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Republic of the Philippines Ultimately, during this period the nature of the possession of the

SUPREME COURT defendants had been good faith, public and with the belief that there has
Manila been no flaw in the title after the first case was dismissed.

SECOND DIVISION WHEREFORE, the complaint is hereby dismissed on the ground of


prescription without pronouncement as to costs.
G.R. No. L-52278 May 29, 1980
The questioned Order has to be set aside as prayed by the petitioner.
MARCIANA DE MORALES, petitioner,
vs. There are two kinds of prescription provided in the Civil Code. One is acquisitive, i.e. the
THE HONORABLE COURT OF FIRST INSTANCE OF MISAMIS OCCIDENTAL, BRANCH II acquisition of a right by the lapse of time. (Art. 1106, par. 1) Other names for acquisitive
OZAMIS CITY, FELICIDAD BUSARANG AND FORTUNATO GONZAGA, respondents. prescription are adverse possession and usucapcion. The other kind is extinctive prescription
whereby rights and actions are lost by the lapse of time. (Arts, 11 06, par. 2 and 1139.) Another
name for extinctive prescription is litigation of action.

The differences between acquisitive and extinctive prescriptions are well-stated as


ABAD SANTOS, J.: follows: t.hqw

This is a petition to review and set aside the Order, dated October 10, 1979, of the respondent Prescription was a statute of limitations. Whereas usucaption expressly
judge which dismissed the petitioner's complaint on ground of prescription. It has been filed 'vests the property' and raised a new title in the occupant, prescription did
pursuant to the provisions of Republic Act No. 5440 for only a question of law is involved. nothing more than bar the right of action. The concept most fundamental
to a system of title by possession is that the relationship between the
The antecedent facts are: On September 26, 1957, Rosario Morales-Terez and Santiago Terez, occupant and he land in terms of possession is capable of producing legal
petitioner's predecessors-in-interest, filed Civil Case No. 2031 in the Court of First Instance of consequences. In other words, it is the possessor who is the actor. Under a
Misamis Occidental, Branch 11 at Ozamis City, against Felicidad Busarang and Fortunato statute of stations, however, one does not look to the act of the possessor
Gonzaga, private respondents herein, for the recovery of possession, ownership, unpaid rentals but to the neglect of the owner. In the former the important feature is the
and damages of one-half of a piece of land and one-half of the house built thereon situated at claimant in possession, and in the latter it is the owner out of possession
the poblacion of Ozamis City. After issues had been joined, the trial court issued an Order, dated which controls.
January 24, 1963, dismissing the complaint, third-party complaint and counter-claim for failure
to prosecute. A motion for reconsideration was filed by the Terez spouses based on reasons which (Montgomery, Prescriptive Acquisition of land Titles, XXVI, Philippine Law
need not be stated here so the court issued another Order, dated August 12, 1963, modifying Journal, 353, 356-357 [195].)
the dismissal to be without prejudice.

In the present case, it is extinctive prescription which is involved and the subject matter being
On May 7, 1978, petitioner as plaintiff and as successor-in-interest of Rosario Morales-Terez real or immovable property, the relevant provision of the Civil Code is Art. 1141 which
filed Civil Case No. OZ-704 in the court presided by the respondent judge, against Felicidad reads: t.hqw
Busarang and Fortunato Gonzaga with allegations and reliefs substantially similar to those
stated in Civil Case No. 2031 which had been previously dismiss without prejudice.
Art. 1141. Real actions over immovables prescribe after thirty years.
On May 31, 1978, private respondents filed their answer, denying the allegations of the complaint
and setting up, among others, the affirmative defense that plaintiff's cause of action was barred This provision is without prejudice to what is established for the acquisition
by prescription. On October 10, 1979, the respondent judge issued an Order which is the subject of ownership and other real rights by prescription.
of the present petition and which reads: t.hqw
Indubitably, from August 12, 1963, to May 7, 1978, less than thirty (30) years had elapsed.
During the hearing of the special affirmative defense of prescription, the Hence the action had not yet prescribed. However, the respondent judge apparently relying on
defendants presented as evidence the Order of the Court dated August 12, paragraph 2 of the above-quoted article has ruled in effect that the action is barred because the
1963 dismissing without prejudice Civil Case No. 2031 entitled Rosauro defendants have acquired the subject matter of the action by acquisitive prescription of ten (10)
Terez, et al., versus Felicidad Busarang, et al, and that after the lapse of years (See Art. 1136, Civil Code.) This is manifest error for the defendants have not claimed
fifteen years, the right of the plaintiffs to recover possession and ownership acquisitive prescription in their answer and even if they did, it cannot be given judicial sanction
of the real property had already prescribed and/or that the plaintiffs had on mere allegations. The law requires one who asserts ownership by adverse possession to prove
been guilty of laches by sleeping on their rights during this period. the presence of the essential elements which in ordinary acquisitive prescription of real estate
are good faith, a just title (which according to Art. 1131 is, never presumed but must be proved),
and the lapse of time fixed by law. (Art. 1117, par. 2, Civil Code.) This was not done by the
It appears that Civil Case No. 2031, involved the same parties and subject- defendants before the respondent judge dismissed the complaint against them.
matter with the same relief prayed for in this case. After the former case
was dismissed on August 12, 1963 without prejudice, the herein plaintiffs
shall have refiled the case within ten (10) years, otherwise their right to WHEREFORE, the Order, dated October 10, 1979, of the respondent judge is hereby set aside
recover possession and ownership of the real property shall prescribed. and he is ordered to reinstate Civil Case No. OZ-704. Costs against the private respondents.

1
SO ORDERED.

Barredo (Chairman), Concepcion, Jr., and De Castro, JJ., concur.1wph1.t

Aquino, J., concurs in the result.

2
Republic of the Philippines Nevertheless, before her death, she had given the subject property to her
SUPREME COURT nephew who had been living with her, the herein defendant-appellant
Manila [private respondent]. The latter immediately took possession of the property
in the concept of owner, built his house thereon and, through the years,
declared the land for taxation purposes as well as paid the taxes due
FIRST DIVISION thereon.

His possession of the subject property was never disturbed by anybody until
plaintiff-appellee [petitioner] filed the instant complaint against him on 5
G.R. No. 112519 November 14, 1996 November 1985, or more than 49 years after the deed of donation was
executed, alleging, among others, that: (1) during the Japanese occupation
of the country, defendant-appellant [private respondent], without the
CATHOLIC BISHOP OF BALANGA, respresented by CRISPULO TORRICO, petitioner, knowledge and prior consent of the plaintiff-appellee [petitioner], and its
vs. predecessors-in-interest, entered and occupied the subject property, and
THE HON. COURT OF APPEALS and AMANDO DE LEON, respondents. (2) despite requests by plaintiff-appellee [petitioner], defendant-appellant
[private respondent] refused to vacate the property in question. In support
of the above contention, Crispulo Torrico, the sole witness and authorized
representative of plaintiff-appellee [petitioner] testified, among others, that:
the subject property is situated at the corner of Lot No. 1272, and
defendant-appellant [private respondent] has, on the strength of the deed
HERMOSISIMA, JR., J.:
of donation, publicly claimed ownership and occupied the same as early as
before the 2nd World War and has built his store thereon.
It is the cardinal principle in Land Registration that a torrens title is indefeasible and
inprescriptible. Considering that private respondent in this case, by himself and
As his defense, defendant-appellant [private respondent] maintains that by
through his predecessor-in-interest, had been in uninterrupted, open and adverse
virtue of the deed of donation of 23 August 1936 executed in favor of his
possession of a portion of the land covered by said title for 49 years, by virtue of a duly
predecessor-in-interest, he is the lawful owner of the subject property and
accepted donation, although unregistered, will private respondent, under this
the complaint states no cause of action as it was filed only to harass him.
circumstance, prevail over the titled owner?

xxx xxx xxx


Thus, we have before us this petition for review of a decision 1 of the Court of
Appeals 2 reversing the Regional Trial Court (RTC) 3 which rendered judgment 4 in
favor of petitioner and ordered private respondent to vacate the subject property and On 27 and 30 October 1986, 10 months after he filed his answer on 10
surrender possession thereof to petitioner and to pay rent from the finality of the RTC December 1985 and almost 3 months after plaintiff-appellee [petitioner]
judgment until the said property is actually vacated. rested its case . . . defendant-appellant [private respondent] filed his
motions [sic] to dismiss the complaint on the ground that . . . the instant
action is barred by the statute of limitations. Plaintiff-appellee [petitioner]
We quote, as the herein parties have done so in their pleadings, the following narration
filed on 3 November 1986 its opposition to the motion alleging that the
of facts rendered by the respondent appellate court:
defense of prescription was not raised in a timely filed motion to dismiss,
and as an affirmative defense in the answer . . .
The parties do not dispute that the Roman Catholic Archbishop [sic] of
Manila was the owner of a parcel of land (Lot No. 1272, Balanga Cadastre)
On 13 November 1989 the lower court rendered the judgment . . . It opined
situated in the Barrio of Puerto Rivas, Municipality of Balanga, Bataan,
that, since: (1) defendant-appellant [private respondent] failed to present
having an area of 3,368 sq. m., more or less covered by OCT No. 14379 of
the necessary power of attorney executed by the Roman Catholic
de Registry of Deeds for the province of Bataan. With respect to its rights
Archbishop of Manila giving Rev. Fr. Mariano Sarili the authority to execute
over its properties in Bataan (inclusive of Lot No. 1272), the said church
the deed of donation; (2) the first 2 paragraphs of the Excritura de Donacion
was succeeded by the Roman Catholic Bishop of San Fernando, Pampanga
indicates that the parish priest . . . was only the administrator of all, hence,
which was, likewise, succeeded by . . . Catholic Bishop of Balanga
had no authority to dispose in whatever manner any of the properties of the
registered as a corporation on 15 December 1975.
Roman Catholic Church of Balanga, Bataan; (3) the parish priest was not a
corporation sole and registered owner of Lot No. 1272; and, (4) he did not,
Prior thereto, or on 23 August 1936, by virtue of the authority given him by in his own behalf or that of the Roman Catholic Archbishop of Manila,
the Roman Catholic Archbishop of Manila to donate a portion of Lot No. secure any prior leave of court to donate a portion of Lot No. 1272 in
1272, the then parish priest and administrator of all the properties of the consonance with Sec. 159 of the old Corporation
said church in the Municipality of Balanga Bataan, Rev. Fr. Mariano Sarili, Code . . . Rev. Fr. Mariano Sarili was not authorized to, and could not
executed an Escritura De Donacion donating an area of 12.40 meters by validly, donate the subject lot. Thus, the deed of donation he executed is
21.40 meters or 265.36 sq. m (the subject property) of Lot No. 1272 to Ana unenforceable under Art. 1403 of the New Civil Code and defendant-
de los Reyes and her heirs, as a reward for her long and satisfactory service appellant [private respondent], as well as his predecessor-in-interest, never
to the church. Her acceptance of the donation, as well as her possession of acquired ownership over the subject property. 5
the subject property, is indicated in the deed of donation, which deed, for
unknown reasons, was refused registration by the Register of Deeds. Six (6)
The court a quo having rendered judgment against private respondent, the latter lost
years later, or in 1939, Ana de los Reyes died without issue.
no time in bringing the case to the respondent Court of Appeals for review.
3
In his appeal, defendant-appellant [private respondent] contend[ed] that the deciding the case. 12 However, equally settled in jurisprudence is the exception to this
lower court erred in not ruling on the issue of prescription which he raised general rule.
in his amended answer and motion to dismiss. The thrust of his argument
[was] that, since the instant case [was] basically and fundamentally a suit
for the recovery of possession of a real property and the complaint was filed . . . Roscoe Pound states that "according to Ulpian in Justinian's Digest,
. . . more than 49 years after the deed of donation was executed . . . the appeals are necessary to correct the unfairness or unskillfulness of those
instant action should have been dismissed on the ground of prescription . who judge." Pound comments that "the purpose of review is prevention quite
. .6 as much as correction of mistakes. The possibility of review by another
tribunal, especially a bench of judges . . . is an important check upon
tribunals of first instance. It is a preventive of unfairness. It is also a
Respondent court is in agreement with private respondent's insistence that the stimulus to care and thoroughness as not to make mistakes." Pound adds
defense of prescription is not deemed waived when prescription is apparent from the that "review involves matters of concern both to the parties to the case and
allegations in the complaint, citing this court's ruling in the cases of Gicano to the public . . . It is of public concern that full justice be done to [e]very
vs. Gegato, 7 Garcia vs. Mathis, 8 and PNB vs. Pacific Commission House. 9 But one." This judicial injunction would best be fulfilled and
respondent court also stated that private respondent could not have acquired the interest of full justice would best be served if it should be maintained
ownership over the subject property through acquisitive prescription because the that . . . appeal brings before the reviewing court the totality of the
same having been duly registered under the Torrens system, title thereto was controversy resolved in the questioned judgment and order apart from the
indefeasible. fact that such full-scale review by appeal is expressly granted as a matter
of right and therefore of due process by the Rules of Court. 13

Nonetheless, respondent Court of Appeals ultimately ruled that under the doctrine of
laches, the consequence of petitioner's inaction for 49 years since the execution of the Guided by the foregoing precepts, we have ruled in a number of cases that the
deed of donation, despite its apparently undeniable knowledge of private respondent's appellate court is accorded a broad discretionary power to waive the lack of proper
adverse, peaceful and continuous possession of the subject property in the concept of assignment of errors and to consider errors not assigned. 14 It is clothed with ample
an owner from 1936 to the institution of the recovery suit in 1985, is that it has lost authority to review rulings even if they are not assigned as errors in the
its rights to the subject property and can no longer recover the same due to its own appeal.15 Inasmuch as the Court of Appeals may consider grounds other than those
inexcusable negligence and grave lack of vigilance in protecting its rights over a touched upon in the decision of the trial court and uphold the same on the basis of
tremendously long period of time. In the words of the respondent court: such other grounds, 16 the Court of Appeals may, with no less authority, reverse the
decision of the trial court on the basis of grounds other than those raised as errors on
appeal. We have applied this rule, as a matter of exception, in the following instances:
. . . He (private respondent] and his predecessor-in-interest have been in
adverse, peaceful and continuous possession of the subject property in the
concept of owners since the execution of the deed of donation on 23 August (1) Grounds not assigned as errors but affecting jurisdiction over the subject matter; 17
1936 and were never ousted therefrom by plaintiff-appellee's [petitioner's]
predecessors-in-interest. It was not until almost 5 decades later or on 5
November 1985 that plaintiff-appellee [petitioner] instituted the instant (2) Matters not assigned as errors on appeal but are evidently plain or clerical errors
action. The inaction for almost half a century now bars plaintiff-appellee within contemplation of law; 18
[petitioner] from recovering the land in question on the equitable principles
of laches, which is defined as "such neglect or omission to assert a right (3) Matters not assigned as errors on appeal but consideration of which is necessary
taken in conjunction with the lapse of time and other circumstances in arriving at a just decision and complete resolution of the case 19 or to serve the
causing prejudice to the adverse party as will operate as a bar in equity." interests of justice 20 or to avoid dispensing piecemeal justice; 21
Registered lands may not be acquired by prescription but the same can be
lost or acquired by Laches, [citing Lola vs. CA, 145 SCRA 439] Plaintiff-
appellee [petitioner] has lost, while defendant-appellant [private (4) Matters not specifically assigned as errors on appeal but raised in the trial court
respondent] has acquired, the subject property by laches. 10 and are matters of record having some bearing on the issue submitted which the
parties failed to raise or which the lower court ignored; 22
Now aggrieved by the aforecited decision of the respondent Court of Appeals, petitioner
comes before us mainly claiming that it was contrary to the law and settled (5) Matters not assigned as errors on appeal but closely related to an error
jurisprudence for the respondent court to have applied the doctrine of laches in the assigned; 23 and
instant case and to have considered a mere administrator as authorized to donate one
of the properties under administration.
(6) Matters not assigned as errors on appeal but upon which the determination of a
question properly assigned, is dependent. 24
Petitioner's asseverations are devoid of merit.

The instant controversy falls squarely under the exception to the general rule that only
First, petitioner postulates that the respondent Court of Appeals should not have, in assigned errors may be passed upon by the appellate court. A just, fair and complete
the first place, applied the doctrine of laches in the instant controversy because private resolution of the present case necessitates the consideration and the application of
respondent did not assign the same as an error on appeal. the doctrine of laches which is not the same as but is undoubtedly closely related to,
the issue of prescription which was properly raised by private respondent before the
respondent Court of Appeals.
True, the appealing party is legally required to indicate in his brief an assignment of
errors, 11 and only those assigned shall be considered by the appellate court in

4
Laches means the failure or neglect for an unreasonable and unexplained length of In 1945, the donee, Ana de los Reyes, died without issue. She had, however, given the
time, to do that which, by exercising due diligence, could or should have been done subject property to her nephew who is the private respondent in the instant case.
earlier; it is negligence or omission to assert a right within a reasonable time, Upon acceptance of the gift, private respondent immediately took possession of the
warranting the presumption that the party entitled to assert it either has abandoned subject property in the concept of owner, built his house thereon, and thenceforth
or declined to assert it. 25 It has also been defined as such neglect or omission to assert paid land taxes therefor after declaring the subject property for that purpose.
a right taken in conjunction with the lapse of time and other circumstances causing
prejudice to an adverse party, as will operate as a bar in equity. 26
The act of petitioner-defendant that culminated in the filing of the present action is
thus clearly his occupation since 1945 of the subject property in the concept of owner
The principle of laches is a creation of equity which, as such, is applied not really to in continuation of the occupation of the same nature regarding the same property by
penalize neglect or sleeping upon one's right, but rather to avoid recognizing a right the donee Ana de los Reyes starting in 1936. Undoubtedly, the first element of laches
when to do so would result in a clearly inequitable exists.
situation. 27 As an equitable defense, laches does not concern itself with the character
of the defendant's title, but only with whether or not by reason of the plaintiff's long
in action or inexcusable neglect, he should be barred from asserting this claim at all, The second element also exists in this case. The second element is three-tiered: (a)
because to allow him to do so would be inequitable and unjust to the defendant. 28 knowledge of defendant's action; (b) opportunity to sue defendant after obtaining such
knowledge; and (c) delay in the filing of such suit. Petitioner, in his complaint filed in
the trial court, alleged that without its consent, private respondent entered and
The doctrine of laches or of stale demands is based upon grounds of public occupied the subject property during the Second World War. By its own admission,
policy which requires, for the peace of society, the discouragement of stale therefore, petitioner was clearly aware of private respondent's possession of the
claims and . . . is principally a question of the inequity or unfairness of subject property in the concept of owner. Petitioner did not also rebut the testimony
permitting a right or claim to be enforced or asserted. 29 of its own authorized representative and sole witness, one Crispulo Torrico, that the
subject property was so proximately located to the rest of petitioner's church property
as to foreclose assertion of ignorance of private respondent's possession of the subject
The time-honored rule anchored on public policy is that relief will be denied to a property, on the part of petitioner.
litigant whose claim or demand has become "stale", or who has acquiesced for an
unreasonable length of time, or who has not been vigilant or who has slept on his
rights either by negligence, folly or inattention. 30 In other words, public policy From that time during the Second World War to 1985 when petitioner actually
requires, for the peace of society, the discouragement of claims grown stale for non- commenced suit against private respondent, there was doubtlessly all the opportunity
assertion; thus laches is an impediment to the assertion or enforcement of a right to file the appropriate action to have the donation of the subject property to Ana de
which has become, under the circumstances, inequitable or unfair to permit. 31 los Reyes and her heirs, declared null and void and to demand reconveyance of said
property from its present occupants.

The following are the essential elements of laches:


Notwithstanding such opportunity available to petitioner, however, forty (40) years
had to first pass by for petitioner to finally institute the appropriate court proceedings.
(1) Conduct on the part of the defendant, or of one under whom he claims, giving rise As such, the second element of knowledge, opportunity to file suit, and delay in filing
to the situation complained of; such suit, is undoubtedly present in the instant controversy.

(2) Delay in asserting complainant's right after he had knowledge of the defendant's The third element of laches is likewise present. There is nothing on the record that
conduct and after he has an opportunity to sue; impresses us as clear evidence of at least an inkling on the part of private respondent
as to petitioner's serious intention to revoke the donated property. There was neither
(3) Lack of knowledge or notice on the part of the defendant that the complainant a demand letter nor positive testimony of any person who actually informed private
would assert the right on which he bases his suit; and respondent of petitioner's intentions. In other words, private respondent manifestly
had every reason to believe that, with the passing of almost half a century since his
predecessor-in-interest accepted the donated property and without unambiguous
(4) Injury or prejudice to the defendant in the event relief is accorded to the intimation of petitioner's non-recognition of such donation, he was secure in his
complainant. 32 possession of the subject property in the concept of owner.

Under the present circumstances, all of the aforegoing elements are attendant in this In the light of all the above, it goes without saying that private respondent will suffer
case. irreparable injury under the most unfair circumstances, were we to disregard
petitioner's inaction for more than forty (40) years in asserting its rights.

On or some time before August 23, 1936, Rev. Fr. Mariano Sarili, the parish priest
and administrator of the church property in the Municipality of Balanga, Bataan, In applying the doctrine of laches, we had ruled that where a party allows the following
executed a deed of donation over a 265-square meter church lot in favor of Ana de los number of years to lapse from the emergence of his cause of action, before instituting
Reyes and her heirs in recognition of her long and satisfactory service to the church court action to enforce his claim, such action would be barred by the equitable defense
of Balanga, Bataan. For some reason or another, the said deed was refused of laches: 36 years; 33 12 years; 34 50 years; 35 34 years; 3637 years; 37 32 years; 38 20
registration by the Register of Deeds. However, she accepted the donation, indicated years; 39 47 years; 40 11 years; 41 25
such acceptance in the said deed, occupied the donated property, and exercised acts years; 42 40 years; 43 19 years; 44 27 years; 45 7 years; 46 44 years; 47 4 years 48 and 67
of ownership thereupon. years 49.

5
In this case, petitioner filed its complaint in court only after forty nine (49) years had
lapsed since the donation in its behalf of the subject property to private respondent's
predecessor-in-interest. There is nary an explanation for the long delay in the filing by
petitioner of the complaint in the case at bench, and that inaction for an unreasonable
and unexplained length of time constitutes laches. As such, petitioner cannot claim
nullity of the donation as an excuse to avoid the consequences of its own unjustified
inaction and as a basis for the assertion of a right on which they had slept for so
long. 50 Courts cannot look with favor at parties who, by their silence, delay and
inaction, knowingly induce another to spend time, effort, and expense in cultivating
the land, paying taxes and making improvements thereon for an unreasonable period
only to spring an ambush and claim title when the possessor's efforts and the rise of
land values offer an opportunity to make easy profit at their own
expense. 51 Considerable delay in asserting one's right before a court of justice is
strongly persuasive of the lack of merit of his claim, since it is human nature for a
person to enforce his right when same is threatened or invaded; thus, it can also be
said that petitioner is estopped by laches from questioning private respondent's
ownership of the subject property. 52 At any rate, petitioner's right to recover the
possession of the subject property from private respondent has, by the latter's long
period of possession and by petitioner's inaction and neglect, been converted into a
stale demand. Such passivity in the face of what might have given rise to an action in
court is visited with the loss of such right, and ignorance resulting from inexcusable
negligence does not suffice to explain such failure to file seasonably the necessary
suit. 53

Finally, we agree with the respondent Court of Appeals that, while petitioner is
admittedly still the registered owner of the donated property, and jurisprudence is
settled as to the imprescriptibility and indefeasibility of a Torrens Title, there is equally
an abundance of cases in the annals of our jurisprudence where we categorically ruled
that a registered landowner may lose his right to recover the possession of his
registered property by reason of leaches. 54

WHEREFORE, the instant petition is DISMISSED with costs against petitioner.

SO ORDERED.

Bellosillo, Vitug and Kapunan, JJ., concur.

Padilla, J., took no part.

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Republic of the Philippines 2. Ordering defendant to pay plaintiff P20,000.00 as moral damages, P20,000.00 as
SUPREME COURT exemplary damages, P10,000.00 by way of attorneys fees and other litigation
Manila expenses, plus cost of suit.

FIRST DIVISION SO ORDERED.8

G.R. No. 155080 February 5, 2004 On appeal by the respondent, the Court of Appeals reversed the trial courts decision and
declared that the donation was valid. Furthermore, it held that petitioner lost her ownership of
the property by prescription.
SOLEDAD CALICDAN, represented by her guardian GUADALUPE CASTILLO, petitioner
vs.
SILVERiO CENDAA, substituted by his legal heir CELSA CENDAA-ALARAS, respondent. Hence, the instant petition for review on the following issues:

DECISION (1) whether or not the donation inter vivos is valid; and

YNARES-SANTIAGO, J.: (2) whether or not petitioner lost ownership of the land by prescription.

This petition for review seeks the reversal of the April 4, 2002 decision of the Court of Appeals in As a rule, our jurisdiction in cases brought from the Court of Appeals is limited to the review and
CA-G.R. CV No. 67266,1 which set aside the November 12, 1996 decision of the Regional Trial revision of errors of law allegedly committed by the appellate court. This is because its findings
Court of Dagupan City, Branch 44 in Civil Case No. D-10270.2 of fact are deemed conclusive and we are not duty-bound to analyze and weigh all over again the
evidence already considered in the proceedings below. 9

The instant controversy involves a 760 square meter parcel of unregistered land located in
Poblacion, Mangaldan, Pangasinan. The land was formerly owned by Sixto Calicdan, who died The rule, however, admits of the following exceptions:
intestate on November 4, 1941. He was survived by his wife, Fermina, and three children,
namely, petitioner Soledad, Jose and Benigno, all surnamed Calicdan. 3
(1) when the findings are grounded on speculation, surmises or conjectures;

On August 25, 1947, Fermina executed a deed of donation inter vivos whereby she conveyed the
land to respondent Silverio Cendaa,4 who immediately entered into possession of the land, built (2) when the inference made is manifestly mistaken, absurd or impossible;
a fence around the land and constructed a two-storey residential house thereon sometime in
1949, where he resided until his death in 1998. 5 (3) when there is grave abuse of discretion in the appreciation of facts;

On June 29, 1992, petitioner, through her legal guardian Guadalupe Castillo, filed a complaint (4) when the factual findings of the trial and appellate courts are conflicting;
for "Recovery of Ownership, Possession and Damages" against the respondent, alleging that the
donation was void; that respondent took advantage of her incompetence in acquiring the land;
and that she merely tolerated respondents possession of the land as well as the construction of (5) when the Court of Appeals, in making its findings, has gone beyond the issues of
his house thereon.6 the case and such findings are contrary to the admissions of both appellant and
appellee;
In his "Answer with Motion to Dismiss", respondent alleged, by way of affirmative defenses, that
the land was donated to him by Fermina in 1947; and that he had been publicly, peacefully, (6) when the judgment of the appellate court is premised on a misapprehension of
continuously, and adversely in possession of the land for a period of 45 years. Moreover, he facts or when it has failed to consider certain relevant facts which, if properly taken
argued that the complaint was barred by prior judgment in the special proceedings for the into account, will justify a different conclusion;
"Inventory of Properties of Incompetent Soledad Calicdan", where the court decreed the exclusion
of the land from the inventory of properties of the petitioner. 7
(7) when the findings of fact are conclusions without citation of specific evidence upon
which they are based; and
On November 12, 1996, the trial court rendered a decision in favor of the petitioner, the
dispositive portion of which reads as follows:
(8) when findings of fact of the Court of Appeals are premised on the absence of
evidence but are contradicted by the evidence on record. 10
WHEREFORE, judgment is rendered in favor of plaintiff and against the defendant as follows:

In the case at bar, the factual findings of the trial court and the Court of Appeals are conflicting;
1. Ordering defendant Silverio Cendaa to vacate the land in question and surrender thus, we are constrained to review the findings of facts.
ownership and possession of the same to plaintiff; and

The trial court found the donation of the land void because Fermina was not the owner thereof,
considering that it was inherited by Sixto from his parents. Thus, the land was not part of the
conjugal property of the spouses Sixto and Fermina Calicdan, because under the Spanish Civil

7
Code, the law applicable when Sixto died in 1941, the surviving spouse had a right of usufruct The Court of Appeals thus erred in ruling based on respondents bare hearsay testimony as
only over the estate of the deceased spouse. Consequently, respondent, who derived his rights evidence of the donation made by Fermina.
from Fermina, only acquired the right of usufruct as it was the only right which the latter could
convey.
Notwithstanding the invalidity of the donation, we find that respondent has become the rightful
owner of the land by extraordinary acquisitive prescription.
After a review of the evidence on record, we find that the Court of Appeals ruling that the
donation was valid was not supported by convincing proof. Respondent himself admitted during
the cross examination that he had no personal knowledge of whether Sixto Calicdan in fact Prescription is another mode of acquiring ownership and other real rights over immovable
purchased the subject land from Felomino Bautista. Pertinent portions of his testimony read: property. It is concerned with lapse of time in the manner and under conditions laid down by
law, namely, that the possession should be in the concept of an owner, public, peaceful,
uninterrupted and adverse. Acquisitive prescription is either ordinary or extraordinary. Ordinary
Q. And Sixto Calicdan inherited this property from his parents? acquisitive prescription requires possession in good faith and with just title for ten years. In
extraordinary prescription ownership and other real rights over immovable property are acquired
through uninterrupted adverse possession thereof for thirty years without need of title or of good
A. No, sir. faith.13

Q. What do you mean by no? The good faith of the possessor consists in the reasonable belief that the person from whom he
received the thing was the owner thereof, and could transmit his ownership. 14 For purposes of
A. To my knowledge and information, Sixto Calicdan bought the property from his prescription, there is just title when the adverse claimant came into possession of the property
cousin, I think Flaviano or Felomino Bautista. through one of the modes recognized by law for the acquisition of ownership or other real rights,
but the grantor was not the owner or could not transmit any right. 15

Q. So, in other words, you have no personal knowledge about how Sixto Calicdan
acquired this property? Assuming arguendo that ordinary acquisitive prescription is unavailing in the case at bar as it
demands that the possession be "in good faith and with just title," 16 and there is no evidence on
record to prove respondents "good faith", nevertheless, his adverse possession of the land for
A. I think it was by purchase. more than 45 years aptly shows that he has met the requirements for extraordinary acquisitive
prescription to set in.

Q. According to information, so you have no actual personal knowledge how Sixto


Calicadan acquired this property? The records show that the subject land is an unregistered land. When the petitioner filed the
instant case on June 29, 1992, respondent was in possession of the land for 45 years counted
from the time of the donation in 1947. This is more than the required 30 years of uninterrupted
A. Yes, because when the property was bought by my uncle, I was not yet born, so adverse possession without just title and good faith. Such possession was public, adverse and
information only. in the concept of an owner. Respondent fenced the land and built his house in 1949, with the
help of Guadalupes father as his contractor. His act of cultivating and reaping the fruits of the
land was manifest and visible to all. He declared the land for taxation purposes and religiously
Q. So when you were born, you came to know already that Sixto Calicdan is the owner
paid the realty taxes thereon.17 Together with his actual possession of the land, these tax
of this property?
declarations constitute strong evidence of ownership of the land occupied by him. As we said in
the case of Heirs of Simplicio Santiago v. Heirs of Mariano Santiago:18
A. Yes, thru the son of Felomino Bautista who is now, I think, in Baguio.
Although tax declarations or realty tax payment of property are not conclusive evidence of
Q. You have not seen any document to show that Sixto Calicdan purchased the ownership, nevertheless, they are good indicia of possession in the concept of owner, for no one
property from one Felomino Bautista? in his right mind would be paying taxes for a property that is not in his actual or constructive
possession. They constitute at least proof that the holder has a claim of title over the property.
The voluntary declaration of a piece of property for taxation purposes manifests not only ones
A. None, sir.11 sincere and honest desire to obtain title to the property and announces his adverse claim against
the State and all other interested parties, but also the intention to contribute needed revenues
to the Government. Such an act strengthens ones bona fide claim of acquisition of ownership.
In People v. Guittap,12 we held that:

Moreover, the deed of donation inter vivos, albeit void for having been executed by one who was
Under Rule 130, Section 36 of the Rules of Court, a witness can testify only to those facts which not the owner of the property donated, may still be used to show the exclusive and adverse
he knows of his own personal knowledge, i.e., which are derived from his own perception; character of respondents possession. Thus, in Heirs of Segunda Maningding v. Court of
otherwise, such testimony would be hearsay. Hearsay evidence is defined as "evidence not of Appeals,19 we held:
what the witness knows himself but of what he has heard from others." The hearsay rule bars
the testimony of a witness who merely recites what someone else has told him, whether orally or
in writing. In Sanvicente v. People, we held that when evidence is based on what was supposedly Even assuming that the donation propter nuptias is void for failure to comply with formal
told the witness, the same is without any evidentiary weight for being patently hearsay. Familiar requisites, it could still constitute a legal basis for adverse possession. With clear and convincing
and fundamental is the rule that hearsay testimony is inadmissible as evidence. evidence of possession, a private document of donation may serve as basis for a claim of
ownership. In Pensader v. Pensader we ruled that while the verbal donation under which the
defendant and his predecessors-in-interest have been in possession of the lands in question is

8
not effective as a transfer of title, still it is a circumstance which may explain the adverse and
exclusive character of the possession. (Underscoring ours)

In sum, the Court of Appeals correctly ordered the dismissal of Civil Case No. D-10270 before
the Regional Trial Court of Dagupan City, Branch 44, and declared respondent the rightful owner
of the subject property, not on the basis of the Deed of Donation Inter Vivos, which is hereby
declared void, but on extraordinary acquisitive prescription.

WHEREFORE, in view of the foregoing, the petition is DENIED. The Decision of the Court of
Appeals dated April 4, 2002 in CA-G.R. CV No. 67266, which ordered the dismissal of Civil Case
No. D-10270 before the Regional Trial Court of Dagupan City, Branch 44, is AFFIRMED.

SO ORDERED.

Davide, Jr., C.J., (Chairman), Panganiban, and Carpio, JJ., concur.


Azcuna, J., on official leave.

9
Republic of the Philippines On 22 July 1996, the Heirs of Marcelina Arzadon-Crisologo, (represented by Leticia A. Crisologo
SUPREME COURT del Rosario), Mauricia Arzadon, and Bernardo Arzadon (petitioners) filed an Answer in
Manila Intervention10 claiming, inter alia, that they are the rightful owners of the subject property,
having acquired the same from their predecessors-in-interest. They averred that there existed no
liens or encumbrances on the subject property in favor of Agrifina Raon; and that no person,
THIRD DIVISION other than they and the spouses Montemayor, has an interest in the property as owner or
otherwise.
G.R. No. 171068 September 5, 2007
Per petitioners allegations, their predecessors-in-interest, spouses Timoteo and Modesta
HEIRS OF MARCELINA ARZADON-CRISOLOGO, represented by Leticia C. del Rosario, Alcantara (spouses Alcantara) bought the subject property from its owner, Rafael Ladera, on 2
MAURICIA ARZADON and BERNARDO ARZADON, petitioners, May 1936. The spouses Alcantara then built a house of strong materials on the subject property
vs. which served as their conjugal home. Residing with them was Timoteo Alcantaras sister,
AGRIFINA RAON, substituted by SUZIMA RAON-DUTERTE and OTHELO Augustina Alcantara-Arzadon. As the spouses Alcantara died without issue, their properties were
RAON, respondents. left to Timoteo Alcantaras nearest of kin, Augustina Alcantara-Arzadon and Tiburcio Alcantara,
sister and brother, respectively, of Timoteo Alcantara. Tiburcio Alcantara also died without any
known heir; thus, leaving the subject property in Augustina Alcantara-Arzadons sole favor.
DECISION Augustina Alcantara-Arzadon is the mother of petitioners Marcelina Arzadon-Crisologo (now
deceased and whose heirs are represented by Leticia del Rosario) and Mauricia Arzadon.
Bernardo Arzadon is the son of Mauricia Arzadon.
CHICO-NAZARIO, J.:

Petitioners asseverated further that Bernardo Arzadon had lived in the house constructed on the
This is a Petition for Certiorari under Rule 45 of the Rules of Court of the Decision1 and subject property until 1985 when it was gutted by fire. To further support their claims,
Resolution2 of the Court of Appeals in CA-G.R. SP No. 72552, dated 10 November 2005 and 12 petitioners averred that they had religiously paid the real estate taxes on the subject property.
January 2006, respectively, which affirmed in toto the Decision 3 dated 8 August 2002 of the Finally, by way of a counterclaim, petitioners sought compensation for the damages which they
Regional Trial Court (RTC) of Batac, Ilocos Norte, Branch 18, in Civil Case No. 3875-18. The RTC allegedly suffered by reason of the baseless filing of the instant suit.
reversed the 11 December 2001 Decision4 of the Municipal Circuit Trial Court (MCTC) of Badoc-
Pinili, Badoc, Ilocos Norte, in Civil Case No. 141-B.
On 22 October 1999, the MCTC issued an Order11 dropping the name of the spouses Montemayor
from the caption of the case on the ground that sometime in 1996, Leticia del Rosario and
Records show that on 18 October 1995, Agrifina Raon 5filed a Complaint6 against spouses Bernardo Arzadon had repurchased the subject property from the spouses Montemayor for the
Conrado and Mila Montemayor (spouses Montemayor) with the MCTC of Badoc, Ilocos Norte, consideration of P100,000.00. As a result, the spouses Montemayor had no more interest or
claiming ownership over an unregistered residential lot (subject property) situated at Brgy. No. claim whatsoever on the property in litigation.
2 Badoc, Ilocos Norte, covered by Tax Declaration No. 420809, more particularly described as
follows:
On 11 December 2001, the MCTC rendered a Decision in favor of the petitioners. The decretal
portion thereof reads, thus:
"RESIDENTIAL with an area of 472 sq. ms. (sic) Bounded on the North by Ladera St.;
on the East by Dionisio Ladera; on the South by Buenaventura Arzadon; and on the
West by Rafael Ladera; Assessed at P1700.00 under Tax Dec. No. 420809."7 WHEREFORE, in view of all the foregoing, judgment is hereby rendered:

According to Agrifina Raon, her family had enjoyed continuous, peaceful and uninterrupted 1. Declaring the [petitioners] to be the true and lawful owners of one-half
possession and ownership over the subject property since 1962, and had religiously paid the (1/2) portion of the undivided whole of the lot-in-suit by mode of succession
taxes thereon. They had built a house on the subject property where she and her family had pursuant to [A]rticle 1001 of the [C]ivil [C]ode of the Philippines;
resided. Unfortunately, in 1986, when her family was already residing in Metro Manila, fire razed
and destroyed the said house. Nonetheless, they continued to visit the subject property, as well
as pay the real estate taxes thereon. However, in August of 1986, her daughter, Zosie Raon, 2. Declaring the [petitioners] to have the better right over the other half of
discovered that the subject property was already in the name of the spouses Montemayor under the undivided whole of the lot-in-suit by mode of prescription pursuant to
Tax Declaration No. 0010563 which was purportedly issued in their favor by virtue of an Affidavit [A]rticle 1137 of the Civil Code of the Philippines;
of Ownership and Possession which the spouses Montemayor executed themselves. The Affidavit
was alleged to have created a cloud of doubt over Raons title and ownership over the subject 3. Dismissing the counter-claim of the [petitioners] against the
property. [respondents];

Hence, Agrifina Raon sought a Writ of Preliminary Injunction 8 against the spouses Montemayor 4. Ordering [petitioners] to pay the cost of the suit. 12
commanding them to cease and desist from further exercising any right of ownership or
possession over the subject property. She further prayed that she be finally declared the true
and lawful owner of the subject property. First, the MCTC ruled that while the adverse claims of Agrifina Raon on the subject lot against
the spouses Alcantara may have started in 1962, this adverse possession was interrupted in the
year 1977 due to the filing of an adverse claim by petitioner Marcelina Arzadon-Crisologo with
The spouses Montemayor, for their part, alleged that they acquired the subject lot by purchase the Office of the Assessor. In 1977, the tax declaration in the name of Valentin Raon, Agrifina
from Leticia del Rosario and Bernardo Arzadon who are the heirs of its previous owners for a Raons husband, was cancelled and a new tax declaration was issued in Marcelina Arzadon-
consideration of P100,000.00.9 Crisologos name. The MCTC said that the period of possession of the spouses Raon in the

10
concept of an owner from 1962 to 1977 did not ripen into ownership because their occupation It bears to note that since the death of Timoteo Alcantara until the year 1977,
was in bad faith. The Civil Code requires, for acquisitive prescription of real property, 30 years [petitioners], as well as their predecessors-in-interests (sic) had not taken any concrete
of uninterrupted possession if the same is wanting in good faith and without a just title. step in exercising their supposed successional rights over the parcel of land in suit,
or at least, the Intervenors should have always [stayed] on their guard or especially
vigilant against anyone who would secure a claim to the said parcel of land, more so
Second, the MCTC held that by virtue of succession, petitioners are entitled to one-half of the that Valentin Raon and plaintiff Agrifina Raon were then living with them. It is very
subject property. This is because according to Article 1001 13 of the Civil Code, should brothers unfortunate that it was only in 1977 that the Intervenors made known to others of
and sisters or their children survive with the widow or the widower (who are without issue), the their supposed successional rights over the parcel of land in suit. Relief is denied to a
latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children claimant whose right has become stale for a long time, considering that some other
to the other half. The spouses Alcantara died without issue. As between Timoteo Alcantara and persons like [respondents] had wayback (sic) taken the necessary action in claiming
Modesta Alcantara, the former predeceased the latter. Timoteo Alcantara was survived by (1) his the parcel of land in suit. It is the vigilant and not the sleepy that is being assisted by
brother Tiburcio Alcantara, who also died without any known heir; and (2) his sister Augustina the laws. (Ledita Burce Jacob v. Court of Appeals, et al., G.R. No. 92159, July 1, 1993).
Alcantara. Thus, following the death of the spouses Alcantara, only the children of Augustina
Alcantara, namely Marcelina Arzadon-Crisologo and Mauricia Arzadon, stand to inherit Timoteo
Alcantaras share in the subject property. It stands to reason, therefore, to hold that because of the claim of the [respondents]
to have acquired the parcel of land in suit by acquisitive prescription, the Intervenors
who belatedly claimed to be the legal and compulsory heirs of the late Timoteo
Moreover, the MCTC declared that for the part of Modesta Alcantara, there was no legal heir who Alcantara, as ruled by the trial court, had regrettably forfeited their such (sic)
claimed the other half of the property which she14 inherited from her husband, Timoteo Alcantara successional rights, simply due to their inaction for a long period of time. Hence,
who predeceased her. On this portion, the MCTC held that petitioners exercised rights of contrary to the findings of the trial court, the [petitioners] are not entitled to the one-
ownership and dominion over the same by periodically visiting the lot and cleaning it. 15 It also half (1/2) portion of the parcel of land in suit. 19
held that from 31 August 1977, when petitioners predecessor-in-interest Marcelina Arzadon-
Crisologo filed an adverse claim for herself and for her brothers and sisters which led to the
issuance of Tax Declaration No. 44120 in her name, to 11 December 2001,16 there is a total of Likewise, the RTC reasoned that the Notice of Adverse Claim executed by petitioners
33 years, three months and 10 days which is sufficient to claim ownership over the subject predecessor-in-interest Marcelina Arzadon-Crisologo against the Raons in 1977 implied that
property by adverse possession under Article 113717 of the Civil Code. respondents have been in possession of the subject property. On this matter, the RTC said, viz:

On appeal, the RTC reversed and set aside the Decision of the MCTC. Evidently, the trial court considered by implication that the execution by Marcelina
Arzadon Crisologo of said Adverse Claim and Notice of Ownership in 1977 to have
interrupted the running of the prescriptive period on the possession by the
The RTC declared that the respondent Raons who are heirs of the original plaintiff had acquired [respondents] of the parcel of land in suit. It bears to stress on (sic) this point, that
the subject property by virtue of acquisitive prescription, and therefore adjudged respondents to the Adverse Claim and Notice of Ownership executed by Marcelina Arzadon Crisologo
be the absolute owners thereof; thus, in the 8 August 2002 Decision of the RTC, it held: is nothing but a notice of a claim adverse to the [respondents]. By its nature, its
implication is that the [respondents] have been in possession of the parcel of land in
WHEREFORE, in view of the foregoing, the Decision of the trial [c]ourt is hereby suit in some concept. But definitely, said Adverse Claim does not, upon its execution,
REVERSED and SET ASIDE, and judgment is hereby rendered: operate to toll or interrupt the running of the prescriptive period because there is a
necessity to determine the validity of the same. And this could only be done by the
filing of the necessary action in court such [as] contemplated in the provisions of
1) Declaring the [respondents] as the absolute owners of the parcel of land in suit, Article 1123 of the Civil Code. It is only on (sic) such instance that the prescriptive
having acquired the same through extraordinary acquisitive prescription. period should be deemed interrupted. And undisputedly, nothing had been done by
the Intervenors after the execution of said Adverse Claim by Marcelina Crisologo,
except of course as they claimed, and as held by the trial court, they started to possess
No costs.18 the parcel of land in suit. Regretably (sic), however, such possession by the Intervenors
of the parcel of land in suit does not benefit them for purposes of prescription. 20
In its findings, the RTC declared that a more circumspect scrutiny of the evidence showed that
for a long time from the death of the spouses Alcantara, no one adjudicated the subject property The RTC also declared that the Raons have been in possession of the parcel of land in the
unto themselves. Although petitioners and their predecessors-in-interest claimed to have concept of an owner since 1962. Even as they had gone to live in Manila following the burning
successional rights over the subject property, they did not take action to have the same of the house on the subject property, they continued to exercise acts of dominion over the same
adjudicated to themselves or, at least, to have the same declared for taxation purposes. The RTC by visiting and looking after the property. The RTC also considered in favor of the respondents,
ruled that petitioners had slept on their rights. On the part of the respondent Raons, in 1962, the admission of petitioner Bernardo Arzadon and the petitioners witnesses that Valentin Raon
Valentin Raon, respondents father, declared the subject property in his name for taxation and Agrifina Raon had been staying in the house on the subject lot since 1947, which shows
purposes and paid the corresponding taxes thereon. In the years that followed, his wife, Agrifina that they had been in possession of the subject property for a period of more than 50 years.
Raon, declared the same in her name for taxation purposes, as well as paid the real estate taxes
on the subject property. In 1977, the latter even mortgaged the subject property with the
Philippine National Bank. It was only in 1977 when petitioners predecessor-in-interest Marcelina On review before the Court of Appeals, the Decision of the RTC was affirmed in toto.
Arzadon-Crisologo executed an Adverse Claim and Notice of Ownership and declared the subject
property in her name and paid its taxes.
The Court of Appeals held that when Valentin Raon executed the affidavit declaring himself to
be the true and lawful owner of the subject property in 1962, the same was a repudiation of
The RTC elucidated in this wise, to wit: petitioners legal title over it. The repudiation, coupled with the payment of realty taxes, was
made with the knowledge of petitioners, who failed to act against it. Thus, from 1962 up to the
filing of the action in 1995, respondents continued to adversely occupy the property. In the
assailed 10 November 2005 Decision of the Court of Appeals, it ruled:
11
Moreover, respondents payment of realty taxes made with the knowledge and consent party who asserts ownership by adverse possession must prove the presence of the essential
of petitioners and went unchallenged for a number of years, indubitably show their elements of acquisitive prescription.
positive claim as owners of the property. While it is true that by themselves tax receipts
and declarations of ownership for taxation purposes are not incontrovertible evidence
of ownership, they become strong evidence of ownership acquired by prescription Article 1117 of the Civil Code is instructive:
when accompanied by proof of actual possession of the property. It is only where
payment of taxes is accompanied by actual possession of the land covered by the tax Art. 1117. Acquisitive prescription of dominion and other real rights may be ordinary
declaration that such circumstance may be material in supporting a claim of or extraordinary.
ownership.

Articles 1134 and 1137 of the Civil Code fix the periods of possession,29 which provide:
Needless to state, from 1962 onwards, prescription begun to run against petitioners
and was not in any way interrupted from their mere execution of the Notice of Adverse
Claim since the notice of adverse claim cannot take the place of judicial summons Art. 1134. Ownership and other real rights over immovable property are acquired by
which produces the civil interruption provided for under the law. And even if We are ordinary prescription through possession of ten years.
to eliminate the question of good faith in determining the prescriptive period, evidence
are (sic) still abundant to substantiate respondents thirty years of possession in the
concept of owner commencing from 1962 until 1995 when the complaint below was Art. 1137. Ownership and other real rights over immovables also prescribe through
filed.21 uninterrupted adverse possession thereof for thirty years, without need of title or of
good faith.

