and after proper hearing and included in the judgment. As a
corollary to these requirements, due notice to the plaintiff and his surety setting forth the facts
showing his right to damages and the amount thereof under the bond is indispensable. This
has to be so if the surety is not to be condemned or made to pay without due process of law.
It is to be kept in mind that the surety in this case was not a party to the action and had no
notice of or intervention in the trial. It seems elementary that before being condemned to pay,
it was the elementary right of the surety to be heard and to be informed that the party seeking
indemnity would hold it liable and was going to prove the grounds and extent of its liability.
This case is different from those in which the surety, by law and/or by the terms of his
contract, has promised to abide by the judgment against the principal and renounced the right
to be sued or cited.

The Court has gone over the decision and finds that the petitioner is "hoist by its own petard."
For as the quoted excerpt itself says, the case is "different from those in which the surety, by
law and/or by the terms of his contract, has promised to abide by the judgment against the
principal and renounced the right to be sued or cited."

In the surety bond, the petitioner unequivocally bound itself:

To answer for all liabilities which the Philippine Overseas Employment Administration may
adjudge/impose against the Principal in connection with the recruitment of Filipino seamen.

Strictly interpreted, this would mean that the petitioner agreed to answer for whatever
decision might be rendered against the principal, whether or not the surety was impleaded in
the complaint and had the opportunity to defend itself. There is nothing in the stipulation
calling for a direct judgment against the surety as a co-defendant in an action against the
principal. On the contrary, the petitioner agreed "to answer for all liabilities" that "might be
adjudged or imposed by the POEA against the Principal."

But even if this interpretation were rejected, considering the well-known maxim that "the
surety is a favorite of the law," the petitioner would still have to explain its other agreement
that "notice to the Principal is notice to the surety." This was in fact another special stipulation
typewritten on the printed form of the surety bond prepared by the petitioner. Under this
commitment, the petitioner is deemed, by the implied notice, to have been given an
opportunity to participate in the litigation and to present its side, if it so chose, to avoid liability.
If it did not decide to intervene as a co-defendant (and perhaps also as cross-claimant against
Pan Asian), it cannot be heard now to complain that it was denied due process.

The petitioner contends, however, that the said stipulation is unconstitutional and contrary to
public policy, because it is "a virtual waiver" of the right to be heard and "opens wide the door
for fraud and collusion between the principal and the bond obligee" to the prejudice of the
surety. Hence, disregarding the stipulation, the petitioner should be deemed as having
received no notice at all of the complaint and therefore deprived of the opportunity to defend
itself.

The Court cannot agree. The argument assumes that the right to a hearing is absolute and
may not be waived in any case under the due process clause. This is not correct. As a matter
of fact, the right to be heard is as often waived as it is invoked, and validly as long as the
party is given an opportunity to be heard on his behalf. 4
The circumstance that the chance to be heard is not availed of does not disparage that
opportunity and deprive the person of the right to due process. This Court has consistently
held in cases too numerous to mention that due process is not violated where a person is not
heard because he has chosen, for whatever reason, not to be heard. It should be obvious that
if he opts to be silent where he has a right to speak, he cannot later be heard to complain that
he was unduly silenced.

Neither is public policy offended on the wicked ground of fraud and collusion imagined by the
petitioner. For one thing, the speculation contravenes without proof the presumption of good
faith and unreasonably imputes dishonest motives to the principal and the obligee. For
another, it disregards the fiduciary relationship between the principal and the surety, which
is the legal and also practical reason why the latter is willing to answer for the liabilities of the
former.

In a familiar parallel, notice to the lawyer is considered notice to the client he represents even
if the latter is not actually notified. It has not been suspected that this arrangement might
result in a confabulation between the counsel and the other party to the client's prejudice.

At any rate, it is too late now for the petitioner to challenge the stipulation. If it believed then
that it was onerous and illegal, what it should have done was object when its inclusion as a
condition in the surety bond was required by the POEA. Even if the POEA had insisted on the
condition, as now claimed, there was still nothing to prevent the petitioner from refusing
altogether to issue the surety bond. The petitioner did neither of these. The fact is that,
whether or not the petitioner objected, it in the end filed the surety bond with the suggested
condition. The consequence of its submission is that it cannot now argue that it is not bound
by that condition because it was coerced into accepting it.

This Court has always been receptive to complaints against the denial of the right to be
heard, which is the very foundation of a free society. This right is especially necessary in the
court of justice, where cases are decided after the parties shall have been given an
opportunity to present their respective positions, for evaluation by the impartial judge.
Nevertheless, a party is not compelled to speak if it chooses to be silent. If it avails itself of the
right to be heard, well and good; but if not, that is also its right. In the latter situation, however,
it cannot later complain that, because it was not heard, it was deprived of due process.

Worthy of consideration also is the private respondent's contention that he sought to enforce
the petitioner's liability not in NSB Case No. 3810-82 as decided by the POEA, but in another
forum. What he did was file an independent action for that purpose with the Insurance
Commission on the basis of the surety bond which bound the petitioner to answer for
whatever liabilities might be adjudged against Qatar National Fishing Co. by the POEA. In the
proceedings before the Commission, the petitioner was given full opportunity (which it took) to
present its side, in its answer with counterclaim to the complaint, in its testimony at the
hearings, in its motion to dismiss the complaint, and in its 10-page memorandum. There is
absolutely no question that in that proceeding, the petitioner was actually and even
extensively heard.

The surety bond required of recruitment agencies 5 is intended for the protection of our
citizens who are engaged for overseas employment by foreign companies. The purpose is to
insure that if the rights of these overseas workers are violated by their employers, recourse
would still be available to them against the local companies that recruited them for the foreign
principal. The foreign principal is outside the jurisdiction of our courts and would probably
have no properties in this country against which an adverse judgment can be enforced. This
difficulty is corrected by the bond, which can be proceeded against to satisfy that judgment.

Given this purpose, and guided by the benign policy of social justice, we reject the
technicalities raised by the petitioner against its established legal and even moral liability to
the private respondent. These technicalities do not impair the rudiments of due process or the
requirements of the law and must be rejected in deference to the constitutional imperative of
justice for the worker.
WHEREFORE, the petition is DENIED and the challenged decision of the Court of Appeals
AFFIRMED in toto. The respondent court is directed to ENFORCE payment to the private
respondent in full, and with all possible dispatch of the amount awarded to him by the POEA
in its decision dated May 13, 1983. It is so ordered.

Narvasa, C.J., Grio-Aquino and Medialdea, JJ., concur.

Footnotes

1 Original records, p. 258.

2 Penned by Pronove, Jr., J. with Melo and Benipayo, JJ., concurring.

3 88 Phil. 357.

4 Bautista vs. Secretary of Labor and Employment, 196 SCRA 470.

5 Article 31 of the Labor Code; Section 4, Book II, Rule II of the POEA Rules and Regulations.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-40334 February 28, 1985

CENTRAL SURETY and INSURANCE COMPANY, INC., petitioner,


vs.
Hon. ALBERTO Q. UBAY as Judge of the Court of First Instance of Rizal, Caloocan City,
Branch XXXII and ONG CHI, doing business under the Firm Name. "TABLERIA DE
LUXE respondents.

Alfredo Feraren for petitioner.

S.I.A. Gonzales for respondents.

ABAD SANTOS, J.:

Ong Chi, doing business under the firm name "Tableria de Luxe sued Francisco Reyes, Jr. for
a sum of money in the City Court of Caloocan City. Ong Chi applied for a writ of attachment
and upon filing a bond in the amount of P6,464.18, a jeep belonging to Reyes was placed
in custodia legis.

Reyes moved to dissolve the writ of attachment. He posted a counterbond in the amount of P
6,465.00; his surety was Central Surety and Insurance Co., the petitioner herein. The
condition of the counterbond is that "in consideration of the dissolution of said attachment,
[Francisco Reyes, Jr., as principal and Central Surety and Insurance Co., as surety] hereby
jointly and severally, bind ourselves in the sum of SIX THOUSAND FOUR HUNDRED SIXTY
FIVE ONLY ( P 6,465.00 ) Philippine Currency, under the condition that in the case the plantiff
recovers judgment in the action the defendant will on demand redeliver the attached property
so released to the officer of the Court to be applied to the payment of the judgment or in
default thereof that the defendant and surety will on demand pay to the plaintiff the full value
of the property released." (Rollo, p. 11) The writ of attachment was thereafter lifted and the
jeep was returned to Reyes.

In the course of time, the City Court rendered judgment as follows:

WHEREFORE, judgment is hereby rendered in favor of the Plaintiff and against the
defendant, ordering said defendant to pay plaintiff the sum of P 6,964.18, with legal interests
thereon from the date of the filing of this complaint until fully paid, plus the sum of P 500. 00,
as and by way of attorney's fees, and the costs of the suit. (Id, p. 14.)

Defendant Reyes appealed to the Court of First Instance of Rizal but said court affirmed the
judgment in toto. (Rollo, p. 16.) Upon finality of the judgment, a writ of execution was issued
against Reyes. The jeep which was the object of the attachment was sold by the sheriff for
P4,000.00 and the amount was credited against the judgment in partial satisfaction thereof.

Soon after the sale of the jeep, Central Surety and Insurance Co. filed a motion to cancel the
counterbond. Ong Chi not only opposed the motion but he also asked that the surety
company pay the deficiency on the judgment in the amount of P5,730. 00 (P9,730.00 as of
the filing of the motion, less P4,000.00 the proceeds of the sale of the jeep). The motion for a
deficiency judgment was opposed by the surety on the ground that it had fulfilled the condition
of the counterbond. Despite the opposition, the court ordered the surety to pay. A motion for
reconsideration was denied which accounts for the instant petition.

The issue is whether or not the petitioner surety is liable for the deficiency. The petitioner
urges a negative answer; it relies on the terms of the counterbond. Upon the other hand, the
private respondent claims that an affirmative answer is proper, he relies on Section 17 of Rule
57, Rules of Court which stipulates thus:

SEC. 17. When execution returned unsatisfied, recovery had upon bond. If the execution
be returned unsatisfied in whole or in part, the surety or sureties on any counterbond given
pursuant to the provisions of this rule to secure the payment of the judgment shall become
charged on such counterbond, and bound to pay to the judgment creditor upon demand, the
amount due under the judgment, which amount may be recovered from such surety or
sureties after notice and summary hearing in the same action.

The petition is highly impressed with merit.

The stipulation in the counterbond executed by the petitioner is the law between the parties in
this case and not the provisions of the Rules of Court.