Petitioners filed a Motion for Reconsideration thereon which was denied by the Court of Appeals
in the following manner, to wit: From the foregoing, it can be gleaned that acquisitive prescription of real rights may be ordinary
or extraordinary.30 Ordinary acquisitive prescription requires possession of things in good faith
and with just title for the time fixed by law; without good faith and just title, acquisitive
After a careful study of the grounds relied upon by petitioners We find no new matters prescription can only be extraordinary in character. 31 Regarding real or immovable property,
raised to justify a modification much less, a reversal of the Decision sought to be ordinary acquisitive prescription requires a period of possession of ten years, while extraordinary
reconsidered. To reiterate, even assuming ex gratia argumenti that petitioner merely acquisitive prescription requires an uninterrupted adverse possession of thirty years. 32
tolerated the Raons (sic) occupancy of the subject property, it must be stressed that
the execution in 1962 of Valentin Raons Affidavit, the corresponding payment of
realty taxes and other acts of dominion which went unchallenged by the petitioners, Were respondents able to sufficiently satisfy the legal requirements to prove prescription?
had effectively severed their alleged juridical relation. Suffice it to state that these acts,
taken as a whole, vest upon the Raons the right to claim ownership over the subject
To recapitulate, respondents traced their claim of ownership from the year 1962 until the filing
property irrespective of whether the nature of their occupation was rooted from the
of their Complaint for Ownership before the MCTC on 18 October 1995. To support their
mere tolerance of the Arzadons or from a bona fide sale between Agrifina Raon and
possession, they rely on an Affidavit executed on 19 October 1962 by Valentin Raon claiming
Rafael Ladera.22
ownership over the subject property by virtue of an alleged sale. The MCTC, the RTC and the
Court of Appeals were unanimous in declaring that the execution by Valentin Raon of the
Hence, the instant Petition. Affidavit in 1962 was an express repudiation of petitioners claim over the property. By virtue of
such Affidavit, respondents were able to cancel Tax Declaration No. 02853 in the name of
petitioners predecessor-in-interest Timoteo Alcantara who was shown to have paid taxes on the
The primordial issue in the case at bar is whether the Court of Appeals erred in declaring that subject property in 1950. Hence, in 1962, Tax Declaration No. 033062 was issued in the name
respondents had acquired ownership over the subject property through uninterrupted and of Valentin Raon. The same was subsequently cancelled by Tax Declaration No. 033106, which
adverse possession thereof for thirty years, without need of title or of good faith. Petitioners was in the name of his wife, Agrifina Raon. The same was likewise cancelled in 1967 by Tax
dispute the findings of the Court of Appeals and the RTC in declaring that acquisitive prescription Declaration No. 420809, similarly under the name of Agrifina Raon. In 1977, however,
has set in against them and in favor of the respondents. They claim that the evidence does not petitioners predecessor-in-interest Marcelina Arzadon-Crisologo filed an Adverse Claim and a
support respondents contention that they have been in public, notorious, and uninterrupted Notice of Ownership claiming that the subject property which is not yet registered in the Office
possession over the subject property in the concept of an owner since 1962 as alleged in their of the Register of Deeds of Laoag City is declared under Tax Declaration No. 420809 in the name
Complaint. Instead, petitioners rely on the finding of the MCTC that respondents were not able of Valentin Raon for taxation purposes only; but that they have been in possession of the said
to prove their adverse claim for an uninterrupted period of thirty years. land publicly, peacefully and continuously without any intervention or interruption for more
than 15 years.
At this juncture, we take an opportune look at the applicable rules on the acquisition of
ownership through prescription. However, a question must be asked: did the Notice of Adverse Claim filed by petitioners constitute
an effective interruption since 1962 of respondents possession of the subject property?
Prescription is another mode of acquiring ownership and other real rights over immovable
property.23 It is concerned with lapse of time in the manner and under conditions laid down by The answer is in the negative.
law, namely, that the possession should be in the concept of an owner, public, peaceful,
uninterrupted and adverse.24 Possession is open when it is patent, visible, apparent, notorious
and not clandestine.25 It is continuous when uninterrupted, unbroken and not intermittent or Article 112333 of the Civil Code is categorical. Civil interruption is produced by judicial summons
occasional;26 exclusive when the adverse possessor can show exclusive dominion over the land to the possessor. Moreover, even with the presence of judicial summons, Article 1124 34 sets
and an appropriation of it to his own use and benefit; 27 and notorious when it is so conspicuous limitations as to when such summons shall not be deemed to have been issued and shall not
that it is generally known and talked of by the public or the people in the neighborhood. 28 The give rise to interruption, to wit: 1) if it should be void for lack of legal solemnities; 2) if the plaintiff

12
should desist from the complaint or should allow the proceedings to lapse; or 3) if the possessor Furthermore, the Court finds it (sic) significant the testimonies of [petitioner] Bernardo
should be absolved from the complaint. Arzadon and his witnesses Leonila Arzadon and Elpidio Evangelista who categorically
testified to the effect that Valentin Raon and [respondent] Agrifina Raon had been
staying in the house standing on the parcel of land in suit since 1947. Basically, the
Both Article 1123 and Article 1124 of the Civil Code underscore the judicial character of civil defendants are bound by their admissions and also bound by the testimonies of the
interruption. For civil interruption to take place, the possessor must have received judicial witnesses they presented. And going along with their respective testimonies, from
summons. None appears in the case at bar. The Notice of Adverse Claim which was filed by 1947 to 1977 or for [a] period of thirty (30) years the [respondents] have been in
petitioners in 1977 is nothing more than a notice of claim which did not effectively interrupt possession of the parcel of land in suit enough to invoke extraordinary acquisitive
respondents possession. Such a notice could not have produced civil interruption. We agree in prescription, pursuant to the provisions of Article 113439 (sic) of the New (sic) Civil
the conclusion of the RTC, which was affirmed by the Court of Appeals, that the execution of the Code. However, as earlier stated, the [respondents], contrary to the claim of the
Notice of Adverse Claim in 1977 did not toll or interrupt the running of the prescriptive period [petitioners] and findings of the trial court, have been in possession of the parcel of
because there remains, as yet, a necessity for a judicial determination of its judicial validity. land in suit continuously and uninterrupted from 1962 to the present but because of
What existed was merely a notice. There was no compliance with Article 1123 of the Civil Code. the admissions of the [petitioners], the [respondents] have been in possession of the
What is striking is that no action was, in fact, filed by petitioners against respondents. As a same from 1947 to the present or for more than fifty (50) years now. 40
consequence, no judicial summons was received by respondents. As aptly held by the Court of
Appeals in its affirmance of the RTCs ruling, the Notice of Adverse Claim cannot take the place
of judicial summons which produces the civil interruption provided for under the law.35 In the The open, continuous, exclusive and notorious possession by respondents of the subject property
instant case, petitioners were not able to interrupt respondents adverse possession since 1962. for a period of more than 30 years in repudiation of petitioners ownership had been established.
The period of acquisitive prescription from 1962 continued to run in respondents favor despite During such length of time, respondents had exercised acts of dominion over the subject
the Notice of Adverse Claim. property, and paid taxes in their name. Jurisprudence is clear that although tax declarations or
realty tax payments of property are not conclusive evidence of ownership, nevertheless, they are
good indicia of possession in the concept of owner for no one in his right mind would be paying
From another angle, we find that, quite clearly, questions of fact exist before us. There is a taxes for a property that is not in his actual or at least constructive possession. 41 They constitute
question of fact when the doubt or difference arises as to the truth or falsehood of facts or when at least proof that the holder has a claim of title over the property. 42 As is well known, the
the query invites calibration of the whole evidence considering mainly the credibility of the payment of taxes coupled with actual possession of the land covered by the tax declaration
witnesses, the existence and relevancy of specific surrounding circumstances as well as their strongly supports a claim of ownership.43 The Court of Appeals did not err in affirming the factual
relation to each other and to the whole, and the probability of the situation. 36 findings of the RTC that respondents had validly established their claim of ownership over the
subject property through acquisitive prescription.
Thus, we find proper the application of the doctrine that findings of facts of the Court of Appeals
upholding those of the trial court are binding upon this Court. 37 Even though the rule is subject WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals dated 10 November
to exceptions,38 we do not find them applicable in the instant case. 2005 and the Resolution dated 12 January 2006 in CA-G.R. SP No. 72552 are AFFIRMED. No
costs.
As found by the RTC and affirmed by the Court of Appeals, nothing was done by petitioners to
claim possession over the subject property from the time their predecessors-in-interest had lost SO ORDERED.
possession of the property due to their deaths. Plainly, petitioners slept on their
rights. Vigilantibus sed non dormientibus jura subveniunt. The law comes to the succor only to
aid the vigilant, not those who slumber on their rights. It was only in 1977 when they attempted Ynares-Santiago, Chairperson, Austria-Martinez, Nachura, Reyes, JJ., concur.
to call the attention of respondents, which as earlier discussed, did not even operate as an
interruption on the latters possession. The RTC and the Court of Appeals held that from 1962
to the time they filed their Complaint before the MCTC and until the present time, respondents
occupied without interruption the subject property in the concept of an owner, thereby acquiring
ownership via extraordinary acquisitive prescription. To reiterate, the RTCs factual findings
based on the evidence on record were manifestly in favor of respondents, to wit:

Thus, by preponderance of evidence, it has been established preponderantly that the


[respondents] have been in possession of the parcel of land in suit continuously,
peacefully, publicly, notoriously, uninterrupted and in the concept of an owner since
1962 to the present. The fact that the [respondents] have gone to live in Manila right
after the house built in the parcel of land in suit was burned in 1988, they, however,
then and thereafter intermittently come to Badoc, Ilocos Norte purposely to look after
and to visit the parcel of land in suit. Actual possession of land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally
exercise over his own property. One needs (sic) not to (sic) stay on it. The acts exercised
by the [respondents] over the parcel of land in suit are consistent with ownership.
Possession in the eyes of the law does not mean that a man has to have his feet on
every square meter of the ground before it can be said that he is in possession [thereof].
(Ramos v. Director of Lands, 39 Phil. 175, cited in the case of Somodio v. Court of
Appeals, et al., 235 SCRA 307). It is sufficient that the [respondents] were able to
subject the parcel of land to the action of their will.

13
Republic of the Philippines pamagatan ay Ruhale nayon ng Calzada, Tagig, Rizal, at na sa loob ng mga
SUPREME COURT kahanganan at sukat na sumusunod[:]
Baguio

Na, ang kahangan sa Hilagaan Sapang Ruhale at Vicente Bunye, sa


FIRST DIVISION Amihanan Felipe Pagkalinawan, sa Timugan Juan Flores, at sa Habagatan
Apolonio Ocol may sukat na 6 areas at 85 centiareas may halagan
amillarada na P80.00) Pesos alinsunod sa Tax Blg. 20037, sa pangalan ng
G.R. No. 175763 April 11, 2012 aking kapatid na Jose Gabriel. Na, ang lupang itoy hindi natatala sa bisa
ng batas Blg. 496 ni sa susog gayon din sa Hipotecaria Espaola itoy may
HEIRS OF BIENVENIDO AND ARACELI TANYAG, namely: ARTURO TANYAG, AIDA T. mga mojon bato ang mga panulok at walang bakod.
JOCSON AND ZENAIDA T. VELOSO, Petitioners,
vs. 2.) Na, alang-alang sa halagang SIYAMNAPO AT ANIM (P96.00) na Pisong
SALOME E. GABRIEL, NESTOR R. GABRIEL, LUZ GABRIEL-ARNEDO married to ARTURO salaping guinagamit dito sa Filipinas na bago dumating ang mga sandaling
ARNEDO, NORA GABRIEL-CALINGO married to FELIX CALINGO, PILAR M. MENDIOLA, itoy tinaggap ko at ibinayad sa akin ng boong kasiyahang loob ko ng
MINERVA GABRIEL-NATIVIDAD married to EUSTAQUIO NATIVIDAD, and ERLINDA magasawang GABRIEL SULIT AT CORNELIA SANGA, mga Filipinos may
VELASQUEZ married to HERMINIO VELASQUEZ, Respondents. mga karapatang gulang mga naninirahan sa nayon ng Calzada, Tagig,
Rizal, ngayon ay inilipat ko at ipinagbili ng bilihang tuluyan (Venta real
DECISION soluta) ang isinasaysay kong lupang kawayanan sa itaas nito ng nasabi
halagang SIYAMNAPO AT ANIM (P96.00) na Piso at sa nabanguit na
magasawang GABRIEL SULIT AT CORNELIA SANGA, gayon din sa lahat ng
VILLARAMA, JR., J.: mga tagapagmana nila, ngayong mga arao na ito ay ang may hawak at
namamahala ng lupang itoy ang mga nakabili sa akin na magasawang
GABRIEL SULIT AT CORNELIA SANGA.
This is a petition for review under Rule 45 which seeks to reverse the Decision1 dated August 18,
2006 and Resolution2 dated December 8, 2006 of the Court of Appeals (CA) in CA-G.R. CV No.
81224. The CA affirmed the Decision3 dated November 19, 2003 of the Regional Trial Court of 3.) Na, ang kasulatang itoy ng bilihan ay nais na itala sa bisa ng batas Blg.
Pasig City, Branch 267 in Civil Case No. 67846 dismissing petitioners complaint for declaration 3344.
of nullity of Original Certificate of Title (OCT) No. 1035, reconveyance and damages, as well as
respondents counterclaims for damages and attorneys fees.
NA SA KATUNAYAN NG LAHAT NG ITOY ako ay lumagda sa kasulatang ito dito sa Tagig, Rizal,
ngayong ika - 28 ng Junio 1944.
Subject of controversy are two adjacent parcels of land located at Ruhale, Barangay Calzada,
Municipality of Taguig (now part of Pasig City, Metro Manila). The first parcel ("Lot 1") with an
area of 686 square meters was originally declared in the name of Jose Gabriel under Tax (Nilagdaan)
Declaration (TD) Nos. 1603 and 6425 issued for the years 1949 and 1966, while the second BENITA GABRIEL5
parcel ("Lot 2") consisting of 147 square meters was originally declared in the name of Agueda
Dinguinbayan under TD Nos. 6418 and 9676 issued for the years 1966 and 1967. 4 For several Lot 1 allegedly came into the possession of Benita Gabriels own daughter, Florencia Gabriel
years, these lands lined with bamboo plants remained undeveloped and uninhabited. Sulit, when her father-in-law Gabriel Sulit gave it to her as part of inheritance of his son, Eliseo
Sulit who was Florencias husband. Florencia Sulit sold the same lot to Bienvenido S. Tanyag,
Petitioners claimed that Lot 1 was owned by Benita Gabriel, sister of Jose Gabriel, as part of her father of petitioners, as evidenced by a notarized deed of sale dated October 14, 1964.6 Petitioners
inheritance as declared by her in a 1944 notarized instrument ("Affidavit of Sale") whereby she then took possession of the property, paid the real estate taxes due on the land and declared the
sold the said property to spouses Gabriel Sulit and Cornelia Sanga. Said document states: same for tax purposes, as shown by TD No. 11445 issued in 1969 in the name of Bienvenidos
wife, Araceli C. Tanyag; TD No. 11445 cancelled TD No. 6425 in the name of Jose Gabriel. TD
Nos. 3380 and 00486 also in the name of Araceli Tanyag were issued in the years 1974 and
DAPAT MALAMAN NG LAHAT NG MAKABABASA 1979.7

Na, akong Benita Gabriel, balo sa nasirang Calixto Lontoc, Filipina may karapatang gulang As to Lot 2, petitioners averred that it was sold by Agueda Dinguinbayan to Araceli Tanyag under
naninirahan sa nayon ng Palingon, Tagig, Rizal, x x x sa pamamaguitan nitoy Deed of Sale executed on October 22, 1968. Thereupon, petitioners took possession of said
property and declared the same for tax purposes as shown by TD Nos. 11361, 3395, 120-014-
00482, 120-00-014-20-002-000, C-014-00180 and D-014-00182 issued for the years 1969,
ISINASAYSAY KO AT PINAGTITIBAY 1974, 1979, 1985, 1991 and 1994.8 Petitioners claimed to have continuously, publicly,
notoriously and adversely occupied both Lots 1 and 2 through their caretaker Juana Quinones 9;
they fenced the premises and introduced improvements on the land. 10
1.) Na, sarili ko at tunay na pagaari ang isang lagay na lupang kawayanan
na sapagkat itoy kabahagui ko sa aking kapatid na [J]ose Gabriel, na itoy
mana ko sa aking nasirang ama Mateo Gabriel sa kami lamang dalawa ng Sometime in 1979, Jose Gabriel, father of respondents, secured TD No. 120-014-01013 in his
aking kapatid na binabanguit ko na Jose Gabriel siyang mga anak at name over Lot 1 indicating therein an increased area of 1,763 square meters. Said tax declaration
tagapagmana ng aming amang nasirang Mateo Gabriel, maliban sa amin supposedly cancelled TD No. 6425 over Lot 1 and contained the following inscription11:
ay wala nang iba, kayat kami ay naghati sa mga ari-arian na na iwan sa
amin ng nasirang ama namin na Mateo Gabriel, na ang lupang kawayanang
itoy may nakatanim na walong (8) punong kawayan at na sa pook na kung

14
Note: Portions of this Property is Also Declared described the place as inaccessible at that time as there were no roads yet and they had to
in the name of Araceli C. Tanyag under traverse muddy tracks to reach their property. 19
T.D.#120-014-00858 686 sq. m.

Arturo further testified that the first time they met Jose Gabriel was when the latter borrowed
Also inscribed on TD No. 120-014-0085812 (1979) in the name of Araceli Tanyag covering Lot 1 from their mother all the documents pertaining to their property. Jose Gabriel came looking for
are the following: a piece of property which he claims as his but he had no documents to prove it and so they
showed him their documents pertaining to the subject property; out of the goodness of her
mothers heart, she lent those documents to her brother Jose Gabriel. During the cadastral
This property is also covered by T.D. #120-014-01013 survey conducted in 1976, they had both lots surveyed in preparation for their consolidation
in the name of Jose P. Gabriel under one tax declaration. However, they did not succeed in registering the consolidated lots as
1-8-80 they discovered that there was another tax declaration covering the same properties and these
which notation was carried into the 1985, 1990 and 1991 tax declarations, all in the name of were applied for titling under the name of Jose Gabriel sometime in 1978 or 1980, which was
Araceli Tanyag. after the time said Jose Gabriel borrowed the documents from their mother. No notice of the
hearings for application of title filed by Jose Gabriel was received by them. They never abandoned
On March 20, 2000, petitioners instituted Civil Case No. 67846 alleging that respondents never the property and their caretaker never left the place except to report to the police when she was
occupied the whole 686 square meters of Lot 1 and fraudulently caused the inclusion of Lot 2 in being harassed by the respondents. He also recalled that respondents had filed a complaint
TD No. 120-014-01013 such that Lot 1 consisting of 686 square meters originally declared in against them before the barangay but since no agreement was reached after several meetings,
the name of Jose Gabriel was increased to 1,763 square meters. They contended that the they filed the present case.20
issuance of OCT No. 1035 on October 28, 1998 over the subject land in the name of respondents
heirs of Jose Gabriel was null and void from the beginning. 13 The next witness for petitioners was Juana Quinones, their caretaker who testified that she had
been staying on petitioners property since 1964 or for 35 years already. She had built a nipa
On the other hand, respondents asserted that petitioners have no cause of action against them hut and artesian well, raised piggery and poultry and planted some root crops and vegetables on
for they have not established their ownership over the subject property covered by a Torrens title the land. At first there was only one parcel but later the petitioners bought an additional lot;
in respondents name. They further argued that OCT No. 1035 had become unassailable one year Arturo Tanyag gave her money which she used for the fencing of the property. During all the
after its issuance and petitioners failed to establish that it was irregularly or unlawfully time she occupied the property there was nobody else claiming it and she also had not received
procured.14 any notice for petitioners concerning the property, nor the conduct of survey on the land. On
cross-examination, she admitted that she was living alone and had no Voters ID or any
document evidencing that she had been a resident there since 1964. Although she was living
Respondents evidence showed that the subject land was among those properties included in the alone, she asks for help from other persons in tending her piggery. 21
Extrajudicial Settlement of Estate of Jose P. Gabriel15 executed on October 5, 1988, covered by
TD No. B-014-00643 (1985) in the name of Jose Gabriel. Respondents declared the property in
their name but the tax declarations (1989, 1991 and 1994) carried the notation that portions Angelita Sulit-delos Santos, cousin of petitioners and also of respondents, testified that she came
thereof (686 sq. ms.) are also declared in the name of Araceli Tanyag. On October 28, 1998, OCT to know the subject property because according to her paternal grandfather Gabriel Sta. Ana
No. 103516 was issued to respondents by the Register of Deeds of Pasig, Metro Manila under Sulit, her maternal grandmother Benita Gabriel-Lontoc mortgaged the property to him. It was
Decree No. N-219177 pursuant to the Decision dated September 20, 1996 of the Land Benita Gabriel Lontoc who took care of her, her siblings and cousins; they lived with her until
Registration Court in LRC Case No. N-11260, covering Lot 1836 MCadm-590-D, Taguig Cadastral her death. She identified the signature of Benita Gabriel in the 1944 Affidavit of Sale in favor of
Mapping, Plan Ap-04-002253, with an area of 1,560 square meters. Gabriel Sulit. Lot 1 consisting of 600 square meters was vacant property at that time but her
family was in possession thereof when it was sold to Gabriel Sulit; it was her father Eliseo Sulit
and uncle Hilario Sulit, who were incharge of their property. On cross-examination, she was
On the other hand, respondents TD Nos. D-014-00839 and D-014-01923 issued in 1993 and asked details regarding the supposed mortgage of Lot 1 to Gabriel Sulit but she admitted she
1999 respectively, showed that respondents sold 468 square meters of Lot 1 to Jayson Sta. does not know anything as she was still very young then. 22
Barbara.17 The segregation of said 468 square meters pertaining to Jayson Sta. Barbara was
reflected in the approved survey plan of Lot 1836 prepared by respondents surveyor on March
18, 2000.18 Respondents first witness was Roberto Gabriel Arnedo, son of Luz Gabriel-Arnedo. He testified
that when he was about 5 or 6 years old (1953 or 1954), his grandfather Jose Gabriel used to
bring him along to visit the subject property consisting of 1,763 square meters based on the tax
At the trial, petitioners presented their witness Arturo Tanyag, son of Bienvenido Tanyag and declaration and OCT. They had picnics and celebrate his grandfathers birthday there. He
Araceli Tanyag who died on March 30, 1968 and October 30, 1993, respectively. He testified that recalled accompanying his grandfather in overseeing the planting of gumamela which served as
according to Florencia Sulit, Benita Gabriel-Lontoc and her family were the ones in possession the perimeter fence. Jose Gabriel had not mentioned anything about the claim of petitioners over
of Lot 1 since 1944; Benita Gabriel had executed an Affidavit of Sale declaring said property as the same land; Jose Gabriel handed the documents pertaining to the land to his eldest aunt and
her inheritance and conveying the same to spouses Gabriel and Cornelia Sulit. He affirmed that hence it now belongs to them.23 On cross-examination, he claimed that during those years he
they had been in possession of Lot 1 from the time Bienvenido Tanyag bought the land from had visited the land together with his grandfather, he did not see Florencia Sulit and her family. 24
Florencia Sulit in 1964. Based on the boundaries indicated in the tax declaration, they fenced
the property, installed Juana Quinones as their caretaker who also attended to the piggery, put
up an artesian well and planted some trees. From 1964 up to 1978, nobody disturbed them in Virginia Villanueva, daughter of Salome Gabriel, testified that they acquired the subject property
their possession or claimed ownership of the land; four years after acquiring Lot 1, they also from their grandfather Jose Gabriel who had a tax declaration in his name. Her mother furnished
purchased the adjacent property (Lot 2) to expand their piggery. Lot 2 was also separately them with documents such as tax declarations and the extrajudicial settlement of the estate of
declared for tax purposes after their mother purchased it from Agueda Dinguinbayan. He had Jose Gabriel; they also have an approved survey plan prepared for Salome Gabriel. She does not
personally witnessed the execution of the 1968 deed of sale including its notarization, and was know the petitioners in this case.25 On cross-examination, she said that the subject property was
also present during the physical turn over of Lot 2 by the seller. In fact, he was one of the inherited by Jose Gabriel from his father Mateo Gabriel; Jose Gabriel was the sole owner of the
instrumental witnesses to the deed of sale and identified his signature therein. He further land while Benita Gabriel has separate properties in Palingon and Langkokak. 26 Though they are
not actually occupying the property, they visit the place and she does not know anybody

15
occupying it, except for the portion (486 square meters) which petitioners sold to Sta. Barbara. In its decision, the trial court dismissed the complaint as well as the counterclaim, holding that
A nine-door apartment was built on the said portion without their permission. She had talked to petitioners failed to establish ownership of the subject property and finding the respondents to
both Sta. Barbara and with Arturo Tanyag they had meetings before the barangay; however, be the declared owners and legal possessors. It likewise ruled that petitioners were unable to
petitioners filed the present case in court. She insisted that there is nobody residing in the prove by preponderance of evidence that respondents acquired title over the property through
subject property; there is still the remaining 901 square meters which is owned by their mother. fraud and deceit.
She admitted there were plants on the land but she does not know who actually planted them;
it was her grandfather who built a wooden fence and gumamela in the 1960s. As to the hearings
on the application for title, she had not attended the same; she does not know whether the Petitioners appealed to the CA which affirmed the trial courts ruling. The CA found that apart
petitioners were notified of the said hearings. She also caused the preparation of the survey plan from the Affidavit executed by Benita Gabriel in 1944 claiming that she inherited Lot 1 from their
for Salome Gabriel. On the increased area of the property indicated in the later tax declarations, father, Mateo Gabriel, there is no evidence that she, not Jose Gabriel, was the true owner thereof.
she admitted the discrepancy but said there were barangay roads being built at the time. 27 It noted that just four years after Benita Gabriels sale of the subject property to the Sulit
spouses, Jose Gabriel declared the same under his name for tax purposes, paying the
corresponding taxes. The appellate court stressed that petitioners allegation of bad faith was not
Esmeraldo Ramos, Municipal Assessor of Taguig, testified that he was formerly a Land Appraiser proven.
in the Office of the Municipal Assessor of Taguig and in the course of his duties had certified one
of the tax declarations in the name of respondents (TD No. EL-014-10585). He identified and
verified said document and the other tax declarations submitted in court by the respondents. He Petitioners motion for reconsideration was likewise denied by the CA. Hence, this petition.
admitted that on January 10, 1980, they made the entry on TD No. 6425 in the name of Jose
Gabriel that the same was cancelled by TD No. 120-014-01013 also in the name of Jose Gabriel Petitioners assail the CA in not finding that the respondents obtained OCT No. 1035 in their
who presented a supposed deed of sale in favor of Araceli Tanyag which caused the earlier names fraudulently and in bad faith. They also claim to have acquired ownership of the subject
cancellation of TD No. 6425 in his name. However, upon investigation they found out that the lots by virtue of acquisitive prescription.
seller Florencia Sulit was not the owner because the declared owner was Jose Gabriel; even the
deed of sale recognized that the property was declared in the name of Jose Gabriel. They also
discovered from the cadastral survey and tax mapping of Taguig that the property is in the name The issues presented are: (1) whether respondents committed fraud and bad faith in registering
of Jose Gabriel both in the Bureau of Lands and Municipal Assessors Office. As far as he knows, the subject lots in their name; and (2) whether petitioners acquired the property through
it was Jose Gabriel who owned the subject property which he usually visited; he recalled that acquisitive prescription.
around the late 70s and 80s, he ordered the fencing of barbed wire and bamboo stalks on the
land which is just 3 lots away from his own property. As to the discrepancy in the area of the
property as originally declared by Jose Gabriel, he explained that the boundaries in the original Registration of a piece of land under the Torrens System does not create or vest title, because it
tax declaration do not change but after the land is surveyed, the boundaries naturally would be is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or
different because the previous owner may have sold his property or the present owner inherits title over the particular property described therein. 33 Thus, notwithstanding the indefeasibility
the property from his parents. He admitted that the tax declaration is just for tax purposes and of the Torrens title, the registered owner may still be compelled to reconvey the registered
not necessarily proof of ownership or possession of the property it covers. 28 property to its true owners. The rationale for the rule is that reconveyance does not set aside or
re-subject to review the findings of fact of the Bureau of Lands. In an action for reconveyance,
the decree of registration is respected as incontrovertible. What is sought instead is the transfer
Respondents last witness was Antonio Argel who testified that he had resided for 52 years on a of the property or its title which has been wrongfully or erroneously registered in another persons
land near the subject property and as far as he knows it was Jose Gabriel who owns it and name, to its rightful or legal owner, or to the one with a better right.34
planted thereon. On cross-examination, he admitted that Jose Gabriel was not in physical
possession of the property. He just assumed that the present occupants of the property were
allowed by Jose Gabriel to stay therein because he is the owner. There is an apartment and three An action for annulment of title or reconveyance based on fraud is imprescriptible where the
small houses existing on the property, and about five families are living there. He confirmed that plaintiff is in possession of the property subject of the acts.35 The totality of the evidence on
there is a piggery being maintained by a certain Juana who had been residing there maybe for record established that it was petitioners who are in actual possession of the subject property;
fifteen years already.29 respondents merely insinuated at occasional visits to the land. However, for an action for
reconveyance based on fraud to prosper, this Court has held that the party seeking reconveyance
must prove by clear and convincing evidence his title to the property and the fact of fraud.36
In rebuttal, petitioners presented two witnesses who are owners of properties adjoining that of
the subject land. Rodante Domingo testified that it was only now did he learn that the property
of Arturo Tanyag is already titled in the name of respondents. He was not aware of the titling The CA correctly observed that the only evidence of Benita Gabriels supposed title was the 1944
proceeding because he never received any notice as adjoining owner. His own property is already Affidavit of Sale whereby Benita Gabriel claimed sole ownership of Lot 1 as her inheritance from
titled in his name and he even asked Arturo Tanyag to act as a witness in his application for their father, Mateo Gabriel. The property until 1949 was still declared in the name Jose Gabriel
titling.30 On the other hand, Dado Dollado testified that he acquired his property in 1979. He despite the 1944 sale executed by Benita Gabriel in favor of spouses Gabriel and Cornelia Sulit.
likewise affirmed that he did not receive any notice of the proceedings for application for titling As to the alleged fraud perpetrated by Jose Gabriel and respondents in securing OCT No. 1035
filed by respondents and it was only now that he learned from Arturo Tanyag that the subject in their name, this was clearly not proven as Arturo Tanyag testified merely that Jose Gabriel
property was already titled in the names of respondents. 31 borrowed their documents pertaining to the property. No document or testimony was presented
to show that Jose Gabriel employed deceit or committed fraudulent acts in the proceedings for
titling of the property.
The last rebuttal witness for petitioners was Dominador Dinguinbayan Ergueza, son of Agueda
Dinguinbayan. He testified that the subject property was formerly owned by his mother and the
present owner is Araceli Tanyag who bought the same from his mother in 1968. He described However, the CA did not address the issue of acquisitive prescription raised by the petitioners.
the boundaries of the property in relation to the adjoining owners at that time; presently, the left In their Complaint before the lower court, petitioners alleged
portion is already a street (Rujale St.) going towards the sea. He admitted that his wife, Livina
Ergueza was an instrumental witness in the 1968 deed of sale in favor of Araceli Tanyag.32
15. Defendants never occupied the whole area of the lot covered by Tax Declaration No. 1603
(686 sq. m.) neither were they able to set foot on the property covered by Tax Declaration No.

16
6542 [sic] for the reason that those lots had been in actual, open continuous, adverse and 1998, they finally obtained an original certificate of title covering the entire 1,763 square meters
notorious possession of the plaintiffs against the whole world for more than thirty years which which included Lot 1. Did these acts of respondents effectively interrupt the possession of
is equivalent to title. petitioners for purposes of prescription?

x x x x37 We answer in the negative.

Such character and length of possession of a party over a parcel of land subject of controversy In the case of Heirs of Marcelina Azardon-Crisologo v. Raon44 this Court citing Article 1123 of
is a factual issue. Settled is the rule that questions of fact are not reviewable in petitions for the Civil Code45held that civil interruption takes place with the service of judicial summons to
review on certiorari under Rule 45 of the Rules of Court, as only questions of law shall be raised the possessor and not by filing of a mere Notice of Adverse Claim. Thus:
in such petitions. While this Court is not a trier of facts, if the inference drawn by the appellate
court from the facts is manifestly mistaken, it may, in the interest of justice, review the evidence
in order to arrive at the correct factual conclusions based on the record. 38 Article 1123 of the Civil Code is categorical. Civil interruption is produced by judicial summons
to the possessor. Moreover, even with the presence of judicial summons, Article 1124 sets
limitations as to when such summons shall not be deemed to have been issued and shall not
In this case, the CA was mistaken in concluding that petitioners have not acquired any right over give rise to interruption, to wit: 1) if it should be void for lack of legal solemnities; 2) if the plaintiff
the subject property simply because they failed to establish Benita Gabriels title over said should desist from the complaint or should allow the proceedings to lapse; or 3) if the possessor
property. The appellate court ignored petitioners evidence of possession that complies with the should be absolved from the complaint.
legal requirements of acquiring ownership by prescription.

Both Article 1123 and Article 1124 of the Civil Code underscore the judicial character of civil
Acquisitive prescription is a mode of acquiring ownership by a possessor through the requisite interruption.1wphi1 For civil interruption to take place, the possessor must have received
lapse of time. In order to ripen into ownership, possession must be in the concept of an owner, judicial summons. None appears in the case at bar. The Notice of Adverse Claim which was filed
public, peaceful and uninterrupted.39 Possession is open when it is patent, visible, apparent, by petitioners in 1977 is nothing more than a notice of claim which did not effectively interrupt
notorious and not clandestine.40 It is continuous when uninterrupted, unbroken and not respondents possession. Such a notice could not have produced civil interruption. We agree in
intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion the conclusion of the RTC, which was affirmed by the Court of Appeals, that the execution of the
over the land and an appropriation of it to his own use and benefit; and notorious when it is so Notice of Adverse Claim in 1977 did not toll or interrupt the running of the prescriptive period
conspicuous that it is generally known and talked of by the public or the people in the because there remains, as yet, a necessity for a judicial determination of its judicial validity.
neighborhood. The party who asserts ownership by adverse possession must prove the presence What existed was merely a notice. There was no compliance with Article 1123 of the Civil Code.
of the essential elements of acquisitive prescription. 41 What is striking is that no action was, in fact, filed by petitioners against respondents. As a
consequence, no judicial summons was received by respondents. As aptly held by the Court of
Appeals in its affirmance of the RTCs ruling, the Notice of Adverse Claim cannot take the place
On the matter of prescription, the Civil Code provides: of judicial summons which produces the civil interruption provided for under the law. In the
instant case, petitioners were not able to interrupt respondents adverse possession since 1962.
Art. 1117. Acquisitive prescription of dominion and other real rights may be ordinary or The period of acquisitive prescription from 1962 continued to run in respondents favor despite
extraordinary. the Notice of Adverse Claim. (Emphasis supplied.)

Ordinary acquisitive prescription requires possession of things in good faith and with just title From 1969 until the filing of this complaint by the petitioners in March 2000, the latter have
for the time fixed by law. been in continuous, public and adverse possession of the subject land for 31 years. Having
possessed the property for the period and in the character required by law as sufficient for
extraordinary acquisitive prescription, petitioners have indeed acquired ownership over the
Art. 1134. Ownership and other real rights over immovable property are acquired by ordinary subject property. Such right cannot be defeated by respondents acts of declaring again the
prescription through possession of ten years. property for tax purposes in 1979 and obtaining a Torrens certificate of title in their name in
1998.

Art. 1137. Ownership and other real rights over immovables also prescribe through
uninterrupted adverse possession thereof for thirty years, without need of title or of good faith. This notwithstanding, we uphold petitioners right as owner only with respect to Lot 1 consisting
(Emphasis supplied.) of 686 square meters. Petitioners failed to substantiate their claim over Lot 2 by virtue of a deed
of sale from the original declared owner, Agueda Dinguinbayan. Respondents asserted that the
147 square meters covered by the tax declarations of Dinguinbayan being claimed by petitioners
Petitioners adverse possession is reckoned from 1969 with the issuance of TD No. 1145 in the is not the same lot included in OCT No. 1035.
name of Araceli Tanyag, which tax declaration cancelled TD No. 6425 in the name of Jose
Gabriel.42 It is settled that tax receipts and declarations are prima facie proofs of ownership or
possession of the property for which such taxes have been paid. Coupled with proof of actual Under Article 434 of the Civil Code, to successfully maintain an action to recover the ownership
possession of the property, they may become the basis of a claim for ownership. 43 Petitioners of a real property, the person who claims a better right to it must prove two (2) things: first, the
caretaker, Juana Quinones, has since lived in a nipa hut, planted vegetables and tended a identity of the land claimed; and second, his title thereto. In regard to the first requisite, in
piggery on the land. Aside from paying taxes due on the property, petitioners also exercised other an accion reinvindicatoria, the person who claims that he has a better right to the property must
acts of ownership such as selling the 468-square meter portion to Sta. Barbara who had first fix the identity of the land he is claiming by describing the location, area and boundaries
constructed thereon a nine-door apartment building. thereof.46 In this case, petitioners failed to identify Lot 2 by providing evidence of the metes and
bounds thereof, so that the same may be compared with the technical description contained in
OCT No. 1035, which would have shown whether Lot 2 consisting of 147 square meters was
It was only in 1979 that respondents began to assert a claim over the property by securing a tax erroneously included in respondents title. The testimony of Agueda Dinguinbayans son would
declaration in the name of Jose Gabriel albeit over a bigger area than that originally declared. In not suffice because said witness merely stated the boundary owners as indicated in the 1966

17
and 1967 tax declarations of his mother. On his part, Arturo Tayag claimed that he had the lots
surveyed in the 1970s in preparation for the consolidation of the two parcels. However, no such
plan was presented in court.

WHEREFORE, the petition is PARTLY GRANTED. The Decision dated August 18, 2006 of the
Court of Appeals in CA-G.R. CV No. 81224 is MODIFIED in that petitioners heirs of Bienvenido
and Araceli Tanyag are hereby declared the owners of 686 square meters previously declared
under Tax Declaration Nos. 11445, 120-014-00486, 120-014-0085, B-014-00501, E-014-01446,
C-014-00893 and D-014-00839 all in the name of Araceli Tanyag, which lot is presently covered
by OCT No. 1035 issued by the Register of Deeds of Pasig, Metro Manila in the name of
respondents Salome Gabriel, Nestor R. Gabriel, Luz Gabriel-Arnedo, Nora Gabriel-Calingo, Pilar
Gabriel-Mendiola, Minerva Gabriel-Natividad and Erlinda Gabriel-Velasquez. Respondents are
ORDERED to RECONVEY the said 686-square meter portion to the petitioners.

No pronouncement as to costs.

SO ORDERED.

MARTIN S. VILLARAMA, JR.


Associate Justice

18
Republic of the Philippines (2) As tot he bill of exceptions prepared by the petitioner, it appears that she made a motion for
SUPREME COURT a new trial in the court below on the ground that the evidence was not sufficient to justify the
Manila findings of fact stated in the decision of the judge. It is therefore necessary to discuss the evidence
EN BANC in relation to that part of the decision.
G.R. No. L-2524 April 27, 1906

On the 26th of November, 1874, the grantors of the petitioner acquired the beneficial interest in
CARMEN AYALA DE ROXAS, petitioner-appellee, the land in question by a deed of that date. On the 3rd of September, 1887, the petitioner
vs. acquired the legal ownership of the whereof had passed to her from the grantees of the deed of
AGAPITA MAGLONSO, ET AL., respondent-appellants. the 26th of November, 1847. The title deeds of the 1892. the evidence presented by her showed
that at the time of the presentation of the petition she was the lawful owner of the land in
question. The evidence presented by the objectors related solely to the possession of certain small
M. Mina for appellants. tract of land included in the land descriptive in the petition. Their entire claim is based upon the
Rafael Palma for appellee. statute of limitations. The court below held as to each of the appellees that each one of them had
been in possession of the land for more than thirty years; that the extraordinary period of
WILLARD, J. prescription applied, and that they became the owner of their respective parcels. each one of the
defendants of objectors testified for himself. He presented the same in all the cases, and was
limited to a statement by the defendant that he went on the land at a certain time, and lived
On the 15th of March, 1904, Ayala de Roxas presented a petition to the Court of Land there ever since, had made improvements thereon by filing low places thereon, did not ask
Registration asking that be inscribed as the owner of a certain tract of land of P12,388.46 permission from anybody, and had not been disturbed in his occupation. In rebuttal the
square meters in extent, fronting on Calle the San Miguel, in Manila. More than fifty people, petitioner presented evidence which proved the following facts; When the land tax was
who are occupying the land, appeared and entered opposed the granting of the petition. established in 1901 the petitioner made a demand upon a notary public that he should visit the
Judgment was entered in the court below on the 31st day of January, 1905. The oppositions of premises for the purpose of notifying the occupants of the land top abandon it within days. In
Agapita Maglonso and forty others were not, sustained, and as to them judgment was entered response tot his requisition the notary visited the premises on the 31st of August, 1901, and
in favor of the petitioner. The oppositions of Alejandro Francisco and seventeen others were delivered to each one of the occupants, including these appellees, such a written or printed
sustained, and as to them the petition was denied. notice. The notary testified that he limited himself to delivering a copy of this notice to each one
of the occupants, and made no threats of any kind whatever. This testimony is corroborated by
other evidence in the case. The appellees, however, practically all them, testify that threats were
Agapita Maglonso and her forty associates, whose petitions had been rejected, excepted to the owner their houses would be torn down within three days. On the day when this notice was given
judgment, and have brought the case here by a new trial in the court below. The petitioner, no documents were signed by the appellees, and none were presented to them for signature.
Carmen Ayala de Roxas, excepted tot he judgment so far as it sustained the oppositions of However, on the days following the 31st day of August, up to and including the 5th day of
Alejandro Francisco and his seventeen associates. She moved for a new trial in the court below, September, 1901, and even later, the occupants at different times during those days, and one
which was denied and she has brought the case here by bill of exceptions. day one voluntarily as far as appears went to the office of the agent of the petitioner and these
signed written instruments, each of which described by meters and bounds the land occupied
by the person who signed it, stated that the property belonged to the petitioner, and the person
(1) The appellants Agapita Maglonso and her forty associates not having moved for a new trial in
who signed the document promised to pay as rent a certain number of cents per square meter
the court below, we are permitted to examine the evidence upon which the decision of the court
for the use of the property of cents per square meter for the use of the property, and also to pay
below against them was based. The only question presented upon the bill of exceptions prepared
the land t ax upon the house occupied by him.
by them is whether the findings of fact contained in the decision of the court below are sufficient
to justify the judgment as to them. The court made separate findings as to tone of the objectors,
and an examination of those findings shows that they support the judgment. It is claimed by We do not think that the evidence is sufficient to show title in the appellees by prescription. (See
these appellants in their brief in this court that the court below found that certain of them Veloso vs. Naguit,1 April 2, 1904, 2 Off. Gaz., 527.)
acquired their interest in the land in question by inheritance or purchase, and that therefore to
them is applicable the prescriptive period of ten years. When the whole of the decision is
examined it is seen that the court did not make the finding claimed. The court said: Articles 444 and 1942 of the Civil Code are as follows:

While there is a legal upon which to base the allegation that those who are able to ART. 444. Acts which are merely tolerated and those clandestinely executed, without
prove a possession of ten years by hereditary title or by purchase can invoke the knowledge of the possessors of a thing, or by force, do no effect the possession.
benefits of the ordinary prescription under article 1940 of the Civil Code, the evidence
in the case relating tot heir status as heirs as well as to the fact of the purchase are
too uncertain to justify the application of such a rule. ART. 1942. Acts of a possessory character, performed by virtue of the license, or by
mere tolerance on the part of the owner, are of no effect for establishing possession.

The appellants signed in August, 1901, recognizing the ownership of the petition. This
interrupted the prescriptive period. The facts stated in the decision relating to threats made by The evidence in the case bring it within the provisions of these articles. the petitioner was the
the notary are not sufficient as a matter of law as to make that recognition void. owner of the land. She collected rent from the another part of the same land. She tolerated the
presence of the defendants upon the small parcels of land which they occupied, not compelling
them to pay any rent until the imposition of the land tax in 1901. The most persuasive evidence
No claim was made in the pleadings in the court below for the value of the improvements made that the defendants were there by her tolerance and that they knew it, is found in the fact that
by the appellants, nor was any evidence introduced as to such value. The judgment as to Agapita in 1901, when a demand was made upon them to pay rent, they did so, and recognized the
Maglonso and the persons who prepared and presented a bill of exceptions with her is affirmed, ownership of the petitioner. The finding of the court below to the effect that the notary threatened
with the costs of this instance against the said appellants. to destroy their houses is not in our opinion supported by the evidence.

19
The judgment of the court below, so far as it is against the petitioner, is reversed. The case is
remanded to the court below with instructions to enter judgment for the petitioner as prayed for
in her petition. No costs in this court will be allowed on the appeal of the petition. So ordered.

Arellano, C.J., Torres, Mapa, and Carson, JJ., concur.

20
Republic of the Philippines part owner of the property or not. The fact that she was invited by Marta Dizon is immaterial;
SUPREME COURT Marta had no greater right than the defendant.
Manila

The appealed judgment is affirmed without costs. So ordered.


EN BANC

Johnson, Malcolm, Johns and Villa-Real, JJ., concur.


G.R. No. L-31919 March 24, 1930

VICENTE SANTIAGO, administrator of the deceased Juan Dizon, plaintiff-appellant,


vs.
CRISTINA CRUZ, defendant-appellant.

The plaintiff-appellant in his own behalf.


Guevara, Francisco and Recto for defendant-appellant.

OSTRAND, J.:

It appears from the record that one Juan Dizon died on July 20, 1927, in a house where he had
lived for at least twenty years prior to his death. After his death, a petition for the appointment
of a special administrator was filed with the Court of First Instance of Rizal. The petition was
opposed by Marta Dizon, a close relative of the deceased, but her opposition was overruled and
on July 27, 1927, the plaintiff, Vicente Santiago, was appointed special administrator. As such,
he took possession of the property left by the deceased, including the house above-mentioned.
Two months later, Marta Dizon entered the house and made it her abode, against the will of the
plaintiff. Three days later, Cristina Cruz, the herein defendant, also made the house her home
on the invitation of Marta Dizon and remained there notwithstanding the objections of the
plaintiff.

Trouble immediately ensued, and the plaintiff asserts that the other persons living in the house
were insulted and annoyed to such an extent that they were compelled to leave. To prevent
further alleged depredations on the part of Marta and Cristina, the plaintiff placed padlocks on
most of the doors in the house, and on October 8, 1927, he obtained an order from the Court of
First Instance authorizing him to employ sheriffs or Constabulary men to aid him in maintaining
order in the house. Three days later, the court revoked said order but authorized the plaintiff to
employ deputy sheriffs at his own expense.

Thereafter, Marta Dizon died, but Cristina Cruz still insisted on living in the house, and the
plaintiff brought the present action against her for forcible entry and detainer. The justice of the
peace rendered judgment in favor of the defendant and absolved her from the complaint. Upon
appeal to the Court of First Instance, that court rendered a judgment ordering the defendant to
vacate the premises in question but absolving her from a claim presented by the plaintiff in the
same case for expenses incurred by him in employing a deputy sheriff. The total amount of the
claim was P2,116.71. Both of the parties appealed to this court, the plaintiff for the denial of his
claim of the expenses and the defendant for ordering her to vacate the house.

In our opinion, neither appeal is well taken. The plaintiff's employment of deputy sheriffs seems
to have been unnecessary, and we cannot hold that the court below erred in declining to allow
him compensation for the resulting expenses.

The defendant-appellant claims that she has inherited an interest in the house and is a tenant
in common with the heirs of Juan Dizon and that she therefore cannot be legally ejected from
said house. This contention cannot be successfully maintained. The plaintiff held possession of
the house before Marta Dizon and the defendant took possession. They acquired such possession
by force and against the will of the plaintiff, taking the law in their own hands. In these
circumstances, the defendant must suffer the consequences of her lawlessness whether she is a

21
Republic of the Philippines 5. That a deed was also executed by Norberto Rapatalo in favor of his son Gregorio
SUPREME COURT Rapatalo, which is Exhibit 2, ratified before the same notary public, attorney Jose
Manila Rivera.

EN BANC 6. That on September 30, 1920, the plaintiffs filed a complain for partition of property
against Juan Razote and his codefendant Norberto Rapatalo.
G.R. No. L-24863 August 5, 1926
7. That in December, 1923, the same plaintiffs filed an amended complaint, including
the spouses Gregorio Rapatalo and Eugenia de Francia as defendants, as a
LEON RAZOTE, ET AL., plaintiffs-appellants, consequence of the answer in which it alleged that the defendant Norberto Rapatalo
vs. has no longer any right or interest in the land in question, having transferred the same
JUAN RAZOTE (alias BANDONG), NORBERTO RAPATALO, GREGORIO RAPATALO, and in 1915 to his son Gregorio Rapatalo.
EUGENIA DE FRANCIA, defendant-appellees.

Upon these stipulations counsel for the defendant Rapatalo moved that the case be dismissed
C. Primicias for appellants. on the ground that Gregorio Rapatalo had acquired title to the land by prescription, but no ruling
Antonio Bengson for appellees. was made upon this motion.

OSTRAND, J.: After receiving the testimony of some witnesses in regard to points not covered by the stipulation
of facts the trial court rendered judgment in favor of the defendants, denying the partition of the
This is an action for the partition of a parcel of land situated in the barrio of San Jose of the property and absolving the defendants from the complaint. From this judgment the plaintiffs
municipality of Alaminos, Pangasinan, the plaintiffs alleging that they are the owners of a four- appeal.
fifths interest in the land, having inherited the same from their father, Juan Razote 1.0. The
original complaint was filed on September 30, 1920, Norberto Rapatalo and Juan Razote, a In our opinion the judgment appealed from must be affirmed. Leaving aside the question of
brother of the plaintiffs, being the only parties defendant. Norberto Rapatalo, through his credibility of witnesses upon the disputed facts, and in regard to which opinions may differ, it
counsel, filed an answer denying the allegations of the complaint and setting up as a special clearly appears from the stipulation of facts, which is not impugned and which binding upon the
defense "that he is in legal possession of the land in question, it being alleged in the complaint parties, that the defendant Gregorio Rapatalo, by himself and through his predecessor in
itself that he purchased the land from Juan Razote in the year 1913." On November 24, 1923, interest, Norberto Rapatalo, had held adverse possession of the property for over ten years when
counsel for the defendant Norberto Rapatalo filed an amended answer in which he denied he was made a defendant in he case in December, 1923, and that he therefore has acquired title
generally the allegations of the complaint and pleaded as a special defense that the only had to the land by prescription. But it has been suggested (1) that inasmuch as action was brought
possession of the land during the years 1913 and 1914 and that he, in 1915, made a donation against Norberto Rapatalo within ten years from the time he obtained possession of the land, his
of the land propter nuptias to his son Gregorio Rapatalo by reason of the latter's marriage to possession cannot be tacked to that of Gregorio; and (2) that it is not clearly shown by the
Eugenia de Francia, and that he, the said defendant, had no further interest in the land. The evidence that the possession held by Norberto and Gregorio was of the character required by
plaintiffs thereupon on December 13, 1923, filed an amended complaint to the same effect as section 41 of the Code of Civil Procedure.
the original complaint, but including Gregorio Rapatalo and Eugenia de Francia as additional
defendants.
Neither one of these contentions can be successfully maintained. Section 41, supra, reads as
follows:
At the beginning of the trial in the Court of First Instance the parties entered into the following
stipulation of facts:
Ten years actual adverse possession by any person claiming to be owner for that time
of any land or interest in land, uninterruptedly continued for ten years by occupancy,
1. That the identity of the land in question is known to the witnesses for both parties descent, grants, or otherwise, in whatever way such occupancy may have
and that they know the description of the land. commenced or continued, shall vest in every actual occupant or possessor of such land
a full and complete title, saying to the persons under disabilities the rights secured by
2. That on June 9, 1913, the defendant Juan Razote (alias Bandong) sold the land to the next section. In order to constitute such title by prescription or adverse possession,
his codefendant Norberto Rapatalo and that on that the same date Norberto Rapatalo the possession by the claimant or by the person under or through whom he claims
entered into the possession of the land and enjoyed the fruits thereof until they year must have been actual open, public, continuous, under a claim of title exclusive of
1915. any other right and adverse to all other claimants. . . .

3. That on March 26, 1915, the defendant Norberto Rapatalo granted said land by The rule is almost universal that if there is privity between successive occupants, the adverse
donation propter nuptias that his son Gregorio Rapatalo and that from the date up to possession of the predecessor may be tacked to the adverse possession of the successor, whether
the present time Gregorio Rapatalo has been in possession of the land and has enjoyed the former had title to the land or not. (See 2 C. J., 82 et seq., 1 R. C. L., 717 et seq.) The very
the products thereof. few exceptions to this rule are based on special statutory provisions which do not exist in this
jurisdiction. The provisions of the section quoted are taken from section 2734 of the annotated
Code of Mississippi of 1892, under which Code, tacking of successive possessions has always
4. That a deed of sale was executed by the defendant Juan Razote (alias Bandong) in been allowed. (Crowder vs. Neal, 100 Miss., 730.) The same rule has also uniformly been followed
favor of his codefendant Norberto Rapatalo, the deed having been acknowledged before in this jurisdiction.
Mr. Jose Rivera, attorney and notary public.

22
As already stated, it is stipulated that Norberto Rapatalo bought the land on June 19, 1913, and
held possession until March 26, 1915, when he ceded it to his son Gregorio, was continued the
possession uninterruptedly until December, 1923, when he was made a party to the case. It also
appears from uncontradicted that when the cession was made Gregorio moved from the barrio
of Pugo, where his father is living, to the barrio of San Jose, where the land in question is
situated, and that he alone enjoyed the fruits of the land during that time. There was therefore
no contenancy between him and his father and there is no indication of collusion between them
with intent to defraud the plaintiffs. As there was privity of possession between the two, the
predecessor's possession must, under the rule stated, be tacked to that of the successor.

At this point attention is called to the clear and positive language of the section above quoted. It
is there in effect stated that the manner in which the possession is commenced is immaterial; to
confer title it is sufficient that the possession has been actual, open, public, continuous and
adverse for the period of ten years saving only certain rights of persons under disability. Nowhere
in our statutes is any exception made in case such as the present, and if there is no exception it
stands to reason that section 41 applies with full force, and if the possession is of the character
described in said section for the period of ten years, it gives the possessor a "full and complete
title." That the possession in the present case was of that character, is fully shown by the
evidence. That it was continuous, is not disputed; that it was adverse and under claim of
ownership, is shown by the facts that both Norberto and Gregorio held the land under
conveyances in fee simple; that it was actual, open, and public, is sufficiently proven by the
testimony to the effect that the land was cultivated to its full and by the stipulation that Norberto
enjoyed its fruits during the time of his possession and that Gregorio received the products
during the succeeding period.

Now, as to the suggestion that Gregorio's rights were affected by the fact that an action for
partition of the land was brought against his father some five years after the father had divested
himself of all interest in the land, it must be considered that after the land had been ceded to
him, Gregorio held adverse possession not only against the plaintiffs but as against the whole
word, including his father. Can an action brought against a person, in regard to whom the
possessor of the land holds adversely, be regarded as an interruption of the possession of the
actual possessor? The question answers itself. It is elementary that an action against a stranger
to the possession cannot interrupt the running of the statute of limitations as to the actual
possessor if the latter's possession has been open and notorious as is admittedly the case here.

The blood relationship between Norberto and Gregorio has nothing to do with the question; and
action against the father is not an action against the son, and it is again to be noted that there
is no indication in the record of conclusion between the father and son to mislead the plaintiffs
into bringing the action against the wrong party. It is probable that Gregorio knew that an action
had been brought against his father, but that knowledge did not interrupt his possession; he
was under no obligation to inform the plaintiffs of their mistake; it was their duty to be vigilant
and to see that the action was brought against the proper party in interest.

Some stress has been laid on the admission of possession contained in the original answer filed
by Norberto's counsel. Aside from the fact that mistakes are frequently made by lawyers in
preparing pleadings and that when such pleadings are subsequently amended but little weight
can be given to original errors in the allegations, it is here to be observed that the question of
possession is not in controversy; that is definitely settled by the stipulation of facts. It may also
be noted that the wording of the allegation of possession in the answer indicates that it was not
based on information furnished by the defendants but upon allegations contained in the
complaint.

For the reasons stated the judgment appealed from is affirmed, with the costs against the
appellants. So ordered.

Avancea, C. J., Street, Villamor, Romualdez and Villa-Real, JJ., concur.


Johns, J., dissents.

23
Republic of the Philippines On June 11, 2004, the Court of Appeals rendered its Decision dismissing his petition in CA-G.R.
SUPREME COURT SP No. 59309.
Manila

Meanwhile, on September 23, 2002, respondent filed anew a complaint for the collection of a
FIRST DIVISION sum of money, this time with Branch 215 of the Quezon City RTC, docketed as Civil Case No. Q-
02-47835.
G.R. No. 165552 January 23, 2007
Forthwith, petitioner filed a motion to dismiss the complaint on the ground of prescription
considering that under Article 1145 of the Civil Code, actions based on oral contracts prescribe
PABLO R. ANTONIO, JR., Petitioner, in six years. Petitioner maintains that from August 14, 1995, when he received respondents last
vs. letter of demand, to September 23, 2002, when respondent filed Civil Case No. Q-02-47835, more
ENGR. EMILIO M. MORALES as Sole Proprietor of E. M. MORALES & than seven years had elapsed; and that the first case, Civil Case No. 95-1796, did not interrupt
ASSOCIATES, Respondent. the running of the period.

DECISION However, the RTC denied petitioners motion to dismiss and his subsequent motion for
reconsideration. Petitioner seasonably filed with the Court of Appeals a petition for certiorari,
SANDOVAL-GUTIERREZ, J.: docketed as CA-G.R. SP No. 80001.

For our resolution is the instant Petition for Review on Certiorari assailing the Decision 1 of the On June 11, 2004, the Court of Appeals promulgated its Decision dismissing the petition in CA-
Court of Appeals dated June 11, 2004 in CA-G.R. SP No. 80001 and its Resolution2 of September G.R. SP No. 80001. Petitioner filed a motion for reconsideration but was denied in a Resolution
21, 2004 denying the motion for reconsideration. dated September 21, 2004.

Records show that on December 18, 1995, E. M. Morales & Associates filed with the Regional Hence, the present petition raising the sole issue of whether the Court of Appeals erred in holding
Trial Court (RTC), Branch 56, Makati City a complaint for a sum of money (based upon an oral that the trial court did not gravely abuse its discretion in denying petitioners motion to dismiss
contract) against Pablo R. Antonio, Jr., petitioner, and Design Consultancy, Inc., docketed as the complaint by reason of prescription.
Civil Case No. 95-1796.
The petition lacks merit.
Petitioner filed a motion to dismiss the complaint on two grounds: (1) plaintiffs failure to attach
to the complaint a certificate of non-forum shopping; and (2) plaintiffs lack of legal capacity to Articles 1139, 1145 and 1155 of the Civil Code provide:
sue, plaintiff being a sole proprietorship.

ART. 1139. Actions prescribe by the mere lapse of time fixed by law.
On September 30, 1996, respondent Engr. Emilio M. Morales, as plaintiff, filed an Amended
Complaint, attaching thereto a certificate of non-forum shopping.
xxx

The RTC issued an Order admitting the amended complaint and denying petitioners motion to
dismiss. Petitioner then filed a motion for reconsideration but it was denied, prompting him to ART. 1145. The following actions must be commenced within six years:
file with the Court of Appeals a petition for certiorari, docketed as CA-G.R. SP No. 59309, which
remained pending for more than six years.
(1) Upon an oral-contract

Feeling that the pendency of CA-G.R. SP No. 59309 would be indefinite, respondent filed with
the RTC a motion to dismiss his complaint.lavvphil.net (2) Upon a quasi-contract.

On August 1, 2001, the RTC dismissed Civil Case No. 95-1796 without prejudice pursuant to xxx
Section 2, Rule 17 of the 1997 Rules of Civil Procedure, as amended.
ART. 1155. The prescription of actions is interrupted when they are filed before the court, when
On August 3, 2001, respondent filed with the Court of Appeals a manifestation that the RTC there is written extra-judicial demand by the creditors, and when there is any written
dismissed without prejudice Civil Case No. 95-1796. However, it was only on August 27, 2002, acknowledgement of the debt by the debtor.
or after more than one year, that the Court of Appeals issued a Resolution directing petitioner to
comment on respondents manifestation. In the early case of US v. Serapio,3 this Court held that under the Civil Code, the prescription of
an action refers to the time within which an action must be brought after the right of action has
On September 17, 2002, petitioner filed his comment. accrued. The prescriptive statutes serve to protect those who are diligent and vigilant, not those
who sleep on their rights. The rationale behind the prescription of actions is to prevent fraudulent
and stale claims from springing up at great distances of time, thus surprising the parties or their
representatives when the facts have become obscure from the lapse of time or the defective

24
memory or death or removal of the witnesses.4 Prescription applies even to the most meritorious
claims.

Prescription as understood and used in this jurisdiction does not simply mean a mere lapse of
time. Rather, there must be a categorical showing that due to plaintiffs negligence, inaction, lack
of interest, or intent to abandon a lawful claim or cause of action, no action whatsoever was
taken, thus allowing the statute of limitations to bar any subsequent suit.1avvphi1.net

Petitioners invocation of prescription is misplaced. We recall that on December 18, 1995,


respondent initially filed with the RTC of Makati City Civil Case No. 95-1796. While it was later
dismissed without prejudice to his own motion, we note that the dismissal sought was not for
the purpose of voluntarily abandoning his claim. On the contrary, respondents intention was to
expedite the enforcement of his rights. Understandably, he felt frustrated at the snails pace at
which his case was moving. As mentioned earlier, CA-G.R. SP No. 59309 remained pending
before the Court of Appeals for six (6) long years.

We further observe that respondent acted swiftly after the dismissal of his case without prejudice
by the Makati RTC. He immediately filed with the Court of Appeals a manifestation that Civil
Case No. 95-1796 was dismissed by the lower court. But the Court of Appeals acted on his
manifestation only after one year. This delay, beyond respondents control, in turn further caused
delay in the filing of his new complaint with the Quezon City RTC. Clearly, there was no inaction
or lack of interest on his part.

The statute of limitations was devised to operate primarily against those who slept on their rights
and not against those desirous to act but could not do so for causes beyond their control. 5 Verily,
the Court of Appeals did not err in holding that the RTC, Branch 215, Quezon City did not gravely
abuse its discretion when it denied petitioners motion to dismiss respondents complaint and
ruled that respondents filing of the complaint in Civil Case No. Q-02-47835 is not barred by
prescription.

WHEREFORE, we DENY the petition and AFFIRM the assailed Decision and Resolution of the
Court of Appeals in CA-G.R. SP No. 80001. Costs against petitioner.

SO ORDERED.

ANGELINA SANDOVAL-GUTIERREZ
Associate Justice

25
Republic of the Philippines On July 30, 2004, the Labor Arbiter (LA) issued an order granting petitioners Motion to Dismiss
SUPREME COURT on the ground of prescription, pertinent portions of which read:
Manila

As correctly cited by (PLDT), as ruled by the Supreme Court in the case of Callanta vs. Carnation
SECOND DIVISION Phils., 145 SCRA 268, the complaint for illegal dismissal must be filed within four (4) years from
and after the date of dismissal.
G.R. No. 182622 September 8, 2010
Needless to state, the money claims have likewise prescribed.
PHILIPPINE LONG DISTANCE TELEPHONE COMPANY [PLDT], Petitioner,
vs. Article 291 of the Labor Code provides:
ROBERTO R. PINGOL, Respondent.

All money claims arising from employer-employee relations accruing from the effectivity of this
DECISION Code shall be filed within three (3) years from the time the cause of action accrued, otherwise
they shall be forever barred.

MENDOZA, J.:
WHEREFORE, let this case be, as it is hereby DISMISSED on the ground of prescription.

This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court filed by
petitioner Philippine Long Distance Telephone Company (PLDT) which seeks to reverse and set SO ORDERED.7
aside: (1) the December 21, 2007 Decision1 of the Court of Appeals (CA), in CA-G.R. SP No.
98670, affirming the November 15, 20062 and January 31, 20073 Resolutions of the National
Labor Relations Commission (NLRC); and (2) its April 18, 2008 Resolution4denying the Motion Pingol appealed to the NLRC arguing that the 4-year prescriptive period has not yet lapsed
for Reconsideration of petitioner. because PLDT failed to categorically deny his claims. The NLRC in its November 15, 2006
Resolution reversed the LAs resolution and favored Pingol. The dispositive portion thereof reads:

THE FACTS
WHEREFORE, the foregoing premises considered, the instant appeal is GRANTED and the Order
appealed from is REVERSED and SET ASIDE.
In 1979, respondent Roberto R. Pingol (Pingol) was hired by petitioner PLDT as a maintenance
technician.
Accordingly, let the entire records of the case be REMANDED to the Labor Arbiter a quo for
further proceedings.
On April 13, 1999, while still under the employ of PLDT, Pingol was admitted at The Medical
City, Mandaluyong City, for "paranoid personality disorder" due to financial and marital
problems. On May 14, 1999, he was discharged from the hospital. Thereafter, he reported for SO ORDERED.8
work but frequently absented himself due to his poor mental condition.
PLDT moved for reconsideration but the same was denied by the NLRC in its Resolution dated
From September 16, 1999 to December 31, 1999, Pingol was absent from work without official January 31, 2007.
leave. According to PLDT, notices were sent to him with a stern warning that he would be
dismissed from employment if he continued to be absent without official leave "pursuant to PLDT Unsatisfied, PLDT elevated the case to the CA by way of a petition for certiorari under Rule 65
Systems Practice A-007 which provides that Absence without authorized leaves for seven (7) alleging grave abuse of discretion on the part of the NLRC in issuing the assailed resolutions.
consecutive days is subject to termination from the service." 5Despite the warning, he failed to
show up for work. On January 1, 2000, PLDT terminated his services on the grounds of
unauthorized absences and abandonment of office. The CA denied the petition in its December 21, 2007 Decision, the fallo of which reads:

On March 29, 2004, four years later, Pingol filed a Complaint for Constructive Dismissal and WHEREFORE, the Petition for Certiorari is hereby DISMISSED. The Resolutions dated 15
Monetary Claims6against PLDT. In his complaint, he alleged that he was hastily dismissed from November 2006 and 31 January 2007 of the National Labor Relations Commission are
his employment on January 1, 2000. In response, PLDT filed a motion to dismiss claiming, AFFIRMED.
among others, that respondents cause of action had already prescribed as the complaint was
filed four (4) years and three (3) months after his dismissal.
SO ORDERED.9

Pingol, however, countered that in computing the prescriptive period, the years 2001 to 2003
must not be taken into account. He explained that from 2001 to 2003, he was inquiring from PLDT moved for reconsideration but the same was denied by the CA in a Resolution dated April
PLDT about the financial benefits due him as an employee who was no longer allowed to do his 18, 2008.
work, but he merely got empty promises. It could not, therefore, result in abandonment of his
claim.
THE ISSUES

26
Not in conformity with the ruling of the CA, PLDT seeks relief with this Court raising the following Article 291. Money Claims. All money claims arising from employer-employee relations accruing
issues: during the effectivity of this Code shall be filed within three (3) years from the time the cause of
action accrued; otherwise they shall be barred forever.

THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF


SUBSTANCE IN A WAY NOT PROBABLY IN ACCORD WITH LAW OR WITH THE The pivotal question in resolving the issues is the date when the cause of action of respondent
APPLICABLE DECISIONS OF THE HONORABLE SUPREME COURT. Pingol accrued.

THE HONORABLE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND It is a settled jurisprudence that a cause of action has three (3) elements, to wit: (1) a right in
USUAL COURSE OF JUDICIAL PROCEEDINGS AS TO CALL FOR AN EXERCISE OF favor of the plaintiff by whatever means and under whatever law it arises or is created; (2) an
THE POWER OF SUPERVISION.10 obligation on the part of the named defendant to respect or not to violate such right; and (3) an
act or omission on the part of such defendant violative of the right of the plaintiff or constituting
a breach of the obligation of the defendant to the plaintiff. 17
The issues boil down to whether or not respondent Pingol filed his complaint for constructive
dismissal and money claims within the prescriptive period of four (4) years as provided in Article
1146 of the Civil Code11 and three (3) years as provided in Article 291 of the Labor Respondent asserts that his complaint was filed within the prescriptive period of four (4) years.
Code,12 respectively. He claims that his cause of action did not accrue on January 1, 2000 because he was not
categorically and formally dismissed or his monetary claims categorically denied by petitioner
PLDT on said date. Further, respondent Pingol posits that the continuous follow-up of his claim
Petitioner PLDT argues that the declaration under oath made by respondent Pingol in his with petitioner PLDT from 2001 to 2003 should be considered in the reckoning of the prescriptive
complaint before the LA stating January 1, 2000 as the date of his dismissal, should have been period.
treated by the NLRC and the CA as a judicial admission pursuant to Section 4, Rule 129 of the
Revised Rules of Court.13 According to petitioner, respondent has never contradicted his
admission under oath. On the basis of said declaration, petitioner posits that the LA was correct Petitioner PLDT, on the other hand, contends that respondent Pingol was dismissed from the
in finding that Pingols complaint for illegal dismissal was filed beyond the prescriptive period of service on January 1, 2000 and such fact was even alleged in the complaint he filed before the
four (4) years from the date of dismissal pursuant to Article 1146 of the New Civil Code. LA. He never contradicted his previous admission that he was dismissed on January 1, 2000.
Such admitted fact does not require proof.

In his Comment,14 respondent Pingol counters that petitioner PLDT could not have sent those
notices with warning as that claim "has never been supported by sufficient proof not only before The Court agrees with petitioner PLDT. Judicial admissions made by parties in the pleadings, or
the Labor Arbiter but likewise before the Court of Appeals."15 He further alleges that his dismissal in the course of the trial or other proceedings in the same case are conclusive and so does not
is likewise unsupported by any evidence. He insists that both the NLRC and the CA correctly require further evidence to prove them. These admissions cannot be contradicted unless
stated that his cause of action has not yet prescribed as he was not formally dismissed on previously shown to have been made through palpable mistake or that no such admission was
January 1, 2000 or his monetary claims categorically denied by petitioner. made.18 In Pepsi Cola Bottling Company v. Guanzon,19it was written:

THE COURTS RULING xxx that the dismissal of the private respondent's complaint was still proper since it is apparent
from its face that the action has prescribed. Private respondent himself alleged in the
complaint that he was unlawfully dismissed in 1979 while the complaint was filed only on
The Court finds the petition meritorious. November 14, 1984. xxx (Emphasis supplied. Citations omitted.)1avvphil

Parties apparently do not dispute the applicable prescriptive period. In the case at bench, Pingol himself alleged the date January 1, 2000 as the date of his dismissal
in his complaint20 filed on March 29, 2004, exactly four (4) years and three (3) months later.
Article 1146 of the New Civil Code provides: Respondent never denied making such admission or raised palpable mistake as the reason
therefor. Thus, the petitioner correctly relied on such allegation in the complaint to move for the
dismissal of the case on the ground of prescription.
Art. 1146. The following actions must be instituted within four years:
The Labor Code has no specific provision on when a claim for illegal dismissal or a monetary
(1) Upon an injury to the rights of the plaintiff; claim accrues. Thus, the general law on prescription applies. Article 1150 of the Civil Code states:

xxx xxx xxx Article 1150. The time for prescription for all kinds of actions, when there is no special provision
which ordains otherwise, shall be counted from the day they may be brought. (Emphasis
supplied)
As this Court stated in Callanta v. Carnation, 16 when one is arbitrarily and unjustly deprived of
his job or means of livelihood, the action instituted to contest the legality of one's dismissal from
employment constitutes, in essence, an action predicated "upon an injury to the rights of the The day the action may be brought is the day a claim starts as a legal possibility. 21 In the present
plaintiff," as contemplated under Art. 1146 of the New Civil Code, which must be brought within case, January 1, 2000 was the date that respondent Pingol was not allowed to perform his usual
four (4) years. and regular job as a maintenance technician. Respondent Pingol cited the same date of dismissal
in his complaint before the LA. As, thus, correctly ruled by the LA, the complaint filed had already
prescribed.
With regard to the prescriptive period for money claims, Article 291 of the Labor Code states:

27
Respondent claims that between 2001 and 2003, he made follow-ups with PLDT management
regarding his benefits. This, to his mind, tolled the running of the prescriptive period.

The rule in this regard is covered by Article 1155 of the Civil Code. Its applicability in labor cases
was upheld in the case of International Broadcasting Corporation v. Panganiban 22 where it was
written:

Like other causes of action, the prescriptive period for money claims is subject to interruption,
and in the absence of an equivalent Labor Code provision for determining whether the said period
may be interrupted, Article 1155 of the Civil Code may be applied, to wit:

ART. 1155. The prescription of actions is interrupted when they are filed before the Court, when
there is a written extrajudicial demand by the creditors, and when there is any written
acknowledgment of the debt by the debtor.

Thus, the prescription of an action is interrupted by (a) the filing of an action, (b) a written
extrajudicial demand by the creditor, and (c) a written acknowledgment of the debt by the debtor.

In this case, respondent Pingol never made any written extrajudicial demand. Neither did
petitioner make any written acknowledgment of its alleged obligation. Thus, the claimed "follow-
ups" could not have validly tolled the running of the prescriptive period. It is worthy to note that
respondent never presented any proof to substantiate his allegation of follow-ups.

Unfortunately, respondent Pingol has no one but himself to blame for his own predicament. By
his own allegations in his complaint, he has barred his remedy and extinguished his right of
action. Although the Constitution is committed to the policy of social justice and the protection
of the working class, it does not necessary follow that every labor dispute will be automatically
decided in favor of labor. The management also has its own rights. Out of Its concern for the less
privileged in life, this Court, has more often than not inclined, to uphold the cause of the worker
in his conflict with the employer. Such leaning, however, does not blind the Court to the rule
that justice is in every case for the deserving, to be dispensed in the light of the established facts
and applicable law and doctrine.23

WHEREFORE, the petition is GRANTED. The assailed December 21, 2007 Decision and April
18, 2008 Resolution of the Court of Appeals, in CA-G.R. SP No. 98670, are REVERSED and SET
ASIDE and a new judgment entered DISMISSING the complaint of Roberto R. Pingol.

SO ORDERED.

JOSE CATRAL MENDOZA


Associate Justice

28
Republic of the Philippines In response, Palao sent a letter dated January 10, 1986, 7 to Atty. Aquino, stating that he was
SUPREME COURT not amenable to the reimbursements claimed by Iringan.
Manila

On February 21, 1989, Iringan, now represented by anew counsel - Atty. Carmelo Z. Lasam,
SECOND DIVISION proposed that the P50,000 which he had already paid Palao be reimbursed 8 or Palao could sell
to Iringan, an equivalent portion of the land.
G.R. No. 129107 September 26, 2001
Palao instead wrote Iringan that the latter's standing obligation had reached P61,600,
representing payment of arrears for rentals from October 1985 up to March 1989. 9 The parties
ALFONSO L. IRINGAN, petitioner, failed to arrive at an agreement.
vs.
HON. COURT OF APPEALS and ANTONIO PALAO, represented by his Attorney-in-Fact,
FELISA P. DELOS SANTOS, respondents. On July 1, 1991, Palao filed a Complaint10 for Judicial Confirmation of Rescission of Contract
and Damages against Iringan and his wife.

QUISUMBING, J.:
In their Answer,11 the spouses alleged that the contract of sale was a consummated contract,
hence, the remedy of Palao was for collection of the balance of the purchase price and not
This petition assails the Decision1 dated April 30, 1997 of the Court of Appeals in CA G.R. CV rescission. Besides, they said that they had always been ready and willing to comply with their
No. 39949, affirming the decision of the Regional Trial Court and deleting the award of attorney's obligations in accordance with said contract.
fee.

In a Decision12 dated September 25, 1992, the Regional Trial Court of Cagayan, Branch I, ruled
The facts of the case are based on the records. in favor of Palao and affirmed the rescission of the contract. It disposed,

On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso Iringan, an WHEREFORE, the Court finds that the evidence preponderates in favor of the plaintiff
undivided portion of Lot No. 992 of the Tuguegarao Cadastre, located at the Poblacion of and against the defendants and judgment is hereby rendered as follows:
Tuguegarao and covered by Transfer Certificate of Title No. T-5790. The parties executed a Deed
of Sale2 on the same date with the purchase price of P295,000.00, payable as follows:
(a) Affirming the rescission of the contract of sale;

(a) P10,000.00 - upon the execution of this instrument, and for this purpose, the
vendor acknowledges having received the said amount from the vendee as of this date; (b) Cancelling the adverse claim of the defendants annotated at the back of TCT No.
T-5790;

(b) P140,000.00 - on or before April 30, 1985;


(c) Ordering the defendants to vacate the premises;

(c) P145,000.00 - on or before December 31, 1985.3


(d) Ordering the defendants to pay jointly and severally the sum of P100,000.00 as
reasonable compensation for use of the property minus 50% of the amount paid by
When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985, Palao them; and to pay P50,000.00 as moral damages; P10,000.00 as exemplary damages;
sent a letter4 to Iringan stating that he considered the contract as rescinded and that he would and P50,000.00 as attorney's fee; and to pay the costs of suit.
not accept any further payment considering that Iringan failed to comply with his obligation to
pay the full amount of the second installment.
SO ORDERED.13

On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, 5
replied that they
were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the As stated, the Court of Appeals affirmed the above decision. Hence, this petition for review.
following amounts:

Iringan avers in this petition that the Court of Appeals erred:


(a) P50,000.00 - cash received by you;

1. In holding that the lower court did not err in affirming the rescission of the contract
(b) P3,200.00 - geodetic engineer's fee; of sale; and

(c) P500.00 - attorney's fee; 2. In holding that defendant was in bad faith for "resisting" rescission and was made
liable to pay moral and exemplary damages. 14

(d) the current interest on P53,700.00.6


We find two issues for resolution: (1) whether or not the contract of sale was validly rescinded,
and (2) whether or not the award of moral and exemplary damages is proper.

29
On the first issue, petitioner contends that no rescission was effected simply by virtue of the This is understood to be without prejudice to the rights of third persons who have
letter15 sent by respondent stating that he considered the contract of sale rescinded. Petitioner acquired the thing, in accordance with articles 1385 and 1388 and the Mortgage Law.
asserts that a judicial or notarial act is necessary before one party can unilaterally effect a
rescission.
But in our view, even if Article 1191 were applicable, petitioner would still not be entitled to
automatic rescission. In Escueta v. Pando,21 we ruled that under Article 1124 (now Article 1191)
Respondent Palao, on the other hand, contends that the right to rescind is vested by law on the of the Civil Code, the right to resolve reciprocal obligations, is deemed implied in case one of the
obligee and since petitioner did not oppose the intent to rescind the contract, Iringan in effect obligors shall fail to comply with what is incumbent upon him. But that right must be invoked
agreed to it and had the legal effect of a mutually agreed rescission. judicially. The same article also provides: "The Court shall decree the resolution demanded,
unless there should be grounds which justify the allowance of a term for the performance of the
obligation."
Article 1592 of the Civil Code is the applicable provision regarding the sale of an immovable
property.
This requirement has been retained in the third paragraph of Article 1191, which states that "the
court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
Article 1592. In the sale of immovable property, even though it may have been period."
stipulated that upon failure to pay the price at the time agreed upon the rescission of
the contract shall of right take place, the vendee may pay, even after the expiration of
the period, as long as no demand for rescission of the contract has been made upon Consequently, even if the right to rescind is made available to the injured party, 22 the obligation
him either judicially or by a notarial act. After the demand, the court may not grant is not ipso facto erased by the failure of the other party to comply with what is incumbent upon
him a new term. (Italics supplied) him. The party entitled to rescind should apply to the court for a decree of rescission. 23 The right
cannot be exercised solely on a party's own judgment that the other committed a breach of the
obligation.24 The operative act which produces the resolution of the contract is the decree of the
Article 1592 requires the rescinding party to serve judicial or notarial notice of his intent to court and not the mere act of the vendor.25 Since a judicial or notarial act is required by law for
resolve the contract.16 a valid rescission to take place, the letter written by respondent declaring his intention to rescind
did not operate to validly rescind the contract.
In the case of Villaruel v. Tan King,17 we ruled in this wise,
Notwithstanding the above, however, in our view when private respondent filed an action for
...since the subject-matter of the sale in question is real property, it does not come Judicial Confirmation of Rescission and Damages26 before the RTC, he complied with the
strictly within the provisions of article 1124 (now Article 1191) of the Civil Code, but requirement of the law for judicial decree of rescission. The complaint 27 categorically stated that
is rather subjected to the stipulations agreed upon by the contracting parties and to the purpose was 1) to compel appellants to formalize in a public document, their mutual
the provisions of article 1504 (now Article 1592) of the Civil Code." 18 agreement of revocation and rescission; and/or 2) to have a judicial confirmation of the said
revocation/rescission under terms and conditions fair, proper and just for both
parties.28 In Luzon Brokerage Co., Inc. v. Maritime Building Co., Inc.,29 we held that even a
Citing Manresa, the Court said that the requirement of then Article 1504, "refers to a demand crossclaim found in the Answer could constitute a judicial demand for rescission that satisfies
that the vendor makes upon the vendee for the latter to agree to the resolution of the obligation the requirement of the law.30
and to create no obstacles to this contractual mode of extinguishing obligations." 19
Petitioner contends that even if the filing of the case were considered the judicial act required,
Clearly, a judicial or notarial act is necessary before a valid rescission can take place, whether the action should be deemed prescribed based on the provisions of Article 1389 of the Civil
or not automatic rescission has been stipulated. It is to be noted that the law uses the phrase Code.31
"even though"20 emphasizing that when no stipulation is found on automatic rescission, the
judicial or notarial requirement still applies.
This provision of law applies to rescissible contracts, 32 as enumerated and defined in Articles
138033 and 1381.34We must stress however, that the "rescission" in Article 1381 is not akin to
On the first issue, both the trial and appellate courts affirmed the validity of the alleged mutual the term "rescission" in Article 1191 and Article 1592.35 In Articles 1191 and 1592, the rescission
agreement to rescind based on Article 1191 of the Civil Code, particularly paragraphs 1 and 2 is a principal action which seeks the resolution or cancellation of the contract while in Article
thereof. 1381, the action is a subsidiary one limited to cases of rescission for lesion as enumerated in
said article.36

Article 1191. The power to rescind obligations is implied in reciprocal ones, in


case one of the obligors should not comply with what is incumbent upon him. The prescriptive period applicable to rescission under Articles 1191 and 1592, is found in Article
1144,37 which provides that the action upon a written contract should be brought within ten
years from the time the right of action accrues. The suit was brought on July 1, 1991, or six
The injured party may choose between the fulfillment and the rescission of the years after the default. It was filed within the period for rescission. Thus, the contract of sale
obligation, with payment of damages in either case. He may also seek rescission, between the parties as far as the prescriptive period applies, can still be validly rescinded.
even after he has chosen fulfillment, if the latter should become impossible.
[Emphasis ours.]
On the issue of moral and exemplary damages, petitioner claims that the Court of Appeals erred
in finding bad faith on his part when he resisted the rescission38 and claimed he was ready to
The court shall decree the rescission claimed, unless there be just cause authorizing pay but never actually paid respondent, notwithstanding that he knew that appellee's principal
the fixing of a period. motivation for selling the lot was to raise money to pay his SSS loan. 39 Petitioner would have us
reverse the said CA findings based on the exception40that these findings were made on a
misapprehension of facts.

30
The records do not support petitioner's claims. First, per the records, petitioner knew
respondent's reason for selling his property. As testified to by petitioner 41 and in the
deposition42 of respondent, such fact was made known to petitioner during their negotiations as
well as in the letters sent to petitioner by Palao.43 Second, petitioner adamantly refused to
formally execute an instrument showing their mutual agreement to rescind the contract of sale,
notwithstanding that it was petitioner who plainly breached the terms of their contract when he
did not pay the stipulated price on time, leaving private respondent desperate to find other
sources of funds to payoff his loan. Lastly, petitioner did not substantiate by clear and convincing
proof, his allegation that he was ready and willing to pay respondent. We are more inclined to
believe his claim of readiness to pay was an afterthought intended to evade the consequence of
his breach. There is no record to show the existence of such amount, which could have been
reflected, at the very least, in a bank account in his name, if indeed one existed; or, alternatively,
the proper deposit made in court which could serve as a formal tender of payment. 44 Thus, we
find the award of moral and exemplary damages proper.1wphi1.nt

WHEREFORE, the petition is DENIED. The assailed decision dated April 30, 1997 of the Court
of Appeals in CA G.R. CV No. 39949, affirming the Regional Trial Court decision and deleting the
award of attorney's fees, is hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

Bellosillo, Mendoza, Buena, De Leon, Jr., JJ., concur.

31
Republic of the Philippines Ten years later, on October 24, 1997, petitioner filed before the trial court a motion to quash the
SUPREME COURT warrant issued for his arrest on the ground of prescription of the penalty imposed upon him.
Manila However, it was denied. His motion for reconsideration thereof was likewise denied.

THIRD DIVISION Dissatisfied, petitioner filed with the Court of Appeals a Petition for Certiorari assailing the orders
of the trial court denying both his motion to quash the warrant of arrest and motion for
reconsideration.
G.R. No. 139033 December 18, 2002

On November 20, 1998, the Court of Appeals rendered its now assailed decision dismissing the
JOVENDO DEL CASTILLO, petitioner, petition for lack of merit.
vs.
HON. ROSARIO TORRECAMPO, Presiding Judge, RTC of Camarines Sur, Branch 33 and
PEOPLE OF THE PHILIPPINES, respondents. Following the denial of his motion for reconsideration, the instant petition was filed before us.

DECISION Petitioner asserts that the Court of Appeals gravely erred in holding that the penalty imposed
upon petitioner has not prescribed. Petitioner maintains that Article 93 of the Revised Penal Code
provides that the period of prescription shall commence to run from the date when the culprit
CORONA, J.: should evade the service of his sentence. The Court of Appeals, in its interpretation of the said
provision, engaged in judicial legislation when it added the phrase "by escaping during the term
The instant petition is one for the review, by way of appeal by certiorari, of the Decision 1 of the of the sentence" thereto, so petitioner claims.
Court of Appeals dated November 20, 1998, and of the Resolution dated June 14, 1999 denying
the motion for reconsideration thereof. Going over the merits of the petition, the Court finds that the Court of Appeals did not err in
dismissing the petition for certiorari.
Petitioner was charged on March 8, 1983 with violation of Section 178 (nn)2 of the 1978 Election
Code in Criminal Case No. F-1447 before Branch 33, Regional Trial Court, Camarines Sur. The The threshold issue in the instant case is the interpretation of Article 93 of the Revised Penal
Information alleged: Code in relation to Article 157 of the same Code.

That on May 17, 1982, (Barangay Election Day), at around 8:15 P.M. in Barangay Ombao, In dismissing the petition, the Court of Appeals ruled:
Municipality of Bula, Province of Camarines Sur, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused did, then and there unlawfully conducted himself in
a disorderly manner, by striking the electric bulb and two (2) kerosene petromax lamps lighting "Article 92 of the Revised Penal Code provides as follows:
the room where voting center no. 24 is located, during the counting of the votes in said voting
center plunging the room in complete darkness, thereby interrupting and disrupting the
proceedings of the Board of Election Tellers.3 When and how penalties prescribe The penalties imposed by the final sentence prescribed as
follows:

On arraignment, petitioner pleaded not guilty. Thereafter, trial on the merits ensued.
1. Death and reclusion perpetua, in twenty years;

On January 14, 1985, the trial court rendered judgment and declared petitioner guilty beyond
reasonable doubt of violating Section 178 (nn) of PD 1296, otherwise known as the 1978 Election 2. Other afflictive penalties, in fifteen years;
Code, as amended, and sentenced petitioner to suffer the indeterminate penalty of imprisonment
of 1 year as minimum to 3 years as maximum. 3. Correctional penalties, in ten years; with the exception of the penalty of arresto
mayor, which prescribes in five years;
Aggrieved, petitioner appealed his conviction to the Court of Appeals which eventually affirmed
the decision of the trial court in toto. Said decision became final and executory. Thus, the 4. Light penalties, in one year.
execution of judgment was scheduled on October 14, 1987.

"And Article 93 of the Revised Penal Code, provides as follows:


On October 12, 1987, an urgent motion to reset the execution of judgment was submitted by
petitioner through his counsel. But it was denied for lack of merit.
Computation of the prescription of penalties The period of prescription of penalties shall
commence to run from the date when the culprit should evade the service of his sentence, and
During the execution of judgment, petitioner failed to appear which prompted the presiding judge it shall be interrupted if the defendant should give himself up, be captured, should go to some
to issue an order of arrest of petitioner and the confiscation of his bond. However, petitioner was foreign country with which his Government has no extradition treaty, or should commit another
never apprehended. He remained at large. crime before the expiration of the period of prescription.

"The penalty imposed upon the petitioner is one (1) year of imprisonment as minimum
to three (3) years of imprisonment as maximum.
32
"The law under which the petitioner was convicted is a special law, the 1978 Election Article 93 of the Revised Penal Code provides when the prescription of penalties shall commence
Code. This law does not provide for the prescription of penalties. This being the case, to run. Under said provision, it shall commence to run from the date the felon evades the service
We have to apply the provision of the Revised Penal Code which allows the application of his sentence. Pursuant to Article 157 of the same Code, evasion of service of sentence can be
of said code in suppletory character when it provides that: committed only by those who have been convicted by final judgment by escaping during the term
of his sentence.

Offenses which are or in the future may be punishable under special laws are not
subject to the provision of this code. This code shall be supplementary to such laws, As correctly pointed out by the Solicitor General, "escape" in legal parlance and for purposes of
unless the latter should specially provide the contrary. Articles 93 and 157 of the RPC means unlawful departure of prisoner from the limits of his
custody. Clearly, one who has not been committed to prison cannot be said to have escaped
therefrom.
"The penalty imposed upon the petitioner is a correctional penalty under Article 25 in
relation to Article 27 of the Revised Penal Code. Being a correctional penalty it
prescribed in ten (10) years. In the instant case, petitioner was never brought to prison. In fact, even before the execution of
the judgment for his conviction, he was already in hiding. Now petitioner begs for the compassion
of the Court because he has ceased to live a life of peace and tranquility after he failed to appear
"The petitioner was convicted by a final judgment on June 14, 1986. Such judgment in court for the execution of his sentence. But it was petitioner who chose to become a fugitive.
would have been executed on October 14, 1986 but the accused did not appear for The Court accords compassion only to those who are deserving. Petitioners guilt was proven
such proceeding. And he has never been apprehended. beyond reasonable doubt but he refused to answer for the wrong he committed. He is therefore
not to be rewarded therefor.
"The contention of the petitioner is that said judgment prescribed on October 24, 1996.
The assailed decision of the Court of Appeals is based on settled jurisprudence and applicable
"The issue here is whether or not the penalty imposed upon the petitioner has laws. It did not engage in judicial legislation but correctly interpreted the pertinent laws. Because
prescribed. petitioner was never placed in confinement, prescription never started to run in his favor.

"The elements in order that the penalty imposed has prescribed are as follows: WHEREFORE, for lack of merit, the petition is hereby DENIED.

1. That the penalty is imposed by final sentence. SO ORDERED.

2. That the convict evaded the service of the sentence by escaping during Puno, (Chairman), Panganiban, Sandoval-Gutierrez, and Morales, JJ., concur.
the term of his sentence.

3. That the convict who escaped from prison has not given himself up, or
been captured, or gone to a foreign country with which we have no
extradition treaty or committed another crime.

4. That the penalty has prescribed, because of the lapse of time form the
date of the evasion of the service of the sentence by the convict.

(p. 93, Revised Penal Code by L. Reyes 93 ed.)

"From the foregoing elements, it is clear that the penalty imposed has not prescribed
because the circumstances of the case at bench failed to satisfy the second element,
to wit That the convict evaded the service of the sentence by escaping during the
service of his sentence. As a matter of fact, the petitioner never served a single minute
of his sentence.

The foregoing conclusion of the Court of Appeals is consistent with the ruling of this Court
in Tanega vs. Masakayan, et. al.,4 where we declared that, for prescription of penalty imposed
by final sentence to commence to run, the culprit should escape during the term of such
imprisonment.

The Court is unable to find and, in fact, does not perceive any compelling reason to deviate from
our earlier pronouncement clearly exemplified in the Tanega case.

33
Republic of the Philippines Sigfredo Veloso, and Jaime Gandiaga, approved another amendment to UNICOMs capitalization.
SUPREME COURT This increased its authorized capital stock to one billion shares divided into 500 million Class
Manila "A" voting common shares, 400 million Class "B" voting common shares, and 100 million Class
"C" non-voting common shares, all with a par value of P1 per share. The paid-up subscriptions
of 5 million shares without par value (consisting of one million shares for the incorporators and
EN BANC 4 million shares for UCPB) were then converted to 500 million Class "A" voting common shares
at the ratio of 100 Class "A" voting common shares for every one without par value share. 5
G.R. No. 139930 June 26, 2012
About 10 years later or on March 1, 1990 the Office of the Solicitor General (OSG) filed a
REPUBLIC OF THE PHILIPPINES, Petitioner, complaint for violation of Section 3(e) of Republic Act (R.A.) 3019 6 against respondents, the 1979
vs. members of the UCPB board of directors, before the Presidential Commission on Good
EDUARDO M. COJUANGCO, JR., JUAN PONCE ENRILE, MARIA CLARA LOBREGAT, JOSE Government (PCGG). The OSG alleged that UCPBs investment in UNICOM was manifestly and
ELEAZAR, JR., JOSE CONCEPCION, ROLANDO P. DELA CUESTA, EMMANUEL M. grossly disadvantageous to the government since UNICOM had a capitalization of only P5 million
ALMEDA, HERMENEGILDO C. ZAYCO, NARCISO M. PINEDA, IAKI R. MENDEZONA, and it had no track record of operation. In the process of conversion to voting common shares,
DANILO S. URSUA, TEODORO D. REGALA, VICTOR P. LAZATIN, ELEAZAR B. REYES, the governments P495 million investment was reduced by P95 million which was credited to
EDUARDO U. ESCUETA, LEO J. PALMA, DOUGLAS LU YM, SIGFREDO VELOSO and JAIME UNICOMs incorporators. The PCGG subsequently referred the complaint to the Office of the
GANDIAGA, Respondents. Ombudsman in OMB-0-90-2810 in line with the ruling in Cojuangco, Jr. v. Presidential
Commission on Good Government,7 which disqualified the PCGG from conducting the preliminary
investigation in the case.
DECISION
About nine years later or on March 15, 1999 the Office of the Special Prosecutor (OSP) issued a
ABAD, J.: Memorandum,8stating that although it found sufficient basis to indict respondents for violation
of Section 3(e) of R.A. 3019, the action has already prescribed. Respondents amended UNICOMs
capitalization a third time on September 18, 1979, giving the incorporators unwarranted benefits
This case, which involves another attempt of the government to recover ill-gotten wealth acquired by increasing their 1 million shares to 100 million shares without cost to them. But, since
during the Marcos era, resolves the issue of prescription. UNICOM filed its Certificate of Filing of Amended Articles of Incorporation with the Securities
and Exchange Commission (SEC) on February 8, 1980, making public respondents acts as board
of directors, the period of prescription began to run at that time and ended on February 8, 1990.
The Facts and the Case
Thus, the crime already prescribed when the OSG filed the complaint with the PCGG for
preliminary investigation on March 1, 1990.
On April 25, 1977 respondents Teodoro D. Regala, Victor P. Lazatin, Eleazar B. Reyes, Eduardo
U. Escueta and Leo J. Palma incorporated the United Coconut Oil Mills, Inc. (UNICOM) 1 with an
In a Memorandum9 dated May 14, 1999, the Office of the Ombudsman approved the OSPs
authorized capital stock of P100 million divided into one million shares with a par value of P100
recommendation for dismissal of the complaint. It additionally ruled that UCPBs subscription
per share. The incorporators subscribed to 200,000 shares worth P20 million and paid P5
to the shares of stock of UNICOM on September 18, 1979 was the proper point at which the
million.
prescription of the action began to run since respondents act of investing into UNICOM was
consummated on that date. It could not be said that the investment was a continuing act. The
On September 26, 1978 UNICOM amended its capitalization by (1) increasing its authorized giving of undue benefit to the incorporators prescribed 10 years later on September 18, 1989.
capital stock to three million shares without par value; (2) converting the original subscription Notably, when the crime was committed in 1979 the prescriptive period for it had not yet been
of 200,000 to one million shares without par value and deemed fully paid for and non-assessable amended. The original provision of Section 11 of R.A. 3019 provided for prescription of 10 years.
by applying the P5 million already paid; and (3) waiving and abandoning the subscription Thus, the OSG filed its complaint out of time.
receivables of P15 million.2
The OSG filed a motion for reconsideration on the Office of the Ombudsmans action but the
On August 29, 1979 the Board of Directors of the United Coconut Planters Bank (UCPB) latter denied the same;10 hence, this petition.
composed of respondents Eduardo M. Cojuangco, Jr., Juan Ponce Enrile, Maria Clara L.
Lobregat, Jose R. Eleazar, Jr., Jose C. Concepcion, Rolando P. Dela Cuesta, Emmanuel M.
Meanwhile, the Court ordered the dismissal of the case against respondent Maria Clara L.
Almeda, Hermenegildo C. Zayco, Narciso M. Pineda, Iaki R. Mendezona, and Danilo S. Ursua
Lobregat in view of her death on January 2, 2004. 11
approved Resolution 247-79 authorizing UCPB, the Administrator of the Coconut Industry
Investment Fund (CII Fund), to invest not more than P500 million from the fund in the equity of
UNICOM for the benefit of the coconut farmers.3 The Issue Presented

On September 4, 1979 UNICOM increased its authorized capital stock to 10 million shares The pivotal issue in this case is whether or not respondents alleged violation of Section 3(e) of
without par value. The Certificate of Increase of Capital Stock stated that the incorporators held R.A. 3019 already prescribed.
one million shares without par value and that UCPB subscribed to 4 million shares worth P495
million.4
The Courts Ruling

On September 18, 1979 a new set of UNICOM directors, composed of respondents Eduardo M.
Cojuangco, Jr., Juan Ponce Enrile, Maria Clara L. Lobregat, Jose R. Eleazar, Jr., Jose Preliminarily, the Court notes that what Republic of the Philippines (petitioner) filed in this case
Concepcion, Emmanuel M. Almeda, Iaki R. Mendezona, Teodoro D. Regala, Douglas Lu Ym, is a petition for review on certiorari under Rule 45. But the remedy from an adverse resolution

34
of the Office of the Ombudsman in a preliminary investigation is a special civil action of certiorari supposedly a Marcos crony. That investment does not, however, appear to have been withheld
under Rule 65.12 Still, the Court will treat this petition as one filed under Rule 65 since a reading from the curious or from those who were minded to know like banks or competing businesses.
of its contents reveals that petitioner imputes grave abuse of discretion and reversible Indeed, the OSG made no allegation that respondent members of the board of directors of UCPB
jurisdictional error to the Ombudsman for dismissing the complaint. The Court has previously connived with UNICOM to suppress public knowledge of the investment.
treated differently labeled actions as special civil actions for certiorari under Rule 65 for
acceptable reasons such as justice, equity, and fair play. 13
Besides, the transaction left the confines of the UCPB and UNICOM board rooms when UNICOM
applied with the SEC, the publicly-accessible government clearing house for increases in
As to the main issue, petitioner maintains that, although the charge against respondents was corporate capitalization, to accommodate UCPBs investment. Changes in shareholdings are
for violation of the Anti-Graft and Corrupt Practices Act, its prosecution relates to its efforts to reflected in the General Information Sheets that corporations have been mandated to submit
recover the ill-gotten wealth of former President Ferdinand Marcos and of his family and cronies. annually to the SEC. These are available to anyone upon request.
Section 15, Article XI of the 1987 Constitution provides that the right of the State to recover
properties unlawfully acquired by public officials or employees is not barred by prescription,
laches, or estoppel. The OSG makes no allegation that the SEC denied public access to UCPBs investment in
UNICOM during martial law at the Presidents or anyone elses instance. Indeed, no accusation
of this kind has ever been hurled at the SEC with reference to corporate transactions of whatever
But the Court has already settled in Presidential Ad Hoc Fact-Finding Committee on Behest Loans kind during martial law since even that regime had a stake in keeping intact the integrity of the
v. Desierto14that Section 15, Article XI of the 1987 Constitution applies only to civil actions for SEC as an instrumentality of investments in the Philippines.
recovery of ill-gotten wealth, not to criminal cases such as the complaint against respondents in
OMB-0-90-2810. Thus, the prosecution of offenses arising from, relating or incident to, or
involving ill-gotten wealth contemplated in Section 15, Article XI of the 1987 Constitution may And, granted that the feint-hearted might not have the courage to question the UCPB investment
be barred by prescription.15 into UNICOM during martial law, the second elementthat the action could not have been
instituted during the 10-year period because of martial lawdoes not apply to this case. The last
day for filing the action was, at the latest, on February 8, 1990, about four years after martial
Notably, Section 11 of R.A. 3019 now provides that the offenses committed under that law law ended. Petitioner had known of the investment it now questions for a sufficiently long time
prescribes in 15 years. Prior to its amendment by Batas Pambansa (B.P.) Blg. 195 on March 16, yet it let those four years of the remaining period of prescription run its course before bringing
1982, however, the prescriptive period for offenses punishable under R.A. 3019 was only 10 the proper action.
years.16 Since the acts complained of were committed before the enactment of B.P. 195, the
prescriptive period for such acts is 10 years as provided in Section 11 of R.A. 3019, as originally
enacted.17 Prescription of actions is a valued rule in all civilized states from the beginning of organized
society. It is a rule of fairness since, without it, the plaintiff can postpone the filing of his action
to the point of depriving the defendant, through the passage of time, of access to defense
Now R.A. 3019 being a special law, the 10-year prescriptive period should be computed in witnesses who would have died or left to live elsewhere, or to documents that would have been
accordance with Section 2 of Act 3326,18 which provides: discarded or could no longer be located. Moreover, the memories of witnesses are eroded by time.
There is an absolute need in the interest of fairness to bar actions that have taken the plaintiffs
too long to file in court.
Section 2. Prescription shall begin to run from the day of the commission of the violation
of the law, and if the same be not known at the time, from the discovery thereof and the
institution of judicial proceedings for its investigation and punishment. Respondents claim that, in any event, the complaint against them failed to show probable cause.
They point out that, prior to the third amendment of UNICOMs capitalization, the stated value
of the one million shares without par value, which belonged to its incorporators, was P5 million.
The above-mentioned section provides two rules for determining when the prescriptive period When these shares were converted to 5 million shares with par value, the total par value of such
shall begin to run: first, from the day of the commission of the violation of the law, if such shares remained at P5 million. But, the action having prescribed, there is no point in discussing
commission is known; and second, from its discovery, if not then known, and the institution of the existence of probable cause against the respondents for violation of Section 3(e) of R.A. 3019.
judicial proceedings for its investigation and punishment.19

WHEREFORE, the Court DENIES the petition and AFFIRMS the Memorandum dated May 14,
Petitioner points out that, assuming the offense charged is subject to prescription, the same 1999 of the Office of the Ombudsman that dismissed on the ground of prescription the subject
began to run only from the date it was discovered, namely, after the 1986 EDSA Revolution. charge of violation of Section 3(e) of R.A. 3019 against respondents Eduardo M. Cojuangco, Jr.,
Thus, the charge could be filed as late as 1996. Juan Ponce Enrile, Jose R. Eleazar, Jr., Jose C. Concepcion, Rolando P. Dela Cuesta, Emmanuel
M. Almeda, Hermenegildo C. Zayco, Narciso M. Pineda, Iaki R. Mendezona, Danilo S. Ursua,
Teodoro D. Regala, Victor P. Lazatin, Eleazar B. Reyes, Eduardo U. Escueta, Leo J. Palma,
In the prosecution of cases of behest loans, the Court reckoned the prescriptive period from the
discovery of such loans.1wphi1 The reason for this is that the government, as aggrieved party, Douglas Lu Ym, Sigfredo Veloso, and Jaime Gandiaga.
could not have known that those loans existed when they were made. Both parties to such loans
supposedly conspired to perpetrate fraud against the government. They could only have been SO ORDERED.
discovered after the 1986 EDSA Revolution when the people ousted President Marcos from office.
And, prior to that date, no person would have dared question the legality or propriety of the
loans.20 ROBERTO A. ABAD
Associate Justice

Those circumstances do not obtain in this case. For one thing, what is questioned here is not
the grant of behest loans that, by their nature, could be concealed from the public eye by the
simple expedient of suppressing their documentations. What is rather involved here is UCPBs
investment in UNICOM, which corporation is allegedly owned by respondent Cojuangco,

35
Republic of the Philippines Jeffrey Walan, and three (3) John Does, one of whom was eventually identified as respondent
SUPREME COURT Ramon Ang. The Affidavit-Complaint was filed with the Office of the City Prosecutor of Baguio
Manila City on May 23, 2003.3 A preliminary investigation took place on May 28, 2003. Respondent
Benedicto Balajadia likewise filed a case charging Jadewell president, Rogelio Tan, and four (4)
of Jadewell's employees with Usurpation of Authority/Grave Coercion in I.S. No. 2003-1935.
THIRD DIVISION

In his Counter-affidavit for the two cases he filed for himself and on behalf of his co-respondents,
G.R. No. 169588 October 7, 2013 respondent Benedicto Balajadia denied that his car was parked illegally. He admitted that he
removed the clamp restricting the wheel of his car since he alleged that the placing of a clamp
JADEWELL PARKING SYSTEMS CORPORATION represented by its manager and on the wheel of the vehicle was an illegal act. He alleged further that he removed the clamp not
authorized representative Norma Tan, Petitioner, to steal it but to remove the vehicle from its clamp so that he and his family could continue using
vs. the car. He also confirmed that he had the clamp with him, and he intended to use it as a piece
HON. JUDGE NELSON F. LIDUA SR., Presiding Judge of The Municipal Trial Court Branch of evidence to support the Complaint he filed against Jadewell. 4
3, Baguio City, BENEDICTO BALAJADIA, EDWIN ANG, "JOHN DOES" and "PETER
DOES" Respondents. In the Resolution5 of the Office of the Provincial Prosecutor of San Fernando City, La Union,
Acting City Prosecutor Mario Anacleto Banez found probable cause to file a case of Usurpation
DECISION of Authority against the petitioner. Regarding the case of Robbery against respondents,
Prosecutor Banez stated that:

LEONEN, J.:
We find no probable cause to charge respondents in these two (2) cases for the felony of Robbery.
The elements of Robbery, specifically the intent to gain and force upon things are absent in the
We are asked to rule on this Petition for Review on Certiorari under Rule 45 of the Rules of Court, instant cases, thereby negating the existence of the crime.
praying that the assailed Decision of Branch 7 of the Regional Trial Court of Baguio City and
Order dated August 15, 2005 be reversed and that Criminal Case Nos. 112934 and 112935 be
ordered reinstated and prosecuted before the Municipal Trial Court of Baguio City. xxxx

Petitioner Jadewell Parking Systems Corporation is a private parking operator duly authorized We, however, respectfully submit that the acts of respondents in removing the wheel clamps on
to operate and manage the parking spaces in Baguio City pursuant to City Ordinance 003-2000. the wheels of the cars involved in these cases and their failure to pay the prescribed fees were in
It is also authorized under Section 13 of the City Ordinance to render any motor vehicle immobile violation of Sec. 21 of Baguio City Ordinance No. 003-2000 which prescribes fines and penalties
by placing its wheels in a clamp if the vehicle is illegally parked. 1 for violations of the provisions of such ordinance. Certainly, they should not have put the law
into their own hands. (Emphasis supplied)

According to the Resolution of the Office of the Provincial Prosecutor, San Fernando City, La
Union, the facts leading to the filing of the Informations are the following: WHEREFORE, premises considered, there is probable cause against all the respondents, except
Jeffrey Walan or Joseph Walan (who has been dragged into this controversy only by virtue of the
fact that he was still the registered owner of the Nissan Cefiro car) for violation of Section 21 of
Jadewell Parking Systems Corporation (Jadewell), thru [sic] its General Manager Norma Tan and City Ord. No. 003-2000 in both cases and we hereby file the corresponding informations against
Jadewell personnel Januario S. Ulpindo and Renato B. Dulay alleged in their affidavit-complaint them in Court.6
that on May 17, 2003, the respondents in I.S No. 2003-1996 Edwin Ang, Benedicto Balajadia
and John Doe dismantled, took and carried away the clamp attached to the left front wheel of a
Mitsubishi Adventure with Plate No. WRK 624 owned by Edwin Ang. Accordingly, the car was Prosecutor Banez issued this Resolution on July 25, 2003.
then illegally parked and left unattended at a Loading and Unloading Zone. The value of the
clamp belonging to Jadewell which was allegedly forcibly removed with a piece of metal On October 2, 2003, two criminal Informations were filed with the Municipal Trial Court of
is P26,250.00. The fines of P500.00 for illegal parking and the declamping fee of P500.00 were Baguio City dated July 25, 2003, stating:
also not paid by the respondents herein.

That on May 17, 2003 at Baguio City and within the jurisdiction of this Honorable Court, the
In I.S. No., 2003-1997, Jadewell thru [sic] its General Manager Norina C. Tan, Renato B. Dulay above-named accused with unity of action and concerted design, did then and there, with unity
and Ringo Sacliwan alleged in their affidavit-complaint that on May 7, 2003, along Upper Mabini of action and concerted design, willfully, unlawfully and feloniously forcibly dismantled [sic] and
Street, Baguio City, herein respondents Benedicto Balajadia, Jeffrey Walan and two (2) John took [sic] an immobilizing clamp then attached to the left front wheel of a Mitsubishi Adventure
Does forcibly removed the clamp on the wheel of a Nissan Cefiro car with Plate No. UTD 933, vehicle with Plate No. WRK 624 belonging to Edwin Ang which was earlier rendered immobilized
belonging to Jeffrey Walan which was then considered illegally parked for failure to pay the by such clamp by Jadewell Personnel's for violation of the Baguio City ordinance No. 003-2600
prescribed parking fee. Such car was earlier rendered immobile by such clamp by Jadewell to the damage and prejudice of private complainant Jadewell Parking System Corporation
personnel. After forcibly removing the clamp, respondents took and carried it away depriving its (Jadewell) which owns such clamp worth P26,250.00 and other consequential damages.
owner, Jadewell, its use and value which is P26,250.00. According to complainants, the fine
of P500.00 and the declamping fee of P500.00 were not paid by the respondents.2
CONTRARY TO LAW,

The incident resulted in two cases filed by petitioner and respondents against each other.
Petitioner Jadewell filed two cases against respondents: Robbery under I.S. Nos. 2003-1996 and San Fernando City, La Union for Baguio City, this 25th day of July 2003. 7
2003-1997. Petitioner filed an Affidavit-Complaint against respondents Benedicto Balajadia,

36
The cases were docketed as Criminal Case Nos. 112934 and 112935 with the Municipal Trial Under Section 9 of the Rule [sic] on Summary Procedure, the running of the prescriptive period
Court of Baguio City, Branch 3. Respondent Benedicto Balajadia and the other accused through shall be halted on the date the case is filed in Court and not on any date before that (Zaldivia vs.
their counsel Paterno Aquino filed a January 20, 2004 Motion to Quash and/or Manifestation 8 on Reyes, Jr. G.R. No. 102342, July 3, 1992, En Banc).
February 2, 2004. The Motion to Quash and/or Manifestation sought the quashal of the two
Informations on the following grounds: extinguishment of criminal action or liability due to
prescription; failure of the Information to state facts that charged an offense; and the imposition In case of conflict, the Rule on Summary Procedure as the special law prevails over Sec. 1 of Rule
of charges on respondents with more than one offense. 110 of the Rules on Criminal Procedure and also Rule 110 of the Rules of Criminal Procedure
must yield to Act No. 3326 or "AN ACT TO ESTABLISH PERIODS OF PRESCRIPTION FOR
VIOLATIONS PENALIZED BY SPECIAL ACTS AND MUNICIPAL ORDINANCES AND TO PROVIDE
In their Motion to Quash, respondents argued that: WHEN PRESCRIPTION SHALL BEGIN TO RUN" (Ibid).