Under the counterbond, the petitioner surety company bound itself solidarily with the principal
obligor "in the sum of P 6,465.00 under the condition that in case the plaintiff recovers
judgment in the action, the defendant will, on demand, redeliver the attached property so
released to the officer of the court to be applied to the payment of the judgment or in default
thereof that the defendant and surety will, on demand, pay to the plaintiff the full value of the
property released." The main obligation of the surety was to redeliver the jeep so that it could
be sold in case execution was issued against the principal obligor. The amount of P6,465.00
was merely to fix the limit of the surety's liability in case the jeep could not be reached. In the
instant case, the jeep was made available for execution of the judgment by the surety. The
surety had done its part; the obligation of the bond had been discharged; the bond should be
cancelled.

The impropriety of the orders of the respondent judge is made more manifest by still another
circumstance. The petitioner's surety bond was for the amount of P6,465.00. So even on the
assumption that the bond was not discharged, since the sale of the jeep yielded P4,000.00,
the surety can be held liable at most for P2,465.00. But the respondent judge ordered the
surety to pay P5,730.00 which is the entire deficiency and is in excess of P2,465.00. It is
axiomatic that the obligation of a surety cannot extend beyond what is stipulated.

WHEREFORE, the petition is granted; the questioned orders of the respondent judge are
hereby set aside and in lieu thereof another is entered cancelling the petitioner's counterbond,
with costs against the private respondent.

SO ORDERED.

Makasiar (Chairman), Aquino, Concepcion, Jr., Escolin and Cuevas, JJ., concur.

THE PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee, vs. ARMINGOL HANASAN Y


NUEZ alias JOSE N. LITERAL, Defendant-Appellant.

Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio G.
Torres and Solicitor Ceferino S. Gaddi for plaintiff-appellee.
Felipe S. Abeleda for defendant-appellant.

PER CURIAM, J.:chanrobles virtual law library

This is an automatic review of criminal case 80837 of the Court of First Instance of
Manila, Branch VIII.chanroblesvirtualawlibrarychanrobles virtual law library

It was sometime in the middle part of 1964 that Armingol Hanasan y Nuez met
Guillermo Literal. The relations between the two thereafter became so close that Literal went
to live with Hanasan in January 1965 in the latter's house on Manga Avenue, Sta. Mesa,
Manila, where he worked as a helper in the latter's business of buying and selling appliances.
In time Hanasan succeeded in prevailing upon Literal to insure himself for P10,000 with the
Philippine American Life Insurance Company, making Hanasan - who then assumed the
name Jose N. Literal and represented himself as the younger brother of Guillermo Literal - the
principal beneficiary thereof. On March 5, 1965 the corresponding application was
accomplished and thumbmarked by Guillermo Literal who was illiterate. 1 The life insurance
policy was approved and issued that same day, March 5. Hanasan thereafter waited for the
opportune time to poison Guillermo Literal with arsenic. The opportunity presented itself on
March 25, 1965. His own narration of the events that transpired on March 25 and thereafter,
contained in his sworn extrajudicial confession given to the National Bureau of Investigation
on December 8, 1965, is as follows:

Q: How did you give the arsenic poison?chanrobles virtual law library

A: Early that day sir, GUILLERMO went to Santa Mesa market and bought
around ten (10) "Galungong" fish and fruits. He made the galunggong into
"paksiw." This time my mind was made up that I will poison him
(GUILLERMO) already. Because I did not want REBECCA to take the poison
accidentally, I asked her to go to our neighbors and play there. When our
dinner was ready, the table was set already, i.e., the rice and "paksiw na
galunggong" were already on the table I poured the arsenic solution on his
plate of rice and also on the paksiw. I told GUILLERMO that I did not like or
feel like eating galunggong that day and I only took fried
eggs.chanroblesvirtualawlibrarychanrobles virtual law library

Q: How were you able to pour the arsenic solution on the plate of
GUILLERMO and on the paksiw without his seeing you?chanrobles virtual
law library

A: When I asked him to get water to drink, he stood and when his back was
turned I poured the solution on his plate and on the
galunggong.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Did you see if GUILLERMO consumed his rice and the "paksiw na
galunggong"? chanrobles virtual law library

A: About three-fourths (3/4) of his plate of rice and around six (6) of the
galunggong sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: How about the sauce of the paksiw? chanrobles virtual law library

A: He drank part of it sir.chanroblesvirtualawlibrarychanrobles virtual law


library

Q: How long did it take before the effects of arsenic poison showed on
GUILLERMO? chanrobles virtual law library

A: After we finished eating sir, it must be more than an hour when he started
vomitting, he complained of dizziness and after a little later sir he started
having loose bowels sir.chanroblesvirtualawlibrarychanrobles virtual law
library

Q: What did you do with the remainder of the "paksiw na


galunggong"? chanrobles virtual law library

A: I threw it away sir, including the rice left in GUILLERMO's


plate.chanroblesvirtualawlibrarychanrobles virtual law library

Q: What did you do when GUILLERMO started showing signs of the effect of
arsenic poisoning? chanrobles virtual law library

A: Nothing sir, I just watched him and when he asked for hot water in a bottle
to be placed over his stomach I gave it to
him.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Did you bring him immediately to a doctor or to a hospital?chanrobles


virtual law library

A: I am not sure of the date and time sir. But I think I brought him
(GUILLERMO) to a doctor the same afternoon March 25,
1965.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Are you sure it was on the 25th of March that you brought GUILLERMO to
see a doctor? chanrobles virtual law library
A: I am not sure of the dates anymore sir, but I remember bringing him to a
doctor, sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: From the time you gave the poison, i.e., lunchtime March 25, 1965, up to
the time you brought GUILLERMO to a doctor, what have you done to
alleviate his sickness or sufferings ? chanrobles virtual law library

A: Nothing, sir. When GUILLERMO asked me to heat water for him to take a
bath and I did. He asked me for medicine but I told him there was none. He
asked me to get him a doctor and I went to Dra. LIGAYA C. SANTOS but she
was not home at that time as I was informed she was in
school.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Did you ever bring GUILLERMO to a doctor? chanrobles virtual law library

A: I brought him later that afternoon to the house of Dra. LIGAYA


SANTOS.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Now, tell us, when for the first time did you bring GUILLERMO to Dra.
SANTOS? chanrobles virtual law library

A: Late in the afternoon of March 25, 1965,


sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: What did you tell Dra. SANTOS when you accompanied GUILLERMO
there? chanrobles virtual law library

A: I told her that he has been having loose bowel movements after taking
those "galungong" fish sir.chanroblesvirtualawlibrarychanrobles virtual law
library

Q: Did you not inform Dra. SANTOS about the arsenic solution you poured in
the food of GUILLERMO? chanrobles virtual law library

A: No, sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: What medicine was given by Dra. SANTOS? chanrobles virtual law library

A: She prescribed some tablets sir which I bought at the drugstore and gave
to GUILLERMO to take.chanroblesvirtualawlibrarychanrobles virtual law
library

Q: Did you give GUILLERMO a second dose of the arsenic


solution? chanrobles virtual law library

A: No more, sir, I just gave him that one dose on his rice and viand that
lunchtime of March 25, 1965.chanroblesvirtualawlibrarychanrobles virtual law
library

Q: After giving GUILLERMO those tablets prescribed by Dra. SANTOS, did


his condition improve, i.e., did this vomitting and loose bowel movements
stop? chanrobles virtual law library

A: No, sir, it continued.chanroblesvirtualawlibrarychanrobles virtual law library


Q: Did you bring him again to the doctor when GUILLERMO'S vomitting and
loose bowel movements persisted? chanrobles virtual law library

A: No more, sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Did you not bring GUILLERMO to the hospital when his condition was
getting worse? chanrobles virtual law library

A: No, sir, because GUILLERMO said the medicine is just enough and he will
just finish it and see the outcome.chanroblesvirtualawlibrarychanrobles virtual
law library

Q: Was GUILLERMO able to consume all the medicine prescribed by Dra.


SANTOS? chanrobles virtual law library

A: No, sir, because he died at about 4:00 or 5:00 in the morning of March 27,
1965.

On December 10, 1965 Hanasan was charged with murder before the Court of First
Instance of Manila, committed, in the language of the information, as follows:

That on or about the 25th day of March, 1965, in the City of Manila
Philippines, the said accused, with intent to kill, treachery and evident
premeditation in consideration of a prize and with cruelty, by deliberately an
inhumanly augmenting the suffering of the victim, with grave abuse of
confidence, employing craft or fraud and by means of poison, did then and
there wilfully, unlawfully and feloniously administer and/or give arsenic
solution mixed with rice and "paksiw na galunggong" to one Guillermo Literal,
thereby inflicting upon the said Guillermo Literal internal physical injuries
which were the direct and immediate cause of his death immediately
thereafter.

Upon arraignment, the accused, duly assisted by counsel de parte, voluntarily pleaded
guilty to the above-quoted indictment. Despite this voluntary plea of guilty, the trial court
nevertheless received evidence relative to the aggravating and mitigating circumstances
attendant in the commission of the crime. The trial court thereafter rendered judgment finding
the accused guilty beyond reasonable doubt of murder by means of poison, with the
aggravating circumstances of evident premeditation and abuse of confidence, and the
mitigating circumstance of voluntary plea of guilty, and consequently sentenced him to
the extreme penalty of death, with the accessory penalties provided by law, to indemnify the
heirs of the deceased in the amount of P10,000 and to pay the
costs.chanroblesvirtualawlibrarychanrobles virtual law library

The automatic elevation of this case to us for review is pursuant to section 9 of Rule
122 of the Rules of Court?chanrobles virtual law library

The appellant poses two issues, formulated by him as follows:

The lower court erred in finding that Guillermo Literal died from arsenic
poisoning; andchanrobles virtual law library

The lower court erred in discounting the mitigating circumstance of


voluntary surrender and appreciating only the plea of guilty, thereby failing to
offset the two aggravating circumstances of evident premeditation and abuse
of confidence.
1. Upon the first issue, the proof of record is indubitable that the effective cause of the
victim's death was arsenic poisoning. In his statement, exhibit A, given under oath to the NBI,
the appellant admitted that he poured arsenic solution on the rice and paksiw na
galunggong that the deceased ate for lunch on March 25, 1965; that the deceased consumed
about three-fourths of the poisoned food; and that after an hour, the deceased complained of
nausea and then vomitted and suffered from loose bowels. This is part of his narration:

Q: Will you explain to us now why arsenic was found in the remains of
GUILLERMO? chanrobles virtual law library

A: Because, sir, two days before GUILLERMO died I mixed arsenic in the
food of GUILLERMO.chanroblesvirtualawlibrarychanrobles virtual law library

Q: What food ?chanrobles virtual law library

A: His rice, sir, and the "paksiw na galunggong."chanrobles virtual law library

Q: When did you give arsenic to GUILLERMO? chanrobles virtual law library

A: Lunchtime, sir, of March 25, 1965.chanroblesvirtualawlibrarychanrobles


virtual law library

Q: Where? chanrobles virtual law library

A: In the dining room of our house there at 682 Manga Avenue, Sta. Mesa,
Manila."