1. The accused in this case are charged with violation of Baguio City Ordinance No. Petitioner then filed a Petition16 for Certiorari under Rule 65 with the Regional Trial Court of
003-2000. Baguio City. The case was raffled to Branch 7 of the Regional Trial Court of Baguio City.
Petitioners contended that the respondent judge committed grave abuse of discretion amounting
to lack or excess of jurisdiction in dismissing Criminal Case Nos. 112934 and 112935 on the
2. Article 89 of the Revised Penal [sic] provides that criminal liability is totally ground of prescription. Petitioners argued that the respondent judge ruled erroneously saying
extinguished by prescription of the crime. that the prescriptive period for the offenses charged against the private respondents was halted
by the filing of the Complaint/Information in court and not when the Affidavit-Complaints were
3. Act No. 3326, as amended by Act No. 3763, provides: "Section 1. x x x Violations filed with the Office of the City Prosecutor of Baguio City. Petitioner cited Section 1 of Rule 110
penalized by municipal ordinances shall prescribed [sic] after two months." of the Rules on Criminal Procedure:

4. As alleged in the Information, the offense charged in this case was committed on x x x "criminal actions shall be instituted x x x in x x x other chartered cities, the complaint shall
May 7, 2003. 5. As can be seen from the right hand corner of the Information, the be filed with the office of the prosecutor unless otherwise provided in their charter" and the last
latter was filed with this Honorable Court on October 2, 2003, almost five (5) months paragraph thereof states that "the institution of the criminal action shall interrupt the running
after the alleged commission of the offense charged. Hence, criminal liability of the of the period of prescription of the offense charged unless otherwise provided in special laws." 17
accused in this case, if any, was already extinguished by prescription when the
Information was filed.9 Petitioner contended further that:

In an Order10 dated February 10, 2004, respondent Judge Nelson F. Lidua, Sr., Presiding Judge the filing of the criminal complaint with the Office of the City Prosecutor of Baguio City, not the
of the Municipal Trial Court of Baguio City, Branch 3, granted the accused's Motion to Quash filing of the criminal information before this Honorable Court, is the reckoning point in
and dismissed the cases. determining whether or not the criminal action in these cases had prescribed.

Petitioner filed a Motion for Reconsideration on February 27, 2004 responding to the February xxxx
10, 2004 Order11to argue among other points that:

The offenses charged in Criminal Case Nos. 112934 and 112935 are covered by the Revised Rules
6.b. For another, the offenses charged have not yet prescribed. Under the law, the period of on Summary Procedure, not by the old Rules on Summary Procedure. Considering that the
prescription of offenses shall be interrupted by the filing of the complaint or information. While offenses charged are for violations of a City Ordinance, the criminal cases can only be
it may be true that the Informations in these cases have been filed only on October 2, 2003, the commenced by informations. Thus, it was only legally and procedurally proper for the petitioner
private complainant has, however, filed its criminal complaint on May 23, 2003, well within the to file its complaint with the Office of the City Prosecutor of Baguio City as required by Section
prescribed period.12 11 of the new Rules on Summary Procedure, these criminal cases "shall be commenced only by
information." These criminal cases cannot be commenced in any other way.
Respondents filed their Opposition13 on March 24, 2004, and petitioner filed a Reply14 on April
1, 2004. Moreover, the ruling of the Supreme Court in Zaldivia vs. Reyes cited in the assailed Resolution
does not apply in this case. The offense charged in Zaldivia is a violation of municipal ordinance
The respondent judge released a Resolution15 dated April 16, 2004 upholding the Order granting in which case, the complaint should have been filed directly in court as required by Section 9 of
respondents' Motion to Quash. The Resolution held that: the old Rules on Summary Procedure. On the other hand, Criminal Case Nos. 112934 and
112935 are for violations of a city ordinance and as aforestated, "shall be commenced only by
information."18
For the guidance of the parties, the Court will make an extended resolution on one of the ground
[sic] for the motion to quash, which is that the criminal action has been extinguished on grounds
of prescription. Thus, petitioner contended that the filing of the criminal complaint with the Office of the City
Prosecutor stopped the running of the two-month prescriptive period. Hence, the offenses
charged have not prescribed.
These offenses are covered by the Rules on Summary Procedure being alleged violations of City
Ordinances.
In their Comment,19 respondents maintained that the respondent judge did not gravely abuse
his discretion. They held that Section 2 of Act No. 3326, as amended, provides that:

37
Sec. 2. Prescription shall begin to run from the day of the commission of the violation of the law, 3326 must include the preliminary investigation proceedings before the National Prosecution
and if the same be not known at the time, from the discovery thereof and the institution of judicial Service in light of the Rules on Criminal Procedure25 and Revised Rules on Summary Procedure.
proceeding for its investigation and punishment.

Lastly, petitioner maintains that it did have legal personality, since in a Petition for Certiorari,
The prescription shall be interrupted when proceedings are instituted against the guilty person, "persons aggrieved x x x may file a verified petition"26 before the court.
and shall begin to run again if the proceedings are dismissed for reasons not constituting
jeopardy.20 (Emphasis supplied)
The Petition is denied.

Respondents argued that Zaldivia v. Reyes21held that the proceedings mentioned in Section 2 of
Act No. 3326, as amended, refer to judicial proceedings . Thus, this Court, in Zaldivia, held that The resolution of this case requires an examination of both the substantive law and the
the filing of the Complaint with the Office of the Provincial Prosecutor was not a judicial procedural rules governing the prosecution of the offense. With regard to the prescription period,
proceeding. The prescriptive period commenced from the alleged date of the commission of the Act No. 3326, as amended, is the only statute that provides for any prescriptive period for the
crime on May 7, 2003 and ended two months after on July 7, 2003. Since the Informations were violation of special laws and municipal ordinances. No other special law provides any other
filed with the Municipal Trial Court on October 2, 2003, the respondent judge did not abuse its prescriptive period, and the law does not provide any other distinction. Petitioner may not argue
discretion in dismissing Criminal Case Nos. 112934 and 112935. that Act No. 3326 as amended does not apply.

In a Decision dated April 20, 2005, the Regional Trial Court of Baguio City Branch 7, through In Romualdez v. Hon. Marcelo,27 this Court defined the parameters of prescription:
Judge Clarence F. Villanueva, dismissed the Petition for Certiorari. The Regional Trial Court held
that, since cases of city ordinance violations may only be commenced by the filing of an In resolving the issue of prescription of the offense charged, the following should be considered:
Information, then the two-month prescription period may only be interrupted by the filing of (1) the period of prescription for the offense charged; (2) the time the period of prescription starts
Informations (for violation of City Ordinance 003-2000) against the respondents in court. The to run; and (3) the time the prescriptive period was interrupted. 28 (Citation omitted)
Regional Trial Court of Baguio City, Branch 7, ruled in favor of the respondents and upheld the
respondent judges Order dated February 10, 2004 and the Resolution dated April 16, 2004.
With regard to the period of prescription, it is now without question that it is two months for the
offense charged under City Ordinance 003-2000.
Petitioners then filed a May 17, 2005 Motion for Reconsideration which was denied by the
Regional Trial Court in an August 15, 2005 Order.
The commencement of the prescription period is also governed by statute. Article 91 of the
Revised Penal Code reads:
Hence, this Petition.

Art. 91. Computation of prescription of offenses. The period of prescription shall commence
The principal question in this case is whether the filing of the Complaint with the Office of the to run from the day on which the crime is discovered by the offended party, the authorities, or
City Prosecutor on May 23, 2003 tolled the prescription period of the commission of the offense their agents, and shall be interrupted by the filing of the complaint or information, and shall
charged against respondents Balajadia, Ang, "John Does," and "Peter Does." commence to run again when such proceedings terminate without the accused being convicted
or acquitted, or are unjustifiably stopped for any reason not imputable to him.
Petitioner contends that the prescription period of the offense in Act No. 3326, as amended by
Act No. 3763, does not apply because respondents were charged with the violation of a city The offense was committed on May 7, 2003 and was discovered by the attendants of the petitioner
ordinance and not a municipal ordinance. In any case, assuming arguendo that the prescriptive on the same day. These actions effectively commenced the running of the prescription period.
period is indeed two months, filing a Complaint with the Office of the City Prosecutor tolled the
prescription period of two months. This is because Rule 110 of the Rules of Court provides that,
in Manila and in other chartered cities, the Complaint shall be filed with the Office of the The procedural rules that govern this case are the 1991 Revised Rules on Summary Procedure.
Prosecutor unless otherwise provided in their charters.

SECTION 1. Scope This rule shall govern the summary procedure in the Metropolitan Trial
In their Comment,22 respondents maintain that respondent Judge Lidua did not err in dismissing Courts, the Municipal Trial Courts in Cities, the Municipal Trial Courts, and the Municipal
the cases based on prescription. Also, respondents raise that the other grounds for dismissal Circuit Trial Courts in the following cases falling within their jurisdiction:
they raised in their Motion to Quash, namely, that the facts charged constituted no offense and
that respondents were charged with more than one offense, were sustained by the Metropolitan
Trial Court. Also, respondents argue that petitioner had no legal personality to assail the Orders, xxxx
since Jadewell was not assailing the civil liability of the case but the assailed Order and
Resolution. This was contrary to the ruling in People v. Judge Santiago 23 which held that the
B. Criminal Cases:
private complainant may only appeal the civil aspect of the criminal offense and not the crime
itself.
(1) Violations of traffic laws, rules and regulations;
In the Reply,24 petitioner argues that the respondent judge only dismissed the case on the ground
of prescription, since the Resolution dated April 16, 2004 only cited that ground. The Order dated (2) Violations of the rental law;
February 10, 2004 merely stated but did not specify the grounds on which the cases were
dismissed. Petitioner also maintains that the proceedings contemplated in Section 2 of Act No.
(3) Violations of municipal or city ordinances (Emphasis supplied)

38
Section 11 of the Rules provides that: investigation. This means that the running of the prescriptive period shall be halted on the date
the case is actually filed in court and not on any date before that.

Sec. 11. How commenced. The filing of criminal cases falling within the scope of this Rule
shall be either by complaint or by information: Provided, however, that in Metropolitan Manila This interpretation is in consonance with the afore-quoted Act No. 3326 which says that the
and in Chartered Cities, such cases shall be commenced only by information, except when the period of prescription shall be suspended "when proceedings are instituted against the guilty
offense cannot be prosecuted de officio. party." The proceedings referred to in Section 2 thereof are "judicial proceedings," contrary to the
submission of the Solicitor General that they include administrative proceedings. His contention
is that we must not distinguish as the law does not distinguish. As a matter of fact, it does.
The Local Government Code provides for the classification of cities. Section 451 reads:

At any rate, the Court feels that if there be a conflict between the Rule on Summary Procedure
SEC. 451. Cities, Classified. A city may either be component or highly urbanized: Provided, and Section 1 of Rule 110 of the Rules on Criminal Procedure, the former should prevail as the
however, that the criteria established in this Code shall not affect the classification and corporate special law. And if there be a conflict between Act No. 3326 and Rule 110 of the Rules on Criminal
status of existing cities. Independent component cities are those component cities whose charters Procedure, the latter must again yield because this Court, in the exercise of its rule-making
prohibit their voters from voting for provincial elective officials. Independent component cities power, is not allowed to "diminish, increase or modify substantive rights" under Article VIII,
shall be independent of the province. Section 5(5) of the Constitution. Prescription in criminal cases is a substantive right. 30

Cities in the Philippines that were created by law can either be highly urbanized cities or Jurisprudence exists showing that when the Complaint is filed with the Office of the Prosecutor
component cities. An independent component city has a charter that proscribes its voters from who then files the Information in court, this already has the effect of tolling the prescription
voting for provincial elective officials. It stands that all cities as defined by Congress are chartered period. The recent People v. Pangilinan31categorically stated that Zaldivia v. Reyes is not
cities. In cases as early as United States v. Pascual Pacis, 29 this Court recognized the validity of controlling as far as special laws are concerned. Pangilinan referred to other cases that upheld
the Baguio Incorporation Act or Act No. 1963 of 1909, otherwise known as the charter of Baguio this principle as well. However, the doctrine of Pangilinan pertains to violations of special laws
City. but not to ordinances.

As provided in the Revised Rules on Summary Procedure, only the filing of an Information tolls There is no distinction between the filing of the Information contemplated in the Rules of Criminal
the prescriptive period where the crime charged is involved in an ordinance. The respondent Procedure and in the Rules of Summary Procedure. When the representatives of the petitioner
judge was correct when he applied the rule in Zaldivia v. Reyes. filed the Complaint before the Provincial Prosecutor of Baguio, the prescription period was
running. It continued to run until the filing of the Information. They had two months to file the
In Zaldivia v. Reyes, the violation of a municipal ordinance in Rodriguez, Rizal also featured Information and institute the judicial proceedings by filing the Information with the Municipal
similar facts and issues with the present case. In that case, the offense was committed on May Trial Court. The conduct of the preliminary investigation, the original charge of Robbery, and the
11, 1990. The Complaint was received on May 30, 1990, and the Information was filed with the subsequent finding of the violation of the ordinance did not alter the period within which to file
Metropolitan Trial Court of Rodriguez on October 2, 1990. This Court ruled that: the Information. Respondents were correct in arguing that the petitioner only had two months
from the discovery and commission of the offense before it prescribed within which to file the
Information with the Municipal Trial Court.
As it is clearly provided in the Rule on Summary Procedure that among the offenses it covers are
violations of municipal or city ordinances, it should follow that the charge against the petitioner,
which is for violation of a municipal ordinance of Rodriguez, is governed by that rule and not Unfortunately, when the Office of the Prosecutor filed the Informations on October 5, 2003, the
Section 1 of Rule 110. period had already prescribed. Thus, respondent Judge Nestor Lidua, Sr. did not err when he
ordered the dismissal of the case against respondents. According to the Department of Justice
National Prosecutors Service Manual for Prosecutors, an Information is defined under Part I,
Where paragraph (b) of the section does speak of "offenses falling under the jurisdiction of the Section 5 as:
Municipal Trial Courts and Municipal Circuit Trial Courts," the obvious reference is to Section
32(2) of B.P. No. 129, vesting in such courts:
SEC. 5. Information. - An information is the accusation in writing charging a person with an
offense, subscribed by the prosecutor, and filed with the court. The information need not be
(2) Exclusive original jurisdiction over all offenses punishable with imprisonment of not placed under oath by the prosecutor signing the same.
exceeding four years and two months, or a fine of not more than four thousand pesos, or both
such fine and imprisonment, regardless of other imposable accessory or other penalties,
including the civil liability arising from such offenses or predicated thereon, irrespective of kind, The prosecutor must, however, certify under oath that
nature, value, or amount thereof; Provided, however, That in offenses involving damage to
property through criminal negligence they shall have exclusive original jurisdiction where the a) he has examined the complainant and his witnesses;
imposable fine does not exceed twenty thousand pesos.

b) there is reasonable ground to believe that a crime has been committed and that the
These offenses are not covered by the Rules on Summary Procedure. accused is probably guilty thereof;

Under Section 9 of the Rules on Summary Procedure, "the complaint or information shall be filed c) the accused was informed of the complaint and of the evidence submitted against
directly in court without need of a prior preliminary examination or preliminary investigation." him; and
Both parties agree that this provision does not prevent the prosecutor from conducting a
preliminary investigation if he wants to. However, the case shall be deemed commenced only
when it is filed in court, whether or not the prosecution decides to conduct a preliminary d) the accused was given an opportunity to submit controverting evidence.

39
As for the place of the filing of the Information, the Manual also provides that: institution of the necessary judicial proceedings until it is too late. However, that possibility
should not justify a misreading of the applicable rules beyond their obvious intent as reasonably
deduced from their plain language.
SEC. 12. Place of the commission of offense. - The complaint or information is sufficient if it
states that the crime charged was committed or some of the ingredients thereof occurred at some
place within the jurisdiction of the court, unless the particular place in which the crime was The remedy is not a distortion of the meaning of the rules but a rewording thereof to prevent the
committed is an essential element of the crime, e.g. in a prosecution for violation of the provision problem here sought to be corrected.33
of the Election Code which punishes the carrying of a deadly weapon in a "polling place," or if it
is necessary to identify the offense charged, e.g., the domicile in the offense of "violation of
domicile." WHEREFORE the Petition is DENIED.

Finally, as for the prescription period, the Manual provides that: SO ORDERED.

SEC. 20. How Period of Prescription Computed and Interrupted. - For an offense penalized under MARVIC MARIO VICTOR F. LEONEN
the Revised Penal Code, the period of prescription commences to run from the day on which the Associate Justice
crime is discovered by the offended party, the authorities, or their agents, and shall be
interrupted:

a) by the filing of the complaint with the Office of the City/Provincial Prosecutor; or
with the Office of the Ombudsman; or

b) by the filing of the complaint or information with the court even if it is merely for
purposes of preliminary examination or investigation, or even if the court where the
complaint or information is filed cannot try the case on its merits.

However, for an offense covered by the Rules on Summary Procedure, the period of prescription
is interrupted only by the filing of the complaint or information in court.

xxxx

For violation of a special law or ordinance, the period of prescription shall commence to run from
the day of the commission of the violation, and if the same is not known at the time, from the
discovery and the institution of judicial proceedings for its investigation and punishment. The
prescription shall be interrupted only by the filing of the complaint or information in court and
shall begin to run again if the proceedings are dismissed for reasons not constituting double
jeopardy. (Emphasis supplied).1wphi1

Presidential Decree No. 127532 reorganized the Department of Justices Prosecution Staff and
established Regional State Prosecution Offices. These Regional State Prosecution Offices were
assigned centers for particular regions where the Informations will be filed. Section 6 provides
that the area of responsibility of the Region 1 Center located in San Fernando, La Union includes
Abra, Benguet, Ilocos Norte, Ilocos Sur, La Union, Mt. Province, Pangasinan, and the cities of
Baguio, Dagupan, Laoag, and San Carlos.

The Regional Prosecutor for Region 1 or his/her duly assigned prosecutor was designated to file
the Information within the two-month period provided for in Act No. 3326, as amended.1wphi1

The failure of the prosecutor to seasonably file the Information is unfortunate as it resulted in
the dismissal of the case against the private respondents. It stands that the doctrine of Zaldivia
is applicable to ordinances and their prescription period. It also upholds the necessity of filing
the Information in court in order to toll the period. Zaldivia also has this to say concerning the
effects of its ruling:

The Court realizes that under the above interpretation, a crime may prescribe even if the
complaint is filed seasonably with the prosecutor's office if, intentionally or not, he delays the

40
Republic of the Philippines The present action is to recover the reasonable rentals from August, 1946, the date when the
SUPREME COURT defendant began to occupy the premises, to the date it vacated it. The defendant does not contest
Manila its liability for the rentals at the rate of P3,000 per month from February 28, 1949 (the date
specified in the judgment in civil case No. 5007), but resists the claim therefor prior to this date.
It interposes the defense that it occupied the property in good faith, under no obligation
EN BANC whatsoever to pay rentals for the use and occupation of the warehouse. Judgment was rendered
for the plaintiff to recover from the defendant the sum of P3,000 a month, as reasonable rentals,
G.R. No. L-3756 June 30, 1952 from August, 1946, to the date the defendant vacates the premises. The judgment declares that
plaintiff has always been the owner, as the sale of Japanese purchaser was void ab initio; that
the Alien Property Administration never acquired any right to the property, but that it held the
SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS, plaintiff- same in trust until the determination as to whether or not the owner is an enemy citizen. The
appellee, trial court further declares that defendant can not claim any better rights than its predecessor,
vs. the Alien Property Administration, and that as defendant has used the property and had
NATIONAL COCONUT CORPORATION, defendant-appellant. subleased portion thereof, it must pay reasonable rentals for its occupation.

First Assistant Corporate Counsel Federico C. Alikpala and Assistant Attorney Augusto Kalaw for Against this judgment this appeal has been interposed, the following assignment of error having
appellant. been made on defendant-appellant's behalf:
Ramirez and Ortigas for appellee.
The trial court erred in holding the defendant liable for rentals or compensation for
LABRADOR, J.: the use and occupation of the property from the middle of August, 1946, to December
14, 1948.

This is an action to recover the possession of a piece of real property (land and warehouses)
situated in Pandacan Manila, and the rentals for its occupation and use. The land belongs to the 1. Want to "ownership rights" of the Philippine Alien Property Administration did not
plaintiff, in whose name the title was registered before the war. On January 4, 1943, during the render illegal or invalidate its grant to the defendant of the free use of property.
Japanese military occupation, the land was acquired by a Japanese corporation by the name of
Taiwan Tekkosho for the sum of P140,00, and thereupon title thereto issued in its name (transfer
certificate of title No. 64330, Register of Deeds, Manila). After liberation, more specifically on 2. the decision of the Court of First Instance of Manila declaring the sale by the plaintiff
April 4, 1946, the Alien Property Custodian of the United States of America took possession, to the Japanese purchaser null and void ab initio and that the plaintiff was and has
control, and custody thereof under section 12 of the Trading with the Enemy Act, 40 Stat., 411, remained as the legal owner of the property, without legal interruption, is not
for the reason that it belonged to an enemy national. During the year 1946 the property was conclusive.
occupied by the Copra Export Management Company under a custodianship agreement with
United States Alien Property Custodian (Exhibit G), and when it vacated the property it was 3. Reservation to the plaintiff of the right to recover from the defendant corporation
occupied by the defendant herein. The Philippine Government made representations with the not binding on the later;
Office Alien Property Custodian for the use of property by the Government (see Exhibits 2, 2-A,
2-B, and 1). On March 31, 1947, the defendant was authorized to repair the warehouse on the
land, and actually spent thereon the repairs the sum of P26,898.27. In 1948, defendant leased 4. Use of the property for commercial purposes in itself alone does not justify payment
one-third of the warehouse to one Dioscoro Sarile at a monthly rental of P500, which was later of rentals.
raised to P1,000 a month. Sarile did not pay the rents, so action was brought against him. It is
not shown, however, if the judgment was ever executed.
5. Defendant's possession was in good faith.

Plaintiff made claim to the property before the Alien Property Custodian of the United States, but
as this was denied, it brought an action in court (Court of First Instance of Manila, civil case No. 6. Defendant's possession in the nature of usufruct.
5007, entitled "La Sagrada Orden Predicadores de la Provinicia del Santisimo Rosario de
Filipinas," vs. Philippine Alien Property Administrator, defendant, Republic of the Philippines, In reply, plaintiff-appellee's counsel contends that the Philippine Allien Property Administration
intervenor) to annul the sale of property of Taiwan Tekkosho, and recover its possession. The (PAPA) was a mere administrator of the owner (who ultimately was decided to be plaintiff), and
Republic of the Philippines was allowed to intervene in the action. The case did not come for trial that as defendant has used it for commercial purposes and has leased portion of it, it should be
because the parties presented a joint petition in which it is claimed by plaintiff that the sale in responsible therefore to the owner, who had been deprived of the possession for so many years.
favor of the Taiwan Tekkosho was null and void because it was executed under threats, duress, (Appellee's brief, pp. 20, 23.)
and intimidation, and it was agreed that the title issued in the name of the Taiwan Tekkosho be
cancelled and the original title of plaintiff re-issued; that the claims, rights, title, and interest of
the Alien Property Custodian be cancelled and held for naught; that the occupant National We can not understand how the trial court, from the mere fact that plaintiff-appellee was the
Coconut Corporation has until February 28, 1949, to recover its equipment from the property owner of the property and the defendant-appellant the occupant, which used for its own benefit
and vacate the premises; that plaintiff, upon entry of judgment, pay to the Philippine Alien but by the express permission of the Alien Property Custodian of the United States, so easily
Property Administration the sum of P140,000; and that the Philippine Alien Property jumped to the conclusion that the occupant is liable for the value of such use and occupation. If
Administration be free from responsibility or liability for any act of the National Coconut defendant-appellant is liable at all, its obligations, must arise from any of the four sources of
Corporation, etc. Pursuant to the agreement the court rendered judgment releasing the obligations, namley, law, contract or quasi-contract, crime, or negligence. (Article 1089, Spanish
defendant and the intervenor from liability, but reversing to the plaintiff the right to recover from Civil Code.) Defendant-appellant is not guilty of any offense at all, because it entered the premises
the National Coconut Corporation reasonable rentals for the use and occupation of the premises. and occupied it with the permission of the entity which had the legal control and administration
(Exhibit A-1.) thereof, the Allien Property Administration. Neither was there any negligence on its part. There
was also no privity (of contract or obligation) between the Alien Property Custodian and the

41
Taiwan Tekkosho, which had secured the possession of the property from the plaintiff-appellee
by the use of duress, such that the Alien Property Custodian or its permittee (defendant-
appellant) may be held responsible for the supposed illegality of the occupation of the property
by the said Taiwan Tekkosho. The Allien Property Administration had the control and
administration of the property not as successor to the interests of the enemy holder of the title,
the Taiwan Tekkosho, but by express provision of law (Trading with the Enemy Act of the United
States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a trustee of the former owner, the plaintiff-
appellee herein, but a trustee of then Government of the United States (32 Op. Atty. Gen. 249;
50 U.S.C.A. 283), in its own right, to the exclusion of, and against the claim or title of, the enemy
owner. (Youghioheny & Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis., 347;
U.S.C.A., 282-283.) From August, 1946, when defendant-appellant took possession, to the late
of judgment on February 28, 1948, Allien Property Administration had the absolute control of
the property as trustee of the Government of the United States, with power to dispose of it by
sale or otherwise, as though it were the absolute owner. (U.S vs. Chemical Foundation [C.C.A.
Del. 1925], 5 F. [2d], 191; 50 U.S.C.A., 283.) Therefore, even if defendant-appellant were liable
to the Allien Property Administration for rentals, these would not accrue to the benefit of the
plaintiff-appellee, the owner, but to the United States Government.

But there is another ground why the claim or rentals can not be made against defendant-
appellant. There was no agreement between the Alien Property Custodian and the defendant-
appellant for the latter to pay rentals on the property. The existence of an implied agreement to
that effect is contrary to the circumstances. The copra Export Management Company, which
preceded the defendant-appellant, in the possession and use of the property, does not appear to
have paid rentals therefor, as it occupied it by what the parties denominated a "custodianship
agreement," and there is no provision therein for the payment of rentals or of any compensation
for its custody and or occupation and the use. The Trading with the Enemy Act, as originally
enacted, was purely a measure of conversation, hence, it is very unlikely that rentals were
demanded for the use of the property. When the National coconut Corporation succeeded the
Copra Export Management Company in the possession and use of the property, it must have
been also free from payment of rentals, especially as it was Government corporation, and steps
where then being taken by the Philippine Government to secure the property for the National
Coconut Corporation. So that the circumstances do not justify the finding that there was an
implied agreement that the defendant-appellant was to pay for the use and occupation of the
premises at all.

The above considerations show that plaintiff-appellee's claim for rentals before it obtained the
judgment annulling the sale of the Taiwan Tekkosho may not be predicated on any negligence or
offense of the defendant-appellant, or any contract, express or implied, because the Allien
Property Administration was neither a trustee of plaintiff-appellee, nor a privy to the obligations
of the Taiwan Tekkosho, its title being based by legal provision of the seizure of enemy property.
We have also tried in vain to find a law or provision thereof, or any principle in quasi contracts
or equity, upon which the claim can be supported. On the contrary, as defendant-appellant
entered into possession without any expectation of liability for such use and occupation, it is
only fair and just that it may not be held liable therefor. And as to the rents it collected from its
lessee, the same should accrue to it as a possessor in good faith, as this Court has already
expressly held. (Resolution, National Coconut Corporation vs. Geronimo, 83 Phil. 467.)

Lastly, the reservation of this action may not be considered as vesting a new right; if no right to
claim for rentals existed at the time of the reservation, no rights can arise or accrue from such
reservation alone.

Wherefore, the part of the judgment appealed from, which sentences defendant-appellant to pay
rentals from August, 1946, to February 28, 1949, is hereby reversed. In all other respects the
judgment is affirmed. Costs of this appeal shall be against the plaintiff-appellee.

Paras, C.J., Pablo, Bengzon, Padilla, Tuason, Montemayor, and Bautista Angelo, JJ, concur.

42
Republic of the Philippines Hence, this petition.
SUPREME COURT
Manila
The Issue

THIRD DIVISION
The petition premises the legal issue in this wise:

G.R. No. 145391 August 26, 2002


"In a certain vehicular accident involving two parties, each one of them may think and
believe that the accident was caused by the fault of the other. x x x [T]he first party,
AVELINO CASUPANAN and ROBERTO CAPITULO, petitioners, believing himself to be the aggrieved party, opted to file a criminal case for reckless
vs. imprudence against the second party. On the other hand, the second party, together
MARIO LLAVORE LAROYA, respondent. with his operator, believing themselves to be the real aggrieved parties, opted in turn
to file a civil case for quasi-delict against the first party who is the very private
complainant in the criminal case."4
CARPIO, J.:

Thus, the issue raised is whether an accused in a pending criminal case for reckless imprudence
The Case can validly file, simultaneously and independently, a separate civil action for quasi-delict against
the private complainant in the criminal case.
This is a petition for review on certiorari to set aside the Resolution 1 dated December 28, 1999
dismissing the petition for certiorari and the Resolution2 dated August 24, 2000 denying the The Courts Ruling
motion for reconsideration, both issued by the Regional Trial Court of Capas, Tarlac, Branch 66,
in Special Civil Action No. 17-C (99).
Casupanan and Capitulo assert that Civil Case No. 2089, which the MCTC dismissed on the
ground of forum-shopping, constitutes a counterclaim in the criminal case. Casupanan and
The Facts Capitulo argue that if the accused in a criminal case has a counterclaim against the private
complainant, he may file the counterclaim in a separate civil action at the proper time. They
Two vehicles, one driven by respondent Mario Llavore Laroya ("Laroya" for brevity) and the other contend that an action on quasi-delict is different from an action resulting from the crime of
owned by petitioner Roberto Capitulo ("Capitulo" for brevity) and driven by petitioner Avelino reckless imprudence, and an accused in a criminal case can be an aggrieved party in a civil case
Casupanan ("Casupanan" for brevity), figured in an accident. As a result, two cases were filed arising from the same incident. They maintain that under Articles 31 and 2176 of the Civil Code,
with the Municipal Circuit Trial Court ("MCTC" for brevity) of Capas, Tarlac. Laroya filed a the civil case can proceed independently of the criminal action. Finally, they point out that
criminal case against Casupanan for reckless imprudence resulting in damage to property, Casupanan was not the only one who filed the independent civil action based on quasi-delict but
docketed as Criminal Case No. 002-99. On the other hand, Casupanan and Capitulo filed a civil also Capitulo, the owner-operator of the vehicle, who was not a party in the criminal case.
case against Laroya for quasi-delict, docketed as Civil Case No. 2089.
In his Comment, Laroya claims that the petition is fatally defective as it does not state the real
When the civil case was filed, the criminal case was then at its preliminary investigation stage. antecedents. Laroya further alleges that Casupanan and Capitulo forfeited their right to question
Laroya, defendant in the civil case, filed a motion to dismiss the civil case on the ground of forum- the order of dismissal when they failed to avail of the proper remedy of appeal. Laroya argues
shopping considering the pendency of the criminal case. The MCTC granted the motion in the that there is no question of law to be resolved as the order of dismissal is already final and a
Order of March 26, 1999 and dismissed the civil case. petition for certiorari is not a substitute for a lapsed appeal.

On Motion for Reconsideration, Casupanan and Capitulo insisted that the civil case is a separate In their Reply, Casupanan and Capitulo contend that the petition raises the legal question of
civil action which can proceed independently of the criminal case. The MCTC denied the motion whether there is forum-shopping since they filed only one action - the independent civil action
for reconsideration in the Order of May 7, 1999. Casupanan and Capitulo filed a petition for for quasi-delict against Laroya.
certiorari under Rule 65 before the Regional Trial Court ("Capas RTC" for brevity) of Capas,
Tarlac, Branch 66,3 assailing the MCTCs Order of dismissal. Nature of the Order of Dismissal

The Trial Courts Ruling The MCTC dismissed the civil action for quasi-delict on the ground of forum-shopping under
Supreme Court Administrative Circular No. 04-94. The MCTC did not state in its order of
The Capas RTC rendered judgment on December 28, 1999 dismissing the petition for certiorari dismissal5 that the dismissal was with prejudice. Under the Administrative Circular, the order of
for lack of merit. The Capas RTC ruled that the order of dismissal issued by the MCTC is a final dismissal is without prejudice to refiling the complaint, unless the order of dismissal expressly
order which disposes of the case and therefore the proper remedy should have been an appeal. states it is with prejudice.6 Absent a declaration that the dismissal is with prejudice, the same is
The Capas RTC further held that a special civil action for certiorari is not a substitute for a lost deemed without prejudice. Thus, the MCTCs dismissal, being silent on the matter, is a
appeal. Finally, the Capas RTC declared that even on the premise that the MCTC erred in dismissal without prejudice.
dismissing the civil case, such error is a pure error of judgment and not an abuse of discretion.
Section 1 of Rule 417 provides that an order dismissing an action without prejudice is not
Casupanan and Capitulo filed a Motion for Reconsideration but the Capas RTC denied the same appealable. The remedy of the aggrieved party is to file a special civil action under Rule 65.
in the Resolution of August 24, 2000. Section 1 of Rule 41 expressly states that "where the judgment or final order is not appealable,
the aggrieved party may file an appropriate special civil action under Rule 65." Clearly, the Capas

43
RTCs order dismissing the petition for certiorari, on the ground that the proper remedy is an reserved the civil action before the presentation of the evidence for the prosecution, all civil
ordinary appeal, is erroneous. actions arising from the same act or omission were deemed "impliedly instituted" in the criminal
case. These civil actions referred to the recovery of civil liability ex-delicto, the recovery of
damages for quasi-delict, and the recovery of damages for violation of Articles 32, 33 and 34 of
Forum-Shopping the Civil Code on Human Relations.

The essence of forum-shopping is the filing of multiple suits involving the same parties for the Thus, to file a separate and independent civil action for quasi-delict under the 1985 Rules, the
same cause of action, either simultaneously or successively, to secure a favorable offended party had to reserve in the criminal action the right to bring such action. Otherwise,
judgment.8 Forum-shopping is present when in the two or more cases pending, there is identity such civil action was deemed "impliedly instituted" in the criminal action. Section 1, Rule 111 of
of parties, rights of action and reliefs sought.9 However, there is no forum-shopping in the instant the 1985 Rules provided as follows:
case because the law and the rules expressly allow the filing of a separate civil action which can
proceed independently of the criminal action.
"Section 1. Institution of criminal and civil actions. When a criminal action is
instituted, the civil action for the recovery of civil liability is impliedly instituted with
Laroya filed the criminal case for reckless imprudence resulting in damage to property based on the criminal action, unless the offended party waives the action, reserves his right to
the Revised Penal Code while Casupanan and Capitulo filed the civil action for damages based institute it separately, or institutes the civil action prior to the criminal action.
on Article 2176 of the Civil Code. Although these two actions arose from the same act or omission,
they have different causes of action. The criminal case is based on culpa criminal punishable
under the Revised Penal Code while the civil case is based on culpa aquiliana actionable under Such civil action includes recovery of indemnity under the Revised Penal Code,
Articles 2176 and 2177 of the Civil Code. These articles on culpa aquiliana read: and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the
Philippines arising from the same act or omission of the accused.

"Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if there A waiver of any of the civil actions extinguishes the others. The institution of, or the
is no pre-existing contractual relation between the parties, is called a quasi-delict and reservation of the right to file, any of said civil actions separately waives the others.
is governed by the provisions of this Chapter.

The reservation of the right to institute the separate civil actions shall be made before
Art. 2177. Responsibility for fault or negligence under the preceding article is entirely the prosecution starts to present its evidence and under circumstances affording the
separate and distinct from the civil liability arising from negligence under the Penal offended party a reasonable opportunity to make such reservation.
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant."
In no case may the offended party recover damages twice for the same act or omission
of the accused.
Any aggrieved person can invoke these articles provided he proves, by preponderance of evidence,
that he has suffered damage because of the fault or negligence of another. Either the private
complainant or the accused can file a separate civil action under these articles. There is nothing x x x." (Emphasis supplied)
in the law or rules that state only the private complainant in a criminal case may invoke these
articles. Section 1, Rule 111 of the 1985 Rules was amended on December 1, 2000 and now provides as
follows:
Moreover, paragraph 6, Section 1, Rule 111 of the 2000 Rules on Criminal Procedure ("2000
Rules" for brevity) expressly requires the accused to litigate his counterclaim in a separate civil "SECTION 1. Institution of criminal and civil actions. (a) When a criminal action is
action, to wit: instituted, the civil action for the recovery of civil liability arising from the
offense charged shall be deemed instituted with the criminal action unless the
"SECTION 1. Institution of criminal and civil actions. (a) x x x. offended party waives the civil action, reserves the right to institute it separately or
institutes the civil action prior to the criminal action.

No counterclaim, cross-claim or third-party complaint may be filed by the accused in


the criminal case, but any cause of action which could have been the subject thereof The reservation of the right to institute separately the civil action shall be made before
may be litigated in a separate civil action." (Emphasis supplied) the prosecution starts presenting its evidence and under circumstances affording the
offended party a reasonable opportunity to make such reservation.

Since the present Rules require the accused in a criminal action to file his counterclaim in a
separate civil action, there can be no forum-shopping if the accused files such separate civil xxx
action.
(b) x x x
Filing of a separate civil action
Where the civil action has been filed separately and trial thereof has not yet
Section 1, Rule 111 of the 1985 Rules on Criminal Procedure ("1985 Rules" for brevity), as commenced, it may be consolidated with the criminal action upon application with the
amended in 1988, allowed the filing of a separate civil action independently of the criminal action court trying the latter case. If the application is granted, the trial of both actions shall
provided the offended party reserved the right to file such civil action. Unless the offended party proceed in accordance with section 2 of this rule governing consolidation of the civil
and criminal actions." (Emphasis supplied)
44
Under Section 1 of the present Rule 111, what is "deemed instituted" with the criminal action is Thus, Section 2, Rule 111 of the present Rules did not change the rule that the separate civil
only the action to recover civil liability arising from the crime or ex-delicto. All the other civil action, filed to recover damages ex-delicto, is suspended upon the filing of the criminal action.
actions under Articles 32, 33, 34 and 2176 of the Civil Code are no longer "deemed instituted," Section 2 of the present Rule 111 also prohibits the filing, after commencement of the criminal
and may be filed separately and prosecuted independently even without any reservation in the action, of a separate civil action to recover damages ex-delicto.
criminal action. The failure to make a reservation in the criminal action is not a waiver of the
right to file a separate and independent civil action based on these articles of the Civil Code. The
prescriptive period on the civil actions based on these articles of the Civil Code continues to run When civil action may proceed independently
even with the filing of the criminal action. Verily, the civil actions based on these articles of the
Civil Code are separate, distinct and independent of the civil action "deemed instituted" in the The crucial question now is whether Casupanan and Capitulo, who are not the offended parties
criminal action.10 in the criminal case, can file a separate civil action against the offended party in the criminal
case. Section 3, Rule 111 of the 2000 Rules provides as follows:
Under the present Rule 111, the offended party is still given the option to file a separate civil
action to recover civil liability ex-delicto by reserving such right in the criminal action before the "SEC 3. When civil action may proceed independently. - In the cases provided in
prosecution presents its evidence. Also, the offended party is deemed to make such reservation Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the independent civil
if he files a separate civil action before filing the criminal action. If the civil action to recover civil action may be brought by the offendedparty. It shall proceed independently of the
liability ex-delicto is filed separately but its trial has not yet commenced, the civil action may be criminal action and shall require only a preponderance of evidence. In no case,
consolidated with the criminal action. The consolidation under this Rule does not apply to however, may the offended party recover damages twice for the same act or omission
separate civil actions arising from the same act or omission filed under Articles 32, 33, 34 and charged in the criminal action." (Emphasis supplied)
2176 of the Civil Code.11

Section 3 of the present Rule 111, like its counterpart in the amended 1985 Rules, expressly
Suspension of the Separate Civil Action allows the "offended party" to bring an independent civil action under Articles 32, 33, 34 and
2176 of the Civil Code. As stated in Section 3 of the present Rule 111, this civil action shall
Under Section 2, Rule 111 of the amended 1985 Rules, a separate civil action, if reserved in the proceed independently of the criminal action and shall require only a preponderance of evidence.
criminal action, could not be filed until after final judgment was rendered in the criminal action. In no case, however, may the "offended party recover damages twice for the same act or omission
If the separate civil action was filed before the commencement of the criminal action, the civil charged in the criminal action."
action, if still pending, was suspended upon the filing of the criminal action until final judgment
was rendered in the criminal action. This rule applied only to the separate civil action filed to There is no question that the offended party in the criminal action can file an independent civil
recover liability ex-delicto. The rule did not apply to independent civil actions based on Articles action for quasi-delict against the accused. Section 3 of the present Rule 111 expressly states
32, 33, 34 and 2176 of the Civil Code, which could proceed independently regardless of the filing that the "offended party" may bring such an action but the "offended party" may not recover
of the criminal action. damages twice for the same act or omission charged in the criminal action. Clearly, Section 3 of
Rule 111 refers to the offended party in the criminal action, not to the accused.
The amended provision of Section 2, Rule 111 of the 2000 Rules continues this procedure, to
wit: Casupanan and Capitulo, however, invoke the ruling in Cabaero vs. Cantos12 where the Court
held that the accused therein could validly institute a separate civil action for quasi-delict against
"SEC. 2. When separate civil action is suspended. After the criminal action has been the private complainant in the criminal case. In Cabaero, the accused in the criminal case filed
commenced, the separate civil action arising therefrom cannot be instituted until final his Answer with Counterclaim for malicious prosecution. At that time the Court noted the
judgment has been entered in the criminal action. "absence of clear-cut rules governing the prosecution on impliedly instituted civil actions and
the necessary consequences and implications thereof." Thus, the Court ruled that the trial
court should confine itself to the criminal aspect of the case and disregard any counterclaim for
If the criminal action is filed after the said civil action has already been civil liability. The Court further ruled that the accused may file a separate civil case against the
instituted, the latter shall be suspended in whatever stage it may be found offended party "after the criminal case is terminated and/or in accordance with the new Rules
before judgment on the merits. The suspension shall last until final judgment which may be promulgated." The Court explained that a cross-claim, counterclaim or third-party
is rendered in the criminal action. Nevertheless, before judgment on the merits is complaint on the civil aspect will only unnecessarily complicate the proceedings and delay the
rendered in the civil action, the same may, upon motion of the offended party, be resolution of the criminal case.
consolidated with the criminal action in the court trying the criminal action. In case
of consolidation, the evidence already adduced in the civil action shall be deemed
automatically reproduced in the criminal action without prejudice to the right of the Paragraph 6, Section 1 of the present Rule 111 was incorporated in the 2000 Rules precisely to
prosecution to cross-examine the witnesses presented by the offended party in the address the lacuna mentioned in Cabaero. Under this provision, the accused is barred from
criminal case and of the parties to present additional evidence. The consolidated filing a counterclaim, cross-claim or third-party complaint in the criminal case. However, the
criminal and civil actions shall be tried and decided jointly. same provision states that "any cause of action which could have been the subject (of the
counterclaim, cross-claim or third-party complaint) may be litigated in a separate civil action."
The present Rule 111 mandates the accused to file his counterclaim in a separate civil actiosn
During the pendency of the criminal action, the running of the period of prescription which shall proceed independently of the criminal action, even as the civil action of the offended
of the civil action which cannot be instituted separately or whose proceeding has been party is litigated in the criminal action.
suspended shall be tolled.

Conclusion
x x x." (Emphasis supplied)

45
Under Section 1 of the present Rule 111, the independent civil action in Articles 32, 33, 34 and event, there are sufficient remedies under the Rules of Court to deal with such remote
2176 of the Civil Code is not deemed instituted with the criminal action but may be filed possibilities.
separately by the offended party even without reservation. The commencement of the criminal
action does not suspend the prosecution of the independent civil action under these articles of
the Civil Code. The suspension in Section 2 of the present Rule 111 refers only to the civil action One final point. The Revised Rules on Criminal Procedure took effect on December 1, 2000 while
arising from the crime, if such civil action is reserved or filed before the commencement of the the MCTC issued the order of dismissal on December 28, 1999 or before the amendment of the
criminal action. rules. The Revised Rules on Criminal Procedure must be given retroactive effect considering the
well-settled rule that -

Thus, the offended party can file two separate suits for the same act or omission. The first a
criminal case where the civil action to recover civil liability ex-delicto is deemed instituted, and "x x x statutes regulating the procedure of the court will be construed as applicable to
the other a civil case for quasi-delict - without violating the rule on non-forum shopping. The two actions pending and undetermined at the time of their passage. Procedural laws are
cases can proceed simultaneously and independently of each other. The commencement or retroactive in that sense and to that extent."14
prosecution of the criminal action will not suspend the civil action for quasi-delict. The only
limitation is that the offended party cannot recover damages twice for the same act or omission WHEREFORE, the petition for review on certiorari is hereby GRANTED. The Resolutions dated
of the defendant. In most cases, the offended party will have no reason to file a second civil action December 28, 1999 and August 24, 2000 in Special Civil Action No. 17-C (99)
since he cannot recover damages twice for the same act or omission of the accused. In some are ANNULLED and Civil Case No. 2089 is REINSTATED.
instances, the accused may be insolvent, necessitating the filing of another case against his
employer or guardians.
SO ORDERED.
Similarly, the accused can file a civil action for quasi-delict for the same act or omission he is
accused of in the criminal case. This is expressly allowed in paragraph 6, Section 1 of the present Puno, Panganiban, and Sandoval-Gutierrez*, JJ., concur.
Rule 111 which states that the counterclaim of the accused "may be litigated in a separate
civil action." This is only fair for two reasons. First, the accused is prohibited from setting up
any counterclaim in the civil aspect that is deemed instituted in the criminal case. The accused
is therefore forced to litigate separately his counterclaim against the offended party. If the
accused does not file a separate civil action for quasi-delict, the prescriptive period may set in
since the period continues to run until the civil action for quasi-delict is filed.

Second, the accused, who is presumed innocent, has a right to invoke Article 2177 of the Civil
Code, in the same way that the offended party can avail of this remedy which is independent of
the criminal action. To disallow the accused from filing a separate civil action for quasi-delict,
while refusing to recognize his counterclaim in the criminal case, is to deny him due process of
law, access to the courts, and equal protection of the law.

Thus, the civil action based on quasi-delict filed separately by Casupanan and Capitulo is proper.
The order of dismissal by the MCTC of Civil Case No. 2089 on the ground of forum-shopping is
erroneous.

We make this ruling aware of the possibility that the decision of the trial court in the criminal
case may vary with the decision of the trial court in the independent civil action. This possibility
has always been recognized ever since the Civil Code introduced in 1950 the concept of an
independent civil action under Articles 32, 33, 34 and 2176 of the Code. But the law itself, in
Article 31 of the Code, expressly provides that the independent civil action "may proceed
independently of the criminal proceedings and regardless of the result of the latter." In Azucena
vs. Potenciano,13 the Court declared:

"x x x. There can indeed be no other logical conclusion than this, for to subordinate
the civil action contemplated in the said articles to the result of the criminal
prosecution whether it be conviction or acquittal would render meaningless the
independent character of the civil action and the clear injunction in Article 31 that
this action 'may proceed independently of the criminal proceedings and regardless of
the result of the latter."

More than half a century has passed since the Civil Code introduced the concept of a civil action
separate and independent from the criminal action although arising from the same act or
omission. The Court, however, has yet to encounter a case of conflicting and irreconcilable
decisions of trial courts, one hearing the criminal case and the other the civil action for quasi-
delict. The fear of conflicting and irreconcilable decisions may be more apparent than real. In any

46
Republic of the Philippines On July 31, 1970, the Court of First Instance of Bulacan, Branch V, Sta. Maria, rendered
SUPREME COURT judgment, stating in its decretal portion:
Manila

IN VIEW OF THE FOREGOING, this Court finds the accused Freddie


FIRST DIVISION Montoya GUILTY beyond reasonable doubt of the crime of damage to
property thru reckless imprudence in Crime. Case No. SM-227, and hereby
sentences him to pay a fine of P972.50 and to indemnify Rodolfo Salazar in
G.R. No. L-32599 June 29, 1979 the same amount of P972.50 as actual damages, with subsidiary
imprisonment in case of insolvency, both as to fine and indemnity, with
EDGARDO E. MENDOZA, petitioner costs.
vs.
HON. ABUNDIO Z. ARRIETA, Presiding Judge of Branch VIII, Court of First Instance of Accused Rodolfo Salazar is hereby ACQUITTED from the offense charged in
Manila, FELINO TIMBOL, and RODOLFO SALAZAR, respondents. Crime. Case No. SM-228, with costs de oficio, and his bond is ordered
canceled
David G. Nitafan for petitioner.
SO ORDERED. 1

Arsenio R. Reyes for respondent Timbol.


Thus, the trial Court absolved jeep-owner-driver Salazar of any liability, civil and criminal, in
Armando M. Pulgado for respondent Salazar. view of its findings that the collision between Salazar's jeep and petitioner's car was the result of
the former having been bumped from behind by the truck driven by Montoya. Neither was
petitioner awarded damages as he was not a complainant against truck-driver Montoya but only
against jeep-owner-driver Salazar.

MELENCIO-HERRERA, J: On August 22, 1970, or after the termination of the criminal cases, petitioner filed Civil Case No.
80803 with the Court of First Instance of Manila against respondents jeep-owner-driver Salazar
and Felino Timbol, the latter being the owner of the gravel and sand truck driven by Montoya,
Petitioner, Edgardo Mendoza, seeks a review on certiorari of the Orders of respondent Judge in for indentification for the damages sustained by his car as a result of the collision involving their
Civil Case No. 80803 dismissing his Complaint for Damages based on quasi-delict against vehicles. Jeep-owner-driver Salazar and truck-owner Timbol were joined as defendants, either in
respondents Felino Timbol and Rodolfo Salazar. the alternative or in solidum allegedly for the reason that petitioner was uncertain as to whether
he was entitled to relief against both on only one of them.
The facts which spawned the present controversy may be summarized as follows:
On September 9, 1970, truck-owner Timbol filed a Motion to Dismiss Civil Case No. 80803 on
the grounds that the Complaint is barred by a prior judgment in the criminal cases and that it
On October 22, 1969, at about 4:00 o'clock in the afternoon, a three- way vehicular accident
fails to state a cause of action. An Opposition thereto was filed by petitioner.
occurred along Mac-Arthur Highway, Marilao, Bulacan, involving a Mercedes Benz owned and
driven by petitioner; a private jeep owned and driven by respondent Rodolfo Salazar; and a gravel
and sand truck owned by respondent Felipino Timbol and driven by Freddie Montoya. As a In an Order dated September 12, 1970, respondent Judge dismissed the Complaint against
consequence of said mishap, two separate Informations for Reckless Imprudence Causing truck-owner Timbol for reasons stated in the afore- mentioned Motion to Dismiss On September
Damage to Property were filed against Rodolfo Salazar and Freddie Montoya with the Court of 30, 1970, petitioner sought before this Court the review of that dismissal, to which petition we
First Instance of Bulacan. The race against truck-driver Montoya, docketed as Criminal Case No. gave due course.
SM-227, was for causing damage to the jeep owned by Salazar, in the amount of Pl,604.00, by
hitting it at the right rear portion thereby causing said jeep to hit and bump an oncoming car,
which happened to be petitioner's Mercedes Benz. The case against jeep-owner-driver Salazar, On January 30, 1971, upon motion of jeep-owner-driver Salazar, respondent Judge also
docketed as Criminal Case No. SM 228, was for causing damage to the Mercedes Benz of dismissed the case as against the former. Respondent Judge reasoned out that "while it is true
petitioner in the amount of P8,890.00 that an independent civil action for liability under Article 2177 of the Civil Code could be
prosecuted independently of the criminal action for the offense from which it arose, the New
Rules of Court, which took effect on January 1, 1964, requires an express reservation of the civil
At the joint trial of the above cases, petitioner testified that jeep-owner- driver Salazar overtook action to be made in the criminal action; otherwise, the same would be barred pursuant to
the truck driven by Montoya, swerved to the left going towards the poblacion of Marilao, and hit Section 2, Rule 111 ... 2 Petitioner's Motion for Reconsideration thereof was denied in the order
his car which was bound for Manila. Petitioner further testified that before the impact, Salazar dated February 23, 1971, with respondent Judge suggesting that the issue be raised to a higher
had jumped from the jeep and that he was not aware that Salazar's jeep was bumped from behind Court "for a more decisive interpretation of the rule. 3
by the truck driven by Montoya. Petitioner's version of the accident was adopted by truck driver
Montoya. Jeep-owner-driver Salazar, on the other hand, tried to show that, after overtaking the
truck driven by Montoya, he flashed a signal indicating his intention to turn left towards the On March 25, 1971, petitioner then filed a Supplemental Petition before us, also to review the
poblacion of Marilao but was stopped at the intersection by a policeman who was directing traffic; last two mentioned Orders, to which we required jeep-owner-driver Salazar to file an Answer.
that while he was at a stop position, his jeep was bumped at the rear by the truck driven by
Montova causing him to be thrown out of the jeep, which then swerved to the left and hit
petitioner's car, which was coming from the opposite direction. The Complaint against

47
truck-owner Timbol Consequently, petitioner's cause of action being based on quasi-delict, respondent Judge
committed reversible error when he dismissed the civil suit against the truck-owner, as said case
may proceed independently of the criminal proceedings and regardless of the result of the latter.
We shall first discuss the validity of the Order, dated September 12, 1970, dismissing petitioner's
Complaint against truck-owner Timbol.
Art. 31. When the civil action is based on an obligation not arising from the
act or omission complained of as a felony, such civil action may proceed
In dismissing the Complaint against the truck-owner, respondent Judge sustained Timbol's independently of the criminal proceedings and regardless of the result of
allegations that the civil suit is barred by the prior joint judgment in Criminal Cases Nos. SM- the latter.
227 and SM-228, wherein no reservation to file a separate civil case was made by petitioner and
where the latter actively participated in the trial and tried to prove damages against jeep-driver-
Salazar only; and that the Complaint does not state a cause of action against truck-owner Timbol But it is truck-owner Timbol's submission (as well as that of jeep-owner-driver Salazar) that
inasmuch as petitioner prosecuted jeep-owner-driver Salazar as the one solely responsible for petitioner's failure to make a reservation in the criminal action of his right to file an independent
the damage suffered by his car. civil action bars the institution of such separate civil action, invoking section 2, Rule 111, Rules
of Court, which says:

Well-settled is the rule that for a prior judgment to constitute a bar to a subsequent case, the
following requisites must concur: (1) it must be a final judgment; (2) it must have been rendered Section 2. Independent civil action. In the cases provided for in Articles
by a Court having jurisdiction over the subject matter and over the parties; (3) it must be a 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, an independent
judgment on the merits; and (4) there must be, between the first and second actions, Identity of civil action entirely separate and distinct from the criminal action may be
parties, Identity of subject matter and Identity of cause of action. brought by the injured party during the pendency of the criminal case,
provided the right is reserved as required in the preceding section. Such
civil action shau proceed independently of the criminal prosecution, and
It is conceded that the first three requisites of res judicata are present. However, we agree with shall require only a preponderance of evidence.
petitioner that there is no Identity of cause of action between Criminal Case No. SM-227 and
Civil Case No. 80803. Obvious is the fact that in said criminal case truck-driver Montoya was
not prosecuted for damage to petitioner's car but for damage to the jeep. Neither was truck-owner Interpreting the above provision, this Court, in Garcia vs. Florida 7 said:
Timbol a party in said case. In fact as the trial Court had put it "the owner of the Mercedes Benz
cannot recover any damages from the accused Freddie Montoya, he (Mendoza) being a
complainant only against Rodolfo Salazar in Criminal Case No. SM-228. 4 And more importantly, As we have stated at the outset, the same negligent act causing damages
in the criminal cases, the cause of action was the enforcement of the civil liability arising from may produce a civil liability arising from crime or create an action for quasi-
criminal negligence under Article l of the Revised Penal Code, whereas Civil Case No. 80803 is delict or culpa extra-contractual. The former is a violation of the criminal
based on quasi-delict under Article 2180, in relation to Article 2176 of the Civil Code As held law, while the latter is a distinct and independent negligence, having always
in Barredo vs. Garcia, et al. 5 had its own foundation and individuality. Some legal writers are of the view
that in accordance with Article 31, the civil action based upon quasi-delict
may proceed independently of the criminal proceeding for criminal
The foregoing authorities clearly demonstrate the separate in. individuality negligence and regardless of the result of the latter. Hence, 'the proviso in
of cuasi-delitos or culpa aquiliana under the Civil Code. Specifically they Section 2 of Rule 111 with reference to ... Articles 32, 33 and 34 of the Civil
show that there is a distinction between civil liability arising from criminal Code is contrary to the letter and spirit of the said articles, for these articles
negligence (governed by the Penal Code) and responsibility for fault or were drafted ... and are intended to constitute as exceptions to the general
negligence under articles 1902 to 1910 of the Civil Code, and that the same rule stated in what is now Section 1 of Rule 111. The proviso, which is
negligent act may produce either a civil liability arising from a crime under procedural, may also be regarded as an unauthorized amendment of
the Penal Code, or a separate responsibility for fault or negligence under substantive law, Articles 32, 33 and 34 of the Civil Code, which do not
articles 1902 to 1910 of the Civil Code. Still more concretely, the authorities provide for the reservation required in the proviso ... .
above cited render it inescapable to conclude that the employer in this case
the defendant- petitioner is primarily and directly liable under article 1903
of the Civil Code. In his concurring opinion in the above case, Mr. Justice Antonio Barredo further observed that
inasmuch as Articles 2176 and 2177 of the Civil Code create a civil liability distinct and different
from the civil action arising from the offense of negligence under the Revised Penal Code, no
That petitioner's cause of action against Timbol in the civil case is based on quasi-delict is evident reservation, therefore, need be made in the criminal case; that Section 2 of Rule 111 is
from the recitals in the complaint to wit: that while petitioner was driving his car along MacArthur inoperative, "it being substantive in character and is not within the power of the Supreme Court
Highway at Marilao, Bulacan, a jeep owned and driven by Salazar suddenly swerved to his to promulgate; and even if it were not substantive but adjective, it cannot stand because of its
(petitioner's) lane and collided with his car That the sudden swerving of Salazar's jeep was caused inconsistency with Article 2177, an enactment of the legislature superseding the Rules of 1940."
either by the negligence and lack of skill of Freddie Montoya, Timbol's employee, who was then
driving a gravel and sand truck iii the same direction as Salazar's jeep; and that as a consequence
of the collision, petitioner's car suffered extensive damage amounting to P12,248.20 and that he We declare, therefore, that in so far as truck-owner Timbol is concerned, Civil Case No. 80803 is
likewise incurred actual and moral damages, litigation expenses and attorney's fees. Clearly, not barred by the fact that petitioner failed to reserve, in the criminal action, his right to file an
therefore, the two factors that a cause of action must consist of, namely: (1) plaintiff's primary independent civil action based on quasi-delict.
right, i.e., that he is the owner of a Mercedes Benz, and (2) defendant's delict or wrongful act or
omission which violated plaintiff's primary right, i.e., the negligence or lack of skill either of jeep- The suit against
owner Salazar or of Timbol's employee, Montoya, in driving the truck, causing Salazar's jeep to
swerve and collide with petitioner's car, were alleged in the Complaint. 6
jeep-owner-driver Salazar

48
The case as against jeep-owner-driver Salazar, who was acquitted in Criminal Case No. SM-228, Art. 29. When the accused in a criminal prosecution is acquitted on the
presents a different picture altogether. ground that his guilt has not been proved beyond reasonable doubt, a civil
action for damages for the same act or omission may be instituted. Such
action requires only a preponderance of evidence ...
At the outset it should be clarified that inasmuch as civil liability co-exists with criminal
responsibility in negligence cases, the offended party has the option between an action for
enforcement of civil liability based on culpacriminal under Article 100 of the Revised Penal Code, If in a criminal case the judgment of acquittal is based upon reasonable
and an action for recovery of damages based on culpa aquiliana under Article 2177 of the Civil doubt, the court shall so declare. In the absence of any declaration to that
Code. The action for enforcement of civil liability based on culpa criminal under section 1 of Rule effect, it may be inferred from the text of the decision whether or not the
111 of the Rules of Court is deemed simultaneously instituted with the criminal action, unless acquittal is due to that ground.
expressly waived or reserved for separate application by the offended party. 8
In so far as the suit against jeep-owner-driver Salazar is concerned, therefore, we sustain
The circumstances attendant to the criminal case yields the conclusion that petitioner had opted respondent Judge's Order dated January 30, 1971 dismissing the complaint, albeit on different
to base his cause of action against jeep-owner-driver Salazar on culpa criminal and not on culpa grounds.
aquiliana as evidenced by his active participation and intervention in the prosecution of the
criminal suit against said Salazar. The latter's civil liability continued to be involved in the
criminal action until its termination. Such being the case, there was no need for petitioner to WHEREFORE, 1) the Order dated September 12, 1970 dismissing Civil Case No. 80803 against
have reserved his right to file a separate civil action as his action for civil liability was deemed private respondent Felino Timbol is set aside, and respondent Judge, or his successor, hereby
impliedly instituted in Criminal Case No. SM-228. ordered to proceed with the hearing on the merits; 2) but the Orders dated January 30, 1971
and February 23, 1971 dismissing the Complaint in Civil Case No. 80803 against respondent
Rodolfo Salazar are hereby upheld.
Neither would an independent civil action he. Noteworthy is the basis of the acquittal of jeep-
owner-driver Salazar in the criminal case, expounded by the trial Court in this wise:
No costs.

In view of what has been proven and established during the trial, accused
Freddie Montoya would be held able for having bumped and hit the rear SO ORDERED.
portion of the jeep driven by the accused Rodolfo Salazar,
Teehankee, (Chairman), Makasiar, Fernandez, Guerrero and De Castro, JJ., concur.
Considering that the collision between the jeep driven by Rodolfo Salazar
and the car owned and driven by Edgardo Mendoza was the result of the
hitting on the rear of the jeep by the truck driven by Freddie Montoya, this
Court behaves that accused Rodolfo Salazar cannot be held able for the
damages sustained by Edgardo Mendoza's car. 9

Crystal clear is the trial Court's pronouncement that under the facts of the case, jeep-owner-
driver Salazar cannot be held liable for the damages sustained by petitioner's car. In other words,
"the fact from which the civil might arise did not exist. " Accordingly, inasmuch as petitioner's
cause of action as against jeep-owner-driver Salazar is ex- delictu, founded on Article 100 of the
Revised Penal Code, the civil action must be held to have been extinguished in consonance with
Section 3(c), Rule 111 of the Rules of Court 10 which provides:

Sec. 3. Other civil actions arising from offenses. In all cases not included
in the preceding section the following rules shall be observed:

xxx xxx xxx

c) Extinction of the penal action does not carry with it extinction of the civil,
unless the extinction proceeds from a declaration in a final judgment that
the fact from which the civil night arise did not exist. ...

And even if petitioner's cause of action as against jeep-owner-driver Salazar were not ex-delictu,
the end result would be the same, it being clear from the judgment in the criminal case that
Salazar's acquittal was not based upon reasonable doubt, consequently, a civil action for
damages can no longer be instituted. This is explicitly provided for in Article 29 of the Civil Code
quoted here under:

49
Republic of the Philippines of the civil action is therefore barred; on the other hand, if there was such
SUPREME COURT reservation, still the civil action cannot be instituted until final judgment
Baguio City has been rendered in the criminal action;

SECOND DIVISION But, this rule (Section 2, Rule 111, Revised Rules of Court) is subject to
exemptions, the same being those provided for in Section 3 of the same rule
which states:

Sec. 3. When civil action may proceed independently.


G.R. No. 119771 April 24, 1998 In the cases provided for in Articles 32, 33, 34 and
2176 of the Civil Code of the Philippines, the
SAN ILDEFONSO LINES, INC., and EDUARDO JAVIER, petitioners, independent civil action which was been reserved may
vs. be brought by the offended party, shall proceed
COURT OF APPEALS (Thirteenth Division) and PIONEER INSURANCE and SURETY independently of the criminal action, and shall require
CORPORATION, respondents. only a preponderance of evidence.

Besides, the requirement in Section 2 of Rule 111 of the former Rules on


Criminal Procedure that there be a reservation in the criminal case of the
right to institute an independent civil action has been declared as not in
MARTINEZ, J.: accordance with law. It is regarded as an unauthorized amendment to our
substantive law, i.e., the Civil Code which does not require such
reservation. In fact, the reservation of the right to file an independent civil
At around 3:30 in the afternoon of June 24, 1991, a Toyota Lite Ace Van being driven by its action has been deleted from Section 2, Rule 111 of the 1985 Rules on
owner Annie U. Jao and a passenger bus of herein petitioner San Ildefonso Lines, Inc. (hereafter, Criminal Procedure, in consonance with the decisions of this Court
SILI) figured in a vehicular mishap at the intersection of Julia Vargas Avenue and Rodriguez declaring such requirement of a reservation as ineffective. (Bonite vs. Zosa,
Lanuza Avenue in Pasig, Metro Manila, totally wrecking the Toyota van and injuring Ms. Jao and 162 SCRA 180).
her two (2) passengers in the process.

Further, the Court rules that a subrogee-plaintiff may institute and


A criminal case was thereafter filed with the Regional Trial Court of Pasig on September 18, 1991 prosecute the civil action, it being allowed by Article 2207 of the Civil Code.
charging the driver of the bus, herein petitioner Eduardo Javier, with reckless imprudence
resulting in damage to property with multiple physical injuries.
After their motion for reconsideration of said July 21, 1993 Order was denied, petitioners elevated
the matter to this Court via petition for certiorari which was, however, referred to public
About four (4) months later, or on January 13, 1992, herein private respondent Pioneer respondent Court of Appeals for disposition. On February 24, 1995, a decision adverse to
Insurance and Surety Corporation (PISC), as insurer of the van and subrogee, filed a case for petitioners once again was rendered by respondent court, upholding the assailed Manila Regional
damages against petitioner SILI with the Regional Trial Court of Manila, seeking to recover the Trial Court Order in this wise:
sums it paid the assured under a motor vehicle insurance policy as well as other damages,
totaling P564,500.00 (P454,000.00 as actual/compensatory damages; P50,000.00 as exemplary
damages; P50,000.00 as attorney's fees; P10,000.00 as litigation expenses; and P500.00 as A separate civil action lies against the offender in a criminal act, whether
appearance fees.) 1 or not he is criminally prosecuted and found guilty or acquitted, provided
that the offended party is not allowed (if the tortfeasor is actually charged
also criminally), to recover damages on both scores, and would be entitled
With the issues having been joined upon the filing of the petitioners' answer to the in such eventuality only to the bigger award of the two, assuming the
complaint for damages and after submission by the parties of their respective pre-trial awards made in the two cases vary.
briefs, petitioners filed on September 18, 1992 a Manifestation and Motion to Suspend
Civil Proceedings grounded on the pendency of the criminal case against petitioner Javier
in the Pasig RTC and the failure of respondent PISC to make a reservation to file a separate To subordinate the civil action contemplated in the said articles to the result
damage suit in said criminal action. This was denied by the Manila Regional Trial Court in of the criminal prosecution whether it be conviction or acquittal would
its Order dated July 21, 1993, 2 ruling thus: render meaningless the independent character of the civil action and the
clear injunction in Art. 31, that this action may proceed independently of
the criminal proceedings and regardless of the result of the latter.
Answering the first question thus posed, the court holds that plaintiff may
legally institute the present civil action even in the absence of a reservation
in the criminal action. This is so because it falls among the very exceptions In Yakult Phil. vs. CA, the Supreme Court said:
to the rule cited by the movant.
Even if there was no reservation in the criminal case
It is true that the general rule is that once a criminal action has been and that the civil action was not filed before the filing
instituted, then civil action based thereon is deemed instituted together of the criminal action but before the prosecution
with the criminal action, such that if the offended party did not reserve the presented evidence in the criminal action, and the
filing of the civil action when the criminal action was filed, then such filing judge handling the criminal case was informed

50
thereof, then the actual filing of the civil action is even controlling procedural rule is confirmed by no less than retired Justice Jose Y.
far better than a compliance with the requirement of Feria, remedial law expert and a member of the committee which drafted the
an express reservation that should be made by the 1988 amendments, whose learned explanation on the matter was aptly pointed
offended party before the prosecution presented its out by petitioners, to wit:
evidence.

The 1988 amendment expands the scope of the civil action which his
The purpose of this rule requiring reservation is to prevent the offended deemed impliedly instituted with the criminal action unless waived,
party from recovering damages twice for the same act or omission. reserved or previously instituted. . . .

Substantial compliance with the reservation requirement may, therefore, be Under the present Rule as amended, such a civil action includes not only
made by making a manifestation in the criminal case that the private recovery of indemnity under the Revised Penal Code and damages under
respondent has instituted a separate and independent civil action for Articles 32, 33, 34 of the Civil Code of the Philippines, but also damages
damages. under Article 2176 of the said code. . . .

Oft-repeated is the dictum that courts should not place undue importance Objections were raised to the inclusion in this Rule of quasi-delicts under
on technicalities when by so doing substantial justice is sacrificed. While Article 2176 of the Civil Code of the Philippines. However, in view of Article
the rules of procedure require adherence, it must be remembered that said 2177 of the said code which provides that the offended party may not
rules of procedure are intended to promote, not defeat, substantial justice, recover twice for the same act or omission of the accused, and in line with
and therefore, they should not be applied in a very rigid and technical the policy of avoiding multiplicity of suits, these objections were overruled.
sense. In any event, the offended party is not precluded from filing a civil action to
recover damages arising from quasi-delict before the institution of the
criminal action, or from reserving his right to file such a separate civil
Hence, this petition for review after a motion for reconsideration of said respondent action, just as he is not precluded from filing a civil action for damages
court judgment was denied. under Articles 32, 33 and 34 before the institution of the criminal action,
or from reserving his right to file such a separate civil action. It is only in
The two (2) crucial issues to be resolved, as posited by petitioners, are: those cases where the offended party has not previously filed a civil action
or has not reserved his right to file a separate civil action that his civil action
is deemed impliedly instituted with the criminal action.
1) If a criminal case was filed, can an independent civil action based on quasi-delict under Article
2176 of the Civil Code be filed if no reservation was made in the said criminal case?
It should be noted that while it was ruled in Abella vs. Marave (57 SCRA
106) that a reservation of the right to file an independent civil action is not
2) Can a subrogee of an offended party maintain an independent civil action during the pendency necessary, such a reservation is necessary under the amended rule. Without
of a criminal action when no reservation of the right to file an independent civil action was made such reservation, the civil action is deemed impliedly instituted with the
in the criminal action and despite the fact that the private complainant is actively participating criminal action, unless previously waived or instituted. (Emphasis ours,
through a private prosecutor in the aforementioned criminal case? Justice Jose Y. Feria [Ret.], 1988 Amendments to the 1985 Rules on
Criminal Procedure, a pamphlet, published by Central Lawbook Publishing
Co., Inc., Philippine Legal Studies, Series No. 3, 5-6). 4
We rule for petitioners.

Sharing the same view on the indispensability of a prior reservation is Mr. Justice Florenz
On the chief issue of "reservation", at the fore is Section 3, Rule 111 of the Rules of Court which D. Regalado, whose analysis of the historical changes in Rule 111 since the 1964 Rules of
reads: Court is equally illuminating. Thus,

Sec. 3. When civil action may proceed independently. In the cases 1. Under Rule 111 of the 1964 Rules of Court, the civil liability arising from
provided for in Articles 32, 33, 34 and 2176 of the Civil Code of the the offense charged was impliedly instituted with the criminal action,
Philippines, the independent civil action which has been reserved may be unless such civil action was expressly waived or reserved. The offended
brought by the offended party, shall proceed independently of the criminal party was authorized to bring an independent civil action in the cases
action, and shall require only a preponderance of evidence. provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code provided
such right was reserved.
There is no dispute that these so-called "independent civil actions" based on the
aforementioned Civil Code articles are the exceptions to the primacy of the criminal In the 1985 Rules on Criminal Procedure, the same Rule 111 thereof
action over the civil action as set forth in Section 2 of Rule 111. 3 However, it is easily reiterated said provision on the civil liability arising from the offense
deducible from the present wording of Section 3 as brought about by the 1988 charged. The independent civil actions, however, were limited to the cases
amendments to the Rules on Criminal Procedure particularly the phrase ". . provided for in Articles 32, 33 and 34 of the Civil Code, obviously because
. which has been reserved" that the "independent" character of these civil the actions contemplated in Articles 31 and 2177 of said Code are not
actions does not do away with the reservation requirement. In other words, prior liabilities ex-delicto. Furthermore, no reservation was required in order the
reservation is a condition sine qua non before any of these independent civil civil actions in said Articles 32, 33 and 34 may be pursued separately.
actions can be instituted and thereafter have a continuous determination apart
from or simultaneous with the criminal action. That this should now be the

51
2. The present amendments introduced by the Supreme Court have the pronouncements that view the reservation requirement as an "unauthorized amendment" to
following notable features on this particular procedural aspect, viz: substantive law i.e., the Civil Code, should no longer be controlling. There must be a renewed
adherence to the time-honored dictum that procedural rules are designed, not to defeat, but to
safeguard the ends of substantial justice. And for this noble reason, no less than the Constitution
a. The civil action which is impliedly instituted with the criminal action, itself has mandated this Court to promulgate rules concerning the enforcement of rights with
barring a waiver, reservation or prior institution thereof, need not arise from the end in view of providing a simplified and inexpensive procedure for the speedy disposition of
the offense charged, as the phrase "arising from the offense charged" which cases which should not diminish, increase or modify substantive rights. 7 Far from altering
creates that nexus has been specifically eliminated. substantive rights, the primary purpose of the reservation is, to borrow the words of the
Court in "Caos v. Peralta": 8
b. The independent civil actions contemplated in the present Rule 111
include the quasi-delicts provided for in Art. 2176 of the Civil Code, in . . . to avoid multiplicity of suits, to guard against oppression and abuse, to
addition to the cases provided in Arts. 32, 33 and 34 thereof. It is necessary, prevent delays, to clear congested dockets, to simplify the work of the trial
however, that the civil liability under all the said articles arise "from the court; in short, the attainment of justice with the least expense and vexation
same act or omission of the accused." Furthermore, a reservation of the right to the parties-litigants.
to institute these separate civil actions is again required otherwise, said civil
actions are impliedly instituted with the criminal action, unless the former are
waived or filed ahead of the criminal action. (Emphasis supplied.) 5 Clearly then, private respondent PISC, as subrogee under Article 2207 of the Civil Code, 9 is not
exempt from the reservation requirement with respect to its damages suit based on quasi-
delict arising from the same act or ommission of petitioner Javier complained of in the
In fact, a deeper reading of the "Yakult Phils. vs. CA" case 6 relied upon by respondent criminal case. As private respondent PISC merely stepped into the shoes of Ms. Jao (as
court reveals an acknowledgment of the reservation requirement. After recognizing that owner of the insured Toyota van), then it is bound to observe the procedural requirements
the civil case instituted by private respondent therein Roy Camaso (represented by his which Ms. Jao ought to follow had she herself instituted the civil case.
father David Camaso) against petitioner Yakult Phils. (the owner of the motorcycle that
sideswiped Roy Camaso, only five years old at the time of the accident) and Larry Salvado
(the driver of the motorcycle) during the pendency of the criminal case against Salvado WHEREFORE, premises considered, the assailed decision of the Court of Appeals dated February
for reckless imprudence resulting to slight physical injuries, as one based on tort, this 24, 1995 and the Resolution dated April 3, 1995 denying the motion for reconsideration thereof
Court said: are hereby REVERSED and SET ASIDE. The "MANIFESTATION AND MOTION TO SUSPEND
CIVIL PROCEEDINGS" filed by petitioners is GRANTED.

The civil liability sought arising from the act or omission of the accused in
this case is a quasi-delict as defined under Article 2176 of the Civil Code as SO ORDERED.
follows:

Regalado, Melo, Puno and Mendoza, JJ., concur.


xxx xxx xxx

The aforecited rule [referring to the amended Section l, Rule 111] requiring,
such previous reservation also covers quasi-delict as defined under Article
2176 of the Civil Code arising from the same act or omission of the accused
(emphasis supplied).

But what prompted the Court to validate the institution and non-suspension of the
civil case involved in "Yakult" was the peculiar facts attendant therein. Thus,

Although the separate civil action filed in this case was without previous
reservation in the criminal case, nevertheless since it was instituted before
the prosecution presented evidence in the criminal action, and the judge
handling the criminal case was informed thereof, then the actual filing of the
civil action is even far better than a compliance with the requirement of an
express reservation that should be made by the offended party before the
prosecution presents its evidence.

The distinct factual scenario in "Yakult" simply does not obtain in this case. No satisfactory proof
exists to show that private respondent PISC's damage suit was instituted before the prosecution
presented its evidence in the criminal case pending in the Pasig Regional Trial Court. Neither is
there any indication that the judge presiding over the criminal action has been made aware of
the civil case. It is in this light that reliance on the "Yakult" case is indeed misplaced.

Now that the necessity of a prior reservation is the standing rule that shall govern the institution
of the independent civil actions referred to in Rule 111 of the Rules of Court, past

52
Republic of the Philippines 3. However, when said check was presented for payment the same was dishonored on
SUPREME COURT the ground that the account of the defendant with the Land Bank of the Philippines
Manila has been closed contrary to his representation that he has an existing account with
the said bank and that the said check was duly funded and will be honored when
presented for payment;
THIRD DIVISION

4. Demands had been made to the defendant for him to make good the payment of the
G.R. No. 157547 February 23, 2011 value of the check, xerox copy of the letter of demand is hereto attached as Annex "B",
but despite such demand defendant refused and continues to refuse to comply with
HEIRS OF EDUARDO SIMON, Petitioners, plaintiffs valid demand;
vs.
ELVIN* CHAN AND THE COURT OF APPEALS, Respondent. 5. Due to the unlawful failure of the defendant to comply with the plaintiffs valid
demands, plaintiff has been compelled to retain the services of counsel for which he
DECISION agreed to pay as reasonable attorneys fees the amount of P50,000.00 plus additional
amount of P2,000.00 per appearance.

BERSAMIN, J.:
ALLEGATION IN SUPPORT OF PRAYER
FOR PRELIMINARY ATTACHMENT
There is no independent civil action to recover the civil liability arising from the issuance of an
unfunded check prohibited and punished under Batas Pambansa Bilang 22 (BP 22).
6. The defendant as previously alleged has been guilty of fraud in contracting the
obligation upon which this action is brought and that there is no sufficient security
Antecedents for the claims sought in this action which fraud consist in the misrepresentation by
the defendant that he has an existing account and sufficient funds to cover the check
when in fact his account was already closed at the time he issued a check;
On July 11, 1997, the Office of the City Prosecutor of Manila filed in the Metropolitan Trial Court
of Manila (MeTC) an information charging the late Eduardo Simon (Simon) with a violation of BP
22, docketed as Criminal Case No. 275381 entitled People v. Eduardo Simon. The accusatory 7. That the plaintiff has a sufficient cause of action and this action is one which falls
portion reads: under Section 1, sub-paragraph (d), Rule 57 of the Revised Rules of Court of the
Philippines and the amount due the plaintiff is as much as the sum for which the
plaintiff seeks the writ of preliminary attachment;
That sometime in December 1996 in the City of Manila, Philippines, the said accused, did then
and there willfully, unlawfully and feloniously make or draw and issue to Elvin Chan to apply on
account or for value Landbank Check No. 0007280 dated December 26, 1996 payable to cash in 8. That the plaintiff is willing and able to post a bond conditioned upon the payment
the amount of P336,000.00 said accused well knowing that at the time of issue she/he/they did of damages should it be finally found out that the plaintiff is not entitled to the
not have sufficient funds in or credit with the drawee bank for payment of such check in full issuance of a writ of preliminary attachment. 3
upon its presentment, which check when presented for payment within ninety (90) days from
the date thereof was subsequently dishonored by the drawee bank for Account Closed and
despite receipt of notice of such dishonor, said accused failed to pay said Elvin Chan the amount On August 9, 2000, the MeTC in Pasay City issued a writ of preliminary attachment, which was
of the check or to make arrangement for full payment of the same within five (5) banking days implemented on August 17, 2000 through the sheriff attaching a Nissan vehicle of Simon. 4
after receiving said notice.
On August 17, 2000, Simon filed an urgent motion to dismiss with application to charge
CONTRARY TO LAW. 1 plaintiffs attachment bond for damages,5 pertinently averring:

More than three years later, or on August 3, 2000, respondent Elvin Chan commenced in the xxx
MeTC in Pasay City a civil action for the collection of the principal amount of P336,000.00,
coupled with an application for a writ of preliminary attachment (docketed as Civil Case No. 915- On the ground of litis pendentia, that is, as a consequence of the pendency of another action
00).2 He alleged in his complaint the following: between the instant parties for the same cause before the Metropolitan Trial Court of Manila,
Branch X (10) entitled "People of the Philippines vs. Eduardo Simon", docketed thereat as
xxx Criminal Case No. 275381-CR, the instant action is dismissable under Section 1, (e), Rule 16,
1997 Rules of Civil Procedure, xxx

2. Sometime in December 1996 defendant employing fraud, deceit, and


misrepresentation encashed a check dated December 26, 1996 in the amount xxx
of P336,000.00 to the plaintiff assuring the latter that the check is duly funded and
that he had an existing account with the Land Bank of the Philippines, xerox copy of While the instant case is civil in nature and character as contradistinguished from the said
the said check is hereto attached as Annex "A"; Criminal Case No. 915-00 in the Metropolitan Trial Court of Manila, Branch X (10), the basis of
the instant civil action is the herein plaintiffs criminal complaint against defendant arising from
a charge of violation of Batas Pambansa Blg. 22 as a consequence of the alleged dishonor in

53
plaintiffs hands upon presentment for payment with drawee bank a Land Bank Check No. that certain Pedro Domingo, as it was payable to cash, the same may be negotiated by
0007280 dated December 26, 1996 in the amount of P336,000- drawn allegedly issued to delivery by who ever was the bearer of the check and such negotiation was valid and
plaintiff by defendant who is the accused in said case, a photocopy of the Criminal information effective against the drawer;
filed by the Assistant City Prosecutor of Manila on June 11, 1997 hereto attached and made
integral part hereof as Annex "1".
5. Indeed, assuming as true the allegations of the defendant regarding the
circumstances relative to the issuance of the check it would be entirely impossible for
It is our understanding of the law and the rules, that, "when a criminal action is instituted, the the plaintiff to have been aware that such check was intended only for a definite
civil action for recovery of civil liability arising from the offense charged is impliedly instituted person and was not negotiable considering that the said check was payable to bearer
with the criminal action, unless the offended party expressly waives the civil action or reserves and was not even crossed;
his right to institute it separately xxx.

6. We contend that what cannot be prosecuted separate and apart from the criminal
On August 29, 2000, Chan opposed Simons urgent motion to dismiss with application to charge case without a reservation is a civil action arising from the criminal offense charged.
plaintiffs attachment bond for damages, stating: However, in this instant case since the liability of the defendant are imposed and the
rights of the plaintiff are created by the negotiable instruments law, even without any
reservation at all this instant action may still be prosecuted;
1. The sole ground upon which defendant seeks to dismiss plaintiffs complaint is the
alleged pendency of another action between the same parties for the same cause,
contending among others that the pendency of Criminal Case No. 275381-CR entitled 7. Having this shown, the merits of plaintiffs complaint the application for damages
"People of the Philippines vs. Eduardo Simon" renders this case dismissable; against the bond is totally without any legal support and perforce should be dismissed
outright.6

2. The defendant further contends that under Section 1, Rule 111 of the Revised Rules
of Court, the filing of the criminal action, the civil action for recovery of civil liability On October 23, 2000, the MeTC in Pasay City granted Simons urgent motion to dismiss with
arising from the offense charged is impliedly instituted with the criminal action which application to charge plaintiffs attachment bond for damages, 7 dismissing the complaint of Chan
the plaintiff does not contest; however, it is the submission of the plaintiff that an because:
implied reservation of the right to file a civil action has already been made, first, by
the fact that the information for violation of B.P. 22 in Criminal Case No. 2753841
does not at all make any allegation of damages suffered by the plaintiff nor is there xxx
any claim for recovery of damages; on top of this the plaintiff as private complainant
in the criminal case, during the presentation of the prosecution evidence was not After study of the arguments of the parties, the court resolves to GRANT the Motion to Dismiss
represented at all by a private prosecutor such that no evidence has been adduced by and the application to charge plaintiffs bond for damages.
the prosecution on the criminal case to prove damages; all of these we respectfully
submit demonstrate an effective implied reservation of the right of the plaintiff to file
a separate civil action for damages; For "litis pendentia" to be a ground for the dismissal of an action, the following requisites must
concur: (a) identity of parties or at least such as to represent the same interest in both actions;
(b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and
3. The defendant relies on Section 3 sub-paragraph (a) Rule 111 of the Revised Rules (c) the identity in the two (2) cases should be such that the judgment, which may be rendered in
of Court which mandates that after a criminal action has been commenced the civil one would, regardless of which party is successful, amount to res judicata in the other. xxx
action cannot be instituted until final judgment has been rendered in the criminal
action; however, the defendant overlooks and conveniently failed to consider that
under Section 2, Rule 111 which provides as follows: A close perusal of the herein complaint denominated as "Sum of Money" and the criminal case
for violation of BP Blg. 22 would readily show that the parties are not only identical but also the
cause of action being asserted, which is the recovery of the value of Landbank Check No.
In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the 0007280 in the amount of P336,000.00. In both civil and criminal cases, the rights asserted and
Philippines, an independent civil action entirely separate and distinct from the relief prayed for, the reliefs being founded on the same facts, are identical.
criminal action, may be brought by the injured party during the pendency of criminal
case provided the right is reserved as required in the preceding section. Such civil
action shall proceed independently of the criminal prosecution, and shall require only Plaintiffs claim that there is an effective implied waiver of his right to pursue this civil case owing
a preponderance of evidence. to the fact that there was no allegation of damages in BP Blg. 22 case and that there was no
private prosecutor during the presentation of prosecution evidence is unmeritorious. It is basic
that when a complaint or criminal Information is filed, even without any allegation of damages
In as much as the case is one that falls under Art. 33 of the Civil Code of the and the intention to prove and claim them, the offended party has the right to prove and claim
Philippines as it is based on fraud, this action therefore may be prosecuted for them, unless a waiver or reservation is made or unless in the meantime, the offended party
independently of the criminal action; has instituted a separate civil action. xxx The over-all import of the said provision conveys that
the waiver which includes indemnity under the Revised Penal Code, and damages arising under
4. In fact we would even venture to state that even without any reservation at all of Articles 32, 33, and 34 of the Civil Code must be both clear and express. And this must be
the right to file a separate civil action still the plaintiff is authorized to file this instant logically so as the primordial objective of the Rule is to prevent the offended party from recovering
case because the plaintiff seeks to enforce an obligation which the defendant owes to damages twice for the same act or omission of the accused.
the plaintiff by virtue of the negotiable instruments law. The plaintiff in this case sued
the defendant to enforce his liability as drawer in favor of the plaintiff as payee of the Indeed, the evidence discloses that the plaintiff did not waive or made a reservation as to his
check. Assuming the allegation of the defendant of the alleged circumstances relative right to pursue the civil branch of the criminal case for violation of BP Blg. 22 against the
to the issuance of the check, still when he delivered the check payable to bearer to defendant herein. To the considered view of this court, the filing of the instant complaint for sum

54
of money is indeed legally barred. The right to institute a separate civil action shall be made On September 26, 2001, Chan appealed to the Court of Appeals (CA) by petition for
before the prosecution starts to present its evidence and under circumstances affording the review,10 challenging the propriety of the dismissal of his complaint on the ground of litis
offended party a reasonable opportunity to make such reservation. xxx pendentia.

Even assuming the correctness of the plaintiffs submission that the herein case for sum of In his comment, 11 Simon countered that Chan was guilty of bad faith and malice in prosecuting
money is one based on fraud and hence falling under Article 33 of the Civil Code, still prior his alleged civil claim twice in a manner that caused him (Simon) utter embarrassment and
reservation is required by the Rules, to wit: emotional sufferings; and that the dismissal of the civil case because of the valid ground of litis
pendentia based on Section 1 (e), Rule 16 of the 1997 Rules of Civil Procedure was warranted.

"In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines,
an independent civil action entirely separate and distinct from the criminal action, may be On June 25, 2002, the CA promulgated its assailed decision, 12 overturning the RTC, viz:
brought by the injured party during the pendency of criminal case provided the right is reserved
as required in the preceding section. Such civil action shall proceed independently of the criminal
prosecution, and shall require only a preponderance of evidence." xxx

xxx As a general rule, an offense causes two (2) classes of injuries. The first is the social injury
produced by the criminal act which is sought to be repaired through the imposition of the
corresponding penalty, and the second is the personal injury caused to the victim of the crime
WHEREFORE, premises considered, the court resolves to: which injury is sought to be compensated through indemnity which is also civil in nature. Thus,
"every person criminally liable for a felony is also civilly liable."

1. Dismiss the instant complaint on the ground of "litis pendentia";


The offended party may prove the civil liability of an accused arising from the commission of the
offense in the criminal case since the civil action is either deemed instituted with the criminal
2. Dissolve/Lift the Writ of Attachment issued by this court on August 14, 2000; action or is separately instituted.

3. Charge the plaintiffs bond the amount of P336,000.00 in favor of the defendant for Rule 111, Section 1 of the Revised Rules of Criminal Procedure, which became effective on
the damages sustained by the latter by virtue of the implementation of the writ of December 1, 2000, provides that:
attachment;

(a) When a criminal action is instituted, the civil action for the recovery of civil liability arising
4. Direct the Branch Sheriff of this Court to RESTORE with utmost dispatch to the from the offense charged shall be deemed instituted with the criminal action unless the offended
defendants physical possession the vehicle seized from him on August 16, 2000; and party waives the civil action, reserves the right to institute it separately or institute the civil action
prior to the criminal action.
5. Direct the plaintiff to pay the defendant the sum of P5,000.00 by way of attorneys
fees. Rule 111, Section 2 further states:

SO ORDERED. After the criminal action has been commenced, the separate civil action arising therefrom cannot
be instituted until final judgment has been entered in the criminal action.
Chans motion for reconsideration was denied on December 20, 2000, 8 viz:
However, with respect to civil actions for recovery of civil liability under Articles 32, 33, 34 and
Considering that the plaintiffs arguments appear to be a mere repetition of his previous 2176 of the Civil Code arising from the same act or omission, the rule has been changed.
submissions, and which submissions this court have already passed upon; and taking into
account the inapplicability of the ratio decidendi in the Tactaquin vs. Palileo case which the In DMPI Employees Credit Association vs. Velez, the Supreme Court pronounced that only the
plaintiff cited as clearly in that case, the plaintiff therein expressly made a reservation to file a civil liability arising from the offense charged is deemed instituted with the criminal action unless
separate civil action, the Motion for Reconsideration is DENIED for lack of merit. the offended party waives the civil action, reserves his right to institute it separately, or institutes
the civil action prior to the criminal action. Speaking through Justice Pardo, the Supreme Court
SO ORDERED. held:

On July 31, 2001, the Regional Trial Court (RTC) in Pasay City upheld the dismissal of Chans "There is no more need for a reservation of the right to file the independent civil action under
complaint, disposing:9 Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines. The reservation and waiver
referred to refers only to the civil action for the recovery of the civil liability arising from the
offense charged. This does not include recovery of civil liability under Articles 32, 33, 34, and
WHEREFORE, finding no error in the appealed decision, the same is hereby AFFIRMED in toto. 2176 of the Civil Code of the Philippines arising from the same act or omission which may be
prosecuted separately without a reservation".

SO ORDERED.
Rule 111, Section 3 reads:

55
Sec. 3. When civil action may proceed independently. In the cases provided in Articles 32, 33, Ruling
34, and 2176 of the Civil Code of the Philippines, the independent civil action may be brought
by the offended party. It shall proceed independently of the criminal action and shall require only
a preponderance of evidence. In no case, however, may the offended party recover damages twice The petition is meritorious.
for the same act or omission charged in the criminal action.
A
The changes in the Revised Rules on Criminal Procedure pertaining to independent civil actions
which became effective on December 1, 2000 are applicable to this case. Applicable Law and Jurisprudence on the

Procedural laws may be given retroactive effect to actions pending and undetermined at the time Propriety of filing a separate civil action based on BP 22
of their passage. There are no vested rights in the rules of procedure. xxx

The Supreme Court has settled the issue of whether or not a violation of BP 22 can give rise to
Thus, Civil Case No. CV-94-124, an independent civil action for damages on account of the fraud civil liability in Banal v. Judge Tadeo, Jr.,17 holding:
committed against respondent Villegas under Article 33 of the Civil Code, may proceed
independently even if there was no reservation as to its filing."
xxx
It must be pointed that the abovecited case is similar with the instant suit. The complaint was
also brought on allegation of fraud under Article 33 of the Civil Code and committed by the Article 20 of the New Civil Code provides:
respondent in the issuance of the check which later bounced. It was filed before the trial court,
despite the pendency of the criminal case for violation of BP 22 against the respondent. While it
may be true that the changes in the Revised Rules on Criminal Procedure pertaining to Every person who, contrary to law, wilfully or negligently causes damage to another, shall
independent civil action became effective on December 1, 2000, the same may be given indemnify the latter for the same.
retroactive application and may be made to apply to the case at bench, since procedural rules
may be given retroactive application. There are no vested rights in the rules of procedure.
Regardless, therefore, of whether or not a special law so provides, indemnification of the offended
party may be had on account of the damage, loss or injury directly suffered as a consequence of
In view of the ruling on the first assigned error, it is therefore an error to adjudge damages in the wrongful act of another. The indemnity which a person is sentenced to pay forms an integral
favor of the petitioner. part of the penalty imposed by law for the commission of a crime (Quemel v. Court of Appeals,
22 SCRA 44, citing Bagtas v. Director of Prisons, 84 Phil 692). Every crime gives rise to a penal
or criminal action for the punishment of the guilty party, and also to civil action for the restitution
WHEREFORE, the petition is hereby GRANTED. The Decision dated July 13, 2001 rendered by of the thing, repair of the damage, and indemnification for the losses (United States v. Bernardo,
the Regional Trial Court of Pasay City, Branch 108 affirming the dismissal of the complaint filed 19 Phil 265).
by petitioner is hereby REVERSED and SET ASIDE. The case is hereby REMANDED to the trial
court for further proceedings.
xxx

SO ORDERED.
Civil liability to the offended party cannot thus be denied. The payee of the check is entitled to
receive the payment of money for which the worthless check was issued. Having been caused the
On March 14, 2003, the CA denied Simons motion for reconsideration. 13 damage, she is entitled to recompense.

Hence, this appeal, in which the petitioners submit that the CA erroneously premised its decision Surely, it could not have been the intendment of the framers of Batas Pambansa Blg. 22 to leave
on the assessment that the civil case was an independent civil action under Articles 32, 33, 34, the offended private party defrauded and empty-handed by excluding the civil liability of the
and 2176 of the Civil Code; that the CAs reliance on the ruling in DMPI Employees Credit offender, giving her only the remedy, which in many cases results in a Pyrrhic victory, of having
Cooperative Inc. v. Velez14 stretched the meaning and intent of the ruling, and was contrary to to file a separate civil suit. To do so may leave the offended party unable to recover even the face
Sections 1 and 2 of Rule 111 of the Rules of Criminal Procedure; that this case was a simple value of the check due her, thereby unjustly enriching the errant drawer at the expense of the
collection suit for a sum of money, precluding the application of Section 3 of Rule 111 of the payee. The protection which the law seeks to provide would, therefore, be brought to naught.
Rules of Criminal Procedure.15

xxx
In his comment,16 Chan counters that the petition for review should be denied because the
petitioners used the wrong mode of appeal; that his cause of action, being based on fraud, was
an independent civil action; and that the appearance of a private prosecutor in the criminal case However, there is no independent civil action to recover the value of a bouncing check issued in
did not preclude the filing of his separate civil action. contravention of BP 22. This is clear from Rule 111 of the Rules of Court, effective December 1,
2000, which relevantly provides:

Issue
Section 1. Institution of criminal and civil actions. - (a) When a criminal action is instituted, the
civil action for the recovery of civil liability arising from the offense charged shall be deemed
The lone issue is whether or not Chans civil action to recover the amount of the unfunded check instituted with the criminal action unless the offended party waives the civil action, reserves the
(Civil Case No. 915-00) was an independent civil action. right to institute it separately or institutes the civil action prior to the criminal action.

56
The reservation of the right to institute separately the civil action shall be made before the Supreme Court Circular 57-97 states:
prosecution starts presenting its evidence and under circumstances affording the offended party
a reasonable opportunity to make such reservation.
Any provision of law or Rules of Court to the contrary notwithstanding, the following rules and
guidelines shall henceforth be observed in the filing and prosecution of all criminal cases under
When the offended party seeks to enforce civil liability against the accused by way of moral, Batas Pambansa Blg. 22 which penalizes the making or drawing and issuance of a check without
nominal, temperate, or exemplary damages without specifying the amount thereof in the funds or credit:
complaint or information, the filing fees therefor shall constitute a first lien on the judgment
awarding such damages.
1. The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to
necessarily include the corresponding civil action, and no reservation to file such civil
Where the amount of damages, other than actual, is specified in the complaint or information, action separately shall be allowed or recognized. 22
the corresponding filing fees shall be paid by the offended party upon the filing thereof in court.

2. Upon the filing of the aforesaid joint criminal and civil actions, the offended party
Except as otherwise provided in these Rules, no filing fees shall be required for actual damages. shall pay in full the filing fees based upon the amount of the check involved which
shall be considered as the actual damages claimed, in accordance with the schedule
of fees in Section 7 (a) and Section 8 (a), Rule 141 of the Rules of Court as last amended
No counterclaim, cross-claim or third-party complaint may be filed by the accused in the criminal by Administrative Circular No. 11-94 effective August 1, 1994. Where the offended
case, but any cause of action which could have been the subject thereof may be litigated in a party further seeks to enforce against the accused civil liability by way of liquidated,
separate civil action. (1a) moral, nominal, temperate or exemplary damages, he shall pay the corresponding
filing fees therefor based on the amounts thereof as alleged either in the complaint or
(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the information. If not so alleged but any of these damages are subsequently awarded by
corresponding civil action. No reservation to file such civil action separately shall be allowed. 18 the court, the amount of such fees shall constitute a first lien on the judgment.

Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full 3. Where the civil action has heretofore been filed separately and trial thereof has not
the filing fees based on the amount of the check involved, which shall be considered as the actual yet commenced, it may be consolidated with the criminal action upon application with
damages claimed. Where the complaint or information also seeks to recover liquidated, moral, the court trying the latter case. If the application is granted, the trial of both actions
nominal, temperate or exemplary damages, the offended party shall pay the filing fees based on shall proceed in accordance with the pertinent procedure outlined in Section 2 (a) of
the amounts alleged therein. If the amounts are not so alleged but any of these damages are Rule 111 governing the proceedings in the actions as thus consolidated.
subsequently awarded by the court, the filing fees based on the amount awarded shall constitute
a first lien on the judgment. 4. This Circular shall be published in two (2) newspapers of general circulation and
shall take effect on November 1, 1997.
Where the civil action has been filed separately and trial thereof has not yet commenced, it may
be consolidated with the criminal action upon application with the court trying the latter case. If The reasons for issuing Circular 57-97 were amply explained in Hyatt Industrial Manufacturing
the application is granted, the trial of both actions shall proceed in accordance with section 2 of Corporation v. Asia Dynamic Electrix Corporation,23 thus:
the Rule governing consolidation of the civil and criminal actions.

xxx
Section 3. When civil action may proceed independently. In the cases provided in Articles 32,
33, 34 and 2176 of the Civil Code of the Philippines, the independent civil action may be brought
by the offended party. It shall proceed independently of the criminal action and shall require only We agree with the ruling of the Court of Appeals that upon filing of the criminal cases for violation
a preponderance of evidence. In no case, however, may the offended party recover damages twice of B.P. 22, the civil action for the recovery of the amount of the checks was also impliedly
for the same act or omission charged in the criminal action. instituted under Section 1(b) of Rule 111 of the 2000 Rules on Criminal Procedure. Under the
present revised Rules, the criminal action for violation of B.P. 22 shall be deemed to include the
corresponding civil action. The reservation to file a separate civil action is no longer needed. The
The aforequoted provisions of the Rules of Court, even if not yet in effect when Chan commenced Rules provide:
Civil Case No. 915-00 on August 3, 2000, are nonetheless applicable. It is axiomatic that the
retroactive application of procedural laws does not violate any right of a person who may feel
adversely affected, nor is it constitutionally objectionable. The reason is simply that, as a general Section 1. Institution of criminal and civil actions.
rule, no vested right may attach to, or arise from, procedural laws. 19 Any new rules may validly
be made to apply to cases pending at the time of their promulgation, considering that no party
to an action has a vested right in the rules of procedure, 20 except that in criminal cases, the (a) x x x
changes do not retroactively apply if they permit or require a lesser quantum of evidence to
convict than what is required at the time of the commission of the offenses, because such (b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to
retroactivity would be unconstitutional for being ex post facto under the Constitution.21 include the corresponding civil action. No reservation to file such civil action
separately shall be allowed.
Moreover, the application of the rule would not be precluded by the violation of any assumed
vested right, because the new rule was adopted from Supreme Court Circular 57-97 that took Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full
effect on November 1, 1997. the filing fees based on the amount of the check involved, which shall be considered as the actual
damages claimed. Where the complaint or information also seeks to recover liquidated, moral,

57
nominal, temperate or exemplary damages, the offended party shall pay additional filing fees on the ground of litis pendentia
based on the amounts alleged therein. If the amounts are not so alleged but any of these damages
are subsequently awarded by the court, the filing fees based on the amount awarded shall
constitute a first lien on the judgment. Did the pendency of the civil action in the MeTC in Manila (as the civil aspect in Criminal Case
No. 275381) bar the filing of Civil Case No. 915-00 in the MeTC in Pasay City on the ground of
litis pendentia?
Where the civil action has been filed separately and trial thereof has not yet commenced, it may
be consolidated with the criminal action upon application with the court trying the latter case. If
the application is granted, the trial of both actions shall proceed in accordance with section 2 of For litis pendentia to be successfully invoked as a bar to an action, the concurrence of the
this Rule governing consolidation of the civil and criminal actions.1avvphi1 following requisites is necessary, namely: (a) there must be identity of parties or at least such as
represent the same interest in both actions; (b) there must be identity of rights asserted and
reliefs prayed for, the reliefs being founded on the same facts; and, (c) the identity in the two
The foregoing rule was adopted from Circular No. 57-97 of this Court. It specifically states that cases should be such that the judgment that may be rendered in one would, regardless of which
the criminal action for violation of B.P. 22 shall be deemed to include the corresponding civil party is successful, amount to res judicata in respect of the other. Absent the first two requisites,
action. It also requires the complainant to pay in full the filing fees based on the amount of the the possibility of the existence of the third becomes nil. 28
check involved. Generally, no filing fees are required for criminal cases, but because of the
inclusion of the civil action in complaints for violation of B.P. 22, the Rules require the payment
of docket fees upon the filing of the complaint. This rule was enacted to help declog court dockets A perusal of Civil Case No. 01-0033 and Criminal Case No. 275381 ineluctably shows that all
which are filled with B.P. 22 cases as creditors actually use the courts as collectors. Because the elements of litis pendentia are attendant. First of all, the parties in the civil action involved
ordinarily no filing fee is charged in criminal cases for actual damages, the payee uses the in Criminal Case No. 275381 and in Civil Case No. 915-00, that is, Chan and Simon, are the
intimidating effect of a criminal charge to collect his credit gratis and sometimes, upon being same. Secondly, the information in Criminal Case No. 275381 and the complaint in Civil Case
paid, the trial court is not even informed thereof. The inclusion of the civil action in the criminal No. 915-00 both alleged that Simon had issued Landbank Check No. 0007280
case is expected to significantly lower the number of cases filed before the courts for collection worth P336,000.00 payable to "cash," thereby indicating that the rights asserted and the reliefs
based on dishonored checks. It is also expected to expedite the disposition of these cases. Instead prayed for, as well as the facts upon which the reliefs sought were founded, were identical in all
of instituting two separate cases, one for criminal and another for civil, only a single suit shall respects. And, thirdly, any judgment rendered in one case would necessarily bar the other by res
be filed and tried. It should be stressed that the policy laid down by the Rules is to discourage judicata; otherwise, Chan would be recovering twice upon the same claim.
the separate filing of the civil action. The Rules even prohibit the reservation of a separate civil
action, which means that one can no longer file a separate civil case after the criminal complaint It is clear, therefore, that the MeTC in Pasay City properly dismissed Civil Case No. 915-00 on
is filed in court. The only instance when separate proceedings are allowed is when the civil action the ground of litis pendentia through its decision dated October 23, 2000; and that the RTC in
is filed ahead of the criminal case. Even then, the Rules encourage the consolidation of the civil Pasay City did not err in affirming the MeTC.
and criminal cases. We have previously observed that a separate civil action for the purpose of
recovering the amount of the dishonored checks would only prove to be costly, burdensome and
time-consuming for both parties and would further delay the final disposition of the case. This Wherefore, we grant the petition for review on certiorari, and, accordingly, we reverse and set
multiplicity of suits must be avoided. Where petitioners rights may be fully adjudicated in the aside the decision promulgated by the Court of Appeals on June 25, 2002. We reinstate the
proceedings before the trial court, resort to a separate action to recover civil liability is clearly decision rendered on October 23, 2000 by the Metropolitan Trial Court, Branch 45, in Pasay
unwarranted. In view of this special rule governing actions for violation of B.P. 22, Article 31 of City.
the Civil Code cited by the trial court will not apply to the case at bar. 24

Costs of suit to be paid by the respondent.