During the trial, the appellant, through counsel, affirmed his extrajudicial confession,
exh. A, thus:

ATTY. RAZON:

Your Honor. Whatever it is in the confession, we already admitted that.

The appellant now claims that what he poured on the rice and fish of Guillermo Literal
on March 25, 1965 was mere water, quoting that part of his extrajudicial confession which
states that "It was the water from this bottle that I poured on the plate of rice of Guillermo and
on the "paksiw na galunggong" that lunchtime of March 25, 965." But the appellant
conveniently omitted to mention his admission that he added lye to make the arsenic more
soluble and the resulting solution more potent. Thus, he stated:

Q: We are showing you this bottle, a 200 cc bottle with the cover marked
"Lady's Choice," half filled with water and about 1/5 of white precipitation.
Have you seen this bottle before?chanrobles virtual law library

A: That is the bottle of arsenic sir. The white substance on the buttom [sic],
sir, is the arsenic and the liquid is water. It was the water from this bottle that I
poured on the plate of rice of GUILLERMO and on the "paksiw na
galunggong" that lunchtime on March 25, 1965? chanrobles virtual law library

Q: Do you mean to tell us that the liquid in this bottle is water


only? chanrobles virtual law library

A: No, sir, I added a little quantity to [sic] LYE there sir, to make the arsenic
more soluble and the solution more potent. (Emphasis supplied)
Dr. Lorenzo A. Sunico of the NBI, whose competence as a toxicologist was admitted by
the appellant, 2 testified that arsenic oxide is soluble in lye, 3 a strongly alkaline substance
used in cleaning and in making soap. 4chanrobles virtual law library

That the cause of death of the victim was arsenic poisoning was confirmed by the
toxicology report 5 of said Dr. Sunico which recites that the right pelvic bone taken as a
specimen from the exhumed remains of the dead was found positive for traces of arsenic. In
his extrajudicial confession, the appellant gave his express conformity to the foregoing
findings:

Q: Are you aware that the NBI exhumed the remains of


GUILLERMO? chanrobles virtual law library

A: Yes, sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Do you know the reason why? chanrobles virtual law library

A: For laboratory examination, sir, to determine the presence of poison,


sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: We are showing you this document - Toxicology Report No. T-65-826, with
the following FINDINGS: "spectrographic examination of the right pelvic bone
after ashing gave POSITIVE RESULT for traces of ARSENIC." This is the
result of the general toxicological examination of the remains of GUILLERMO
LITERAL. Do you believe this toxicological report which you just read?
chanrobles virtual law library

A: Yes, sir, I do.chanroblesvirtualawlibrarychanrobles virtual law library

Q: And you are also aware that the specimens mentioned in this report were
taken from the remains of the late GUILLERMO whom you claimed and
injured as your brother?chanrobles virtual law library

A: Yes, sir."

The mention of "gastro-enteritis" in the death certificate 6 as the cause of death cannot
avail the accused any as the certificate itself recites that the informant on the matters stated
therein was no other than the appellant himself. He was not expected to, as in fact he did not,
disclose that the victim died of arsenic poisoning administered by him. Instead he reported
that the deceased died from natural causes. Indeed, the appellant misled the physician who
treated the victim as to the real cause of the latter's ailment by informing her that the
deceased was suffering merely from loose bowel movement, 7 and did not inform her that he
had administered arsenic solution to the said deceased. 8chanrobles virtual law library

2. Upon the second issue, we agree with the court a quo that the mitigating
circumstance of voluntary surrender cannot legally be credited in favor of the
appellant.chanroblesvirtualawlibrarychanrobles virtual law library

So that the mitigating circumstance of voluntary surrender may properly be appreciated


in favor of an accused, the following requisites must concur: (a) the offender had not been
actually arrested; (b) the offender surrendered himself to a person in authority or to an agent
of a person in authority; and (c) the surrender was voluntary. 9In his extrajudicial confession,
exhibit A, the contents of which he unequivocally affirmed at the trial, the appellant stated:

Q: This information you gave us now is contrary to your denials in your


statement of November 18 and 21, 1965 where you denied poisoning
GUILLERMO for the P10,000.00 insurance. What made you give this
confession to us now? chanrobles virtual law library

A: Last night when I was laying [sic] wide awake at the NBI cell, I came to
realize that it would be futile for me to hide these things from the NBI.
Earlier, I attempted to escape but I was not able to go far and I was
recaptured. Sir, thinking about all these things I realize that the only way I can
clear my conscience is to tell you everything and all the wrong deeds I have
done in the past. As a matter of fact, sir, I will tell you now everything about
the death of my niece VIVENCIA HANASAN and that girl ZOSIMA
BALLENTOS.chanroblesvirtualawlibrarychanrobles virtual law library

Q: What is this that you want to tell us about VIVENCIA HANASAN and
ZOSIMA BALLENTOS? chanrobles virtual law library

A: About their deaths sir, which is almost similar to the death of REBECCA
HERNANDO and GUILLERMO (LlTERAL) of which I am also responsible.
(Emphasis supplied)

At the hearing for the reception of evidence to prove aggravating and mitigating
circumstances, the appellant testified:

Q: Is it not a fact on December 6 you escaped the NBI custody that is why
you gave the statement on December 8, 1965? chanrobles virtual law library

A: I do not exactly remember the date but that is true. (Emphasis supplied)

It is crystal clear then that the appellant did not surrender voluntarily to a person in
authority or to an agent of a person in authority. While he was being investigated under NBI
custody regarding the death of one Rebecca Hanasan, he denied in statements he issued on
November 13 and 21, 1965 that he poisoned Guillermo Literal. He escaped from NBI custody
sometime during the first week of December but was immediately recaptured. It was then
while under NBI custody again that, on December 8, 1965, he confessed to sole responsibility
for the death of Guillermo Literal. Voluntary surrender was no longer possible as he was
already in custody. There is thus no voluntary surrender to speak of since the appellant was in
point of fact arrested. 10chanrobles virtual law library

3. The court a quo appreciated the aggravating circumstances of evident premeditation


and abuse of confidence against the appellant. Indeed, a searching study of the record
compels our concurrence in the court's view.chanroblesvirtualawlibrarychanrobles virtual law
library

It was sometime in January 1965 that the thought of insuring the life of Guillermo
Literal, with himself as the primary beneficiary thereof, first entered his mind. This thought
was translated into a reality on March 5, 1965 when the deceased (Guillermo) was insured by
the Philippine American Life Insurance Company for P10,000, through the appellant's
initiative and efforts. Then he waited for the opportunity to poison the insured so that he could
collect the amount of the insurance policy. This opportunity came on March 25, 1965.

Q: When did you transfer to Manga Avenue? chanrobles virtual law library

A: Around January 1965, sir. I am not sure of the exact date,


sir.chanroblesvirtualawlibrarychanrobles virtual law library

Q: When you transferred to 692 Manga Ave., did GUILLERMO join you
immediately? chanrobles virtual law library
A: No sir, after about two (2) weeks
later.chanroblesvirtualawlibrarychanrobles virtual law library

Q: When for the first time did you think of insuring GUILLERMO? chanrobles
virtual law library

A: After he has stayed with me for about two (2)


weeks.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Whose idea was it to have GUILLERMO insured? chanrobles virtual law


library

A: He was present when one (1) underwriter came to the house and talked
about insurance and he (GUILLERMO) told me what was this (insurance) all
about and I explained to him the benefits of insurance until he was convinced
to get one for himself.

xxx xxx xxx

Q: Before this insurance underwriter came to your house, did you have any
other agreement with GUILLERMO concerning your identities? chanrobles
virtual law library

A: Yes, sir. We agreed that his name will be GUILLERMO LITERAL who is
my elder brother and that I am JOSE N.
LITERAL.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Why did you change your identities? chanrobles virtual law library

A: Because, sir, when I was still in Sta. Ana, I was arrested by MPD men
because of my murder case in Masbate where I used the name MANUEL
HANASAN and also I have a case in Davao City in which I am charged under
my true name ARMINGOL HANASAN. We agreed to use the name LITERAL
so that we will not be detected. Because, sir, I have already posted my bail
bond in my case in Masbate that is why I was released but I did not appear in
court during the hearing of the case and I know that there will be a warrant for
my arrest.chanroblesvirtualawlibrarychanrobles virtual law library

Q: Now, going back to this insurance, what happened after your talk with
BENJAMIN VERINA, the underwriter? chanrobles virtual law library

A: We agreed that GUILLERMO will insure himself with the PhilamLife for
P10,000.00 for a Five year Convertible Non-Participating insurance.

xxx xxx xxx

Q: Tell us, why did you poison GUILLERMO? chanrobles virtual law library

A: For the money, sir. I needed money badly and this was the reason I
convinced him to insure himself for P10,000.00 making myself his beneficiary.
When the policy was approved I waited for the right opportunity to poison him
and March 25, 1965 was it, sir.

Obviously the appellant had nurtured, deliberated on, and persisted in, his evil plan to
kill the deceased - "for the money," to quote his own words - from the time he broached the
subject of the insurance to the latter sometime in January 1965, until he finally poisoned him
on March 25, 1965. Undeniably present here is that period of time sufficient in a judicial sense
to afford full opportunity for meditation and reflection and long enough to allow the appellant's
conscience to overcome the determination of his will if he had desired to harken to its
warnings. 11 Inescapable are the facts that the crime was spawned by cold-blooded scheming,
and the tenacious persistence of the appellant in moving forward to its conclusion the
accomplishment of the felony. 12chanrobles virtual law library

The aggravating circumstance of abuse of confidence must likewise be appreciated in


this case. The appellant befriended Guillermo Literal, and later enticed him to live in his
(appellant's) house and help in his buy and sell business as well as in the household chores.
By this apparently charitable act of taking a jobless illiterate man into his household and
providing him with the necessities of life, the appellant must assuredly have gained the
confidence and trust of the deceased who clearly regarded him as benefactor and protector. It
was this confidence which enabled the shrewd appellant to deceive the deceased into signing
his own death warrant - i.e., taking a life insurance policy for P10,000 and making the
appellant the primary beneficiary. It was also this confidence which led the unsuspecting
victim to stand up and turn his back in order to comply with the appellant's command to get
drinking water, thus affording the appellant the chance to pour the arsenic solution on the
deceased's meal of rice and "paksiw na galunggong." The victim's confidence and trust in the
appellant facilitated the commission of the crime, the latter taking advantage of the victim's
belief that he would not abuse the confidence reposed in him. 13chanrobles virtual law library

Viewing the record in its entirety, we see no reason to disturb the lower court's finding
that the appellant committed the crime of murder by means of poison on the person of
Guillermo Literal, attended by the aggravating circumstances of evident premeditation and
abuse of confidence, only one of which is offset by the mitigating circumstance of voluntary
plea of guilty.chanroblesvirtualawlibrarychanrobles virtual law library

The civil indemnity awarded to the heirs of the deceased must be increased to
P12,000.14chanrobles virtual law library

ACCORDINGLY, with the modification that the indemnity to be paid by the appellant to
the heirs of Guillermo Literal is increased to P12,000.00, the judgment a quo is affirmed, at
appellant's cost.

Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano and
Teehankee, JJ., concur.
Barredo, J., took no part.
Reyes, J.B.L., J., is on leave.

Endnotes:
1
Exhibit A, pp. 1, 2, 4 and 8, Record, pp. 17-
24.chanroblesvirtualawlibrarychanrobles virtual law library

2
P. 8, tsn., January 11, 1966.chanroblesvirtualawlibrarychanrobles virtual law
library

3
P. 9, tsn., id.chanroblesvirtualawlibrarychanrobles virtual law library

4
Webster's New World Dictionary, College Edition, p.
876.chanroblesvirtualawlibrarychanrobles virtual law library

5
Exh. B, Record, p. 28.chanroblesvirtualawlibrarychanrobles virtual law library

6
Exhibit E, Record, p. 30.chanroblesvirtualawlibrarychanrobles virtual law
library
7
Testimony of Dra. Ligaya T. Santos, p. 11,
tsn., id.chanroblesvirtualawlibrarychanrobles virtual law library

8
Testimony of the appellant, p. 15,
tsn., id.chanroblesvirtualawlibrarychanrobles virtual law library

9
Reyes, The Revised Penal Code, 1965 ed., vol. 1, pp. 271-
272.chanroblesvirtualawlibrarychanrobles virtual law library

10
People vs. Conwi, 71 Phil. 595.chanroblesvirtualawlibrarychanrobles virtual
law library

11
People vs. Sarmiento, L-19146, May 31, 1963; People vs. Yturriaga, 86
Phil. 534; U.S. vs. Gil, 13 Phil. 531.chanroblesvirtualawlibrarychanrobles
virtual law library

12
People vs. Gonzales, 76 Phil. 473; People vs. Carillo, 77 Phil.
572.chanroblesvirtualawlibrarychanrobles virtual law library

13
People vs. Luchico, 49 Phil. 689; Mariano vs. People, 68 Phil.
724.chanroblesvirtualawlibrarychanrobles virtual law library

14
People vs. Pantoja, L-18793, October 11, 1968, 25 SCRA 469, 473.
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-5794 July 23, 1953

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
MAMERTO DE LA CRUZ, defendant.
BENIGNO ILAGAN, CHRISTOPHER VALENCIA and TIMOTEO VALENCIA, sureties-
appellants.

Potenciano A. Magtibay for appellants.


First Assistant Solicitor General Roberto A. Gianzon and Solicitor Felicisimo R. Rosete
for appellee.

TUASON, J.:

This appeal is from an order of the Court of First Instance of Quezon for the appellants,
as sureties for an accused who had escaped, to show cause why the bailbond should not
be forfeited, and another order denying their motion to be discharged as sureties. The
bail has not actually been forfeited and much less have the appellants been required to
pay the amount thereof, but it is assumed that they would be unless the orders on appeal
were set aside.

The facts are not in dispute. It will be well to sacrifice brevity in the recital of the facts the
better to understand and appreciate the main issue and the discussion that will follow.
The main issue is whether the actions of the sureties, of the court, and of the
government, to be presently set forth, worked to cancel the bail or exonerate the
appellants.

Mamerto de la Cruz was charged with theft of large cattle in the court of justice of the
peace of Tagkawayan, Province of Quezon, by reason of which on December 31, 1946,
he put up a bond of P1,500 signed by the three appellants herein. Preliminary
investigation of the complaint was conducted on January 2, 1947, after which, on the
same date, the defendant was bound over to the Court of First Instance for trial. The
Provincial Fiscal filed an information on January 9, and the case was set for arraignment
of the accused for January 31.

Meanwhile, i.e., on December 24, 1946, the Justice of the Peace of Paracale, Camarines
Norte, had issued a warrant for the arrest of the same defendant, also for thefts of large
cattle, which warrant a squad of constabulary soldiers headed by one Sergeant Andres
Agustin from Camarines Norte came to Tagkawayan to execute. Appraised of that fact,
the sureties surrendered De la Cruz to the Mayor of that municipality, and that official
took him into custody and forthwith turned him over to the Justice of Peace, who in turn
delivered him over to the constabulary soldiers from the adjacent province. Then and
there, in a writing dated January 14, 1947, Sgt. Agustin acknowledged receipt of the
prisoner and further stated, among other matters: "Subject to action by superior
authorities, I undertake to bring back the person of said Mamerto de la Cruz to
Tagkawayan, Quezon, whatever may be the result of the investigation to be made by the
Justice of the Peace of Paracale, Camarines Norte, so that said accused may be
transmitted to Lucena, Quezon, to answer for the criminal case No. 656 of that court."

Let us return to developments in Lucena..

Notice of the order setting the case for arraignment for January 31 sent on January 16 by
the Provincial Sheriff to the Chief of Police of Tagkawayan as ex oficio Deputy Sheriff for
service to the bondsmen. On January 18, the Chief of Police of Tagkawayan returned the
notice to the Provincial Sheriff with the information that the bondsmen "refused to sign
the subpoena because the accused Mamerto de la Cruz is held for trial at the Justice of
the Peace Court of Paracale, Camarines Norte." There-upon, on January 20, the Clerk of
Court of Quezon transmitted the notice direct to the Chief of Police of Paracale,
Camarines Norte, but none to the bondsmen, who from this time on were bypassed. On
January 25, the Chief of Police of Paracale returned the notice to the Court of First
Instance of Quezon stating that Mamerto de la Cruz was being detained in the provincial
jail at Daet, Camarines Norte, awaiting trial. The Paracale Chief of Police added that the
cases with the accused had been elevated to the Court of First Instance at Date on the
18th of January by the Justice of the Peace of Paracale. The Chief of Police attached to
his communication a copy of the receipt of the prisoner signed by the Clerk of Court of
Camarines Norte.

On February 1, the Clerk of Court of Quezon wrote the Provincial Warden at Daet,
Camarines Norte, for confirmation of the Paracale Chief of Police's communication, with
a request for an early reply, and on February 6, the Provincial Warden answered "that
Mamerto dela Cruz was already confined in the provincial jail of Daet, Camarines Norte,
since January 18, 12:30 p.m., 1947."

In view of the defendant's arrest and detention in Camarines Norte, on February 11


Judge Antonio Caizares of the Court of First Instance of Quezon reset the casein an
order of the following tenor: "Apareciendo delinforme del Alcaide Provincial de Daet,
Camarines Norte, que el acusado Mamerto de la Cruz se halla detenido enla carcel
provincial de dicha provincia, se seala la vistade esta causa para el dia 25 Marzo de
1947, a las ochoy media de la maana." On the same date His Honor appointed an
attorney de oficio to defend the defendant. On his part the Clerk of Court forwarded to the
Provincial Sheriff of Camarines Norte at Daet, for service on Mamerto de la Cruz, notice
in judicial form No. 65 informing the prisoner that his case was set for arraignment and
hearing for March 25th.

For reasons not disclosed by the record, on February 13, the arraignment and hearing
was ordered postponed for March 31 and notice of the postponement was for-warded on
February 14 by registered mail to the Provincial Sheriff of Camarines Norte for service on
Mamerto de la Cruz. On February 17, the Provincial Sheriff through a deputy the notice
to the Clerk of Court of Quezon with the information that it had been duly served.

On February 26, Mamerto de la Cruz escaped from the provincial jail at Daet. Unaware,
apparently, of that escape, the Provincial Fiscal of Quezon moved for postponement of
the arraignment and hearing from March 31 to another date, alleging that he was
"contemplating to conduct a reinvestigation of the case to secure additional evidence,"
and the court ordered that the case be included in the next April calendar.

Nothing seems to have been done on the case until December of the same year (1947),
when notice was sent by the Clerk of Court of Quezon by registered mail to the Provincial
Sheriff of Camarines Norte for service on the prisoner through the Provincial Warden. On
December 18, the Provincial Warden informed the Camarines Norte Provincial Sheriff
that the prisoner had escaped in February (ten months ago), which information was
transmitted to the Quezon Court of First Instance on the same date.
Because of that information, so it seems, trial of the case in Lucena was set for February
23, 1948, and from that date postponed to March 17. On the latter date Judge Arguelles,
then presiding, having "been informed by the fiscal that the accused had escaped," had
the case dropped from the calendar until further assignment, and ordered the arrest of
the escaped prisoner. Still no order to produce the accused or notice of the hearing was
given the sureties.

In an order dated December 10, 1948, the case was put on the calendar for January 10,
1949, by Honorable Victoriano, now the presiding Judge. Before the latter date, the
Fiscal filed a motion for an indefinite postponement of the trial because of the prisoner's
escape. Nevertheless, on the scheduled date, January 10, the case was called.

It was then that the bondsmen were given by Judge Victoriano 30 days within which to
show cause why the bail should not be forfeited. In the same order His Honor, Judge
Victoriano, noted that the bondsmen had refused to sign the subpoena on the ground
that they had already withdrawn as such.

In United States vs. Bonoan, 22 Phil., 1, it was held that it was a good defense in an
action on a bail bond for the sureties to allege that the indicted person was, when his
production was ordered, in prison in another province for another cause.

The facts of that case were substantially identical with those of the instant case. As
summarized in the syllabus of the decision they were as follows:

Mandac was allowed bail by the Court of First Instance of Ilocos Norte while his case was
on appeal in the Supreme Court from a sentence for homicide. While at liberty, he
committed the crime of bandolerismo in Nueva Vizcaya, for which he was arrested. His
appeal having been declared deserted by the Supreme Court, the sentence was
remanded for execution. At the precise time the lower court called upon his bondsmen for
his appearance, their principal was under arrest in Nueva Vizcaya, whose authorities
refused to surrender him to the said bondsmen.