The CAs reliance on DMPI Employees Credit Association v. Velez25 to give due course to the civil
action of Chan independently and separately of Criminal Case No. 275381 was unwarranted.
DMPI Employees, which involved a prosecution for estafa, is not on all fours with this case, which SO ORDERED.
is a prosecution for a violation of BP 22. Although the Court has ruled that the issuance of a
bouncing check may result in two separate and distinct crimes of estafa and violation of BP
LUCAS P. BERSAMIN
22,26 the procedures for the recovery of the civil liabilities arising from these two distinct crimes
Associate Justice
are different and non-interchangeable. In prosecutions of estafa, the offended party may opt to
reserve his right to file a separate civil action, or may institute an independent action based on
fraud pursuant to Article 33 of the Civil Code,27 as DMPI Employees has allowed. In prosecutions
of violations of BP 22, however, the Court has adopted a policy to prohibit the reservation or
institution of a separate civil action to claim the civil liability arising from the issuance of the
bouncing check upon the reasons delineated in Hyatt Industrial Manufacturing Corporation,
supra.

To repeat, Chans separate civil action to recover the amount of the check involved in the
prosecution for the violation of BP 22 could not be independently maintained under both
Supreme Court Circular 57-97 and the aforequoted provisions of Rule 111 of the Rules of Court,
notwithstanding the allegations of fraud and deceit.

Aptness of the dismissal of the civil action

58
Republic of the Philippines "Considering that the prosecution under B.P. 22 is without prejudice to any liability for violation
SUPREME COURT of any provision of the Revised Penal Code (BP 22, Sec. 5), the civil action for the recovery of the
civil liability arising from the estafa cases pending before this Court is deemed instituted with
the criminal action (Rule 111, Sec. 1 [a]). The offended party may thus intervene by counsel in
THIRD DIVISION the prosecution of the offense (Rule 110. Sec. 16).

G.R. Nos. 155531-34 July 29, 2005 "WHEREFORE, the appearance of a private prosecutor shall be allowed upon payment of the
legal fees for these estafa cases pending before this Court pursuant to Section 1 of Rule 141 of
MARY ANN RODRIGUEZ, Petitioners, the Rules of Court, as amended."4
vs.
Hon. THELMA A. PONFERRADA, in Her Official Capacity as Presiding Judge of the The Facts
Regional Trial Court of Quezon City, Branch 104; PEOPLE OF THE PHILIPPINES; and
GLADYS NOCOM, Respondents.
The undisputed facts are narrated by petitioner as follows:

DECISION
"On 10 December 2001, the Honorable Assistant City Prosecutor Rossana S. Morales-Montojo of
Quezon City Prosecutors Office issued her Resolution in I.S. No. 01-15902, the dispositive
PANGANIBAN, J.: portion of which reads as follows:

Settled is the rule that the single act of issuing a bouncing check may give rise to two distinct Premises considered, there being PROBABLE CAUSE to charge respondent for ESTAFA under
criminal offenses: estafa and violation of Batas Pambansa Bilang 22 (BP 22). The Rules of Court Article 315 paragraph 2(d) as amended by PD 818 and for Violation of Batas Pambansa Blg. 22,
allow the offended party to intervene via a private prosecutor in each of these two penal it is respectfully recommended that the attached Information be approved and filed in Court.
proceedings. However, the recovery of the single civil liability arising from the single act of issuing
a bouncing check in
"As a consequence thereof, separate informations were separately filed against herein [p]etitioner
before proper [c]ourts, for Estafa and [v]iolation of Batas Pambansa Blg. 22.
__________________

"Upon payment of the assessed and required docket fees by the [p]rivate [c]omplainant, the
* On official leave. informations for [v]iolation of Batas Pambansa Blg. 22 against herein [p]etitioner were filed and
raffled to the Metropolitan Trial Court of Quezon City, Branch 42, docketed as Criminal Cases
either criminal case bars the recovery of the same civil liability in the other criminal action. While Nos. 0108033 to 36.
the law allows two simultaneous civil remedies for the offended party, it authorizes recovery in
only one. In short, while two crimes arise from a single set of facts, only one civil liability attaches "On the other hand, the informations for [e]stafa cases against herein [p]etitioner were likewise
to it. filed and raffled to the Regional Trial Court of Quezon City, Branch 104, docketed as Criminal
Cases Nos. 01-106256 to 59.
The Case
"On 17 June 2002, petitioner through counsel filed in open court before the [p]ublic [r]espondent
Before us is a Petition for Certiorari1 under Rule 65 of the Rules of Court, seeking to reverse the an Opposition to the Formal Entry of Appearance of the Private Prosecutor dated 14 June 2002.
July 27, 2002 Order2 of the Regional Court (RTC) of Quezon City (Branch 104) in Criminal Case
Nos. Q-01-106256 to Q-01-106259. Also assailed is the August 16, 2002 Order 3 of the RTC "The [p]ublic [r]espondent court during the said hearing noted the Formal Entry of Appearance
denying petitioners Motion for Reconsideration. The first assailed Order is quoted in full as of Atty. Felix R. Solomon as [p]rivate [p]rosecutor as well as the Opposition filed thereto by herein
follows: [p]etitioner. x x x.

"For consideration is the opposition of the accused, through counsel, to the formal entry of "As ordered by the Court, [p]rivate [c]omplainant through counsel filed her Comment to the
appearance of private prosecutor. Opposition of herein [p]etitioner.

"Accused, through counsel, contends that the private prosecutor is barred from appearing before "On 27 June 2002, the [p]ublic [r]espondent court issued the first assailed Order allowing the
this Court as his appearance is limited to the civil aspect which must be presented and asserted appearance of the [p]rivate [p]rosecutor in the above-entitled criminal cases upon payment of the
in B.P. 22 cases pending before the Metropolitan Trial Court of Quezon City. legal fees pursuant to Section 1 of Rule 141 of the Rules of Court, as amended.

"The private prosecutor submitted comment stating that the offended party did not manifest "On 31 July 2002, [a]ccused through counsel filed a Motion for Reconsideration dated 26 July
within fifteen (15) days following the filing of the information that the civil liability arising from 2002.
the crime has been or would be separately prosecuted and that she should therefore be required
to pay the legal fees pursuant to Section 20 of Rule 141 of the Rules of Court, as amended.
"On 16 August 2002, the [p]ublic [r]espondent court issued the second assailed Order denying
the Motion for Reconsideration of herein [p]etitioner."5

59
Ruling of the Trial Court complaint or information, the filing fees therefor shall constitute a first lien on the judgment
awarding such damages.

Noting petitioners opposition to the private prosecutors entry of appearance, the RTC held that
the civil action for the recovery of civil liability arising from the offense charged is deemed xxxxxxxxx
instituted, unless the offended party (1) waives the civil action, (2) reserves the right to institute
it separately, or (3) institutes the civil action prior to the criminal action. Considering that the
offended party had paid the corresponding filing fee for the estafa cases prior to the filing of the "(b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to include the
BP 22 cases with the Metropolitan Trial Court (MeTC), the RTC allowed the private prosecutor to corresponding civil action. No reservation to file such civil action separately shall be allowed.
appear and intervene in the proceedings.
"Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay in full
Hence, this Petition.6 the filing fees based on the amount of the check involved, which shall be considered as the actual
damages claimed. Where the complaint or information also seeks to recover liquidated, moral,
nominal, temperate or exemplary damages, the offended party shall pay the filing fees based on
Issues the amounts alleged therein. If the amounts are not so alleged but any of these damages are
subsequently awarded by the court, the filing fees based on the amount awarded shall constitute
a first lien on the judgment.
Petitioner raises this sole issue for the Courts consideration:

"Where the civil action has been filed separately and trial thereof has not yet commenced, it may
"Whether or not a [p]rivate [p]rosecutor can be allowed to intervene and participate in the be consolidated with the criminal action upon application with the court trying the latter case. If
proceedings of the above-entitled [e]stafa cases for the purpose of prosecuting the attached civil the application is granted, the trial of both actions shall proceed in accordance with section 2 of
liability arising from the issuance of the checks involved which is also subject mater of the this Rule governing consolidation of the civil and criminal actions."
pending B.P. 22 cases."7

Based on the foregoing rules, an offended party may intervene in the prosecution of a crime,
The Courts Ruling except in the following instances: (1) when, from the nature of the crime and the law defining
and punishing it, no civil liability arises in favor of a private offended party; and (2) when, from
The Petition has no merit. the nature of the offense, the offended parties are entitled to civil indemnity, but (a) they waive
the right to institute a civil action, (b) expressly reserve the right to do so or (c) the suit has
already been instituted. In any of these instances, the private complainants interest in the case
Sole Issue: disappears and criminal prosecution becomes the sole function of the public prosecutor.8 None
of these exceptions apply to the instant case. Hence, the private prosecutor cannot be barred
from intervening in the estafa suit.
Civil Action in BP 22 Case Not a Bar

True, each of the overt acts in these instances may give rise to two criminal liabilities -- one for
to Civil Action in Estafa Case estafa and another for violation of BP 22. But every such act of issuing a bouncing check involves
only one civil liability for the offended party, who has sustained only a single injury.9 This is the
import of Banal v. Tadeo,10 which we quote in part as follows:
Petitioner theorizes that the civil action necessarily arising from the criminal case pending before
the MTC for violation of BP 22 precludes the institution of the corresponding civil action in the
criminal case for estafa now pending before the RTC. She hinges her theory on the following "Generally, the basis of civil liability arising from crime is the fundamental postulate of our law
provisions of Rules 110 and 111 of the Rules of Court: that Every man criminally liable is also civilly liable (Art. 100, The Revised Penal Code).
Underlying this legal principle is the traditional theory that when a person commits a crime he
offends two entities namely (1) the society in which he lives in or the political entity called the
"SECTION 16. Intervention of the offended party in criminal action. -- Where the civil action for
State whose law he had violated; and (2) the individual member of that society whose person,
recovery of civil liability is instituted in the criminal action pursuant to Rule 111, the offended
right, honor, chastity or property was actually or directly injured or damaged by the same
party may intervene by counsel in the prosecution of the offense."
punishable act or omission. However, this rather broad and general provision is among the most
complex and controversial topics in criminal procedure. It can be misleading in its implications
"SECTION 1. Institution of criminal and civil actions. -- (a) When a criminal action is instituted, especially where the same act or omission may be treated as a crime in one instance and as a
the civil action for the recovery of civil liability arising from the offense charged shall be deemed tort in another or where the law allows a separate civil action to proceed independently of the
instituted with the criminal action unless the offended party waives the civil action, reserves the course of the criminal prosecution with which it is intimately intertwined. Many legal scholars
right to institute it separately or institutes the civil action prior to the criminal action. treat as a misconception or fallacy the generally accepted notion that the civil liability actually
arises from the crime when, in the ultimate analysis, it does not. While an act or omission is
felonious because it is punishable by law, it gives rise to civil liability not so much because it is
"The reservation of the right to institute separately the civil action shall be made before the a crime but because it caused damage to another. Viewing things pragmatically, we can readily
prosecution starts presenting its evidence and under circumstances affording the offended party see that what gives rise to the civil liability is really the obligation and the moral duty of everyone
a reasonable opportunity to make such reservation. to repair or make whole the damage caused to another by reason of his own act or omission,
done intentionally or negligently, whether or not the same be punishable by law. In other words,
criminal liability will give rise to civil liability only if the same felonious act or omission results
"When the offended party seeks to enforce civil liability against the accused by way of moral, in damage or injury to another and is the direct and proximate cause thereof. Damage or injury
nominal, temperate, or exemplary damages without specifying the amount thereof in the to another is evidently the foundation of the civil action. Such is not the case in criminal actions
for, to be criminally liable, it is enough that the act or omission complained of is punishable,

60
regardless of whether or not it also causes material damage to another. (See Sangco, Philippine The purpose of Section 1(b) of Rule 111 is explained by Justice Florenz D. Regalado (ret.), former
Law on Torts and Damages, 1978, Revised Edition, pp. 246-247)." chairman of the committee tasked with the revision of the Rules of Criminal Procedure. He
clarified that the special rule on BP 22 cases was added, because the dockets of the courts were
clogged with such litigations; creditors were using the courts as collectors. While ordinarily no
Thus, the possible single civil liability arising from the act of issuing a bouncing check can be filing fees were charged for actual damages in criminal cases, the rule on the necessary inclusion
the subject of both civil actions deemed instituted with the estafa case and the BP 22 violation of a civil action with the payment of filing fees based on the face value of the check involved was
prosecution. In the crimes of both estafa and violation of BP 22, Rule 111 of the Rules of Court laid down to prevent the practice of creditors of using the threat of a criminal prosecution to
expressly allows, even automatically in the present case, the institution of a civil action without collect on their credit free of charge.21
need of election by the offended party. As both remedies are simultaneously available to this
party, there can be no forum shopping.11
Clearly, it was not the intent of the special rule to preclude the prosecution of the civil action
that corresponds to the estafa case, should the latter also be filed. The crimes of estafa and
Hence, this Court cannot agree with what petitioner ultimately espouses. At the present stage, violation of BP 22 are different and distinct from each other. There is no identity of offenses
no judgment on the civil liability has been rendered in either criminal case. There is as yet no involved, for which legal jeopardy in one case may be invoked in the other. The offenses charged
call for the offended party to elect remedies and, after choosing one of them, be considered barred in the informations are perfectly distinct from each other in point of law, however nearly they
from others available to her. may be connected in point of fact.22

Election of Remedies What Section 1(b) of the Rules of Court prohibits is the reservation to file the corresponding civil
action.1wphi1 The criminal action shall be deemed to include the corresponding civil action.
Petitioner is actually raising the doctrine of election of remedies. "In its broad sense, election of "[U]nless a separate civil action has been filed before the institution of the criminal action, no such
remedies refers to the choice by a party to an action of one of two or more coexisting remedial civil action can be instituted after the criminal action has been filed as the same has been
rights, where several such rights arise out of the same facts, but the term has been generally included therein."23 In the instant case, the criminal action for estafa was admittedly filed prior
limited to a choice by a party between inconsistent remedial rights, the assertion of one being to the criminal case for violation of BP 22, with the corresponding filing fees for the inclusion of
necessarily repugnant to, or a repudiation of, the other." 12 In its more restricted and technical the corresponding civil action paid accordingly. 24
sense, the election of remedies is the adoption of one of two or more coexisting ones, with the
effect of precluding a resort to the others.13 Furthermore, the fact that the Rules do not allow the reservation of civil actions in BP 22 cases
cannot deprive private complainant of the right to protect her interests in the criminal action for
The Court further elucidates in Mellon Bank v. Magsino14 as follows: estafa. Nothing in the current law or rules on BP 22 vests the jurisdiction of the corresponding
civil case exclusively in the court trying the BP 22 criminal case.25

"As a technical rule of procedure, the purpose of the doctrine of election of remedies is not to
prevent recourse to any remedy, but to prevent double redress for a single wrong. 15 It is regarded In promulgating the Rules, this Court did not intend to leave the offended parties without any
as an application of the law of estoppel, upon the theory that a party cannot, in the assertion of remedy to protect their interests in estafa cases. Its power to promulgate the Rules of Court is
his right occupy inconsistent positions which form the basis of his respective remedies. However, limited in the sense that rules "shall not diminish, increase or modify substantive
when a certain state of facts under the law entitles a party to alternative remedies, both founded rights."26 Private complainants intervention in the prosecution of estafa is justified not only for
upon the identical state of facts, these remedies are not considered inconsistent remedies. In the prosecution of her interests, but also for the speedy and inexpensive administration of justice
such case, the invocation of one remedy is not an election which will bar the other, unless the as mandated by the Constitution.27
suit upon the remedy first invoked shall reach the stage of final adjudication or unless by the
invocation of the remedy first sought to be enforced, the plaintiff shall have gained an advantage The trial court was, therefore, correct in holding that the private prosecutor may intervene before
thereby or caused detriment or change of situation to the other. 16 It must be pointed out that the RTC in the proceedings for estafa, despite the necessary inclusion of the corresponding civil
ordinarily, election of remedies is not made until the judicial proceedings has gone to judgment action in the proceedings for violation of BP 22 pending before the MTC. A recovery by the
on the merits.17 offended party under one remedy, however, necessarily bars that under the other. Obviously
stemming from the fundamental rule against unjust enrichment, 28 this is in essence the rationale
"Consonant with these rulings, this Court, through Justice J.B.L. Reyes, opined that while some for the proscription in our law against double recovery for the same act or omission.
American authorities hold that the mere initiation of proceedings constitutes a binding choice of
remedies that precludes pursuit of alternative courses, the better rule is that no binding election WHEREFORE, the Petition is DISMISSED and the assailed Order AFFIRMED. Costs against
occurs before a decision on the merits is had or a detriment to the other party supervenes. 18 This petitioner.
is because the principle of election of remedies is discordant with the modern procedural
concepts embodied in the Code of Civil Procedure which permits a party to seek inconsistent
remedies in his claim for relief without being required to elect between them at the pleading stage SO ORDERED.
of the litigation."19
ARTEMIO V. PANGANIBAN
In the present cases before us, the institution of the civil actions with the estafa cases and the Associate Justice
inclusion of another set of civil actions with the BP 22 cases are not exactly repugnant or Chairman, Third Division
inconsistent with each other. Nothing in the Rules signifies that the necessary inclusion of a civil
action in a criminal case for violation of the Bouncing Checks Law 20 precludes the institution in
an estafa case of the corresponding civil action, even if both offenses relate to the issuance of the
same check.

61
Republic of the Philippines him.12 Deconstructing the testimonies of the prosecution witnesses individually, the MeTC found
SUPREME COURT that: (a) Marla merely testified on the damages sustained by her family but she failed to identify
Manila Daluraya as the driver of the vehicle that hit her mother; (b) Serrano also did not identify

FIRST DIVISION Daluraya as the driver of the said vehicle; (c) Dr. Ortiz merely testified on the autopsy results;
and (d) PSI Gomez, while he did investigate the incident, likewise declared thathe did not witness
the same.13
G.R. No. 210148 December 8, 2014

Marla moved for reconsideration,14 which the MeTC denied in an Order15 dated November 4,
ANTONIO L. DALURAYA, Petitioner, 2010, clarifying that the grant of Dalurayas demurrer had the effect of an acquittal and that
vs. reconsideration of its Order granting Dalurayas demurrer would violate the latters right against
MARLA OLIVA, Respondent. double jeopardy.16 With respect to the civil aspect of the case, the MeTC likewise denied the same,
holding that no civil liability can be awarded absent any evidence proving that Daluraya was the
DECISION person responsible for Marina Olivas demise. 17

PERLAS-BERNABE, J.: Aggrieved, Marla appealed18 to the Regional Trial Court of Quezon City, Branch 76 (RTC),
insisting that the MeTC failed to make any finding as to the civil liability of Daluraya,19 which
finding was not precluded by the dismissal of the criminal aspect of the case.
Assailed in this petition for review on certiorari1 are the Decision2 dated June 28, 2013 and the
Resolution3 dated November 22, 2013 rendered by the Court of Appeals (CA) in CA-G.R. SP No.
125113 finding petitioner Antonio L. Daluraya (Daluraya) civilly liable for the death of Marina The RTC Ruling
Arabit Oliva (Marina Oliva) despite having been acquitted for Reckless Imprudence Resulting in
Homicide on the ground of insufficiency of evidence. In a Decision20 dated September 8, 2011, the RTC dismissed the appeal and affirmed the MeTCs
ruling,declaring that "the act from which the criminal responsibility may spring did not at all
The Facts exist."21

On January 4, 2006, Daluraya was charged in an Information 4 for Reckless Imprudence Marla filed a motion for reconsideration22 which, although filed beyond the reglementary period,
Resulting in Homicide in connection with the death5 of Marina Oliva. Records reveal that was nonetheless accepted. However, the RTC found the same without merit and thus, sustained
sometime in the afternoon of January 3, 2006, Marina Oliva was crossing the street when a the factual findings and rulings of the MeTC in its Order 23 dated May 10, 2012. Dissatisfied,
Nissan Vanette, bearing plate number UPN-172 and traversing EDSA near the Quezon Avenue Marla elevated the case to the CA via petition for review, maintaining that Daluraya must be held
flyover in Quezon City, ran her over. 6 While Marina Oliva was rushed to the hospital to receive civilly liable.
medical attention,she eventually died, prompting her daughter, herein respondent Marla Oliva
(Marla), to file a criminal case for Reckless Imprudence Resulting in Homicide against Daluraya, The CA Ruling
the purported driver of the vehicle.7

In a Decision24 dated June 28, 2013, the CA granted the petition and reversed the RTC Decision,
During the proceedings, the prosecution presented as witness Shem Serrano (Serrano), an eye- ordering Daluraya to pay Marla the amounts of P152,547.00 as actual damages, P50,000.00 as
witness to the incident, who testified that on said date, he saw a woman crossing EDSA heading civil indemnity, and P50,000.00 as moral damages.25 In so ruling, the CA held that the MeTCs
towards the island near the flyover and that the latter was bumped by a Nissan Vanette bearing Order showed that Dalurayas acquittal was based on the fact that the prosecution failed to prove
plate number UPN-172. The prosecution also offered the testimonies of (a) Marla, who testified his guilt beyond reasonable doubt. As such, Daluraya was not exonerated from civil liability. 26
as to the civil damages sustained by her family as a result of her mothers death; (b) Dr. Paul
Ortiz (Dr. Ortiz), who presented his findings on the autopsy conducted upon the body of Marina
Oliva; and (c) Police Senior Inspector Lauro Gomez (PSI Gomez), who conducted the investigation Moreover, the CA considered the following pieces of evidence to support its finding that Daluraya
following the incident and claimed that Marina Oliva was hit by the vehicle being driven by must be held civilly liable: (a) the inadmissible sworn statement executed by Daluraya where he
Daluraya, albeit he did not witness the incident. 8 admitted that he drove the subject vehicle which hit Marina Oliva; (b) the conclusion derived
from Serranos testimony that the woman he saw crossing the street who was hit by a Nissan
Vanette with plate number UPN-172, and the victim who eventually died, are one and the same;
After the prosecution rested its case, Daluraya filed an Urgent Motion to Dismiss (c) the Philippine National Police Referral Letter of one Police Chief Inspector Virgilio Pereda
(demurrer)9 asserting, inter alia, that he was not positively identified by any of the prosecution identifying Daluraya as the suspectin the case of Reckless Imprudence Resulting in Homicide
witnesses as the driver of the vehicle that hit the victim, and that there was no clear and involving the death of Marina Oliva, and stating that he brought the victim to the Quezon City
competent evidence of how the incident transpired. 10 General Hospital for treatment but was declared dead on arrival; and (d) the subject vehicle was
registered in the name of Dalurayas aunt, Gloria Zilmar, 27 who authorized him to claim the
The MeTC Ruling vehicle from the MeTC.28

In an Order11 dated May 24, 2010, the Metropolitan Trial Court of Quezon City, Branch 38 Daluraya filed a motion for reconsideration, 29 which the CA denied in a Resolution30 dated
(MeTC) granted Dalurayas demurrer and dismissed the case for insufficiency of evidence. It November 22, 2013,hence, this petition.
found that the testimonies of the prosecution witnesses were wanting in material details and
that they failed to sufficiently establish that Daluraya committed the crime imputed upon The Issue Before the Court

62
The sole issue advanced for the Courts resolution is whether or not the CA was correct in finding the author of the crime imputed against him. Such conclusion is clear and categorical when the
Daluraya civilly liable for Marina Olivas death despite his acquittal in the criminal case for MeTC declared that "the testimonies of the prosecution witnesses are wanting in material details
Reckless Imprudence Resulting in Homicide on the ground of insufficiency of evidence. and they did not sufficiently establish that the accused precisely committed the crime charged
against him."37 Furthermore, when Marla sought reconsideration of the MeTCs Order acquitting
Daluraya, said court reiterated and firmly clarified that "the prosecution was not able to establish
The Courts Ruling that the accused was the driver of the Nissan Vanette which bumped Marina Oliva" 38 and that
"there is no competent evidence on hand which proves that the accused was the person
The petition is meritorious. responsible for the death of Marina Oliva."39

Every person criminally liable for a felony is also civilly liable. The acquittal of an accused of the Clearly, therefore, the CA erred in construing the findings of the MeTC, as affirmed by the RTC,
crime charged, however, does not necessarily extinguish his civil liability. 31 In Manantan v. that Dalurayas acquittal was anchored on reasonable doubt, which would necessarily call for a
CA,32 the Court expounded on the two kinds of acquittal recognized by our law and their remand of the case to the court a quo for the reception of Dalurayas evidence on the civil
concomitant effects on the civil liability of the accused, as follows: aspect.1wphi1 Records disclose that Dalurayas acquittal was based on the fact that "the act or
omission from which the civil liability may arise did not exist" in view of the failure of the
prosecution to sufficiently establish that he was the author of the crime ascribed against him.
Our law recognizes two kinds of acquittal, with different effects on the civil liability of the accused. Consequently, his civil liability should be deemed as non-existent by the nature of such acquittal.
First is an acquittal on the ground that the accused is not the author of the actor omission
complained of. This instance closes the door to civil liability, for a person who has been found to
be not the perpetrator of any act or omission cannot and can never be held liable for such act or WHEREFORE, the petition is GRANTED. The Decision dated June 28, 2013 and the Resolution
omission. There being no delict, civil liability ex delictois out of the question, and the civil action, dated November 22, 2013 of the Court of Appeals in CA-G.R. SP No. 125113 are hereby
if any, which may be instituted must be based on grounds other than the delict complained of. REVERSED and SET ASIDE. The Decision dated September 8,2011 and the Order dated May
This is the situation contemplated inRule 111 of the Rules of Court. The second instance is an 10, 2012 of the Regional Trial Court of Quezon City, Branch 76 are REINSTATED.
acquittal based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of
the accused has not been satisfactorily established, he is not exempt from civil liability which SO ORDERED.
may be proved by preponderance of evidence only. 33

ESTELA M. PERLAS-BERNABE
In Dayap v. Sendiong,34 the Court explained further: Associate Justice

The acquittal of the accused does not automatically preclude a judgment against him on the civil
aspect of the case.1wphi1 The extinction of the penal action does not carry with it the extinction
of the civil liability where: (a) the acquittal is based on reasonable doubt as only preponderance
of evidence is required; (b) the court declares that the liability of the accused is only civil; and (c)
the civil liability of the accused does not arise from or is not based upon the crime of which the
accused is acquitted. However, the civil action based on delictmay be deemed extinguished if
there is a finding on the final judgment in the criminal action that the act or omission from which
the civil liability may arise did not exist or where the accused did not commit the acts or omission
imputed to him.

Thus, if demurrer is granted and the accused is acquitted by the court, the accused has the right
to adduce evidence on the civil aspect of the case unless the court also declares that the act or
omission from which the civil liability may arise did not exist. This is because when the accused
files a demurrer to evidence, he has not yet adduced evidence both on the criminal and civil
aspects of the case. The only evidence on record is the evidence for the prosecution. What the
trial court should do is issue an order or partial judgment granting the demurrer to evidence and
acquitting the accused, and set the case for continuation of trial for the accused to adduce
evidence on the civil aspect of the case and for the private complainant to adduce evidence by
way of rebuttal. Thereafter, the court shall render judgment on the civil aspect of the case. 35

(Emphases supplied)

In case of an acquittal, the Rules of Court requires that the judgment state "whether the evidence
of the prosecution absolutely failed to prove the guilt of the accused or merely failed to prove his
guilt beyond reasonable doubt. In either case, the judgment shall determine if the act or omission
from which the civil liability might arise did not exist."36

A punctilious examination of the MeTCs Order, which the RTC sustained, will show that
Dalurayas acquittal was based on the conclusion that the act or omission from which the civil
liability may arise did not exist, given that the prosecution was not able to establish that he was

63
Republic of the Philippines At the trial, the Prosecution presented several witnesses, including Dr. Rufino Agudera as an
SUPREME COURT expert witness and as the physician who had operated on Hanz twice to repair the damaged
Manila urethra. Dr. Agudera testified that Hanz had been diagnosed to have urethral stricture and
cavernosal injury left secondary to trauma that had necessitated the conduct of two operations
to strengthen and to lengthen the urethra. Although satisfactorily explaining that the injury to
FIRST DIVISION the urethra had been caused by trauma, Dr. Agudera could not determine the kind of trauma
that had caused the injury.
G.R. No. 163753 January 15, 2014
In his defense, the petitioner denied the charge. He contended that at the time of his examination
DR. ENCARNACION C. LUMANTAS, M.D., Petitioner, of Hanz on January 16, 1995, he had found an accumulation of pus at the vicinity of the
vs. appendix two to three inches from the penis that had required immediate surgical operation;
HANZ CALAPIZ, REPRESENTED BY HIS PARENTS, HILARIO CALAPIZ, JR. and HERLITA that after performing the appendectomy, he had circumcised Hanz with his parents consent by
CALAPIZ, Respondent. using a congo instrument, thereby debunking the parents claim that their child had been
cauterized; that he had then cleared Hanz on January 27, 1995 once his fever had subsided;
that he had found no complications when Hanz returned for his follow up check-up on February
DECISION 2, 1995; and that the abscess formation between the base and the shaft of the penis had been
brought about by Hanzs burst appendicitis.

BERSAMIN, J.:
Ruling of the RTC

The acquittal of the accused does not necessarily mean his absolution from civil liability.
In its decision rendered on August 6, 1999,6 the RTC acquitted the petitioner of the crime charged
for insufficiency of the evidence. It held that the Prosecutions evidence did not show the required
The Case standard of care to be observed by other members of the medical profession under similar
circumstances. Nonetheless, the RTC ruled that the petitioner was liable for moral damages
because there was a preponderance of evidence showing that Hanz had received the injurious
In this appeal, an accused desires the reversal of the decision promulgated on February 20,
trauma from his circumcision by the petitioner. The decision disposed as follows:
2003,1 whereby the Court of Appeals (CA) affirmed the judgment rendered on August 6, 1999 by
the Regional Trial Court (RTC), Branch 13, in Oroquieta City ordering him to pay moral damages
despite his acquittal of the crime of reckless imprudence resulting in serious physical injuries WHEREFORE, for insufficiency of evidence, this court renders judgment acquitting the accused,
charged against him.2 Dr. Encarnacion Lumantas, of reckless imprudence resulting in serious physical injuries, but
ordering him to pay Hanz Calapiz P50,000.00 as moral damages. No costs.
Antecedents
SO ORDERED.
On January 16, 1995, Spouses Hilario Calapiz, Jr. and Herlita Calapiz brought their 8-year-old
son, Hanz Calapiz (Hanz), to the Misamis Occidental Provincial Hospital, Oroquieta City, for an Ruling of the CA
emergency appendectomy. Hanz was attended to by the petitioner, who suggested to the parents
that Hanz also undergo circumcision at no added cost to spare him the pain. With the parents
consent, the petitioner performed the coronal type of circumcision on Hanz after his On appeal, the CA affirmed the RTC,7 sustaining the award of moral damages. It opined that
appendectomy. On the following day, Hanz complained of pain in his penis, which exhibited even if the petitioner had been acquitted of the crime charged, the acquittal did not necessarily
blisters. His testicles were swollen. The parents noticed that the child urinated abnormally after mean that he had not incurred civil liability considering that the Prosecution had preponderantly
the petitioner forcibly removed the catheter, but the petitioner dismissed the abnormality as established the sufferings of Hanz as the result of the circumcision.
normal. On January 30, 1995, Hanz was discharged from the hospital over his parents
protestations, and was directed to continue taking antibiotics.
The petitioner moved for reconsideration, but the CA denied the motion on April 28, 2004. 8

On February 8, 1995, Hanz was confined in a hospital because of the abscess formation between
the base and the shaft of his penis. Presuming that the ulceration was brought about by Hanzs Hence, this appeal.
appendicitis, the petitioner referred him to Dr. Henry Go, an urologist, who diagnosed the boy to
have a damaged urethra. Thus, Hanz underwent cystostomy, and thereafter was operated on Issue
three times to repair his damaged urethra.

Whether the CA erred in affirming the petitioners civil liability despite his acquittal of the crime
When his damaged urethra could not be fully repaired and reconstructed, Hanzs parents of reckless imprudence resulting in serious physical injuries.
brought a criminal charge against the petitioner for reckless imprudence resulting to serious
physical injuries. On April 17, 1997, the information 3 was filed in the Municipal Trial Court in
Cities of Oroquieta City (MTCC), to which the latter pleaded not guilty on May 22, 1998. 4 Under Ruling
the order of April 30, 1999, the case was transferred to the RTC pursuant to Supreme Court
Circular No. 11-99.5
The petition for review lacks merit.

64
It is axiomatic that every person criminally liable for a felony is also civilly liable. 9 Nevertheless, compounded. For that purpose, the reckoning of interest should be from the filing of the criminal
the acquittal of an accused of the crime charged does not necessarily extinguish his civil liability. information on April 17, 1997, the making of the judicial demand for the liability of the petitioner.
In Manantan v. Court of Appeals,10the Court elucidates on the two kinds of acquittal recognized
by our law as well as on the different effects of acquittal on the civil liability of the accused, viz:
WHEREFORE, the Court AFFIRMS the decision promulgated on February 20, 2003, with the
modification that legal interest of 6% per annum to start from April 17, 1997 is imposed on the
Our law recognizes two kinds of acquittal, with different effects on the civil liability of the award of:P50,000.00 as moral damages; and ORDERS the petitioner to pay the costs of suit.
accused.1wphi1 First is an acquittal on the ground that the accused is not the author of the
act or omission complained of. This instance closes the door to civil liability, for a person who
has been found to be not the perpetrator of any act or omission cannot and can never be held SO ORDERED.
liable for such act or omission. There being no delict, civil liability ex delicto is out of the question,
and the civil action, if any, which may be instituted must be based on grounds other than the LUCAS P. BERSAMIN
delict complained of. This is the situation contemplated in Rule 111 of the Rules of Court. The Associate Justice
second instance is an acquittal based on reasonable doubt on the guilt of the accused. In this
case, even if the guilt of the accused has not been satisfactorily established, he is not exempt
from civil liability which may be proved by preponderance of evidence only.

The Rules of Court requires that in case of an acquittal, the judgment shall state "whether the
evidence of the prosecution absolutely failed to prove the guilt of the accused or merely failed to
prove his guilt beyond reasonable doubt. In either case, the judgment shall determine if the act
or omission from which the civil liability might arise did not exist." 11

Conformably with the foregoing, therefore, the acquittal of an accused does not prevent a
judgment from still being rendered against him on the civil aspect of the criminal case unless
the court finds and declares that the fact from which the civil liability might arise did not exist.

Although it found the Prosecutions evidence insufficient to sustain a judgment of conviction


against the petitioner for the crime charged, the RTC did not err in determining and adjudging
his civil liability for the same act complained of based on mere preponderance of evidence. 12 In
this connection, the Court reminds that the acquittal for insufficiency of the evidence did not
require that the complainants recovery of civil liability should be through the institution of a
separate civil action for that purpose.13

The petitioners contention that he could not be held civilly liable because there was no proof of
his negligence deserves scant consideration. The failure of the Prosecution to prove his criminal
negligence with moral certainty did not forbid a finding against him that there was preponderant
evidence of his negligence to hold him civilly liable. 14 With the RTC and the CA both finding that
Hanz had sustained the injurious trauma from the hands of the petitioner on the occasion of or
incidental to the circumcision, and that the trauma could have been avoided, the Court must
concur with their uniform findings. In that regard, the Court need not analyze and weigh again
the evidence considered in the proceedings a quo. The Court, by virtue of its not being a trier of
facts, should now accord the highest respect to the factual findings of the trial court as affirmed
by the CA in the absence of a clear showing by the petitioner that such findings were tainted
with arbitrariness, capriciousness or palpable error.

Every person is entitled to the physical integrity of his body.1wphi1 Although we have long
advocated the view that any physical injury, like the loss or diminution of the use of any part of
ones body, is not equatable to a pecuniary loss, and is not susceptible of exact monetary
estimation, civil damages should be assessed once that integrity has been violated. The
assessment is but an imperfect estimation of the true value of ones body. The usual practice is
to award moral damages for the physical injuries sustained. 15 In Hanzs case, the undesirable
outcome of the circumcision performed by the petitioner forced the young child to endure several
other procedures on his penis in order to repair his damaged urethra. Surely, his physical and
moral sufferings properly warranted the amount of P50,000.00 awarded as moral damages.

Many years have gone by since Hanz suffered the injury. Interest of 6% per annum should then
be imposed on the award as a sincere means of adjusting the value of the award to a level that
is not only reasonable but just and commensurate. Unless we make the adjustment in the
permissible manner by prescribing legal interest on the award, his sufferings would be unduly

65
Republic of the Philippines Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for
SUPREME COURT inspection on 15 May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the
Manila then Ministry of Public Works and Highways, 11 Regional Office No. IV-A, found that the store of
Visitacion remained intact and stood strong. This finding of Engineer Gorospe was contested by
the Municipality of Nagcarlan.
FIRST DIVISION

The store of Visitacion continued to operate after the fire until 15 October 1993.
G.R. Nos. 159017-18 March 9, 2011

On 1 September 1993, Visitacion received a letter 12 from Mayor Comendador directing her to
PAULINO S. ASILO, JR., Petitioner, demolish her store within five (5) days from notice. Attached to the letter were copies of
vs. Sangguniang Bayan Resolution No. 15613dated 30 August 1993 and a Memorandum issued by
THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION AND CESAR C. Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
BOMBASI, Respondents.

The relevant provisos of the Resolution No. 156 states that:


x - - - - - - - - - - - - - - - - - - - - - - -x

NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize Hon. Demetrio T.


G.R. No. 159059 Comendador to enforce and order the Coronados to demolish the building constructed on the
space previously rented to them in order to give way for the construction of a new municipal
VICTORIA BUETA VDA. DE COMENDADOR, IN REPRESENTATION OF DEMETRIO T. market building.
COMENDADOR,Petitioner,
vs. RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable Mayor of Nagcarlan to
VISITACION C. BOMBASI AND CESAR C. BOMBASI, Respondents. file an Unlawful Detainer Case with damages for the expenses incurred due to the delay in the
completion of the project if the Coronados continuously resists the order.
DECISION
On 3 September 1993, Visitacion wrote a reply letter to Mayor Comendador saying that: (1) the
PEREZ, J.: lease contract was still existing and legally binding; (2) she was willing to vacate the store as long
as same place and area would be given to her in the new public market; and (3) in case her
proposals are not acceptable to Mayor Comendador, for the latter to just file an unlawful detainer
At bench are appeals by certiorari1 from the Decision2 of the Fourth Division of the case against her pursuant to Sangguniang Bayan Resolution No. 156. Pertinent portions of the
Sandiganbayan; (1) finding Demetrio T. Comendador 3 (Mayor Comendador) and Paulino S. Asilo, letter read:
Jr.4 guilty beyond reasonable doubt of violation of Sec. 3(e) of Republic Act No. 3019; (2)
dismissing the cases against accused Alberto S. Angeles; 5 (3) ordering the defendants
Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino S. Asilo, Jr. to pay the x x x With all due respect to the resolution of the Municipal Council and the opinion rendered
plaintiffs now respondents Visitacion C. Bombasi (Visitacion) and Cesar C. Bombasi damages; by the Laguna Asst. Provincial Prosecutor, it is my considered view, however, arrived at after
and (4) dismissing the cases against the spouses Alida and Teddy Coroza 6 and Benita and Isagani consultation with my legal counsel, that our existing lease contract is still legally binding and in
Coronado.7 full force and effect. Lest I appear to be defiant, let me reiterate to you and the council that we
are willing to vacate the said building provided that a new contract is executed granting to us
the same space or lot and the same area. I believe that our proposal is most reasonable and fair
The factual antecedents of the case are: under the circumstance. If you are not amenable to the said proposal, I concur with the position
taken by the Council for you to file the appropriate action in court for unlawful detainer to enable
our court to finally thresh out our differences. 141avvphi1
On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De Coronado
(Vda. De Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then
Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the Municipality On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to Visitacion
allowed the use and enjoyment of property comprising of a lot and a store located at the corner ordering her to vacate the portion of the public market she was occupying within 15 days from
of Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents her receipt of the letter; else, a court action will be filed against her.
mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.8
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No. 183
authorizing Mayor Comendador to demolish the store being occupied by Visitacion using legal
The lease contract provided that the late Vda. De Coronado could build a firewall on her rented means. The significant portion of the Resolution reads:
property which must be at least as high as the store; and in case of modification of the public
market, she or her heir/s would be given preferential rights.
Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA: Ang pagbibigay
kapangyarihan kay Kgg. Demetrio T. Comendador na ipagiba ang anumang istrakturang
Visitacion took over the store when her mother died sometime in 1984. 9 From then on up to nagiging sagabal sa mabilis at maayos na pagbabangon ng pamilihang bayan. 15
January 1993, Visitacion secured the yearly Mayors permits. 10
On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo) also sent a letter 16 to
Visitacion informing her of the impending demolition of her store the next day. Within the same

66
day, Visitacion wrote a reply letter17 to Asilo, alleging that there is no legal right to demolish the That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines, and within the
store in the absence of a court order and that the Resolutions did not sanction the demolition of jurisdiction of this Honorable Court, the above-named accused, all public officers, accused
her store but only the filing of an appropriate unlawful detainer case against her. She further Demetrio T. Comendador, being then the Municipal Mayor, accused Paulino S. Asilo, Jr. being
replied that if the demolition will take place, appropriate administrative, criminal and civil actions then the Municipal Administrator and accused Alberto S. Angeles being then the Municipal
will be filed against Mayor Comendador, Asilo and all persons who will take part in the Planning and Development Coordinator, all of the Municipality of Nagcarlan, Laguna, committing
demolition. the crime herein charged in relation to, while in the performance and taking advantage of their
official functions, conspiring and confederating with each other, and with evident bad faith,
manifest partiality or through gross inexcusable negligence, did then and there willfully,
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan unlawfully, criminally cause the demolition of a public market stall leased by the municipal
Resolution Nos. 183 and 156 authorized the demolition of the store with Asilo and Angeles government in favor of one Visitacion Coronado-Bombasi without legal or justifiable ground
supervising the work. therefor, thus, causing undue injury to the latter in the amount of PESOS: FOUR HUNDRED
THIRTY SEVEN THOUSAND AND NINE HUNDRED ONLY (P437,900.00).
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost of
the demolished property as amounting to P437,900.0018 Upon their arraignments, all the accused entered their separate pleas of "Not Guilty."

On 19 August 1994, Visitacion, together with her husband Cesar Bombasi (Spouses Bombasi) On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering the consolidation of
filed with the Regional Trial Court of San Pablo City, Laguna a Civil Case19 for damages with Civil Case No. SP-4064 (94)23 with Criminal Case No. 23267 pending before the Third Division
preliminary injunction against the Municipality of Nagcarlan, Laguna, Mayor Demetrio T. pursuant to Section 4, Presidential Decree No. 1606, which pertinently reads:
Comendador, Paulino S. Asilo, Jr., and Alberto S. Angeles. The complaint was soon after
amended to include the Spouses Benita and Isagani Coronado and Spouses Alida and Teddy
Coroza as formal defendants because they were then the occupants of the contested area. Any provision of law or Rules of Court to the contrary notwithstanding, the criminal action and
the corresponding civil action for the recovery of civil liability arising from the offense charged
shall at all times be simultaneously instituted with, and jointly determined in the same
The spouses prayed for the following disposition: proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being
deemed to necessarily carry with it the filing of the civil action, and no right to reserve the filing
1. RESTRAINING or ENJOINING defendant Municipality and defendant Municipal of such civil action separately from the criminal action shall be recognized; Provided, however,
Mayor from leasing the premises subject of lease Annex "A" hereof, part of which is that where the civil action had heretofore been filed separately but judgment therein has not yet
now occupied by PNP Outpost and by the Municipal Collectors Office, and the been rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate
equivalent adjacent area thereof, and to cause the removal of said stalls; court, said civil action shall be transferred to the Sandiganbayan or the appropriate court as the
case may be, for consolidation and joint determination with the criminal action, otherwise the
separate civil action shall be deemed abandoned. 24
2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area of the leased
areas being now assigned to other persons by defendants Municipality and/or by
defendant Municipal Mayor, and to allow plaintiffs to construct their stalls thereon; During the pendency of the case, Alberto S. Angeles died on 16 November 1997. Accordingly, the
counsel of Angeles filed a motion to drop accused Angeles. On 22 September 1999, the Third
Division of Sandiganbayan issued an Order 25 DISMISSING the case against Angeles. The
3. MAKING the injunction permanent, after trial; germane portion of the Order reads:

4. ORDERING defendants to pay plaintiffs, jointly and severally, the following In view of the submission of the death certificate of accused/defendant Alberto S. Angeles, and
there being no objection on the part of the Public Prosecutor, cases against deceased
accused/defendant Angeles only, are hereby DISMISSED.
(a) P437,900.00 for loss of building/store and other items therein;

The death of Mayor Comendador followed on 17 September 2002. As a result, the counsel of the
(b) P200,000.00 for exemplary damages; late Mayor filed on 3 March 2003 a Manifestation before the Sandiganbayan informing the court
of the fact of Mayor Comendadors death.
(c) P200,000.00 for moral damages;
On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive portion of which reads
as follows:
(d) P30,.00 for attorneys fees and P700.00 for every attendance of counsel
in court.
WHEREFORE, premises considered, judgment is hereby rendered as follows:
5. GRANTING further reliefs upon plaintiffs as justice and equity may warrant in the
premises.20 In Criminal Case No. 23267, the court finds accused Demetrio T. Comendador and Paulino S.
Asilo, Jr. guilty beyond reasonable doubt of violation of Sec. 3(e) of Republic Act. No. 3019 as
amended, and in the absence of aggravating and mitigating circumstances, applying the
Spouses Bombasi, thereafter, filed a criminal complaint21 against Mayor Comendador, Asilo and
Indeterminate Sentence Law, said accused are sentenced to suffer the indeterminate penalty of
Angeles for violation of Sec. 3(e) of Republic Act No. 3019 otherwise known as the "Anti-Graft
6 years and 2 months imprisonment as minimum to 10 years and 1 day as maximum.
and Corrupt Practices Act" before the Office of the Ombudsman. On 22 February 1996, an
Information22 against Mayor Comendador, Asilo and Angeles was filed, which reads:

67
The order of the court dated September 22, 1999 dismissing the cases against the accused Section 3(e) of Republic Act No. 3019 provides:
Alberto S. Angeles, who died on November 16, 1997 is hereby reiterated.

In addition to acts or omissions of public officers already penalized by existing law, the following
In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna, Demetrio T. Comendador shall constitute corrupt practices of any public officer and are hereby declared to be unlawful:
and Paulino S. Asilo, Jr. are hereby ordered jointly and severally to pay plaintiff P437,900.00 as
actual damages for the destruction of the store; P100,000.00 as moral damages; P30,000.00 as
attorneys fees, and to pay the cost of the suit. The prayer for exemplary damages is denied as xxxx
the court found no aggravating circumstances in the commission of the crime.
(e) Causing any undue injury to any party, including the Government, or giving any private party
In view of this courts finding that the defendant spouses Alida and Teddy Coroza are lawful any unwarranted benefits, advantage or preference in the discharge of his official, administrative
occupants of the subject market stalls from which they cannot be validly ejected without just or judicial functions through manifest partiality, evident bad faith or gross inexcusable
cause, the complaint against them is dismissed. The complaint against defendant spouses Benita negligence. This provision shall apply to officers and employees of offices or government
and Isagani Coronado is likewise dismissed, it appearing that they are similarly situated as the corporations charged with the grant of licenses or permits or other concessions.
spouses Coroza. Meanwhile, plaintiff Visitacion Bombasi is given the option to accept market
space being given to her by the municipality, subject to her payment of the appropriate rental The elements of the offense are as follows: (1) that the accused are public officers or private
and permit fees. persons charged in conspiracy with them; (2) that said public officers commit the prohibited acts
during the performance of their official duties or in relation to their public positions; (3) that they
The prayer for injunctive relief is denied, the same having become moot and academic. caused undue injury to any party, whether the Government or a private party; (4) OR that such
injury is caused by giving unwarranted benefits, advantage or preference to the other party; and
(5) that the public officers have acted with manifest partiality, evident bad faith or gross
The compulsory counterclaim of defendant Comendador is likewise denied for lack of merit.26 inexcusable negligence.33

Within the same day, Asilo, through his counsel, filed a Motion for Reconsideration 27 of the We sustain the Sandiganbayan in its finding of criminal and civil liabilities against petitioner
Decision alleging that there was only an error of judgment when he complied with and Asilo and petitioner Mayor Comendador as here represented by his widow Victoria Bueta.
implemented the order of his superior, Mayor Comendador. He likewise alleged that there is no
liability when a public officer commits in good faith an error of judgment. The Sandiganbayan,
on its Resolution28 dated 21 July 2003 denied the Motion for Reconsideration on the ground that We agree with the Sandiganbayan that it is undisputable that the first two requisites of the
good faith cannot be argued to support his cause in the face of the courts finding that bad faith criminal offense were present at the time of the commission of the complained acts and that, as
attended the commission of the offense charged. The Court further explained that the invocation to the remaining elements, there is sufficient amount of evidence to establish that there was an
of compliance with an order of a superior is of no moment for the "demolition [order] cannot be undue injury suffered on the part of the Spouses Bombasi and that the public officials concerned
described as having the semblance of legality inasmuch as it was issued without the authority acted with evident bad faith when they performed the demolition of the market stall.
and therefore the same was patently illegal."29
Causing undue injury to any party, including the government, could only mean actual injury or
The counsel for the late Mayor also filed its Motion for Reconsideration30 on 12 May 2003 alleging damage which must be established by evidence. 34
that the death of the late Mayor had totally extinguished both his criminal and civil liability. The
Sandiganbayan on its Resolution31 granted the Motion insofar as the extinction of the criminal In jurisprudence, "undue injury" is consistently interpreted as "actual." Undue has been defined
liability is concerned and denied the extinction of the civil liability holding that the civil action is as "more than necessary, not proper, [or] illegal;" and injury as "any wrong or damage done to
an independent civil action. another, either in his person, rights, reputation or property [that is, the] invasion of any legally
protected interest of another." Actual damage, in the context of these definitions, is akin to that
Hence, these Petitions for Review on Certiorari. 32 in civil law.35

Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e) of Republic Act No. It is evident from the records, as correctly observed by the Sandiganbayan, that Asilo and Mayor
3019 or "The Anti-Graft and Corrupt Practices Act," the public officer must have acted with Comendador as accused below did not deny that there was indeed damage caused the Spouses
manifest partiality, evident bad faith or gross negligence. He also contended that he and his co- Bombasi on account of the demolition. We affirm the finding that:
accused acted in good faith in the demolition of the market and, thereby, no liability was
incurred. xxx. Clearly, the demolition of plaintiffs store was carried out without a court order, and
notwithstanding a restraining order which the plaintiff was able to obtain. The demolition was
On the other hand, Petitioner Victoria argues that the death of Mayor Comendador prior to the done in the exercise of official duties which apparently was attended by evident bad faith,
promulgation of the decision extinguished NOT ONLY Mayor Comendadors criminal liability but manifest partiality or gross inexcusable negligence as there is nothing in the two (2) resolutions
also his civil liability. She also asserted good faith on the part of the accused public officials when which gave the herein accused the authority to demolish plaintiffs store.
they performed the demolition of the market stall. Lastly, she contended that assuming arguendo
that there was indeed liability on the part of the accused public officials, the actual amount of "Evident bad faith" connotes not only bad judgment but also palpably and patently fraudulent
damages being claimed by the Spouses Bombasi has no basis and was not duly substantiated. and dishonest purpose to do moral obliquity or conscious wrongdoing for some perverse motive
or ill will.36 [It] contemplates a state of mind affirmatively operating with furtive design or with
Liability of the accused public officials some motive or self-interest or ill will or for ulterior purposes. 37
under Republic Act No. 3019

68
It is quite evident in the case at bar that the accused public officials committed bad faith in We note, first off, that the death of Angeles and of Mayor Comendador during the pendency of
performing the demolition. the case extinguished their criminal liabilities.

First, there can be no merit in the contention that respondents structure is a public nuisance. We now hold, as did the Sandiganbayan that the civil liability of Mayor Comendador survived his
The abatement of a nuisance without judicial proceedings is possible if it is nuisance per death; and that of Angeles could have likewise survived had it not been for the fact that the
se.38 Nuisance per se is that which is nuisance at all times and under any circumstance, resolution of the Sandiganbayan that his death extinguished the civil liability was not questioned
regardless of location and surroundings.39 In this case, the market stall cannot be considered as and lapsed into finality.
a nuisance per se because as found out by the Court, the buildings had not been affected by the
1986 fire. This finding was certified to by Supervising Civil Engineer Wilfredo A. Sambrano of the
Laguna District Engineer Office.40 To quote: We laid down the following guidelines in People v. Bayotas: 46

An inspection has been made on the building (a commercial establishment) cited above and Death of the accused pending appeal of his conviction extinguishes his criminal liability as well
found out the following: as the civil liability based solely thereon. As opined by Justice Regalado, in this regard, "the
death of the accused prior to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed, i.e., civil liability ex
1. It is a two-storey building, sketch of which is attached. delicto in senso strictiore."

2. It is located within the market site. Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the
same may also be predicated on a source of obligation other than delict. Article 1157 of the Civil
Code enumerates these other sources of obligation from which the civil liability may arise as a
3. The building has not been affected by the recent fire. result of the same act or omission:

4. The concrete wall[s] does not even show signs of being exposed to fire. 41 a) Law

Second, the Sangguniang Bayan resolutions are not enough to justify demolition. Unlike its b) Contracts
predecessor law,42the present Local Government Code43 does not expressly provide for the
abatement of nuisance.44 And even assuming that the power to abate nuisance is provided for
by the present code, the accused public officials were under the facts of this case, still devoid of c) Quasi-contracts
any power to demolish the store. A closer look at the contested resolutions reveals that Mayor
Comendador was only authorized to file an unlawful detainer case in case of resistance to obey
the order or to demolish the building using legal means. Clearly, the act of demolition without d) Acts or omissions punished by law; and
legal order in this case was not among those provided by the resolutions, as indeed, it is a legally
impossible provision. e) Quasi-delicts. (Emphasis ours)

Furthermore, the Municipality of Nagcarlan, Laguna, as represented by the then Mayor Where the civil liability survives, as explained [above], an action for recovery therefore may be
Comendador, was placed in estoppel after it granted yearly business permits 45 in favor of the pursued but only by way of filing a separate civil action 47 and subject to Section 1, Rule 111 of
Spouses Bombasi. Art. 1431 of the New Civil Code provides that, through estoppel, an admission the 1985 Rules on Criminal Procedure as amended. This separate civil action may be enforced
or representation is rendered conclusive upon the person making it, and cannot be denied or either against the executor/administrator or the estate of the accused, depending on the source
disproved as against the person relying thereon. The representation made by the municipality of obligation upon which the same is based as explained above.
that the Spouses Bombasi had the right to continuously operate its store binds the municipality.
It is utterly unjust for the Municipality to receive the benefits of the store operation and later on
claim the illegality of the business. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil
action by prescription, in cases where during the prosecution of the criminal action and prior to
its extinction, the private-offended party instituted together therewith the civil action. In such
The bad faith of the petitioners completes the elements of the criminal offense of violation of Sec. case, the statute of limitations on the civil liability is deemed interrupted during the pendency of
3(e) of Republic Act No. 3019. The same bad faith serves as the source of the civil liability of the criminal case, conformably with provisions of Article 1155 of the New Civil Code, which
Asilo, Angeles, and Mayor Comendador. should thereby avoid any apprehension on a possible privation of right by prescription.

It must be noted that when Angeles died on 16 November 1997, a motion to drop him as an Upon death of the accused pending appeal of his conviction, the criminal action is extinguished
accused was filed by his counsel with no objection on the part of the prosecution. The inasmuch as there is no longer a defendant to stand as the accused; the civil action instituted
Sandiganbayan acted favorably on the motion and issued an Order dismissing all the cases filed therein for recovery of civil liability ex delicto is ipso facto extinguished, grounded as it is on the
against Angeles. On the other hand, when Mayor Comendador died and an adverse decision was criminal.48
rendered against him which resulted in the filing of a motion for reconsideration by Mayor
Comendadors counsel, the prosecution opposed the Motion specifying the ground that the civil
liability did not arise from delict, hence, survived the death of the accused. The Sandiganbayan The New Civil Code provisions under the Chapter, Human Relations, were cited by the
upheld the opposition of the prosecution which disposition was not appealed. prosecution to substantiate its argument that the civil action based therein is an independent
one, thus, will stand despite the death of the accused during the pendency of the case.

69
On the other hand, the defense invoked Section 4 of Presidential Decree No. 1606, as amended In causing or doing the forcible demolition of the store in question, the individual natural
by Republic Act No. 8249, in support of its argument that the civil action was dependent upon defendants did not only act with grave abuse of authority but usurped a power which belongs to
the criminal action, thus, was extinguished upon the death of the accused. The law provides our courts of justice; such actuations were done with malice or in bad faith and constitute an
that: invasion of the property rights of plaintiff(s) without due process of law.

Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action xxxx
and the corresponding civil action for the recovery of civil liability arising from the offense charged
shall at all times be simultaneously instituted with, and jointly determined in the same
proceeding by, the Sandiganbayan, the filing of the criminal action being deemed to necessarily The Court is in one with the prosecution that there was a violation of the right to private property
carry with it the filing of the civil action, and no right to reserve the filing of such action shall be of the Spouses Bombasi. The accused public officials should have accorded the spouses the due
recognized. (Emphasis ours) process of law guaranteed by the Constitution and New Civil Code. The Sangguniang Bayan
Resolutions as asserted by the defense will not, as already shown, justify demolition of the store
without court order. This Court in a number of decisions 51 held that even if there is already a
We agree with the prosecution. writ of execution, there must still be a need for a special order for the purpose of demolition
issued by the court before the officer in charge can destroy, demolish or remove improvements
over the contested property.52 The pertinent provisions are the following:
Death of Mayor Comendador during the pendency of the case could have extinguished the civil
liability if the same arose directly from the crime committed. However, in this case, the civil
liability is based on another source of obligation, the law on human relations.49 The pertinent Before the removal of an improvement must take place, there must be a special order, hearing
articles follow: and reasonable notice to remove. Section 10(d), Rule 39 of the Rules of Court provides:

Art. 31 of the Civil Code states: (d) Removal of improvements on property subject of execution. When the property subject of
execution contains improvements constructed or planted by the judgment obligor or his
agent, the officer shall not destroy, demolish or remove said improvements except upon special
When the civil action is based on an obligation not arising from the act or omission complained order of the court, issued upon motion of the judgment obligee after due hearing and after the
of as a felony, such civil action may proceed independently of the criminal proceedings and former has failed to remove the same within a reasonable time fixed by the court.
regardless of the result of the latter.

The above-stated rule is clear and needs no interpretation. If demolition is necessary, there must
And, Art. 32(6) states: be a hearing on the motion filed and with due notices to the parties for the issuance of a special
order of demolition.53
Any public officer or employee, or any private individual, who directly or indirectly obstructs,
defeats, violates or in any manner impedes or impairs any of the following rights and liberties of This special need for a court order even if an ejectment case has successfully been litigated,
another person shall be liable to the latter for damages: underscores the independent basis for civil liability, in this case, where no case was even filed
by the municipality.
(6) The right against deprivation of property without due process of law;
The requirement of a special order of demolition is based on the rudiments of justice and fair
xxxx play. It frowns upon arbitrariness and oppressive conduct in the execution of an otherwise
legitimate act. It is an amplification of the provision of the Civil Code that every person must, in
the exercise of his rights and in the performance of his duties, act with justice, give everyone his
In any of the cases referred to in this article, whether or not the defendant's act or omission due, and observe honesty and good faith.54
constitutes a criminal offense, the aggrieved party has a right to commence an entirely separate
and distinct civil action for damages, and for other relief. Such civil action shall proceed
independently of any criminal prosecution (if the latter be instituted), and may be proved by a Notably, the fact that a separate civil action precisely based on due process violations was filed
preponderance of evidence. even ahead of the criminal case, is complemented by the fact that the deceased plaintiff
Comendador was substituted by his widow, herein petitioner Victoria who specified in her
petition that she has "substituted him as petitioner in the above captioned case." Section 1, Rule
As held in Aberca v. Ver: III of the 1985 Rules in Criminal Procedure mentioned in Bayotas is, therefore, not applicable.
Truly, the Sandiganbayan was correct when it maintained the separate docketing of the civil and
criminal cases before it although their consolidation was erroneously based on Section 4 of
It is obvious that the purpose of the above codal provision [Art. 32 of the New Civil Code] is to Presidential Decree No. 1606 which deals with civil liability "arising from the offense charged."
provide a sanction to the deeply cherished rights and freedoms enshrined in the Constitution.
Its message is clear; no man may seek to violate those sacred rights with impunity. x x x. 50
We must, however, correct the amount of damages awarded to the Spouses Bombasi.

Indeed, the basic facts of this case point squarely to the applicability of the law on human
relations. First, the complaint for civil liability was filed way AHEAD of the information on the To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a
Anti-Graft Law. And, the complaint for damages specifically invoked defendant Mayor reasonable degree of certainty, premised upon competent proof and on the best evidence
Comendadors violation of plaintiffs right to due process. Thus: obtainable.55 In this case, the Court finds that the only evidence presented to prove the actual
damages incurred was the itemized list of damaged and lost items 56 prepared by Engineer
Cabrega, an engineer commissioned by the Spouses Bombasi to estimate the costs.
xxxx

70
As held by this Court in Marikina Auto Line Transport Corporation v. People of the Philippines, 57 substituted by Victoria Bueta Vda. De Comendador, are hereby declared solidarily liable to the
Spouses Bombasi for temperate damages in the amount of P200,000.00 and moral damages in
the amount of P100,000.00.
x x x [W]e agree with the contention of petitioners that respondents failed to prove that the
damages to the terrace caused by the incident amounted to P100,000.00. The only evidence
adduced by respondents to prove actual damages claimed by private respondent were the Costs against the petitioners-appellants.
summary computation of damage made by Engr. Jesus R. Regal, Jr. amounting to P171,088.46
and the receipt issued by the BB Construction and Steel Fabricator to private respondent
for P35,000.00 representing cost for carpentry works, masonry, welding, and electrical works. SO ORDERED.
Respondents failed to present Regal to testify on his estimation. In its five-page decision, the trial
court awarded P150,000.00 as actual damages to private respondent but failed to state the JOSE PORTUGAL PEREZ
factual basis for such award. Indeed, the trial court merely declared in the decretal portion of its Associate Justice
decision that the "sum of P150,000.00 as reasonable compensation sustained by plaintiff for her
damaged apartment." The appellate court, for its part, failed to explain how it arrived at the
amount of P100,000.00 in its three-page decision. Thus, the appellate court merely declared:

With respect to the civil liability of the appellants, they contend that there was no urgent
necessity to completely demolish the apartment in question considering the nature of the
damages sustained as a result of the accident. Consequently, appellants continue, the award
of P150,000.00 as compensation sustained by the plaintiff-appellee for her damaged apartment
is an unconscionable amount.

Further, in one case,58 this Court held that the amount claimed by the respondent-claimants
witness as to the actual amount of damages "should be admitted with extreme caution
considering that, because it was a bare assertion, it should be supported by independent
evidence." The Court further said that whatever claim the respondent witness would allege must
be appreciated in consideration of his particular self-interest.59 There must still be a need for the
examination of the documentary evidence presented by the claimants to support its claim with
regard to the actual amount of damages.

The price quotation made by Engineer Cabrega presented as an exhibit60 partakes of the nature
of hearsay evidence considering that the person who issued them was not presented as a
witness.61 Any evidence, whether oral or documentary, is hearsay if its probative value is not
based on the personal knowledge of the witness but on the knowledge of another person who is
not on the witness stand. Hearsay evidence, whether objected to or not, has no probative value
unless the proponent can show that the evidence falls within the exceptions to the hearsay
evidence rule.62 Further, exhibits do not fall under any of the exceptions provided under Sections
37 to 47 of Rule 130 of the Rules of Court.

Though there is no sufficient evidence to award the actual damages claimed, this Court grants
temperate damages for P200,000.00 in view of the loss suffered by the Spouses Bombasi.
Temperate damages are awarded in accordance with Art. 2224 of the New Civil Code when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the nature
of the case, be proven with certainty. The amount of temperate or moderated damages is usually
left to the discretion of the courts but the same should be reasonable, bearing in mind that the
temperate damages should be more than nominal but less than compensatory.63 Without a
doubt, the Spouses Bombasi suffered some form of pecuniary loss in the impairment of their
store. Based on the record of the case,64 the demolished store was housed on a two-story building
located at the markets commercial area and its concrete walls remained strong and not affected
by the fire. However, due to the failure of the Spouses Bombasi to prove the exact amount of
damage in accordance with the Rules of Evidence, 65 this court finds that P200,000.00 is the
amount just and reasonable under the circumstances.

WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of the Sandiganbayan
dated 28 April 2003 is hereby AFFIRMED WITH MODIFICATION. The Court affirms the decision
finding the accused Paulino S. Asilo, Jr. and Demetrio T. Comendador guilty of violating Section
3(e) of Republic Act No. 3019. We declare the finality of the dismissal of both the criminal and
civil cases against Alberto S. Angeles as the same was not appealed. In view of the death of
Demetrio T. Comendador pending trial, his criminal liability is extinguished; but his civil liability
survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T. Comendador, as
71
Republic of the Philippines However, in a letter10 dated February 7, 2013, Ramoncito D. Roque (Roque), Officer-in-Charge,
SUPREME COURT Inmate Documents and Processing Division of the Bureau of Corrections, informed the Court
Manila that Amistoso had died on December 11, 2012 at the New Bilibid Prison (NBP), Muntinlupa City.
Roque attached to his letter a photocopy of the Death Report 11 signed by Marylou V. Arbatin,
MD, Medical Officer III, NBP, stating that Amistoso, 62 years old, died at about 5:00 p.m. on
FIRST DIVISION December 11, 2012 of Cardio Respiratory Arrest. Roques letter was received by the Court on
February 12, 2013.
G.R. No. 201447 August 28, 2013
Penal Institution Supervisor (PIS) Fajardo R. Lansangan, Sr. (Lansangan), Officer-in-Charge,
PEOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, Maximum Security Compound, NBP, wrote another letter 12 dated February 12, 2013, likewise
vs. informing the Court of Amistosos death on December 11, 2012. PIS Lansangan appended to his
ANASTACIO AMISTOSO Y BROCA, ACCUSED-APPELLANT. letter a mere photocopy of Amistosos Death Certificate. 13 The Court received PIS Lansangans
letter on February 18, 2013.

RESOLUTION
Yet, on February 22, 2013, the Public Attorneys Office (PAO), which represented Amistoso and
which was apparently also unaware of its clients demise, still filed a Motion for
LEONARDO-DE CASTRO, J.: Reconsideration14 of the Courts Decision dated January 9, 2013.

Accused-appellant Anastacio Amistoso y Broca (Amistoso) was charged before the Regional Trial In a Resolution15 dated March 20, 2013, the Court required Roque to submit a certified true copy
Court (RTC) of Masbate City, Branch 48, in Criminal Case No. 10106, with the rape of his of Amistosos Death Certificate within 10 days from notice and deferred action on the Motion for
daughter, AAA,1 alleged to be 12 years old at the time of the incident. The Reconsideration filed by the PAO pending compliance with the Courts former directive.
Information2 specifically charged Amistoso with statutory rape under Article 266-A, paragraph
(1)(d) of the Revised Penal Code, as amended.
In a letter16 dated June 20, 2013, and received by the Court on June 25, 2013, PIS Lansangan
finally provided the Court with a certified true copy of Amistosos Death Certificate.17
After trial, on March 23, 2006, the RTC promulgated its Decision3 finding Amistoso guilty, not of
statutory rape, but of qualified rape under Article 266-A, paragraph (1)(a), in relation to Article
266-B, paragraph (1), of the Revised Penal Code, as amended. The dispositive portion of the RTC Article 89 of the Revised Penal Code provides:
judgment reads:
ART. 89. How criminal liability is totally extinguished. Criminal liability is totally extinguished:
WHEREFORE, accused ANASTACIO AMISTOSO, having been convicted of Qualified Rape, he is
hereby sentenced to the capital penalty of DEATH; to pay the victim the sum of Seventy[-]Five 1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability
Thousand Pesos (PhP75,000.00) as indemnity; to pay the said victim the sum of Fifty Thousand therefore is extinguished only when the death of the offender occurs before final judgment[.]
Pesos (PhP50,000.00) as for moral damages, and to pay the costs. 4

In People v. Bayotas,18 the Court laid down the rules in case the accused dies prior to final
The Court of Appeals, in its Decision5 dated August 25, 2011, in CA-G.R. CR.-H.C. No. 04012, judgment:
affirmed Amistosos conviction for qualified rape but modified the penalties imposed in
accordance with Republic Act No. 93466 and the latest jurisprudence on awards of damages. The
appellate court decreed: 1. Death of the accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon. As opined by Justice
Regalado, in this regard, "the death of the accused prior to final judgment terminates
WHEREFORE, the appeal is DISMISSED and the assailed Decision dated March 23, 2006 of the his criminal liability and only the civil liability directly arising from and based solely
Regional Trial Court of Masbate City, Branch 48, in Criminal Case No. 10106 is AFFIRMED WITH on the offense committed, i.e., civil liability ex delicto in senso strictiore."
MODIFICATION.

2. Corollarily, the claim for civil liability survives notwithstanding the death of
Accused-appellant Anastacio Amistoso is sentenced to suffer the penalty of reclusion perpetua accused, if the same may also be predicated on a source of obligation other than delict.
without eligibility for parole. In addition to civil indemnity in the amount of P75,000.00, he is Article 1157 of the Civil Code enumerates these other sources of obligation from which
ordered to pay the victim P75,000.00 as moral damages and P30,000.00 as exemplary damages.7 the civil liability may arise as a result of the same act or omission:

Insisting upon his innocence, Amistoso appealed to this Court. In its Decision 8 dated January 9, a) Law
2013, the Court affirmed with modification the judgment of conviction against Amistoso,
expressly making him liable for interest on the amounts of damages awarded, to wit:
b) Contracts

WHEREFORE, in view of the foregoing, the instant appeal of Anastacio Amistoso y Broca is
DENIED. The Decision dated August 25, 2011 of the Court of Appeals in CA-G.R. CR.-H.C. No. c) Quasi-contracts
04012 is AFFIRMED with the MODIFICATION that Amistoso is further ORDERED to pay interest
on all damages awarded at the legal rate of 6% per annum from the date of finality of this
Decision.9 d) x x x

72
e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for
recovery therefor may be pursued but only by way of filing a separate civil action and
subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended.
This separate civil action may be enforced either against the executor/administrator
or the estate of the accused, depending on the source of obligation upon which the
same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the
criminal action and prior to its extinction, the private-offended party instituted
together therewith the civil action. In such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of the criminal case, conformably
with provisions of Article 1155 of the Civil Code, that should thereby avoid any
apprehension on a possible privation of right by prescription. (Citations omitted.)

Given the foregoing, it is clear that the death of the accused pending appeal of his conviction
extinguishes his criminal liability, as well as his civil liability ex delicto. Since the criminal action
is extinguished inasmuch as there is no longer a defendant to stand as the accused, the civil
action instituted therein for recovery of civil liability ex delicto is ipso facto extinguished,
grounded as it is on the criminal case.19

Undeniably, Amistosos death on December 11, 2012 preceded the promulgation by the Court of
its Decision on January 9, 2013. When Amistoso died, his appeal before the Court was still
pending and unresolved. The Court ruled upon Amistosos appeal only because it was not
immediately informed of his death.1wphi1

Amistosos death on December 11, 2012 renders the Courts Decision dated January 9, 2013,
even though affirming Amistosos conviction, irrelevant and ineffectual. Moreover, said Decision
has not yet become final, and the Court still has the jurisdiction to set it aside.

WHEREFORE, the Court RESOLVES to:

(1) NOTE PIS Lansangans letter dated June 20, 2013 providing the Court with a
certified true copy of Amistosos Death Certificate;

(2) SET ASIDE its Decision dated January 9, 2013 and DISMISS Criminal Case No.
10106 before the RTC of Masbate City, Branch 48 by reason of Amistosos death on
December 11, 2012; and

(3) NOTE WITHOUT ACTION the Motion for Reconsideration of the Courts Decision
dated January 9, 2013 filed by the PAO given the Courts actions in the preceding
paragraphs.

SO ORDERED.

TERESITA J. LEONARDO-DE CASTRO


Associate Justice

73
Republic of the Philippines Additionally, respondents averred that the mishap deprived them of a daily income of P1,000.00.
SUPREME COURT Engaged in the business of buying plastic scraps and delivering them to recycling plants,
Manila respondents claimed that the Isuzu truck was vital in the furtherance of their business.

SECOND DIVISION For their part, petitioners capitalized on the issue of ownership of the bus in question.
Respondents argued that although the registered owner was Lim, the actual owner of the bus
was SPO1 Cirilo Enriquez (Enriquez), who had the bus attached with Mayamy Transportation
G.R. No. 160110 June 18, 2014 Company (Mayamy Transport) under the so-called "kabit system." Respondents then impleaded
both Lim and Enriquez.
MARIANO C. MENDOZA and ELVIRA LIM, Petitioners,
vs. Petitioners, on the other hand, presented Teresita Gutierrez (Gutierrez), whose testimony was
SPOUSES LEONORA J. GOMEZ and GABRIEL V. GOMEZ, Respondents. offered to prove that Mayamy Bus or Mayamy Transport is a business name registered under her
name, and that such business is a sole proprietorship. Such was presented by petitioners to
DECISION rebut the allegation of respondents that Mayamy Transport is a corporation; 15 and to show,
moreover, that although Gutierrez is the sole proprietor of Mayamy Transport, she was not
impleaded by respondents in the case at bar. 16
PEREZ, J.:
After weighing the evidence, the RTC found Mendoza liable for direct personal negligence under
Assailed in the present appeal by certiorari is the Decision1 dated 29 September 2003 of the Article 2176 of the Civil Code, and it also found Lim vicariously liable under Article 2180 of the
Special Fourth Division of the Court of Appeals (CA) in CA-G.R. CV No. 71877, which affirmed same Code.
with modification the Decision2dated 31 January 2001 of the Regional Trial Court (RTC), Branch
172, Valenzuela City in Civil Case No. 5352-V-97, and which effectively allowed the award of
actual, moral, and exemplary damages, as well as attorney's fees and costs of the suit in favor of As regards Lim, the RTC relied on the Certificate of Registration issued by the Land
respondent Spouses Leonora and Gabriel Gomez (respondents). Transportation Office on 9 December 199617 in concluding that she is the registered owner of
the bus in question. Although actually owned by Enriquez, following the established principle in
transportation law, Lim, as the registered owner, is the one who can be held liable.
Antecedent Facts
Thus, the RTC disposed of the case as follows:
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW 582, 3 owned by
respondent Leonora J. Gomez (Leonora)4 and driven by Antenojenes Perez (Perez),5 was hit by a
Mayamy Transportation bus (Mayamy bus) with temporary plate number 1376-1280,6 registered WHEREFORE, judgment is hereby rendered in favor of the [respondents] and against the
under the name of petitioner Elvira Lim (Lim)7 and driven by petitioner Mariano C. Mendoza [petitioners]:
(Mendoza).8
1. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and
Owing to the incident, an Information for reckless imprudence resulting in damage to property severally, the costs of repair of the damaged vehicle in the amount of P142,757.40;
and multiple physical injuries was filed against Mendoza. 9 Mendoza, however, eluded arrest,
thus, respondents filed a separate complaint for damages against Mendoza and Lim, seeking 2. Ordering the defendants except Enriquez to pay [respondents], jointly and severally,
actual damages, compensation for lost income, moral damages, exemplary damages, attorneys the amount of P1,000.00 per day from March 7, 1997 up to November 1997
fees and costs of the suit.10 This was docketed as Civil Case No. 5352-V-97. representing the unrealized income of the [respondents] when the incident transpired
up to the time the damaged Isuzu truck was repaired;
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating officer of the case, at around
5:30 a.m., the Isuzu truck, coming from Katipunan Road and heading towards E. Rodriguez, Sr. 3. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and
Avenue, was travelling along the downward portion of Boni Serrano Avenue when, upon reaching severally, the amount of P100,000.00 as moral damages, plus a separate amount
the corner of Riviera Street, fronting St. Ignatius Village, its left front portion was hit by the of P50,000.00 as exemplary damages;
Mayamy bus.11 According to PO1 Rosales, the Mayamy bus, while traversing the opposite lane,
intruded on the lane occupied by the Isuzu truck.12
4. Ordering the [petitioners] except Enriquez to pay [respondents], jointly and
severally, the amount of P50,000.00 as attorneys fees; 5. Ordering the [petitioners]
PO1 Rosales also reported that Mendoza tried to escape by speeding away, but he was except Enriquez to pay [respondents] the costs of suit. 18
apprehended in Katipunan Road corner C. P. Garcia Avenue by one Traffic Enforcer Galante and
a security guard of St. Ignatius Village.13
Displeased, petitioners appealed to the CA, which appeal was docketed as CA-G.R. CV No. 71877.
After evaluating the damages awarded by the RTC, such were affirmed by the CA with the
As a result of the incident, Perez,as well as the helpers on board the Isuzu truck, namely Melchor exception of the award of unrealized income which the CA ordered deleted, viz:
V. Anla (Anla), Romeo J. Banca (Banca), and Jimmy Repisada (Repisada), sustained injuries
necessitating medical treatment amounting to P11,267.35,which amount was shouldered by
respondents. Moreover, the Isuzu truck sustained extensive damages on its cowl, chassis, lights WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The judgment of the
and steering wheel, amounting to P142,757.40.14 Regional Trial Court of Valenzuela City, Branch 172 dated January 31, 2001, is MODIFIED, in
that the award of P1,000.00 per day from March 1997 up to November 1997 representing

74
unrealized income is DELETED. The award of P142,757.40 for the cost of repair of the damaged The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions,
vehicle, the award of P100,000.00 as moral damages, the award of P50,000.00 as exemplary but also for those of persons for whom one is responsible.
damages, the award of P50,000.00 as attorneys fees and the costs of the suit are hereby
MAINTAINED.19
xxxx

The Present Petition


Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
Unsatisfied with the CA ruling, petitioners filed an appeal by certiorari before the Court, raising business of industry.
the following issues:20

The first question to address, then, is whether or not Mendozas negligence was duly proven.
1. The court a quo has decided questions of substance in a way not in accord with law Negligence is defined as the failure to observe for the protection of the interests of another person,
or with the applicable decisions of the Supreme Court when it awarded: that degree of care, precaution and vigilance which the circumstances justly demand, whereby
such other person suffers injury.21

a. Moral damages in spite of the fact that the [respondents] cause of action
is clearly based on quasi-delict and [respondents] did not sustain physical As found by the RTC, and affirmed by the CA, Mendoza was negligent in driving the subject
injuries to be entitled thereto pursuant to Article 2219 (2) of the New Civil Mayamy bus, as demonstrated by the fact that, at the time of the collision, the bus intruded on
Code and pertinent decisions of the Supreme Court to that effect. The court the lane intended for the Isuzu truck. Having encroached on the opposite lane, Mendoza was
a quo erroneously concluded that the driver acted in bad faith and clearly in violation of traffic laws. Article2185 of the Civil Code provides that unless there is proof
erroneously applied the provision of Article 21 of the same code to justify to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the
the award for bad faith is not consistent with quasi-delict which is founded time of the mishap, he was violating any traffic regulation. In the case at bar, Mendozas violation
on fault or negligence. of traffic laws was the proximate cause of the harm.

b. Exemplary damages in spite of the fact that there is no finding that the Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken
vehicular accident was due to petitioner-drivers gross negligence to be by any efficient intervening cause, produces the injury, and without which the result would not
entitled thereto pursuant to Article 2231 of the New Civil Code and have occurred. And more comprehensively, the proximate legal cause is that acting first and
pertinent decisions of the Supreme Court to that effect. The factual basis of producing the injury, either immediately or by setting other events in motion, all constituting a
the court a quo that "the act of the driver of the bus in attempting to escape natural and continuous chain of events, each having a close causal connection with its
after causing the accident in wanton disregard of the consequences of his immediate predecessor, the final event in the chain immediately effecting the injury as a natural
negligent act is such gross negligence that justifies an award of exemplary and probable result of the cause which first acted, under such circumstances that the person
damages" is an act after the fact which is not within the contemplation of responsible for the first event should, as an ordinary prudent and intelligent person, have
Article 2231 of the New Civil Code. reasonable ground to expect at the moment of his act or default that an injury to some person
might probably result therefrom.22

c. Attorneys fees in spite of the fact that the assailed decisions of the trial
court and the court a quo are bereft with jurisdictions for the award of The evidence on record shows that before the collision, the Isuzu truck was in its rightful lane,
attorneys fees pursuant to the pertinent decisions of the Supreme Court and was even at a stop, having been flagged down by a security guard of St. Ignatius
on the matter and provision Article 2208 of the New Civil Code. The court a Village.23 The mishap occurred when the Mayamy bus, travelling at a fast speed as shown by the
quo erroneously applied the decision of the Supreme Court in Baas, Jr. impact of the collision, and going in the opposite direction as that of the Isuzu truck, encroached
vs. Court of Appeals, 325 SCRA 259. on the lane rightfully occupied by said Isuzu truck, and caused the latter to spin, injuring Perez,
Anla, Banca, and Repisada, and considerably damaging the Isuzu truck.

The Courts Ruling


Having settled the fact of Mendozas negligence, then, the next question that confronts us is who
may beheld liable. According to Manresa, liability for personal acts and omissions is founded on
The petition is partially meritorious. that indisputable principle of justice recognized by all legislations that when a person by his act
or omission causes damage or prejudice to another, a juridical relation is created by virtue of
Respondents anchor their claim for damages on Mendozas negligence, banking on Article 2176 which the injured person acquires a right to be indemnified and the person causing the damage
of the Civil Code, to wit: is charged with the corresponding duty of repairing the damage. The reason for this is found in
the obvious truth that man should subordinate his acts to the precepts of prudence and if he
fails to observe them and causes damage to another, he must repair the damage. 24 His negligence
Whoever by act or omission causes damage to another, there being fault or negligence, is obliged having caused the damage, Mendoza is certainly liable to repair said damage.
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this
Chapter. Additionally, Mendozas employer may also be held liable under the doctrine of vicarious liability
or imputed negligence. Under such doctrine, a person who has not committed the act or omission
which caused damage or injury to another may nevertheless be held civilly liable to the latter
In impleading Lim, on the other hand, respondents invoke the latters vicarious liability as either directly or subsidiarily under certain circumstances. 25 In our jurisdiction, vicarious
espoused in Article 2180 of the same Code: liability or imputed negligence is embodied in Article 2180 of the Civil Code and the basis for
damages in the action under said article is the direct and primary negligence of the employer in
the selection or supervision, or both, of his employee. 26

75
In the case at bar, who is deemed as Mendozas employer? Is it Enriquez, the actual owner of the Having identified the persons liable, our next question is what may be awarded.
bus or Lim, the registered owner of the bus?

Actual or Compensatory Damages. Actual or compensatory damages are those awarded in


In Filcar Transport Services v. Espinas, 27 we held that the registered owner is deemed the satisfaction of, or in recompense for, loss or injury sustained. They simply make good or replace
employer of the negligent driver, and is thus vicariously liable under Article 2176, in relation to the loss caused by the wrong.34
Article 2180, of the Civil Code. Citing Equitable Leasing Corporation v. Suyom, 28 the Court ruled
that in so far as third persons are concerned, the registered owner of the motor vehicle is the
employer of the negligent driver, and the actual employer is considered merely as an agent of Article 2202 of the Civil Code provides that in crimes and quasi delicts, the defendant shall be
such owner. Thus, whether there is an employer-employee relationship between the registered liable for all damages which are the natural and probable consequences of the act or omission
owner and the driver is irrelevant in determining the liability of the registered owner who the law complained of. It is not necessary that such damages have been foreseen or could have
holds primarily and directly responsible for any accident, injury or death caused by the operation reasonably been foreseen by the defendant. Article 2199 of the same Code, however, sets the
of the vehicle in the streets and highways.29 limitation that, except as provided by law or by stipulation, one is entitled to an adequate
compensation only for such pecuniary loss suffered by him as he has duly proved. As such, to
warrant an award of actual or compensatory damages, the claimant must prove that the damage
As early as Erezo v. Jepte,30 the Court, speaking through Justice Alejo Labrador summarized the sustained is the natural and probable consequences of the negligent act and, moreover, the
justification for holding the registered owner directly liable, to wit: claimant must adequately prove the amount of such damage.

x x x The main aim of motor vehicle registration is to identify the owner so that if any accident In the case at bar, the RTC, basing on the receipts submitted by respondents and which receipts
happens, or that any damage or injury is caused by the vehicles on the public highways, petitioners had the opportunity to examine, found that the total repairs on the Isuzu truck
responsibility therefore can be fixed on a definite individual, the registered owner. Instances are amounted to P142,757.40, and that the full hospitalization and medical expenses of Perez, Anla,
numerous where vehicle running on public highways caused accidents or injuries to pedestrians Banca, and Repisada amounted to P11,267.35. As such, these are the amounts that respondents
or other vehicles without positive identification of the owner or drivers, or with very scant means are entitled to as actual and compensatory damages.
of identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is primarily ordained, in the interest of the determination of
persons responsible for damages or injuries caused on public highways. Although respondents alleged in their complaint that the damage to their Isuzu truck caused
them the loss of a daily income of P1,000.00, such claim was not duly substantiated by any
evidence on record, and thus cannot be awarded in their favor.
"One of the principal purposes of motor vehicles legislation is identification of the vehicle and of
the operator, in case of accident; and another is that the knowledge that means of detection are
always available may act as a deterrent from lax observance of the law and of the rules of Moral Damages. Moral damages are awarded to enable the injured party to obtain means,
conservative and safe operation. Whatever purpose there may be in these statutes, it is diversions or amusements that will serve to alleviate the moral suffering he has undergone, by
subordinate at the last to the primary purpose of rendering it certain that the violator of the law reason of the defendant's culpable action.35
or of the rules of safety shall not escape because of lack of means to discover him." The purpose
of the statute is thwarted, and the displayed number becomes a "snare and delusion," if courts In prayers for moral damages, however, recovery is more an exception rather than the rule. Moral
will entertain such defenses as that put forward by appellee in this case. No responsible person damages are not meant to be punitive but are designed to compensate and alleviate the physical
or corporation could be held liable for the most outrageous acts of negligence, if they should be suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
allowed to place a "middleman" between them and the public, and escape liability by the manner moral shock, social humiliation, and similar harm unjustly caused to a person. To be entitled to
in which they recompense their servants.31 such an award, the claimant must satisfactorily prove that he has suffered damages and that
the injury causing it has sprung from any of the cases listed in Articles 2219 and 2220 of the
Generally, when an injury is caused by the negligence of a servant or employee, there instantly Civil Code. Moreover, the damages must be shown to be the proximate result of a wrongful act
arises a presumption of law that there was negligence on the part of the master or employer or omission. The claimant must thus establish the factual basis of the damages and its causal
either in the selection of the servant or employee (culpa in eligiendo) or in the supervision over tie with the acts of the defendant.36
him after the selection (culpa vigilando), or both. The presumption is juris tantum and not juris
et de jure; consequently, it may be rebutted. Accordingly, the general rule is that if the employer In fine, an award of moral damages calls for the presentation of 1) evidence of besmirched
shows to the satisfaction of the court that in the selection and supervision of his employee he reputation or physical, mental or psychological suffering sustained by the claimant; 2)a culpable
has exercised the care and diligence of a good father of a family, the presumption is overcome act or omission factually established; 3) proof that the wrongful act or omission of the defendant
and he is relieved of liability.32 However, with the enactment of the motor vehicle registration law, is the proximate cause of the damages sustained by the claimant; and 4) the proof that the act
the defenses available under Article 2180 of the Civil Code - that the employee acts beyond the is predicated on any of the instances expressed or envisioned by Article 2219 and Article 2220
scope of his assigned task or that it exercised the due diligence of a good father of a family to of the Civil Code.37
prevent damage are no longer available to the registered owner of the motor vehicle, because
the motor vehicle registration law, to a certain extent, modified Article 2180. 33
A review of the complaint and the transcript of stenographic notes yields the pronouncement
that respondents neither alleged nor offered any evidence of besmirched reputation or physical,
As such, there can be no other conclusion but to hold Lim vicariously liable with Mendoza. mental or psychological suffering incurred by them. All that Leonora and her counsel had to say
on the matter of damages other than actual or compensatory damages is this: 38
This does not mean, however, that Lim is left without any recourse against Enriquez and
Mendoza. Under the civil law principle of unjust enrichment, the registered owner of the motor Q: Did you ever spend covering attorneys fees?
vehicle has a right to be indemnified by the actual employer of the driver; and under Article 2181
of the Civil Code, whoever pays for the damage caused by his dependents or employees may
recover from the latter what he has paid or delivered in satisfaction of the claim. A: Yes, sir. P50,000.00.

76
Q: Aside from the actual damage that you have mentioned x x x, how much more would you like requisite positive misconduct which will support a claim for punitive damages, the courts have
this Court to award you by way of moral damages? used such descriptive terms as willful, wanton, grossly negligent, reckless, or malicious, either
alone or in combination.45

A: P100,000.00, sir.
Gross negligence is the absence of care or diligence as to amount to a reckless disregard of the
safety of persons or property. It evinces a thoughtless disregard of consequences without exerting
Q: How about exemplary damages? any effort to avoid them.46

A: P50,000.00, sir. In the case at bar, having established respondents right to compensatory damages, exemplary
damages are also in order, given the fact that Mendoza was grossly negligent in driving the
Q: What happened to you, what did you feel when the defendants failed to immediately repair Mayamy bus. His act of intruding or encroaching on the lane rightfully occupied by the Isuzu
your vehicle that was damaged Madam Witness? truck shows his reckless disregard for safety.

A: I have incurred expenses and I was forced to apply for a loan, sir. In Bao v. Bachelor Express, Inc., et al.,47 where an erring bus, in the process of overtaking a
jeepney, also encroached on the opposite lane, and consequently collided with a dump truck, the
Court held the driver of the bus grossly negligent and affirmed the award of exemplary damages.
In Kierulf v. CA,39 we observed that this Court cannot remind the bench and the bar often enough Attorneys Fees. Article 2208 of the Civil Code enumerates the instances when attorneys fees
that in order that moral damages may be awarded, there must be pleading and proof of moral may be recovered:
suffering, mental anguish, fright and the like. Citing Francisco v. GSIS, 40 the Court held that
there must be clear testimony on the anguish and other forms of mental suffering. Thus, if the
plaintiff fails to take the witness stand and testify as to his social humiliation, wounded feelings Art. 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than
and anxiety, moral damages cannot be awarded. judicial costs, cannot be recovered, except:

Moreover, respondents were not able to show that their claim properly falls under Articles 2219 (1) When exemplary damages are awarded;
and 2220 of the Civil Code. Respondents cannot rely on Article 2219 (2) of the Civil Code which
allows moral damages in quasi-delicts causing physical injuries because in physical injuries, (2) When the defendants act or omission has compelled the plaintiff to litigate with
moral damages are recoverable only by the injured party, 41 and in the case at bar, herein third persons or to incur expenses to protect his interest;
respondents were not the ones who were actually injured.

(3) In criminal cases of malicious prosecution against the plaintiff;


In B.F. Metal (Corp.) v. Sps. Lomotan, et al.,42 the Court, in a claim for damages based on quasi-
delict causing physical injuries, similarly disallowed an award of moral damages to the owners
of the damaged vehicle, when neither of them figured in the accident and sustained injuries. (4) In case of a clearly unfounded civil action or proceeding against the plaintiff;

Neither can respondents rely on Article 21 of the Civil Code as the RTC erroneously did. Article (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
21 deals with acts contra bonus mores, and has the following elements: (1) There is an act which plaintiffs valid and demandable claim;
is legal; (2) but which is contrary to morals, good custom, public order, or public policy; (3) and
it is done with intent to injure.43 In the present case, it can hardly be said that Mendozas
negligent driving and violation of traffic laws are legal acts. Moreover, it was not proven that (6) In actions for legal support;
Mendoza intended to injure Perez, et al. Thus, Article 21 finds no application to the case at bar.
All in all, we find that the RTC and the CA erred in granting moral damages to respondents. (7) In actions for the recovery of wages of household helpers, laborers and skilled
Exemplary Damages. Article 2229 of the Civil Code provides that exemplary or corrective workers;
damages are imposed, by way of example or correction for the public good, in addition to moral,
temperate, liquidated or compensatory damages. Article 2231 of the same Code further states
that in quasi-delicts, exemplary damages may be granted if the defendant acted with gross (8) In actions for indemnity under workmens compensation and employers liability
negligence. laws;

Our jurisprudence sets certain conditions when exemplary damages may be awarded: First, they (9) In a separate civil action to recover civil liability arising from a crime;
may be imposed by way of example or correction only in addition, among others, to compensatory
damages, and cannot be recovered as a matter of right, their determination depending upon the
amount of compensatory damages that may be awarded to the claimant. Second, the claimant (10) When at least double judicial costs are awarded;
must first establish his right to moral, temperate, liquidated or compensatory damages. Third,
the wrongful act must be accompanied by bad faith, and the award would be allowed only if the
(11) In any other case where the court deems it just and equitable that attorneys fees
guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. 44
and expenses of litigation should be recovered;

In motor vehicle accident cases, exemplary damages may be awarded where the defendants
In all cases, the attorneys fees and expenses of litigation must be reasonable.
misconduct is so flagrant as to transcend simple negligence and be tantamount to positive or
affirmative misconduct rather than passive or negative misconduct. In characterizing the

77
From the very opening sentence of Article 2208 of the Civil Code, it is clearly intended to retain 2) MAINTAIN the award of actual or compensatory damages in the amount
the award of attorneys fees as the exception in our law, as the general rule remains that of P142,757.40 for the repair of the Isuzu Elf truck, with legal interest beginning 31
attorneys fees are not recoverable in the absence of a stipulation thereto, the reason being that January 2001 until fully paid;
it is not sound policy to set a premium on the right to litigate. 48

3) GRANT additional actual or compensatory damages in the amount of P11,267.35


As such, in Spouses Agustin v. CA,49 we held that, the award of attorneys fees being an exception for the medical expenses shouldered by respondent Spouses Leonora and Gabriel
rather than the general rule, it is necessary for the court to make findings of facts and law that Gomez, with legal interest beginning 31 January 2001 until fully paid;
would bring the case within the exception and justify the grant of such award. Thus, the reason
for the award of attorneys fees must be stated in the text of the courts decision; otherwise, if it
is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. 4) DELETE the award of moral damages;

In the case at bar, the RTC Decision had nil discussion on the propriety of attorneys fees, and it 5) MAINTAIN the award of exemplary damages at P50,000.00;
merely awarded such in the dispositive. The CA Decision, on the other hand, merely stated that
the award of attorneys fees is merited as such is allowed when exemplary damages are 6) DELETE the award of attorney's fees; and
awarded.50 Following established jurisprudence,51however, the CA should have disallowed on
appeal said award of attorneys fees as the RTC failed to substantiate said award. Costs of suit.
The Rules of Court provide that, generally, costs shall be allowed to the prevailing party as a 7) MAINTAIN the award of costs of suit.
matter of course, thus:52

SO ORDERED.
Section 1. Costs ordinarily follow results of suit.- Unless otherwise provided in these rules, costs
shall be allowed to the prevailing party as a matter of course, but the court shall have power, for
special reasons, to adjudge that either party shall pay the costs of an action, or that the same be JOSE PORTUGAL PEREZ
divided, as may be equitable. No costs shall be allowed against the Republic of the Philippines, Associate Justice
unless otherwise provided by law.

In the present case, the award of costs of suit to respondents, as the prevailing party, is in order.
Interests.1wphi1 Interest by way of damages has been defined as interest allowed in actions for
breach of contractor tort for the unlawful detention of money already due. This type of interest
is frequently called "moratory interest." Interest as a part of damage, is allowed, not by
application of arbitrary rules, but as a result of the justice of the individual case and as
compensation to the injured party.53

The legal provision on interests in quasi-delicts is Article 2211 of the Civil Code which provides
that in crimes and quasi-delicts, interest as part of the damage, may, in a proper case, be
adjudicated in the discretion of the court.

Generally, interest is allowed as a matter of right for failure to pay liquidated claims when
due.54 For unliquidated claims, however, Article 2213 of the Civil Code provides that interest
cannot be recovered upon unliquidated claims or damages, except when the demand can be
established with reasonable certainty.

In the case at bar, although the award of exemplary damages is unliquidated in the sense that
petitioners cannot know for sure, before judgment, the exact amount that they are required to
pay to respondents, the award of actual or compensatory damages, however, such as the truck
repairs and medical expenses, is arguably liquidated in that they can be measured against a
reasonably certain standard.55 Moreover, justice would seem to require that the delay in paying
for past losses which can be made reasonably certain should be compensated through an award
of interest.56

WHEREFORE, premises considered, the Court Resolves to PARTIALLY GRANT the appeal by
certiorari, as follows:

1) DECLARE Mariano Mendoza and Elvira Lim solidarily liable to respondent Spouses
Leonora and Gabriel Gomez;

78
Republic of the Philippines At the outset, it is to be observed that the respondent appellate court primarily anchored its
SUPREME COURT decision on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil
Manila Code. 1 Pertinent portions of the appellate court's now assailed ruling state:

SECOND DIVISION Article 2180 (formerly Article 1903) of the Civil Code is an adoption from
the old Spanish Civil Code. The comments of Manresa and learned
authorities on its meaning should give way to present day changes. The law
is not fixed and flexible (sic); it must be dynamic. In fact, the greatest value
and significance of law as a rule of conduct in (sic) its flexibility to adopt to
G.R. No. 84698 February 4, 1992 changing social conditions and its capacity to meet the new challenges of
progress.

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P.


PAULINO, ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M. Construed in the light of modern day educational system, Article 2180
SORIANO, petitioners, cannot be construed in its narrow concept as held in the old case of Exconde
vs. vs. Capuno 2 and Mercado vs. Court of Appeals; 3hence, the ruling in
COURT OF APPEALS, HON. REGINA ORDOEZ-BENITEZ, in her capacity as Presiding the Palisoc 4 case that it should apply to all kinds of educational
Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA institutions, academic or vocational.
D. BAUTISTA, respondents.
At any rate, the law holds the teachers and heads of the school staff liable
Balgos and Perez for petitioners. unless they relieve themselves of such liability pursuant to the last
paragraph of Article 2180 by "proving that they observed all the diligence to
prevent damage." This can only be done at a trial on the merits of the case. 5
Collantes, Ramirez & Associates for private respondents.
While we agree with the respondent appellate court that the motion to dismiss the complaint was
correctly denied and the complaint should be tried on the merits, we do not however agree with
the premises of the appellate court's ruling.

PADILLA, J.:
Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco
parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza,
A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such cases, it had been
second-floor premises of the Philippine School of Business Administration (PSBA) prompted the stressed that the law (Article 2180) plainly provides that the damage should have been caused
parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided or inflicted by pupils or students of he educational institution sought to be held liable for the acts
over by Judge (now Court of Appeals justice) Regina Ordoez-Benitez, for damages against the of its pupils or students while in its custody. However, this material situation does not exist in
said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third the present case for, as earlier indicated, the assailants of Carlitos were not students of the
year commerce course at the PSBA. It was established that his assailants were not members of PSBA, for whose acts the school could be made liable.
the school's academic community but were elements from outside the school.

However, does the appellate court's failure to consider such material facts mean the exculpation
Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim of the petitioners from liability? It does not necessarily follow.
(President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col.
Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). Substantially,
the plaintiffs (now private respondents) sought to adjudge them liable for the victim's untimely When an academic institution accepts students for enrollment, there is established
demise due to their alleged negligence, recklessness and lack of security precautions, means and a contract between them, resulting in bilateral obligations which both parties are bound to
methods before, during and after the attack on the victim. During the proceedings a quo, Lt. M. comply with. 7 For its part, the school undertakes to provide the student with an education that
Soriano terminated his relationship with the other petitioners by resigning from his position in would presumably suffice to equip him with the necessary tools and skills to pursue higher
the school. education or a profession. On the other hand, the student covenants to abide by the school's
academic requirements and observe its rules and regulations.

Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they
are presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action Institutions of learning must also meet the implicit or "built-in" obligation of providing their
against them, as jurisprudence on the subject is to the effect that academic institutions, such as students with an atmosphere that promotes or assists in attaining its primary undertaking of
the PSBA, are beyond the ambit of the rule in the afore-stated article. imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher
mathematics or explore the realm of the arts and other sciences when bullets are flying or
grenades exploding in the air or where there looms around the school premises a constant threat
The respondent trial court, however, overruled petitioners' contention and thru an order dated 8 to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain
December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was peace and order within the campus premises and to prevent the breakdown thereof.
similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's
disposition before the respondent appellate court which, in a decision * promulgated on 10 June
1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court Because the circumstances of the present case evince a contractual relation between the PSBA
resolved to deny the petitioners' motion for reconsideration. Hence, this petition. and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176

79
shows that obligations arising from quasi-delicts or tort, also known as extra-contractual may still avoid liability by proving that the breach of its contractual obligation to the students
obligations, arise only between parties not otherwise bound by contract, whether express or was not due to its negligence, here statutorily defined to be the omission of that degree of
implied. However, this impression has not prevented this Court from determining the existence diligence which is required by the nature of the obligation and corresponding to the
of a tort even when there obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the circumstances of persons, time and place. 9
private respondent was awarded damages for his unwarranted expulsion from a first-class seat
aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-
airline's liability as one arising from tort, not one arising from a contract of carriage. In effect, Air As the proceedings a quo have yet to commence on the substance of the private respondents'
France is authority for the view that liability from tort may exist even if there is a contract, for complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial
the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 court can make such a determination from the evidence still to unfold.
Fed. 231).
WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin
This view was not all that revolutionary, for even as early as 1918, this Court was already of a (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the
similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: Court. Costs against the petitioners.

The field of non-contractual obligation is much broader than that of SO ORDERED.


contractual obligation, comprising, as it does, the whole extent of juridical
human relations. These two fields, figuratively speaking, concentric; that is Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.
to say, the mere fact that a person is bound to another by contract does not
relieve him from extra-contractual liability to such person. When such a
contractual relation exists the obligor may break the contract under such
conditions that the same act which constitutes a breach of the contract would
have constituted the source of an extra-contractual obligation had no contract
existed between the parties.

Immediately what comes to mind is the chapter of the Civil Code on Human Relations,
particularly Article 21, which provides:

Any person who wilfully causes loss or injury to another in a manner that
is contrary to morals, good custom or public policy shall compensate the
latter for the damage. (emphasis supplied).

Air France penalized the racist policy of the airline which emboldened the petitioner's employee
to forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had
a better right to the seat." In Austro-American, supra, the public embarrassment caused to the
passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award
damages to the latter. From the foregoing, it can be concluded that should the act which breaches
a contract be done in bad faith and be violative of Article 21, then there is a cause to view the
act as constituting a quasi-delict.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the
contract between the school and Bautista had been breached thru the former's negligence in
providing proper security measures. This would be for the trial court to determine. And, even if
there be a finding of negligence, the same could give rise generally to a breach of contractual
obligation only. Using the test of Cangco, supra, the negligence of the school would not be
relevant absent a contract. In fact, that negligence becomes material only because of the
contractual relation between PSBA and Bautista. In other words, a contractual relation is a
condition sine qua non to the school's liability. The negligence of the school cannot exist
independently of the contract, unless the negligence occurs under the circumstances set out in
Article 21 of the Civil Code.

This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-
mentioned, for conceptually a school, like a common carrier, cannot be an insurer of its students
against all risks. This is specially true in the populous student communities of the so-called
"university belt" in Manila where there have been reported several incidents ranging from gang
wars to other forms of hooliganism. It would not be equitable to expect of schools to
anticipate all types of violent trespass upon their premises, for notwithstanding the security
measures installed, the same may still fail against an individual or group determined to carry
out a nefarious deed inside school premises and environs. Should this be the case, the school

80
Republic of the Philippines The petitioners contend that their son was in the school to show his physics experiment as a
SUPREME COURT prerequisite to his graduation; hence, he was then under the custody of the private respondents.
Manila The private respondents submit that Alfredo Amadora had gone to the school only for the purpose
of submitting his physics report and that he was no longer in their custody because the semester
had already ended.
EN BANC

There is also the question of the identity of the gun used which the petitioners consider important
G.R. No. L-47745 April 15, 1988 because of an earlier incident which they claim underscores the negligence of the school and at
least one of the private respondents. It is not denied by the respondents that on April 7, 1972,
JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A. YLAYA Sergio Damaso, Jr., the dean of boys, confiscated from Jose Gumban an unlicensed pistol but
PANTALEON A. AMADORA, JOSE A. AMADORA III, LUCY A. AMADORA, ROSALINDA A. later returned it to him without making a report to the principal or taking any further action
AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA, VICENTE A. AMADORA and . 6 As Gumban was one of the companions of Daffon when the latter fired the gun that killed
MARIA TISCALINA A. AMADORA, petitioners Alfredo, the petitioners contend that this was the same pistol that had been confiscated from
vs. Gumban and that their son would not have been killed if it had not been returned by Damaso.
HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS, VICTOR LLUCH The respondents say, however, that there is no proof that the gun was the same firearm that
SERGIO P. DLMASO JR., CELESTINO DICON, ANIANO ABELLANA, PABLITO DAFFON thru killed Alfredo.
his parents and natural guardians, MR. and MRS. NICANOR GUMBAN, and ROLANDO
VALENCIA, thru his guardian, A. FRANCISCO ALONSO, respondents. Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as
it happens, is invoked by both parties in support of their conflicting positions. The pertinent part
Jose S. Amadora & Associates for petitioners. of this article reads as follows:

Padilla Law Office for respondents. Lastly, teachers or heads of establishments of arts and trades shall be liable
for damages caused by their pupils and students or apprentices so long as
they remain in their custody.