The Solicitor General would distinguish between that case and the case at bar because
"the sureties in the Bonoan case could have produced the accused in court were it not for
the refusal by the provincial authorities of Nueva Vizcaya to surrender him." In other
words, Bonoan and his fellow-sureties made an effort to bring Mandac from Nueva
Vizcaya while the sureties here did nothing of the sort.

It is not easy to see how the failure of the appellants herein to claim Mamerto de la Cruz
from the authorities of Camarines Norte can influence the result of this appeal. In the first
place, the unsuccessful attempt by Mandac's sureties to get their principal was not the
ratio decidendi of the judgment or the underlying reason for exonerating them. In the
second place, law does not require the useless or the impossible. The Camarines Norte
authorities could hardly be expected to let the bondsmen have the prisoner if they had
demanded his custody for the purpose of presenting him to the Court of First Instance of
Quezon Province. As a matter of fact, it was the court alone which could demand the
transfer of the accused to Quezon; and the court far from doing something in that
direction, appeared from all indications to be satisfied with holding the case before it until
the Camarines Norte cases were finished.

It is pointed out that the appellant did not surrender the accused to the court as provided
by section 16 of Rule 110, according to which, "upon application filed with the court and
after due notice to the fiscal, the bail shall be cancelled and the sureties discharged from
liability(a) where the sureties so request upon surrender of the defendant to the court; . . .
." But this Rule has no bearing on the case, in our opinion. Manifestly it has in view of a
situation where the prisoner is at the disposal of his sureties and these wish to be
released from their obligation on the bond before its terms are broken. The sureties'
rights, duties, and liabilities after the prisoner has absconded, or when for one reason or
another he cannot be found, must be controlled by other statutory provisions or by the
general principles of contract. Bailis nothing but a contact. (U.S. vs. Bonoan, supra).

In consonance with these principles, "It is the settled law of this class of cases that the
bail will be exonerated where the performance of the condition is rendered impossible by
the act of God, the act of the obligee, or the act of law." (Taylor vs. Taintor, 83 U.S., 366,
cited in U.S. vs. Bonoan, supra). And so the Court reasoned on Bonoan's appeal:

The United States, the plaintiff in the homicide case against Mandac, was the obligee in
the bond. The same plaintiff and obligee caused the arrest and confinement of Mandac in
Nueva Vizcaya on a charge of bandolerismo and refused to surrender him to the
appellants. It would be against all principle of equity and justice to allow the Government
to recover against the sureties for not producing their principal when it had itself placed
the principal beyond their reach and control. There was an implied covenant on the part
of the Government when the bond was accepted that it would not in any way interfere
with the due compliance of the conditions in the bond or take any proceeding against the
principal which would affect the rights of the sureties. Reese vs. U.S., 13, citing Rathbone
vs. Warren, 10 Jones 586; etc.

xxx xxx xxx

The Government had a perfect right to arrest and hold Mandacin the Province of Nueva
Vizcaya on the charge of bandolerismo. It also had the right to decline to surrender him
to these appellants. But it cannot by these acts prevent the fulfillment of the conditions in
the bond by the sureties, and at the same time force the sureties to pay the amount of
the bond.

What material differences there are between the Bonoan case and the case at hand will
be found to improve the herein appellants' position. As already noted, soon after
Mamerto de la Cruz was arrested in Tagkawayan and conducted to Camarines Norte-to
be exact, on January 18 (the escape took place on February 26) the sureties refused
to accept service of notice of hearing and informed the court through the Provincial
Sheriff that their principal was being held for trial in other cases in Camarines Norte, and
gave the court to understand that, for that reason, they could not effect his appearance
and were not obligated to do so. And from that time on the court dealt directly and
exclusively with Camarines Norte officials, not bothering any more in any manner with the
sureties. The court did not tell the sureties to produce the defendant until 1949, more
than two years after his escape and after it had notice of the escape. When the accused
was still in jail the court did not insinuate to the sureties that they should go and fetch
him. If it had, it is to be presumed that the sureties would have followed the indication,
much as they realized the futility and senselessness of the step. As it was, the court by its
action led the sureties into believing, and these had every reason to believe all that time,
that what they had done was enough and that their connection, incidentally, the
Government may rightly be considered estopped by laches.

If this appeal must be decided within the confines of section 16 of Rule 110, as the
appellee would have it, the preceding circumstances and discussion could supply the
argument that the appellants did substantially comply with the terms of their undertaking.
It has been seen that if the sureties did not bring the person of the accused to court,
which they were powerless to do due to causes brought about by the Government itself,
they did the next best thing by informing the court of the prisoner's arrest and
confinement in another province and impliedly asking that they be discharged. On its
part, the court, by keeping quiet and, indeed, issuing notices of the hearings direct to the
prisoner through the Sheriff of Camarines Norte and ignoring the sureties, impliedly
acquiesced in the latter's request and appeared to have regarded the accused
surrendered. All signs combined to give the impression that the court in reality had that
precise notion and intent.

As to the Provincial Fiscal, no notice of the sureties' desire to be discharged was


furnished him. But there is every reason to believe that he learned of all that happened.
Having control of the case, he must have known of its various continuances and the
reasons therefor. What is more, notice to the Provincial Fiscal of the sureties' request for
discharge would have been a useless formality. There is no suggestion that office would
have opposed or could have done anything to change the bondsmen's status and
responsibility or otherwise protect the interest of the Government if he had been given
formal notice. And again, the Government can not very well complain that the prosecuting
officer was not informed in writing of De la Cruz's detention in Camarines Norte and the
bonds-men's desire to be relieved of all obligation, when it itself, through other agencies,
effected the detention. Lastly, the Fiscal appears to have been satisfied with the manner
in which the sureties proceeded in the premises, as evidenced by his making no move
whatever to have them brought to account. The order to the sureties to explain why their
bail should not be forfeited was of the court's own initiative, even in disregard of the
Fiscal's motion to continue the scheduled trial indefinitely.

Universe in the manners of court and law, the appellants may not have followed the
prescribed procedure to the letter, but they tried with all the diligence at their command to
live up to their commitment the best they knew how and the court and the Government's
representative acquisced in what they had done and the form in which they had acted.

One important point to be kept in mind in this discussion is that sureties are said to be
favorites of the law. Assuming an obligation without any thought of material gain, except
in some instances, all presumptions are indulged in their favor. This rule is especially to
be adhered to with respect to bail, which is a right ensured by the Constitution as a
matter of the highest public concern and policy.

Accordingly it is the judgment of this Court that the appellants should be discharged as
sureties for Mamerto de la Cruz, and it is so ordered, without costs.

Paras, C.J., Pablo, Bengzon, Padilla, Reyes, Jugo, Bautista Angelo, and Labrador,
JJ., concur.

Separate Opinions

MONTEMAYOR, J., dissenting:

From the majority opinion discharging the appellants as sureties, I dissent.

In great measure the majority relies on the case of U.S. vs. Bonoan (22 Phil., 1), and it is
claimed that the ratio decidendi in said case was not the unsuccessful attempt by the
sureties to get the accused from the Nueva Vizcaya authorities and present him to the
Court of First Instance of Ilocos Norte. I am afraid that claim is untenable. I hold that the
only reason why the Supreme Court in that case exonerated the sureties was because
the Nueva Vizcaya authorities refused to give up Mandac to them. And that is why the
court said that it would be against all principle and justice to allow the Government to
recover against the sureties for not producing their principal when it had itself placed the
principal beyond their reach and control. And to further show that the ratio decidendi of
the case was the refusal of the Nueva Vizcaya authorities to give the defendant up, said
sureties gave as reason for their failure to produce Mandac before the court the fact that
the Nueva Vizcaya authorities refused to give him up; and the decision of this Court in
that case mentioned this refusal thus:

. . . It is admitted by all parties . . . that the said authorities (Nueva Vizcaya) refused to
turn him over to the appellant bondsmen for the purpose of presentation to the Court of
First Instance of Ilocos Norte; . . .

. . . The same plaintiff and obligee (United States) caused the arrest and confinement of
Mandac in Nueva Vizcaya on a charge of bandolerismo and refused to deliver him up to
the appellants. (22 Phil., 1, 4 and 5).

The very majority opinion in citing the case of Mandac states that the Nueva Vizcaya
authorities refused to surrender him to the appellant bondsmen.

The rule cannot be otherwise. The mere arrest of a defendant out on bail, for the
commission of another crime in another province, does not ipso facto release the sureties
in the first case. While said defendant is confined in the second province under the
second charge, the obligation and liability of the surety on the bail in the first charge is
merely suspended, dormant, unless, of course, as in the case of Mandac, they tried to
get the defendant from the authorities in the second province to present him to the court
of the first province and they were refused by the authorities. Any other rule would be
unfair and disastrous to the Government.

Supposing that A is arrested on a charge of murder and before trial, he is released on


bail, but because of the strength of the evidence against him, the amount of the bond is
fixed at P30,000. Let us further suppose that now free, A goes to another province and
commits alight offense or misdemeanor penalized with arresto menor. Does it mean and
could it mean that for the arrest under the second charge of said light offense or
misdemeanor, the sureties on the bail bond of P30,000 are automatically released? If so,
then what assurance or guarantee has the court in the first province before which the
charge of murder is pending, that A will appear at the trial, if we assume that his sureties
have already been released on their bond? A, in this case, for the light offense committed
in the second province may at any time be released on bail for, say P50 or a P100. But
even if he were not released on bail under the second charge, considering the lack of
facilities of small towns or municipalities for keeping prisoners, and considering the lax
methods of confining them, specially those charged only with a light offense, he could
easily escape. Whether he escapes from the town jail or islet out on bail of say P50 or
P100, he is completely free and at liberty, without any bail on the serious charge of
murder in the first province, this under the theory of the majority that his second arrest for
misdemeanor automatically cancelled his bond on the murder charge. It is not difficult to
imagine the serious consequences of such a rule. I hold that the subsequent arrest for
another charge in another province of a person out on bail in the first province on a
different charge, does not automatically exonerate and release his sureties, but that the
obligation of said sureties is merely suspended.

The subsequent arrest or custody of the principal on another charge, or in other


proceedings, while he is out on bail, does not operate ipso facto as a discharge of his
bail, but its effect depends on its continuance at the time the principal is bound to appear.
For example, where the removal of a prisoner by a court of competent jurisdiction beyond
the control of the bondsmen continues through the term at which he is bound to appear,
thus rendering them unable to produce him at the time and place set for trial in
accordance with the obligation, it constitutes an act of law which discharges the
sureties. Until the time for trial the rights and liabilities of the bail are dormant only, and
revive the moment the principal is free again, so that if, while in custody on another
charge, he escapes, or is again discharged, and is a freeman when called upon his
recognizance to appear, his bail are bond to produce him. (8 C.J.S., Bail sec. 77 p. 148.)
The majority opinion leans heavily on the circumstance that the Court of Quezon
Province by-passed the sureties and had been dealing directly with the authorities of
Camarines Norte in notifying the defendant to appear for trial in Quezon Province. This
was a mistake on the part of the court or rather of the Clerk of Court of Quezon Province.
This error may have been due to the impression of the Quezon Province Court or clerk
that the sureties had already been released and so were no longer under obligation to
bring the accused before it for trial. But this wrong impression was created or caused by
the sureties themselves who refused to sign the notice sent to them claiming that by
surrendering the defendant to the town authorities of Tagkawayan, they had already been
released. Of course, this was an error. In fact, there has been a series or comedy of
errors, beginning with the municipal authorities of Tagkawayan, down to the Court of
Quezon Province, not excluding the sureties themselves. When the Constabulary
soldiers came to Tagkawayan with a warrant of arrest against the defendant, his sureties
believing that they could release themselves by presenting him to the town authorities,
brought him to the Municipal Mayor; the Municipal Mayor acknowledged delivery and in
turn delivered the accused to the Justice of the Peace and the latter official, believing
himself duly authorized, acknowledged delivery and turned him over to the PC soldiers,
who accepted delivery and promised to bring him back if and when needed. Of course,
all this was based on a misapprehension of their powers, duties and obligations, and a
misconception of surely error or ignorance of the law, though based on good faith, cannot
serve to exonerate the sureties to a bail bond. The law on the release of sureties is clear
and definite. Rule 110, section 16 (a) provides as follows:

SEC. 16. Discharge of sureties. Upon application filed with the court and after due
notice to the fiscal, the bail bond shall be cancelled and the sureties discharged from
liability (a) where the sureties so request upon surrender of the defendant to the
court; . . .

Said section of the rule was taken from section 75 of General Orders No. 58. In
interpreting said section 75, this Court in the case of People vs. Loredo (50 Phil.,
209)said:

In the present case it does not appear that the fiscal had been notified of the petition for
the discharge of the bond, nor had the court issued an order of discharge. The mere
presentation or presence of an accused in an open court is not sufficient in itself. The
attention of the court must be called to his presence and the intention to surrender the
body of the accused must be clearly and definitely stated and understood by the court. (6
C.J., page 243, paragraph 313). A surety who desires to produce and surrender the body
of the accused in open court is not relieved from further liability upon his bond until the
court accepts said surrender, and the only evidence of such act is the record of the court.
(Du Lawrence vs. State, 31 Oh. Cir., 418.)

It is a rule of general acceptance that the law on the release of bondsmen must be
substantially complied with.

SEC. 164. Compliance with Statutory Requisites. The procedure required by a statute
prescribing the manner in which a surrender by the sureties of their principal shall be
made must be substantially followed in order to exonerate them. (6 Am. Jur., 111, 112)

Surrender should be by unequivocal act with delivery of defendant into proper custody,
and should be made in compliance with statutory regulations, if any, such as those
covering notice and costs.

. . . If the statute or rules of court provide that a surrender by bail of their principal shall be
made in a certain manner, the surrender, to be effectual, should be in the manner
prescribed . . . (8 C.J.S., sec. 25 d[1], page 38).
Some authorities even stand for strict compliance:

Statutory manner in which surrender in exoneration of bail should be performed must be


strictly followed. (664 Bay Ridge Ave. Corporation vs. Maresca, 263 N.Y.S. 600, 147
Misc. 232, cited in 8 C.J.S., 38 note 49).

It is evident that by their act of delivering the person of the accused to the municipal
authorities of Tagkawayan, the appellants herein were not released. In the first place,
they made no proper application for release. In the second place, the Provincial Fiscal
was not notified. But most important of all was the fact that at that time the Justice of the
Peace court has already lost jurisdiction over the case, because it had long been sent up
to the Court of First Instance, and the Provincial Fiscal had already even filed the
corresponding information. At that stage, it was only the Court of First Instance of
Quezon Province that could validly and competently accept delivery of the person of the
accused and release the sureties, provided, of course, that the corresponding application
was made and the provincial Fiscal was notified, which were not done.

The majority opinion says that the sureties were by-passed, and were not notified to
produce the defendant until 1949, and that "when the accused was still in jail the court
did not insinuate to the sureties that they should go and fetch him. If it had, it is to be
presumed that the sureties would have followed the indication, much as they realized the
futility and senselessness of the step." This assertion not only finds no support in the
record, but is even contrary to it and to the very statement of facts contained in the first
part of the majority decision, which says:

Notice of the order setting the case for arraignment for January 31 was sent on January
16 by the provincial Sheriff to the Chief of Police of Tagkawayan as ex-oficio Deputy
Sheriff for service to the bondsmen. On January 18, the Chief of Police of Tagkawayan
returned the notice to the Provincial Sheriff with the information that the bondsmen
'refused to sign the subpoena because the accused Mamerto de la Cruz is held for trial at
the Justice of the Peace Court of Paracale, Camarines Norte. (as quoted from page 3 of
the majority opinion).

The majority decision says that the Camarines Norte authorities could hardly be expected
to the bondsmen have the prisoner if they had demanded his custody for the purpose of
presenting him to the Court of First Instance of Quezon Province, and that the law does
not require the useless or the impossible. To this I cannot agree. There is nothing to
justify the belief that the Camarines Norte authorities would not give up the defend-ant for
trial in Quezon Province. In Camarines Norte, he was accused only of theft of large
cattle, the same kind of offense of which he was accused in Quezon Province. The notice
sent by the Quezon Province Court to the defendant through the Camarines Norte
authorities was according to the records duly served on him while in jail. If the Camarines
Norte authorities were really unwilling to give him up even temporarily for trial in Quezon
Province, they would have said so in the return of the service and they would not even
have made the service on the defendant because in that case it would have been
useless and unnecessary to notify him if said authorities would not let him go anyway.
Moreover, the very Sergeant of the Constabulary who received the person of the
defendant in Tagkawayan, made a solemn promise in writing that he would bring back
the accused to Quezon Province whenever needed. In other words, there was already an
undertaking by the authorities of Camarines Norte through a responsible peace officer
that they would not only release the accused from confinement in Ca-marines Norte, but
would even take him to Quezon province for trial. Furthermore, it is nothing unusual for a
prisoner confined in jail in one province to be taken to another province to face trial for
another offense. Of course, he would have to be under guard. Even dangerous criminals
finally convicted and serving sentence in the Insular Prison at Muntinglupa are
sometimes sent to distant provinces even by sea to face trial there in another case, or
even merely to testify. So, with more reason may one, accused of nothing more than theft
of large cattle, be sent to another province to face trial on another prior charge, specially
when his sureties demand his presence there.

In the present case, Quezon province and Camarines Norte adjoin each other and their
capitals are not far from each other. Had the appellant sureties complied with the notice
to them on January 27 to bring the accused for trial in Quezon Province, there is no
reason to believe that the Camarines Norte authorities would not have given them the
custody of the accused, although perhaps under Constabulary guard. The trouble is that
they made no effort or attempt in that direction, but even ignored the notice by refusing to
sign it. And not they come here and blame the Court of First Instance of Quezon Province
for holding them accountable for their failure to comply with the terms of their
undertaking.

Again, the majority says" "Unversed in the manners of court and law, the appellants may
not have followed the prescribed procedure to the letter, but they tried with all the
diligence at their command to live up to their commitment the best they knew how . . . ." I
am afraid this assertion not only finds no support in the record of the case, but actually
runs counter to it, because said record reveals that far from trying with all the diligence at
their command to live up to their commitment, they not only neglected to live up to said
commitment, but they actually refused to do so, in spite of the notice given them by the
court in January, 1947, before the accused had escaped. An as to their ignorance of
manners of court and law, there is the universal principle that ignorance of the law
excuses no one.

The majority opinion itself states that a bail bond is a contract between the Government
and the surety. I agree. But surely, a person who assumed the roles of surety and
contracts with the Government should before doing so apprise himself of the meaning
and consequences of the contract into which he is entering. He cannot and should not do
it blindly and in blissful ignorance and later ask and expect the courts to protect him from
the con-sequences of his own ignorance, neglect or folly. And the Government has
reason to assume that said person offering to be a bondsman is responsible and knows
what he is doing. When a person who commits a crime is arrested, the Government is
unreservedly willing to keep him safely in custody and even give him food and shelter
meanwhile, so as to secure his appearance in court for trial and decision. And when the
surety comes to court and offers himself to assume the role of jailer and solemnly
promised to produce the person of the accused in court whenever needed or else forfeits
the amount of his bond, he knowingly assumes a serious and solemn undertaking from
which he cannot easily extricate himself, to the prejudice of the Government, the speedy
administration of justice and the conviction and punishment of the accused is found
guilty.

Finally, the majority opinion says that the Government through the court, in leading the
appellants into believing that what they had done was enough and that their connection
with the case had been terminated, may really be considered as estopped by laches. In
the first place, the court's erroneous impression at the beginning that the appellants were
no longer liable under the bail bond and so by-passed them and dealt directly with the
authorities of Camarines Norte, was induced by the very act of said appellants in making
the court believe that they had already been released as sureties by their act of delivering
the accused to the municipal authorities of Tagkawayan. Surely, this mutual error, even
assuming the act of the clerk of court in later sending the notice of hearing to the
authorities of Camarines Norte, to be the act of the court itself, cannot serve to release
appellants, in violation of the express provision of the law. To secure exoneration as
sureties, the law provides a procedure which must be substantially followed. In the
second place, the general rule is that the Government may be held guilty of equitable
estoppel only when acting in its proprietary capacity. It cannot be so held when it acts in
its governmental capacity, as the Government acted in the present case.
An equitable estoppel ordinarily may not be invoked against a government or public
agency functioning in its governmental capacity; but where the elements of an estoppel
are present it may be asserted against the government when acting in its proprietary
capacity. (31 C.J. S., 403.)

In view of the foregoing, I dissent.

Republic of the Philippines


SUPREME COURT
Manila

SECOND DIVISION

G.R. No. L-64157-58 April 29, 1987

PHILIPPINE PHOENIX SURETY and INSURANCE INC., petitioner,


vs.
SANDIGANBAYAN [Third Division] respondent.

Renato C. Quintana for petitioner.

FERNAN, J.:

The issue in this special civil action for certiorari is whether or not the Sandiganbayan
acted with grave abuse of discretion in denying petitioner Philippine Phoenix Surety and
Insurance, Inc.'s motion for the cancellation of the bail bonds issued to accused
Remberto F. Castro and Winston Dulay were detained at the PC-INP jail in Camp Crame
by virtue of an Arrest, Search and Seizure Order [ASSO 4735] for alleged economic
sabotage.

On March 3, 1980, two informations for estafa against Castro were separately filed in
Branch 20 and 21 of the Court of First Instance of Rizal in Pasig [Criminal Cases Nos.
34721 and 347221. On the same day, two informations for falsification of public
documents were separately filed against him in the Court of First Instance of Rizal in
Pasay City.

On April 1, 1980, Phoenix Surety issued personal bail bonds for Castro [AAF 01077,
01078, 01079 and 010801. 1 Castro paid P9,832.00 for premiums.

On June 4, 1980, Castro escaped from the custody of his military escorts while enroute
to attend trial before Branch 20 of the Court of First Instance of Rizal in Pasig. He has
reportedly left the country since then. Winston Dulay, on the other hand, is still at large.

In June 1980, Phoenix Surety filed an urgent motion for cancellation of bail bond before
the Court of First Instance of Rizal, Branch 20 and 21 in Pasig, on the ground that the
bonds posted for Castro were useless because the military authorities did not recognize
them as legal basis for Castro's release. Judge Gregorio G. Pineda of Branch 21 denied
the motion, it appearing that Castro was no longer in military custody as he had
escaped. 2
Judge Celso L. Magsino of Branch 20, however, granted Phoenix Surety's motion and
relieved the latter of any responsibility on the personal bail bond, JCR [21 Bond No.
0619, AAF 0 1065: 3 for the provisional liberty of Castro. 4

In due time, the records of the four criminal cases against Castro and Dulay were
endorsed to the Office of the Tanodbayan by the Ministry of Justice. The Tanodbayan
consolidated the cases and filed before the Sandiganbayan two amended informations
charging Castro with two separate complex crimes of estafa through falsification of public
documents [Criminal Cases Nos. 5556-5557].

It appears that the Sandiganbayan directed Phoenix Surety to produce Castro and Dulay
before the court. Despite an extension of the deadline for complying with the court order,
Phoenix Surety was unable to do so. As a result, on April 23, 1982, the Sandiganbayan
apparently declared the forfeiture of Dulay's bond and required the petitioner surety to
show cause why a judgment should not be rendered against it for the amount of the
bond. 5 That prompted Phoenix Surety to file several motions with the Sandiganbayan
seeking the reconsideration of its order dated April 23, 1982 insofar as accused Dulay was
concerned, the cancellation of the bond issued in favor of Castro, and the suspension of the
resolution of the prosecution's motion for judgment on the bond.

The Sandiganbayan, in its challenged resolution of December 27, 1982, denied the
motion for reconsideration in connection with Dulay and refused the cancellation of
Castro's bond as well as the suspension of the resolution on the motion for judgmenton
the bond. Accordingly, it granted the prosecution's motion for judgment on the bonds of
Castro and Dulay for their full amount in view of Phoenix Surety's failure to procure their
presence before the court within the required period. Upon denial of its motion for
reconsideration on April 29, 1983, Phoenix Surety filed the present petition praying that
the resolutions of December 27, 1982 and April 29, 1983 be set aside and that the bail
bonds in favor of Castro be discharged.

'I'he petition is devoid of merit.

Bail is defined by the Rules as the security required and given for the release of a person
who has been placed under legal custody, that he will appear before any court in which
hisappearance may be required as stipulated in the bail bond or recognizance. 6

The purpose of the bail is to relieve an accused from imprisonment until his conviction
and yet secure his appearance at the trial. 7

To release on bail an arrested person "is to deliver him in contemplation of law, yet not
commonly in real fact, to others who become entitled to his custody and responsible for
his appearance when and where agreed." 8 Upon assumption of the obligation of bail, the
sureties become in law the jailers of their principal. 9

The conditions of the bail are: [1] If before conviction, that the defendant shall answer the
complaint or information in the court in which it is filed or to which it may be transferred
for trial; [2] after conviction, that he will surrender hiniself in execuLion of the judgment
that the appellate court may render; and [3] that in case the cause is remanded for new
trial, he will appear in the court to which it may be remanded and submit himself to the
orders and processes thereof. For failure to perform any of these conditions, the bond
git,en in security thereof nlay be forfeited. 10

The forfeiture of the bond rests upon the sound discretion of the court, also dependent
upon the court's discretion is the question of discharge of the surety. As a general
principle, aside from the instances enumerated in section 16 of Rule 114, the surety,
upon application filed with the court, may also be relieved from the non-appearance of
the bond where its performance is rendered impossible by the act of God, the act of the
obligee [the Government] or the act of the law. The exoneration under the second
category is predicated upon the principle thatthe Government, as the obligee in the bond,
cannot by its own acts prevent the fulfillment of the conditions of the bond by the sureties
and at the same time demand its forfeiture. 11

There is no question that in the present case petitioner Phoenix Surety failed to produce
the body of Remberto F. Castro before the Sandiganbayan within the required period.
However, Phoenix Surety opted to wash its hands off the matter by insisting that the bail
bonds it posted for Castro were null and void since Castro was under military detention
[by virtue of an ASSO issued by the Minister of National Defense] at the time of his
escape. It argued that considering that the bail bonds were intended primarily to obtain
the provisional liberty of the accused and this was rendered impossible by the ASSO,
then it would be more in accord with justice and fairness for the Sandiganbayan to
absolve the surety from furthelliability on the bonds.

While the argument may be valid, we cannot fully subscribe to it for the precise reason
that Phoenix Surety is in estoppel. As correctly observed by the Solicitor General,
Phoenix Surety issued the personal bail bonds of Castro on April 1, 1980 when latter had
already been under detention for three 131 months. Without question, Phoenix Surety
had knowledge of Castro's detention by the military when it issued the bail bonds. As a
matter of fact, Phoenix Surety attached as Annex "F" to the present petition the letter
[dated May 29, 1980] of Castro's counsel requesting petitioner surety to seek the
cancellation of said bc)nds. Said letter reads in part:

It is unfortunate however that despite the said bail bonds, the representations and
assurances of your agent la certain Alice] to my client that he woVId thereafter enjoy his
provisional liberty turned to be false and untrue.

To the present, my client has not been released from military custody [Camp Cramel for
the reason that the bail bonds issued by your company are not recognized as legal basis
for his release. Your agent [Alice] knew from the beginning that my client is under
detention.at Camp Crame by virtue of an ASSO ... 12

So, at the outset, Phoenix Surety had offered for a valuable consideration, to assume the
responsibility under the bond despite knowledge of Castro's military detention by reason
of an ASSO. It must be presumed that Phoenix Surety knew fully well that the existence
of the ASSO precluded provisional release by bail or by any other means.

Under such circumstances and considering that when the surety posts a bond for the
temporary liberty of an accused, it becomes its jailer and as such is at all times charged
with the duty to keep him under its surveillance, which duty continues until the bond is
cancelled, or the surety is discharged. 13 Phoenix Surety is likewise deemed to have assumed the
responsibility for Castro's escape and subsequent flight to another country. It was incumbent upon the surety to prohibit the
accused from leaving the jurisdiction of the Philippines and placing himself beyond the reach of its orders and processes.

In conclusion, the principle of estoppel strongly militates against the stand taken by
Phoenix Surety. Although the courts are usually liberal in accepting the explanations of
the surety regarding the cancellation of the bond, such liberality must not be to the extent
of totally exonerating a surety from an undertaking it has freely and voluntarily assumed
with full awareness of all its attendant risks.

WHEREFORE, finding no cogent reason to set aside the resolutions of the


Sandiganbayan dated December 27, 1982 and April 29, 1983, the Court RESOLVED to
DISMISS the instant petition for lack of merit.
SO ORDERED.

Gutierrez, Jr., Paras, Padilla, Bidin and Cortes, JJ., concur.

Footnotes

1 P. 19, Rollo.

2 Annex C of Petition, p. 14, Rollo.

3 Said bail bond does not tally with the ones posted for Castro on April 1, 1980, p. 19,
Rollo.

4 Annex B of Petition, p. 13, Rollo.

5 No copy of Order dated April 23, 1982 is attached to the records.

6 Rule 114, section 1.

7 Almeda v.Villaluz, L-31665, August 6, 1975, 66 SCRA 38.

8 Bishop Criminal Procedure, 2nd Ed., p. 150, cited in 4 Moran, Comments on the Rules
of Court, 1980 Ed., p 150.

9 US v. Sunico, 40 Phil. 826.

10 Rule 114, section 2, People v. Celeste, No. L-25806, April 29, 1977. 76 SCRA 601.

11 US vs. Bonoan, 22 Phil. 1; US vs. Que Ping, 40 Phil. 17.

12 Annex F of the Petition, p. 19, Rollo.

13 People vs. Lee Diet, 94 Phil. 31.


Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. L-25806 April 29, 1977

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee,


vs.
ELMO CELESTE, accused, RIZAL SURETY & INSURANCE COMPANY,
INC., bondsman-appellant.

Carlos, Madarang, Carballo & Valdez for appellant.

Solicitor General Antonio P. Barredo, Assistant Solicitor General Frine C. Zaballero and
Solicitor Sumilang V. Bernardo for appellee.

MUOZ PALMA, J.:

The crux of this appeal lies in the question, viz: for purposes of discharge of a bondsman
from his liability under a bail bond, is it sufficient that he produces the accused before the
court for the promulgation of the judgment without need of his filing a motion or verbally
moving for discharge and without the court expressly relieving the bondsman from further
liability on his bond?

Appellant Rizal Surety & Insurance Co. answers the query in the affirmative and avers
that the court a quo erred in holding the contrary and declaring it liable under its bail bond
of Twelve Thousand Pesos (P12,000.00) filed in Criminal Case No. 4066 of the Court of
First Instance of Misamis Oriental.

The antecedent facts follow:

On January 17, 1963, Elmo D. Celeste was charged with frustrated murder in an
Information filed with the Municipal Court of Cagayan de Oro City. A warrant for his arrest
was issued and a bail bond for his provisional release was fixed at P12,000.00. The
accused filed the required bond of P12,000.00 with the Rizal Surety & Insurance
Company as his bondsman, the bail bond been approved on February 14, 1963. The
accused waived his right to a preliminary investigation and the record of the case was
forwarded to the Court of First Instance of Misamis Oriental for trial on the merits. 1
After the trial was completed, the case was set for promulgation of judgment and on
January 31, 1964, the decision was read to the accused in open court whereby he was
found guilty and sentenced accordingly for the crime of frustrated homicide. 2

On February 7, 1964, the accused, through counsel, filed a notice of appeal, hence, on
the same date the trial court issued an order fixing the bail bond on appeal at
P12,000.00. 3 Because of the failure of the accused to file the required bail bond, the court
ordered the arrest of the accused. 4

In the meantime the record of the case had been forwarded to the Court of Appeals. On
April 21, 1965, the Appellate Court dismissed the appeal of accused Celeste for failure to
file the appellant's brief within the reglementary period. 5

The case was then remanded to the trial court which set the promulgation of the
Resolution of the Court of Appeals sending notice thereof to the Rizal Surety as
bondsman of the accused. For non-appearance of the accused, the Presiding Judge,
Hon. Benjamin K. Gorospe, issued in open court on September 15, 1965, an order for the
arrest of the defendant and the confiscation of his bail bond. 6

Appellant herein in a motion dated October 21, 1965, moved for 30 days extension of
time to produce the accused in court and this was granted. 7

Subsequently, another motion dated November 5, 1965, was filed praying that the order
of confiscation be lifted and that the bail bond be cancelled and the bondsman released
under said bond, alleging inter alia that conscious of its undertaking under the bond,
movant-appellant notified and caused the appearance of the accused in court for the
reading of the sentence, that the record shows that the judgment was promulgated in the
presence of the accused and consequently, the bonding company was relieved of its
obligation, having faithfully complied with its undertaking, to wit:

NOW THEREFORE, the RIZAL SURETY & INSURANCE COMPANY, of Manila, hereby
undertakes that the above-named ELMO D. CELESTE, will appear and answer the
charge abovementioned in whatever court it may be tried, and will at all times hold
himself/herself amenable to the order and processes of the court, and if convicted, will
appear for judgment and render himself/herself to the execution thereof; ... 8

Appellant's foregoing motion was denied for lack of merit in an order dated November 13,
1965. 9

A second motion dated November 26, 1965, was filed praying for another 30-day
extension to produce the accused which was granted by the court counted from
November 27, 1965 with warning however of no further extension. 10

In a motion dated December 24, 1965, appellant moved for a reconsideration of the
November 13, 1965 order which denied its motion to lift order of forfeiture, praying, in the
alternative, for another extension of 30 days within which to produce the accused
counted from December 27, 1965. The motion for reconsideration was denied in an order
dated January 5, 1966, although the surety was given another extension of 30 days from
December 27, 1965 to surrender the accused. 11

Hence, this appeal from the Orders of September 15, 1965, November 13, 1965, and
January 5, 1966.

Appellant in its assignment of errors poses the following questions:


1. Whether or not it has fully complied with its undertaking under the bond;

2. Whether or not it has been relieved of its liability; and

3. Whether or not its bail bond would still answer for the presence of the accused before
the Court for the promulgation of the judgment of conviction rendered by the Court of
Appeals. (pp. 6-7, Appellant's brief)

1. Appellant submits that its liability under the bail bond extended "only up to the
promulgation of the judgment of conviction" and inasmuch as it had produced the
accused in court during the promulgation, it is now relieved from its obligation under the
bond; that to hold otherwise would be to extend the liability of the surety beyond that
stipulated in the bail bond and to impose an additional obligation to the bondsman,
contrary to Article 1231 of the Civil Code which provides that obligations are
extinguished, among others, by payment or performance. 12

Appellant's assertion is unfounded. The very terms of the bail bond provide that the
surety undertakes that the accused will at all times hold himself amenable to the order
and processes of the court and if convicted will appear for judgment and render himself
to the execution thereof.

Here, the criminal proceeding in the trial court consisted mainly of three stages: the trial,
the promulgation of judgment, and the execution of the sentence. The surety's liability
covered all the three stages appearance of the accused at the trial, appearance during
the promulgation of judgment, and service by the accused of the sentence imposed upon
him. This undertaking of the surety is derived from Section 2, Rule 114 of the Rules of
Court which sets forth the conditions of bail in criminal cases, viz:

SEC. 2. Condition of the bail. The condition of the bail is that the defendant shall
answer the complaint or information in the court in which it is filed or to which it may be
transferred for trial, and after conviction, if the case is appealed to the Court of First
Instance upon application supported by an undertaking or bail, that he will surrender
himself in execution of such judgment as the appellate court may render, or that, in case
the cause is to be tried anew or remanded for a new trial, he will appear in the court to
which it may be remanded and submit himself to the orders and processes thereof.

2. To effect the discharge of appellant surety from its undertaking, it was not enough that
it produced the person of the accused at the time of promulgation of the
decision. Section 16, Rule 114 sets forth a procedure for discharge of sureties which was
not followed by herein appellant.

In the early case of People vs. Lorredo, 1927, the Court, speaking through Justice
Antonio Villa-Real, explicitly ruled that the mere presentation or presence of an accused
in an open court is not sufficient in itself to cause the discharge of a bond, for the
attention of the court must be called to his presence and the intention to surrender the
body of the accused must be clearly and definitely stated and understood by the Court,
and that a surety who desires to produce and surrender the body of the accused is not
relieved from further liability upon his bond until the court accepts said surrender. 13

The ruling in Lorredo was reiterated in People vs. Valle, defendant, Alto Surety &
Insurance Co., bondsman-appellant, through then Justice, later Chief Justice, Roberto
Concepcion where the Court stated inter alia that the appellant surety's liability continued
until after the accused had been surrendered and the court had ordered the cancellation
of its bonds. 14
Again in Mabuhay Insurance & Guaranty, Inc, vs. Court of Appeals, et al., the Court, this
time through Justice Claudio Teehankee, adhering to the pronouncements made
in Lorredo and following Sec. 16, Rule 114 of the Rules of Court, held that a bondsman
who wishes to be relieved from its undertaking should petition the court for his discharge
as a surety, and inasmuch as petitioner Mabuhay did not avail itself of Sec. 16, Rule 114
and ask for its discharge as a surety nor did it manifest to the trial court at the
promulgation of sentence its wish to be relieved of its responsibility for the custody of the
accused, its liability under the bond continued to exist. 15

The circumtances present in the instant case are not course exactly the same as those
in Valle and Mabuhay, nonetheless, the principles enunciated therein given above are
equally applicable to now appellant Rizal Surety who as stated earlier did not petition the
trial court that it be discharged from its bond upon the appearance of the accused
Celeste during the promulgation of the court's decision for which reason there was no
order of the court cancelling said bond.

3. It is contention of appellant Rizal Surety that when the accused Celeste filed on
February 7, 1964, that is, seven days after the promulgation of judgment, a notice of
appeal, it was relieved from its undertaking considering that the trial court ordered the
accused to file a new bond on appeal for P12,000.00, and that consequently there is no
legal basis for holding appellant liable for the non-appearance of the accused at the
promulgation of the decision of the Court of Appeals.

At first blush there appears to be some merit to appellant's plea, but again We cannot
dissociate the situation from the Lorredo Decision to which We are bound to adhere
based as it is on existing law and authoritative jurisprudence.

The sureties ibn the Lorredo case were even in a more pathetic situation, We may say,
than Rizal Surety. There the accused was presented by the sureties in open court for the
promulgation of the judgment and upon the decision being read which imposed a fine of
Fifty Pesos (P50.00) on the accused, the latter's counsel offered a guaranty that the
accused would comply with the judgment within the period of ten days. Forthwith, the
sureties filed a motion stating that they were surrendering the body of the accused and
asking that they be relieved of all liability in connection with their bond. The record of the
case did not show that their motion was acted upon by the court. The 10-day period
expired without the accused paying the fine as promised. On motion of the fiscal the trial
court ordered the execution of the judgment, directed the sureties to produce the body of
the accused and at the same time issued warrants of arrest. The sureties then explained
to the court that they were relieved from their undertaking with the acceptance by the
court of the guaranty of the lawyer that the accused would comply with the judgment.
This explanation was not found satisfactory and an order of forfeiture of the bonds was
issued. On appeal, this Court, as earlier indicated, sustained the liability of the sureties,
and We quote further from the decision as follows:

From what has been said it follows that the mere filing of a motion stating the surrender
of the person of the accused and asking for their release from liability upon the obligation
contracted by virtue of a bond for temporary release, where it does not appear that the
attention of the court had been called to said surrender and that the latter had so
understood it, and without an express order accepting said surrender and relieving the
sureties from all liability, does not relieve them from the same, notwithstanding the fact
that the court granted the accused the period of ten days within which to comply with the
judgment under a verbal guaranty of his attorney. (supra, p. 218) I

Thus, in Lorredo the accused promised to comply with the judgment in ten days, while in
this case of Rizal Surety, the accused filed a notice of appeal on the seventh day;
in Lorredo the accused failed to comply within the promised period, in Rizal Surety the
accused failed to file a bond on appeal and his appeal was eventually dismissed;
in Lorredo, the sureties filed a motion to be discharged, in Rizal Surety no such motion
was ever filed by the sureties; in Lorredo, the accused eventually appeared and paid his
fine, while in Rizal Surety, the accused remains at large; in both, there was no court order
cancelling the bonds.

Under these circumstances, We cannot but hold Rizal Surety liable under its bond which
through its own inaction it allowed to remain uncancelled by the trial court. The legal
question posed at the opening of this Decision calls therefore for a negative answer as
correctly asserted by the Solicitor General. 16

To restate, for a surety to be discharged it is necessary that he petitions the court for
relief from liability and that the court grants the petition and cancels the bond.

PREMISES CONSIDERED, We find this appeal without merit and We hereby affirm the
appealed order of Hon. Benjamin K. Gorospe dated September 15, 1965, and all
subsequent orders relative thereto with double costs against appellant.

So ordered.

Teehankee, (Chairman), Makasiar, Antonio, and Martin, JJ., concur.

Antonio J., was designated to sit in the First Division.

Footnotes

1 pp. 2-32 Crim. Case Rec.

2 pp. 94-103, Ibid.

3 pp. 104-105, Ibid.

4 p. 106-a, Ibid.

5 pp. 108-109, Ibid.

6 pp. 1-2, Record on Appeal.

7 pp. 124-125, Crim. Case Rec.

8 See pp. 5-11, Record on Appeal.

9 p. 12, Ibid.

10 pp. 13-16, Ibid.

11 pp. 16-22, Ibid.

12 pp. 8-13, Ibid.

13 50 Phil. 209, 217-218, citing Sec. 75, G. O. No. 58; 6 C.J., p. 243, par. 313, and Du
Lawrence vs. State, 31 Oh. Cir. 418.
14 L-18044, April 30, 1963, 7 SCRA 1025, 1027.

15 L-28700, March 30, 1970, 32 SCRA 245, 251-252.

16 Representing the People was Solicitor General Antonio P. Barredo now Associate
Justice of this Court.