Three cases have so far been decided by the Court in connection with the above-quoted provision,
CRUZ, J.: to wit: Exconde v. Capuno 7 Mercado v. Court of Appeals, 8 and Palisoc v. Brillantes. 9 These will
be briefly reviewed in this opinion for a better resolution of the case at bar.

Like any prospective graduate, Alfredo Amadora was looking forward to the commencement
exercises where he would ascend the stage and in the presence of his relatives and friends receive In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy
his high school diploma. These ceremonies were scheduled on April 16, 1972. As it turned out, Scout, attended a Rizal Day parade on instructions of the city school supervisor. After the parade,
though, fate would intervene and deny him that awaited experience. On April 13, 1972, while the boy boarded a jeep, took over its wheel and drove it so recklessly that it turned turtle,
they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a classmate, resulting in the death of two of its passengers. Dante was found guilty of double homicide with
Pablito Damon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as reckless imprudence. In the separate civil action flied against them, his father was held solidarily
well. The victim was only seventeen years old. 1 liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for the tort
committed by the 15-year old boy.

Daffon was convicted of homicide thru reckless imprudence . 2 Additionally, the herein
petitioners, as the victim's parents, filed a civil action for damages under Article 2180 of the Civil This decision, which was penned by Justice Bautista Angelo on June 29,1957, exculpated the
Code against the Colegio de San Jose-Recoletos, its rector the high school principal, the dean of school in an obiter dictum (as it was not a party to the case) on the ground that it was riot a
boys, and the physics teacher, together with Daffon and two other students, through their school of arts and trades. Justice J.B.L. Reyes, with whom Justices Sabino Padilla and Alex
respective parents. The complaint against the students was later dropped. After trial, the Court Reyes concurred, dissented, arguing that it was the school authorities who should be held liable
of First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of Liability under this rule, he said, was imposed on (1) teachers in general; and (2) heads of schools
P294,984.00, representing death compensation, loss of earning capacity, costs of litigation, of arts and trades in particular. The modifying clause "of establishments of arts and trades"
funeral expenses, moral damages, exemplary damages, and attorney's fees . 3 On appeal to the should apply only to "heads" and not "teachers."
respondent court, however, the decision was reversed and all the defendants were completely
absolved . 4
Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate
with a razor blade during recess time at the Lourdes Catholic School in Quezon City, and the
In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules parents of the victim sued the culprits parents for damages. Through Justice Labrador, the Court
of Court, the respondent court found that Article 2180 was not applicable as the Colegio de San declared in another obiter (as the school itself had also not been sued that the school was not
Jose-Recoletos was not a school of arts and trades but an academic institution of learning. It liable because it was not an establishment of arts and trades. Moreover, the custody requirement
also held that the students were not in the custody of the school at the time of the incident as had not been proved as this "contemplates a situation where the student lives and boards with
the semester had already ended, that there was no clear identification of the fatal gun and that the teacher, such that the control, direction and influences on the pupil supersede those of the
in any event the defendant, had exercised the necessary diligence in preventing the injury. 5 parents." Justice J.B.L. Reyes did not take part but the other members of the court concurred
in this decision promulgated on May 30, 1960.

The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April
13, 1972, and while in its auditorium was shot to death by Pablito Daffon, a classmate. On the In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a
implications and consequences of these facts, the parties sharply disagree. classmate with fist blows in the laboratory of the Manila Technical Institute. Although the

81
wrongdoer who was already of age was not boarding in the school, the head thereof and the in Art. 1903 of the old Civil Code, the words "arts and trades" does not
teacher in charge were held solidarily liable with him. The Court declared through Justice qualify "teachers" but only "heads of establishments." The phrase is only an
Teehankee: updated version of the equivalent terms "preceptores y artesanos" used in
the Italian and French Civil Codes.

The phrase used in the cited article "so long as (the students) remain in
their custody" means the protective and supervisory custody that the If, as conceded by all commentators, the basis of the presumption of
school and its heads and teachers exercise over the pupils and students for negligence of Art. 1903 in some culpa in vigilando that the parents,
as long as they are at attendance in the school, including recess time. There teachers, etc. are supposed to have incurred in the exercise of their
is nothing in the law that requires that for such liability to attach, the pupil authority, it would seem clear that where the parent places the child under
or student who commits the tortious act must live and board in the school, the effective authority of the teacher, the latter, and not the parent, should
as erroneously held by the lower court, and the dicta in Mercado (as well as be the one answerable for the torts committed while under his custody, for
in Exconde) on which it relied, must now be deemed to have been set aside the very reason/that the parent is not supposed to interfere with the
by the present decision. discipline of the school nor with the authority and supervision of the
teacher while the child is under instruction. And if there is no authority,
there can be no responsibility.
This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who
stressed, in answer to the dissenting opinion, that even students already of age were covered by
the provision since they were equally in the custody of the school and subject to its discipline. There is really no substantial distinction between the academic and the non-academic schools
Dissenting with three others, 11 Justice Makalintal was for retaining the custody interpretation insofar as torts committed by their students are concerned. The same vigilance is expected from
in Mercado and submitted that the rule should apply only to torts committed by students not the teacher over the students under his control and supervision, whatever the nature of the
yet of age as the school would be acting only in loco parentis. school where he is teaching. The suggestion in the Exconde and Mercado Cases is that the
provision would make the teacher or even the head of the school of arts and trades liable for an
injury caused by any student in its custody but if that same tort were committed in an academic
In a footnote, Justice Teehankee said he agreed with Justice Reyes' dissent in the Exconde Case school, no liability would attach to the teacher or the school head. All other circumstances being
but added that "since the school involved at bar is a non-academic school, the question as to the the same, the teacher or the head of the academic school would be absolved whereas the teacher
applicability of the cited codal provision to academic institutions will have to await another case and the head of the non-academic school would be held liable, and simply because the latter is
wherein it may properly be raised." a school of arts and trades.

This is the case. The Court cannot see why different degrees of vigilance should be exercised by the school
authorities on the basis only of the nature of their respective schools. There does not seem to be
Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded any plausible reason for relaxing that vigilance simply because the school is academic in nature
and is sought to be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and for increasing such vigilance where the school is non-academic. Notably, the injury subject
and trades but an academic institution of learning. The parties herein have also directly raised of liability is caused by the student and not by the school itself nor is it a result of the operations
the question of whether or not Article 2180 covers even establishments which are technically not of the school or its equipment. The injury contemplated may be caused by any student regardless
schools of arts and trades, and, if so, when the offending student is supposed to be "in its of the school where he is registered. The teacher certainly should not be able to excuse himself
custody." by simply showing that he is teaching in an academic school where, on the other hand, the head
would be held liable if the school were non-academic.

After an exhaustive examination of the problem, the Court has come to the conclusion that the
provision in question should apply to all schools, academic as well as non-academic. Where the These questions, though, may be asked: If the teacher of the academic school is to be held
school is academic rather than technical or vocational in nature, responsibility for the tort answerable for the torts committed by his students, why is it the head of the school only who is
committed by the student will attach to the teacher in charge of such student, following the first held liable where the injury is caused in a school of arts and trades? And in the case of the
part of the provision. This is the general rule. In the case of establishments of arts and trades, it academic or non- technical school, why not apply the rule also to the head thereof instead of
is the head thereof, and only he, who shall be held liable as an exception to the general rule. In imposing the liability only on the teacher?
other words, teachers in general shall be liable for the acts of their students except where the
school is technical in nature, in which case it is the head thereof who shall be answerable. The reason for the disparity can be traced to the fact that historically the head of the school of
Following the canon of reddendo singula singulis "teachers" should apply to the words "pupils arts and trades exercised a closer tutelage over his pupils than the head of the academic school.
and students" and "heads of establishments of arts and trades" to the word "apprentices." The old schools of arts and trades were engaged in the training of artisans apprenticed to their
master who personally and directly instructed them on the technique and secrets of their craft.
The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde The head of the school of arts and trades was such a master and so was personally involved in
where he said in part: the task of teaching his students, who usually even boarded with him and so came under his
constant control, supervision and influence. By contrast, the head of the academic school was
not as involved with his students and exercised only administrative duties over the teachers who
I can see no sound reason for limiting Art. 1903 of the Old Civil Code to were the persons directly dealing with the students. The head of the academic school had then
teachers of arts and trades and not to academic ones. What substantial (as now) only a vicarious relationship with the students. Consequently, while he could not be
difference is there between them insofar as concerns the proper supervision directly faulted for the acts of the students, the head of the school of arts and trades, because of
and vice over their pupils? It cannot be seriously contended that an his closer ties with them, could be so blamed.
academic teacher is exempt from the duty of watching that his pupils do
not commit a tort to the detriment of third Persons, so long as they are in a
position to exercise authority and Supervision over the pupil. In my opinion, It is conceded that the distinction no longer obtains at present in view of the expansion of the
in the phrase "teachers or heads of establishments of arts and trades" used schools of arts and trades, the consequent increase in their enrollment, and the corresponding
diminution of the direct and personal contract of their heads with the students. Article 2180,
82
however, remains unchanged. In its present state, the provision must be interpreted by the Court The responsibility treated of in this article shall cease when the Persons
according to its clear and original mandate until the legislature, taking into account the charges herein mentioned prove that they observed all the diligence of a good father
in the situation subject to be regulated, sees fit to enact the necessary amendment. of a family to prevent damages.

The other matter to be resolved is the duration of the responsibility of the teacher or the head of In this connection, it should be observed that the teacher will be held liable not only when he is
the school of arts and trades over the students. Is such responsibility co-extensive with the period acting in loco parentis for the law does not require that the offending student be of minority age.
when the student is actually undergoing studies during the school term, as contended by the Unlike the parent, who wig be liable only if his child is still a minor, the teacher is held answerable
respondents and impliedly admitted by the petitioners themselves? by the law for the act of the student under him regardless of the student's age. Thus, in the
Palisoc Case, liability attached to the teacher and the head of the technical school although the
wrongdoer was already of age. In this sense, Article 2180 treats the parent more favorably than
From a reading of the provision under examination, it is clear that while the custody requirement, the teacher.
to repeat Palisoc v. Brillantes, does not mean that the student must be boarding with the school
authorities, it does signify that the student should be within the control and under the influence
of the school authorities at the time of the occurrence of the injury. This does not necessarily The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his
mean that such, custody be co-terminous with the semester, beginning with the start of classes dissenting opinion in Palisoc that the school may be unduly exposed to liability under this article
and ending upon the close thereof, and excluding the time before or after such period, such as in view of the increasing activism among the students that is likely to cause violence and
the period of registration, and in the case of graduating students, the period before the resulting injuries in the school premises. That is a valid fear, to be sure. Nevertheless, it should
commencement exercises. In the view of the Court, the student is in the custody of the school be repeated that, under the present ruling, it is not the school that will be held directly liable.
authorities as long as he is under the control and influence of the school and within its premises, Moreover, the defense of due diligence is available to it in case it is sought to be held answerable
whether the semester has not yet begun or has already ended. as principal for the acts or omission of its head or the teacher in its employ.

It is too tenuous to argue that the student comes under the discipline of the school only upon The school can show that it exercised proper measures in selecting the head or its teachers and
the start of classes notwithstanding that before that day he has already registered and thus the appropriate supervision over them in the custody and instruction of the pupils pursuant to
placed himself under its rules. Neither should such discipline be deemed ended upon the last its rules and regulations for the maintenance of discipline among them. In almost all cases now,
day of classes notwithstanding that there may still be certain requisites to be satisfied for in fact, these measures are effected through the assistance of an adequate security force to help
completion of the course, such as submission of reports, term papers, clearances and the like. the teacher physically enforce those rules upon the students. Ms should bolster the claim of the
During such periods, the student is still subject to the disciplinary authority of the school and school that it has taken adequate steps to prevent any injury that may be committed by its
cannot consider himself released altogether from observance of its rules. students.

As long as it can be shown that the student is in the school premises in pursuance of a legitimate A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold
student objective, in the exercise of a legitimate student right, and even in the enjoyment of a him directly answerable for the damage caused by his students as long as they are in the school
legitimate student right, and even in the enjoyment of a legitimate student privilege, the premises and presumably under his influence. In this respect, the Court is disposed not to expect
responsibility of the school authorities over the student continues. Indeed, even if the student from the teacher the same measure of responsibility imposed on the parent for their influence
should be doing nothing more than relaxing in the campus in the company of his classmates over the child is not equal in degree. Obviously, the parent can expect more obedience from the
and friends and enjoying the ambience and atmosphere of the school, he is still within the child because the latter's dependence on him is greater than on the teacher. It need not be
custody and subject to the discipline of the school authorities under the provisions of Article stressed that such dependence includes the child's support and sustenance whereas submission
2180. to the teacher's influence, besides being coterminous with the period of custody is usually
enforced only because of the students' desire to pass the course. The parent can instill more las
discipline on the child than the teacher and so should be held to a greater accountability than
During all these occasions, it is obviously the teacher-in-charge who must answer for his the teacher for the tort committed by the child.
students' torts, in practically the same way that the parents are responsible for the child when
he is in their custody. The teacher-in-charge is the one designated by the dean, principal, or
other administrative superior to exercise supervision over the pupils in the specific classes or And if it is also considered that under the article in question, the teacher or the head of the
sections to which they are assigned. It is not necessary that at the time of the injury, the teacher school of arts and trades is responsible for the damage caused by the student or apprentice even
be physically present and in a position to prevent it. Custody does not connote immediate and if he is already of age and therefore less tractable than the minor then there should all the
actual physical control but refers more to the influence exerted on the child and the discipline more be justification to require from the school authorities less accountability as long as they
instilled in him as a result of such influence. Thus, for the injuries caused by the student, the can prove reasonable diligence in preventing the injury. After all, if the parent himself is no longer
teacher and not the parent shag be held responsible if the tort was committed within the premises liable for the student's acts because he has reached majority age and so is no longer under the
of the school at any time when its authority could be validly exercised over him. former's control, there is then all the more reason for leniency in assessing the teacher's
responsibility for the acts of the student.

In any event, it should be noted that the liability imposed by this article is supposed to fall
directly on the teacher or the head of the school of arts and trades and not on the school itself. Applying the foregoing considerations, the Court has arrived at the following conclusions:
If at all, the school, whatever its nature, may be held to answer for the acts of its teachers or
even of the head thereof under the general principle of respondeat superior, but then it may
exculpate itself from liability by proof that it had exercised the diligence of a bonus paterfamilias. 1. At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of
Colegio de San Jose-Recoletos notwithstanding that the fourth year classes had formally ended.
It was immaterial if he was in the school auditorium to finish his physics experiment or merely
Such defense is, of course, also available to the teacher or the head of the school of arts and to submit his physics report for what is important is that he was there for a legitimate purpose.
trades directly held to answer for the tort committed by the student. As long as the defendant As previously observed, even the mere savoring of the company of his friends in the premises of
can show that he had taken the necessary precautions to prevent the injury complained of, he the school is a legitimate purpose that would have also brought him in the custody of the school
can exonerate himself from the liability imposed by Article 2180, which also states that: authorities.

83
2. The rector, the high school principal and the dean of boys cannot be held liable because none
of them was the teacher-in-charge as previously defined. Each of them was exercising only a
general authority over the student body and not the direct control and influence exerted by the
teacher placed in charge of particular classes or sections and thus immediately involved in its
discipline. The evidence of the parties does not disclose who the teacher-in-charge of the
offending student was. The mere fact that Alfredo Amadora had gone to school that day in
connection with his physics report did not necessarily make the physics teacher, respondent
Celestino Dicon, the teacher-in-charge of Alfredo's killer.

3. At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was
negligent in enforcing discipline upon Daffon or that he had waived observance of the rules and
regulations of the school or condoned their non-observance. His absence when the tragedy
happened cannot be considered against him because he was not supposed or required to report
to school on that day. And while it is true that the offending student was still in the custody of
the teacher-in-charge even if the latter was physically absent when the tort was committed, it
has not been established that it was caused by his laxness in enforcing discipline upon the
student. On the contrary, the private respondents have proved that they had exercised due
diligence, through the enforcement of the school regulations, in maintaining that discipline.

4. In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable
especially in view of the unrefuted evidence that he had earlier confiscated an unlicensed gun
from one of the students and returned the same later to him without taking disciplinary action
or reporting the matter to higher authorities. While this was clearly negligence on his part, for
which he deserves sanctions from the school, it does not necessarily link him to the shooting of
Amador as it has not been shown that he confiscated and returned pistol was the gun that killed
the petitioners' son.

5. Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly
liable under the article because only the teacher or the head of the school of arts and trades is
made responsible for the damage caused by the student or apprentice. Neither can it be held to
answer for the tort committed by any of the other private respondents for none of them has been
found to have been charged with the custody of the offending student or has been remiss in the
discharge of his duties in connection with such custody.

In sum, the Court finds under the facts as disclosed by the record and in the light of the principles
herein announced that none of the respondents is liable for the injury inflicted by Pablito Damon
on Alfredo Amadora that resulted in the latter's death at the auditorium of the Colegio de San
Jose-Recoletos on April 13, 1972. While we deeply sympathize with the petitioners over the loss
of their son under the tragic circumstances here related, we nevertheless are unable to extend
them the material relief they seek, as a balm to their grief, under the law they have invoked.

WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered.

Yap, Narvasa, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Grio-Aquino, JJ., concur.

Fernan, Padilla and Teehankee, C.J., JJ, took no part.

84
Republic of the Philippines In its Answer, respondent claimed that petitioners requested a combination of king prawns and
SUPREME COURT salmon, hence, the price was increased to P1,200.00 per person, but discounted at P1,150.00;
Manila that contrary to petitioners claim, Marquez and Alvarez were present during the event, albeit
they were not permanently stationed thereat as there were three other hotel functions; that while
there was a delay in the service of the meals, the same was occasioned by the sudden increase
THIRD DIVISION of guests to 470 from the guaranteed expected minimum number of guests of 350 to a maximum
of 380, as stated in the Banquet Event Order (BEO);2 and that Isaac Albacea, Banquet Service
G.R. No. 190601 February 7, 2011 Director, in fact relayed the delay in the service of the meals to petitioner Luigis father, Gil
Guanio.

SPOUSES LUIGI M. GUANIO and ANNA HERNANDEZ-GUANIO, Petitioners,


vs. Respecting the belated service of meals to some guests, respondent attributed it to the insistence
MAKATI SHANGRI-LA HOTEL and RESORT, INC., also doing business under the name of of petitioners wedding coordinator that certain guests be served first.
SHANGRI-LA HOTEL MANILA, Respondent.
On Svenssons letter, respondent, denying it as an admission of liability, claimed that it was
DECISION meant to maintain goodwill to its customers.

CARPIO MORALES, J.: By Decision of August 17, 2006, Branch 148 of the Makati RTC rendered judgment in favor of
petitioners, disposing as follows:

For their wedding reception on July 28, 2001, spouses Luigi M. Guanio and Anna Hernandez-
Guanio (petitioners) booked at the Shangri-la Hotel Makati (the hotel). WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendant ordering the defendants to pay the plaintiff the following:

Prior to the event, Makati Shangri-La Hotel & Resort, Inc. (respondent) scheduled an initial food
tasting. Petitioners claim that they requested the hotel to prepare for seven persons the two of 1) The amount of P350,000.00 by way of actual damages;
them, their respective parents, and the wedding coordinator. At the scheduled food tasting,
however, respondent prepared for only six. 2) The amount of P250,000.00 for and as moral damages;

Petitioners initially chose a set menu which included black cod, king prawns and angel hair 3) The amount of P100,000.00 as exemplary damages;
pasta with wild mushroom sauce for the main course which cost P1,000.00 per person. They
were, however, given an option in which salmon, instead of king prawns, would be in the menu
at P950.00 per person. They in fact partook of the salmon. 4) The amount of P100,000.00 for and as attorneys fees.

Three days before the event, a final food tasting took place. Petitioners aver that the salmon With costs against the defendant.
served was half the size of what they were served during the initial food tasting; and when queried
about it, the hotel quoted a much higher price (P1,200.00) for the size that was initially served
to them. The parties eventually agreed on a final price P1,150 per person. SO ORDERED.3

A day before the event or on July 27, 2001, the parties finalized and forged their contract. 1 In finding for petitioners, the trial court relied heavily on the letter of Svensson which is partly
quoted below:

Petitioners claim that during the reception, respondents representatives, Catering Director Bea
Marquez and Sales Manager Tessa Alvarez, did not show up despite their assurance that they Upon receiving your comments on our service rendered during your reception here with us, we
would; their guests complained of the delay in the service of the dinner; certain items listed in are in fact, very distressed. Right from minor issues pappadums served in the soup instead of
the published menu were unavailable; the hotels waiters were rude and unapologetic when the creutons, lack of valet parkers, hard rolls being too hard till a major one slow service, rude
confronted about the delay; and despite Alvarezs promise that there would be no charge for the and arrogant waiters, we have disappointed you in all means.
extension of the reception beyond 12:00 midnight, they were billed and paid P8,000 per hour for
the three-hour extension of the event up to 4:00 A.M. the next day. Indeed, we feel as strongly as you do that the services you received were unacceptable and
definitely not up to our standards. We understand that it is our job to provide excellent service
Petitioners further claim that they brought wine and liquor in accordance with their open bar and in this instance, we have fallen short of your expectations. We ask you please to accept our
arrangement, but these were not served to the guests who were forced to pay for their drinks. profound apologies for causing such discomfort and annoyance. 4 (underscoring supplied)

Petitioners thus sent a letter-complaint to the Makati Shangri-la Hotel and Resort, Inc. The trial court observed that from "the tenor of the letter . . . the defendant[-herein respondent]
(respondent) and received an apologetic reply from Krister Svensson, the hotels Executive admits that the services the plaintiff[-herein petitioners] received were unacceptable and
Assistant Manager in charge of Food and Beverage. They nevertheless filed a complaint for definitely not up to their standards."5
breach of contract and damages before the Regional Trial Court (RTC) of Makati City.

85
On appeal, the Court of Appeals, by Decision of July 27, 2009,6 reversed the trial courts decision, of the expected number of guests, except where the ENGAGER cancels the Function in
it holding that the proximate cause of petitioners injury was an unexpected increase in their accordance with its Letter of Confirmation with the HOTEL. Should the attendance exceed the
guests: minimum guaranteed attendance, the ENGAGER shall also be billed at the actual rate per cover
in excess of the minimum guaranteed attendance.

x x x Hence, the alleged damage or injury brought about by the confusion, inconvenience and
disarray during the wedding reception may not be attributed to defendant-appellant Shangri-la. xxxx

We find that the said proximate cause, which is entirely attributable to plaintiffs-appellants, set 4.5. The ENGAGER must inform the HOTEL at least forty eight (48) hours before the scheduled
the chain of events which resulted in the alleged inconveniences, to the plaintiffs-appellants. date and time of the Function of any change in the minimum guaranteed covers. In the absence
Given the circumstances that obtained, only the Sps. Guanio may bear whatever consequential of such notice, paragraph 4.3 shall apply in the event of under attendance. In case the actual
damages that they may have allegedly suffered.7(underscoring supplied) number of attendees exceed the minimum guaranteed number

Petitioners motion for reconsideration having been denied by Resolution of November 19, 2009, by ten percent (10%), the HOTEL shall not in any way be held liable for any damage or
the present petition for review was filed. inconvenience which may be caused thereby. The ENGAGER shall also undertake to advise
the guests of the situation and take positive steps to remedy the same. 10 (emphasis, italics
and underscoring supplied)
The Court finds that since petitioners complaint arose from a contract, the doctrine of proximate
cause finds no application to it:
Breach of contract is defined as the failure without legal reason to comply with the terms of a
contract. It is also defined as the [f]ailure, without legal excuse, to perform any promise which
The doctrine of proximate cause is applicable only in actions for quasi-delicts, not in actions forms the whole or part of the contract.11
involving breach of contract. x x x The doctrine is a device for imputing liability to a person where
there is no relation between him and another party. In such a case, the obligation is created by
law itself. But, where there is a pre-existing contractual relation between the parties, it is the The appellate court, and even the trial court, observed that petitioners were remiss in their
parties themselves who create the obligation, and the function of the law is merely to regulate obligation to inform respondent of the change in the expected number of guests. The observation
the relation thus created.8 (emphasis and underscoring supplied) is reflected in the records of the case. Petitioners failure to discharge such obligation thus
excused, as the above-quoted paragraph 4.5 of the parties contract provide, respondent from
liability for "any damage or inconvenience" occasioned thereby.
What applies in the present case is Article 1170 of the Civil Code which reads:

As for petitioners claim that respondent departed from its verbal agreement with petitioners, the
Art. 1170. Those who in the performance of their obligations are guilty of fraud, negligence or same fails, given that the written contract which the parties entered into the day before the event,
delay, and those who in any manner contravene the tenor thereof, are liable for damages. being the law between them.

RCPI v. Verchez, et al. 9 enlightens: Respecting the letter of Svensson on which the trial court heavily relied as admission of
respondents liability but which the appellate court brushed aside, the Court finds the appellate
In culpa contractual x x x the mere proof of the existence of the contract and the failure of its courts stance in order. It is not uncommon in the hotel industry to receive comments, criticisms
compliance justify, prima facie, a corresponding right of relief. The law, recognizing the obligatory or feedback on the service it delivers. It is also customary for hotel management to try to smooth
force of contracts, will not permit a party to be set free from liability for any kind of ruffled feathers to preserve goodwill among its clientele.
misperformance of the contractual undertaking or a contravention of the tenor thereof. A breach
upon the contract confers upon the injured party a valid cause for recovering that which may Kalalo v. Luz holds:12
have been lost or suffered. The remedy serves to preserve the interests of the promissee that may
include his "expectation interest," which is his interest in having the benefit of his bargain by
being put in as good a position as he would have been in had the contract been performed, or Statements which are not estoppels nor judicial admissions have no quality of conclusiveness,
his "reliance interest," which is his interest in being reimbursed for loss caused by reliance on and an opponent whose admissions have been offered against him may offer any evidence which
the contract by being put in as good a position as he would have been in had the contract not serves as an explanation for his former assertion of what he now denies as a fact.
been made; or his "restitution interest," which is his interest in having restored to him any
benefit that he has conferred on the other party. Indeed, agreements can accomplish little, either
for their makers or for society, unless they are made the basis for action. The effect of every Respondents Catering Director, Bea Marquez, explained the hotels procedure on receiving and
infraction is to create a new duty, that is, to make RECOMPENSE to the one who has been processing complaints, viz:
injured by the failure of another to observe his contractual obligation unless he can show
extenuating circumstances, like proof of his exercise of due diligence x x x or of ATTY. CALMA:
the attendance of fortuitous event, to excuse him from his ensuing liability. (emphasis and
underscoring in the original; capitalization supplied)
Q You mentioned that the letter indicates an acknowledgement of the concern and
that there was-the first letter there was an acknowledgment of the concern and an
The pertinent provisions of the Banquet and Meeting Services Contract between the parties read: apology, not necessarily indicating that such or admitting fault?

4.3 The ENGAGER shall be billed in accordance with the prescribed rate for the minimum A Yes.
guaranteed number of persons contracted for, regardless of under attendance or non-appearance

86
Q Is this the letter that you are referring to? In the present petition, under considerations of equity, the Court deems it just to award the
amount of P50,000.00 by way of nominal damages to petitioners, for the discomfiture that they
were subjected to during to the event.15The Court recognizes that every person is entitled to
If I may, Your Honor, that was the letter dated August 4, 2001, previously marked as respect of his dignity, personality, privacy and peace of mind. 16 Respondents lack of prudence
plaintiffs exhibits, Your Honor. What is the procedure of the hotel with respect to is an affront to this right.
customer concern?

WHEREFORE, the Court of Appeals Decision dated July 28, 2009 is PARTIALLY REVERSED.
A Upon receipt of the concern from the guest or client, we acknowledge receipt of such Respondent is, in light of the foregoing discussion, ORDERED to pay the amount of P50,000.00
concern, and as part of procedure in service industry particularly Makati Shangri-la to petitioners by way of nominal damages.
we apologize for whatever inconvenience but at the same time saying, that of course,
we would go through certain investigation and get back to them for the feedback with
whatever concern they may have. SO ORDERED.

Q Your Honor, I just like at this point mark the exhibits, Your Honor, the letter dated CONCHITA CARPIO MORALES
August 4, 2001 identified by the witness, Your Honor, to be marked as Exhibit 14 and Associate Justice
the signature of Mr. Krister Svensson be marked as Exhibit 14-A.13

xxxx

Q In your opinion, you just mentioned that there is a procedure that the hotel follows
with respect to the complaint, in your opinion was this procedure followed in this
particular concern?

A Yes, maam.

Q What makes you say that this procedure was followed?

A As I mentioned earlier, we proved that we did acknowledge the concern of the client
in this case and we did emphatize from the client and apologized, and at the same
time got back to them in whatever investigation we have.

Q You said that you apologized, what did you apologize for?

A Well, first of all it is a standard that we apologize, right? Being in the service industry, it is a
practice that we apologize if there is any inconvenience, so the purpose for apologizing is mainly
to show empathy and to ensure the client that we are hearing them out and that we will do a
better investigation and it is not in any way that we are admitting any fault.14 (underscoring
supplied)

To the Court, the foregoing explanation of the hotels Banquet Director overcomes any
presumption of admission of breach which Svenssons letter might have conveyed.

The exculpatory clause notwithstanding, the Court notes that respondent could have managed
the "situation" better, it being held in high esteem in the hotel and service industry. Given
respondents vast experience, it is safe to presume that this is not its first encounter with booked
events exceeding the guaranteed cover. It is not audacious to expect that certain measures have
been placed in case this predicament crops up. That regardless of these measures, respondent
still received complaints as in the present case, does not amuse.1avvphil

Respondent admitted that three hotel functions coincided with petitioners reception. To the
Court, the delay in service might have been avoided or minimized if respondent exercised
prescience in scheduling events. No less than quality service should be delivered especially in
events which possibility of repetition is close to nil. Petitioners are not expected to get married
twice in their lifetimes.

87
Republic of the Philippines "2. Out of the approved loan of THIRTY MILLION PESOS (P30,000,000.00), the sum of
SUPREME COURT P9,595,000.00 was released to defendant Moonwalk as of November 28, 1973;
Manila

"3. A third Amended Deed of First Mortgage was executed on December 18, 1973 Annex `D'
SECOND DIVISION providing for restructuring of the payment of the released amount of P9,595,000.00.

"4. Defendants Rosita U. Alberto and Rosita U. Alberto, mother and daughter respectively, under
paragraph 5 of the aforesaid Third Amended Deed of First Mortgage substituted Associated
G.R. No. 73345. April 7, 1993. Construction and Surveys Corporation, Philippine Model Homes Development Corporation,
Mariano Z. Velarde and Eusebio T. Ramos, as solidary obligors;

SOCIAL SECURITY SYSTEM, petitioner,


vs. "5. On July 23, 1974, after considering additional releases in the amount of P2,659,700.00, made
MOONWALK DEVELOPMENT & HOUSING CORPORATION, ROSITA U. ALBERTO, ROSITA U. to defendant Moonwalk, defendant Moonwalk delivered to the plaintiff a promissory note for
ALBERTO, JMA HOUSE, INC., MILAGROS SANCHEZ SANTIAGO, in her capacity as Register of TWELVE MILLION TWO HUNDRED FIFTY FOUR THOUSAND SEVEN HUNDRED PESOS
Deeds for the Province of Cavite, ARTURO SOLITO, in his capacity as Register of Deeds for (P12,254,700.00) Annex `E', signed by Eusebio T. Ramos, and the said Rosita U. Alberto and
Metro Manila District IV, Makati, Metro Manila and the INTERMEDIATE APPELLATE COURT, Rosita U. Alberto;
respondents.

"6. Moonwalk made a total payment of P23,657,901.84 to SSS for the loan principal of
The Solicitor General for petitioner. P12,254,700.00 released to it. The last payment made by Moonwalk in the amount of
K.V. Faylona & Associates for private respondents. P15,004,905.74 were based on the Statement of Account, Annex "F" prepared by plaintiff SSS
for defendant;

DECISION
"7. After settlement of the account stated in Annex 'F' plaintiff issued to defendant Moonwalk the
Release of Mortgage for Moonwalk's mortgaged properties in Cavite and Rizal, Annexes 'G' and
CAMPOS, JR., J p: 'H' on October 9, 1979 and October 11, 1979 respectively.

Before Us is a petition for review on certiorari of decision 1 of the then Intermediate Appellate "8. In letters to defendant Moonwalk, dated November 28, 1979 and followed up by another letter
Court affirming in toto the decision of the former Court of First Instance of Rizal, Seventh Judicial dated December 17, 1979, plaintiff alleged that it committed an honest mistake in releasing
District, Branch XXIX, Pasay City. defendant.

The facts as found by the Appellate Court are as follows: "9. In a letter dated December 21, 1979, defendant's counsel told plaintiff that it had completely
paid its obligations to SSS;
"On February 20, 1980, the Social Security System, SSS for brevity, filed a complaint in the
Court of First Instance of Rizal against Moonwalk Development & Housing Corporation, "10. The genuineness and due execution of the documents marked as Annex (sic) 'A' to 'O'
Moonwalk for short, alleging that the former had committed an error in failing to compute the inclusive, of the Complaint and the letter dated December 21, 1979 of the defendant's counsel
12% interest due on delayed payments on the loan of Moonwalk resulting in a chain of errors to the plaintiff are admitted.
in the application of payments made by Moonwalk and, in an unpaid balance on the principal
loan agreement in the amount of P7,053.77 and, also in not reflecting in its statement or account
an unpaid balance on the said penalties for delayed payments in the amount of P7,517,178.21 "Manila for Pasay City, September 2, 1980." 2
as of October 10, 1979.

On October 6, 1990, the trial court issued an order dismissing the complaint on the ground that
Moonwalk answered denying SSS' claims and asserting that SSS had the opportunity to the obligation was already extinguished by the payment by Moonwalk of its indebtedness to SSS
ascertain the truth but failed to do so. and by the latter's act of cancelling the real estate mortgages executed in its favor by defendant
Moonwalk. The Motion for Reconsideration filed by SSS with the trial court was likewise
dismissed by the latter.
The trial court set the case for pre-trial at which pre-trial conference, the court issued an order
giving both parties thirty (30) days within which to submit a stipulation of facts.
These orders were appealed to the Intermediate Appellate Court. Respondent Court reduced the
errors assigned by the SSS into this issue: ". . . are defendants-appellees, namely, Moonwalk
The Order of October 6, 1980 dismissing the complaint followed the submission by the parties Development and Housing Corporation, Rosita U. Alberto, Rosita U. Alberto, JMA House, Inc.
on September 19, 1980 of the following stipulation of Facts: still liable for the unpaid penalties as claimed by plaintiff-appellant or is their obligation
extinguished?" 3 As We have stated earlier, the respondent Court held that Moonwalk's obligation
"1. On October 6, 1971, plaintiff approved the application of defendant Moonwalk for an interim was extinguished and affirmed the trial court.
loan in the amount of THIRTY MILLION PESOS (P30,000,000.00) for the purpose of developing
and constructing a housing project in the provinces of Rizal and Cavite; Hence, this Petition wherein SSS raises the following grounds for review:

88
"First, in concluding that the penalties due from Moonwalk are "deemed waived and/or barred," However, on October 1, 1979, plaintiff-appellant issued its statement of account (Exhibit F)
the appellate court disregarded the basic tenet that waiver of a right must be express, made in a showing the total obligation of Moonwalk as P15,004,905.74, and forthwith demanded payment
clear and unequivocal manner. There is no evidence in the case at bar to show that SSS made a from defendant-appellee. Because of the demand for payment, Moonwalk made several payments
clear, positive waiver of the penalties, made with full knowledge of the circumstances. on September 29, October 9 and 19, 1979 respectively, all in all totalling P15,004,905.74 which
was a complete payment of its obligation as stated in Exhibit F. Because of this payment the
obligation of Moonwalk was considered extinguished, and pursuant to said extinguishment, the
Second, it misconstrued the ruling that SSS funds are trust funds, and SSS, being a mere real estate mortgages given by Moonwalk were released on October 9, 1979 and October 10, 1979
trustee, cannot perform acts affecting the same, including condonation of penalties, that would (Exhibits G and H). For all purposes therefore the principal obligation of defendant-appellee was
diminish property rights of the owners and beneficiaries thereof. (United Christian Missionary deemed extinguished as well as the accessory obligation of real estate mortgage; and that is the
Society v. Social Security Commission, 30 SCRA 982, 988 [1969]). reason for the release of all the Real Estate Mortgages on October 9 and 10, 1979 respectively.

Third, it ignored the fact that penalty at the rate of 12% p.a. is not inequitable. Now, besides the Real Estate Mortgages, the penal clause which is also an accessory obligation
must also be deemed extinguished considering that the principal obligation was considered
Fourth, it ignored the principle that equity will cancel a release on the ground of mistake of fact." extinguished, and the penal clause being an accessory obligation. That being the case, the
4 demand for payment of the penal clause made by plaintiff-appellant in its demand letter dated
November 28, 1979 and its follow up letter dated December 17, 1979 (which parenthetically are
the only demands for payment of the penalties) are therefore ineffective as there was nothing to
The same problem which confronted the respondent court is presented before Us: Is the penalty demand. It would be otherwise, if the demand for the payment of the penalty was made prior to
demandable even after the extinguishment of the principal obligation? the extinguishment of the obligation because then the obligation of Moonwalk would consist of:
1) the principal obligation 2) the interest of 12% on the principal obligation and 3) the penalty of
12% for late payment for after demand, Moonwalk would be in mora and therefore liable for the
The former Intermediate Appellate Court, through Justice Eduard P. Caguioa, held in the penalty.
negative. It reasoned, thus:

Let it be emphasized that at the time of the demand made in the letters of November 28, 1979
"2. As we have explained under No. 1, contrary to what the plaintiff-appellant states in its Brief, and December 17, 1979 as far as the penalty is concerned, the defendant-appellee was not in
what is sought to be recovered in this case is not the 12% interest on the loan but the 12% default since there was no mora prior to the demand. That being the case, therefore, the demand
penalty for failure to pay on time the amortization. What is sought to be enforced therefore is the made after the extinguishment of the principal obligation which carried with it the
penal clause of the contract entered into between the parties. extinguishment of the penal clause being merely an accessory obligation, was an exercise in
futility.
Now, what is a penal clause. A penal clause has been defined as
3. At the time of the payment made of the full obligation on October 10, 1979 together with the
12% interest by defendant-appellee Moonwalk, its obligation was extinguished. It being
"an accessory obligation which the parties attach to a principal obligation for the purpose of
extinguished, there was no more need for the penal clause. Now, it is to be noted that penalty at
insuring the performance thereof by imposing on the debtor a special presentation (generally
anytime can be modified by the Court. Even substantial performance under Art. 1234 authorizes
consisting in the payment of a sum of money) in case the obligation is not fulfilled or is irregularly
the Court to consider it as complete performance minus damages. Now, Art, 1229 Civil Code of
or inadequately fulfilled" (3 Castan 8th Ed. p. 118).
the Philippines provides:

Now an accessory obligation has been defined as that attached to a principal obligation in order
"ART. 1229. The judge shall equitably reduce the penalty when the principal obligation has been
to complete the same or take its place in the case of breach (4 Puig Pea Part 1 p. 76). Note
partly or irregularly complied with by the debtor. Even if there has been no performance, the
therefore that an accessory obligation is dependent for its existence on the existence of a principal
penalty may also be reduced by the courts if it is iniquitous or unconscionable."
obligation. A principal obligation may exist without an accessory obligation but an accessory
obligation cannot exist without a principal obligation. For example, the contract of mortgage is
an accessory obligation to enforce the performance of the main obligation of indebtedness. An If the penalty can be reduced after the principal obligation has been partly or irregularly complied
indebtedness can exist without the mortgage but a mortgage cannot exist without the with by the debtor, which is nonetheless a breach of the obligation, with more reason the penal
indebtedness, which is the principal obligation. In the present case, the principal obligation is clause is not demandable when full obligation has been complied with since in that case there is
the loan between the parties. The accessory obligation of a penal clause is to enforce the main no breach of the obligation. In the present case, there has been as yet no demand for payment
obligation of payment of the loan. If therefore the principal obligation does not exist the penalty of the penalty at the time of the extinguishment of the obligation, hence there was likewise an
being accessory cannot exist. extinguishment of the penalty.

Now then when is the penalty demandable? A penalty is demandable in case of non performance Let Us emphasize that the obligation of defendant-appellee was fully complied with by the debtor,
or late performance of the main obligation. In other words in order that the penalty may arise that is, the amount loaned together with the 12% interest has been fully paid by the appellee.
there must be a breach of the obligation either by total or partial non fulfillment or there is non That being so, there is no basis for demanding the penal clause since the obligation has been
fulfillment in point of time which is called mora or delay. The debtor therefore violates the extinguished. Here there has been a waiver of the penal clause as it was not demanded before
obligation in point of time if there is mora or delay. Now, there is no mora or delay unless there the full obligation was fully paid and extinguished. Again, emphasis must be made on the fact
is a demand. It is noteworthy that in the present case during all the period when the principal that plaintiff-appellant has not lost anything under the contract since in got back in full the
obligation was still subsisting, although there were late amortizations there was no demand made amount loan (sic) as well as the interest thereof. The same thing would have happened if the
by the creditor, plaintiff-appellant for the payment of the penalty. Therefore up to the time of the obligation was paid on time, for then the penal clause, under the terms of the contract would not
letter of plaintiff-appellant there was no demand for the payment of the penalty, hence the debtor apply. Payment of the penalty does not mean gain or loss of plaintiff-appellant since it is merely
was no in mora in the payment of the penalty. for the purpose of enforcing the performance of the main obligation has been fully complied with
and extinguished, the penal clause has lost its raison d' entre." 5
89
We find no reason to depart from the appellate court's decision. We, however, advance the already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the
following reasons for the denial of this petition. performance judicially and extrajudicially. 12 Default generally begins from the moment the
creditor demands the performance of the obligation. 13

Article 1226 of the Civil Code provides:


Nowhere in this case did it appear that SSS demanded from Moonwalk the payment of its
monthly amortizations. Neither did it show that petitioner demanded the payment of the
"Art. 1226. In obligations with a penal clause, he penalty shall substitute the indemnity for stipulated penalty upon the failure of Moonwalk to meet its monthly amortization. What the
damages and the payment of interests in case of noncompliance, if there is no stipulation to the complaint itself showed was that SSS tried to enforce the obligation sometime in September,
contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty 1977 by foreclosing the real estate mortgages executed by Moonwalk in favor of SSS. But this
of fraud in the fulfillment of the obligation. foreclosure did not push through upon Moonwalk's requests and promises to pay in full. The
next demand for payment happened on October 1, 1979 when SSS issued a Statement of Account
The penalty may be enforced only when it is demandable in accordance with the provisions of to Moonwalk. And in accordance with said statement, Moonwalk paid its loan in full. What is
this Code." (Emphasis Ours.) clear, therefore, is that Moonwalk was never in default because SSS never compelled
performance. Though it tried to foreclose the mortgages, SSS itself desisted from doing so upon
the entreaties of Moonwalk. If the Statement of Account could properly be considered as demand
A penal clause is an accessory undertaking to assume greater liability in case of breach. 6 It has for payment, the demand was complied with on time. Hence, no delay occurred and there was,
a double function: (1) to provide for liquidated damages, and (2) to strengthen the coercive force therefore, no occasion when the penalty became demandable and enforceable. Since there was
of the obligation by the threat of greater responsibility in the event of breach. 7 From the no default in the performance of the main obligation payment of the loan SSS was never
foregoing, it is clear that a penal clause is intended to prevent the obligor from defaulting in the entitled to recover any penalty, not at the time it made the Statement of Account and certainly,
performance of his obligation. Thus, if there should be default, the penalty may be enforced. One not after the extinguishment of the principal obligation because then, all the more that SSS had
commentator of the Civil Code wrote: no reason to ask for the penalties. Thus, there could never be any occasion for waiver or even
mistake in the application for payment because there was nothing for SSS to waive as its right
to enforce the penalty did not arise.
"Now when is the penalty deemed demandable in accordance with the provisions of the Civil
Code? We must make a distinction between a positive and a negative obligation. With regard to
obligations which are positive (to give and to do), the penalty is demandable when the debtor is SSS, however, in buttressing its claim that it never waived the penalties, argued that the funds
in mora; hence, the necessity of demand by the debtor unless the same is excused . . ." 8 it held were trust funds and as trustee, the petitioner could not perform acts affecting the funds
that would diminish property rights of the owners and beneficiaries thereof. To support its claim,
SSS cited the case of United Christian Missionary Society v. Social Security Commission. 14
When does delay arise? Under the Civil Code, delay begins from the time the obligee judicially or
extrajudicially demands from the obligor the performance of the obligation.
We looked into the case and found out that it is not applicable to the present case as it dealt not
with the right of the SSS to collect penalties which were provided for in contracts which it entered
"Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee into but with its right to collect premiums and its duty to collect the penalty for delayed payment
judicially or extrajudicially demands from them the fulfillment of their obligation." or non-payment of premiums. The Supreme Court, in that case, stated:

There are only three instances when demand is not necessary to render the obligor in default. "No discretion or alternative is granted respondent Commission in the enforcement of the law's
These are the following: mandate that the employer who fails to comply with his legal obligation to remit the premiums
to the System within the prescribed period shall pay a penalty of three (3%) per month. The
prescribed penalty is evidently of a punitive character, provided by the legislature to assure that
"(1) When the obligation or the law expressly so declares;
employers do not take lightly the State's exercise of the police power in the implementation of
the Republic's declared policy "to develop, establish gradually and perfect a social security system
(2) When from the nature and the circumstances of the obligation it appears that the designation which shall be suitable to the needs of the people throughout the Philippines and (to) provide
of the time when the thing is to be delivered or the service is to be rendered was a controlling protection to employers against the hazards of disability, sickness, old age and death . . ."
motive for the establishment of the contract; or
Thus, We agree with the decision of the respondent court on the matter which We quote, to wit:
(3) When the demand would be useless, as when the obligor has rendered it beyond his power to
perform." 9
"Note that the above case refers to the condonation of the penalty for the non remittance of the
premium which is provided for by Section 22(a) of the Social Security Act . . . In other words,
This case does not fall within any of the established exceptions. Hence, despite the provision in what was sought to be condoned was the penalty provided for by law for non remittance of
the promissory note that "(a)ll amortization payments shall be made every first five (5) days of premium for coverage under the Social Security Act.
the calendar month until the principal and interest on the loan or any portion thereof actually
released has been fully paid," 10 petitioner is not excused from making a demand. It has been
The case at bar does not refer to any penalty provided for by law nor does it refer to the non
established that at the time of payment of the full obligation, private respondent Moonwalk has
remittance of premium. The case at bar refers to a contract of loan entered into between plaintiff
long been delinquent in meeting its monthly arrears and in paying the full amount of the loan
and defendant Moonwalk Development and Housing Corporation. Note, therefore, that no
itself as the obligation matured sometime in January, 1977. But mere delinquency in payment
provision of law is involved in this case, nor is there any penalty imposed by law nor a case about
does not necessarily mean delay in the legal concept. To be in default ". . . is different from mere
non-remittance of premium required by law. The present case refers to a contract of loan payable
delay in the grammatical sense, because it involves the beginning of a special condition or status
in installments not provided for by law but by agreement of the parties. Therefore, the ratio
which has its own peculiar effects or results." 11 In order that the debtor may be in default it is
decidendi of the case of United Christian Missionary Society vs. Social Security Commission
necessary that the following requisites be present: (1) that the obligation be demandable and
which plaintiff-appellant relies is not applicable in this case; clearly, the Social Security

90
Commission, which is a creature of the Social Security Act cannot condone a mandatory
provision of law providing for the payment of premiums and for penalties for non remittance. The
life of the Social Security Act is in the premiums because these are the funds from which the
Social Security Act gets the money for its purposes and the non-remittance of the premiums is
penalized not by the Social Security Commission but by law.

xxx xxx xxx

It is admitted that when a government created corporation enters into a contract with private
party concerning a loan, it descends to the level of a private person. Hence, the rules on contract
applicable to private parties are applicable to it. The argument therefore that the Social Security
Commission cannot waive or condone the penalties which was applied in the United Christian
Missionary Society cannot apply in this case. First, because what was not paid were installments
on a loan but premiums required by law to be paid by the parties covered by the Social Security
Act. Secondly, what is sought to be condoned or waived are penalties not imposed by law for
failure to remit premiums required by law, but a penalty for non payment provided for by the
agreement of the parties in the contract between them . . ." 15

WHEREFORE, in view of the foregoing, the petition is DISMISSED and the decision of the
respondent court is AFFIRMED. LLpr

SO ORDERED.

Narvasa, C .J ., Padilla, Regalado and Nocon, JJ ., concur.

91
Republic of the Philippines the proceeds of any such sale, or any part thereof as may be required, shall be partially
SUPREME COURT devoted to the payment of the Foundation's obligations under this agreement as may
Manila still be subsisting and payable at the time of any such sale or sales;

FIRST DIVISION ...

G.R. No. 153004 November 5, 2004 5. Failure of compliance of any of the foregoing terms and conditions by either or both
parties to this agreement shall ipso facto and ipso jure automatically entitle the
aggrieved party to a writ of execution for the enforcement of this agreement. [Emphasis
SANTOS VENTURA HOCORMA FOUNDATION, INC., petitioner, supplied]5
vs.
ERNESTO V. SANTOS and RIVERLAND, INC., respondents.
In compliance with the Compromise Agreement, respondent Santos moved for the dismissal of
the aforesaid civil cases. He also caused the lifting of the notices of lis pendens on the real
properties involved. For its part, petitioner SVHFI, paid P1.5 million to respondent Santos,
DECISION leaving a balance of P13 million.

QUISUMBING, J.:
Subsequently, petitioner SVHFI sold to Development Exchange Livelihood Corporation two real
properties, which were previously subjects of lis pendens. Discovering the disposition made by
Subject of the present petition for review on certiorari is the
Decision, 1
dated January 30, 2002, the petitioner, respondent Santos sent a letter to the petitioner demanding the payment of the
as well as the April 12, 2002, Resolution2 of the Court of Appeals in CA-G.R. CV No. 55122. The remaining P13 million, which was ignored by the latter. Meanwhile, on September 30, 1991, the
appellate court reversed the Decision, dated October 4, 1996, of the Regional Trial Court of
3
Regional Trial Court of Makati City, Branch 62, issued a Decision6approving the compromise
Makati City, Branch 148, in Civil Case No. 95-811, and likewise denied petitioner's Motion for agreement.
Reconsideration.

On October 28, 1992, respondent Santos sent another letter to petitioner inquiring when it would
The facts of this case are undisputed. pay the balance of P13 million. There was no response from petitioner. Consequently, respondent
Santos applied with the Regional Trial Court of Makati City, Branch 62, for the issuance of a writ
Ernesto V. Santos and Santos Ventura Hocorma Foundation, Inc. (SVHFI) were the plaintiff and of execution of its compromise judgment dated September 30, 1991. The RTC granted the writ.
defendant, respectively, in several civil cases filed in different courts in the Philippines. On Thus, on March 10, 1993, the Sheriff levied on the real properties of petitioner, which were
October 26, 1990, the parties executed a Compromise Agreement4 which amicably ended all their formerly subjects of the lis pendens. Petitioner, however, filed numerous motions to block the
pending litigations. The pertinent portions of the Agreement read as follows: enforcement of the said writ. The challenge of the execution of the aforesaid compromise
judgment even reached the Supreme Court. All these efforts, however, were futile.

1. Defendant Foundation shall pay Plaintiff Santos P14.5 Million in the following
manner: On November 22, 1994, petitioner's real properties located in Mabalacat, Pampanga were
auctioned. In the said auction, Riverland, Inc. was the highest bidder for P12 million and it was
issued a Certificate of Sale covering the real properties subject of the auction sale. Subsequently,
a. P1.5 Million immediately upon the execution of this agreement; another auction sale was held on February 8, 1995, for the sale of real properties of petitioner in
Bacolod City. Again, Riverland, Inc. was the highest bidder. The Certificates of Sale issued for
both properties provided for the right of redemption within one year from the date of registration
b. The balance of P13 Million shall be paid, whether in one lump sum or in of the said properties.
installments, at the discretion of the Foundation, within a period of not
more than two (2) years from the execution of this agreement; provided,
however, that in the event that the Foundation does not pay the whole or On June 2, 1995, Santos and Riverland Inc. filed a Complaint for Declaratory Relief and
any part of such balance, the same shall be paid with the corresponding Damages7 alleging that there was delay on the part of petitioner in paying the balance of P13
portion of the land or real properties subject of the aforesaid cases and million. They further alleged that under the Compromise Agreement, the obligation became due
previously covered by the notices of lis pendens, under such terms and on October 26, 1992, but payment of the remaining P12 million was effected only on November
conditions as to area, valuation, and location mutually acceptable to both 22, 1994. Thus, respondents prayed that petitioner be ordered to pay legal interest on the
parties; but in no case shall the payment of such balance be later than two obligation, penalty, attorney's fees and costs of litigation. Furthermore, they prayed that the
(2) years from the date of this agreement; otherwise, payment of any unpaid aforesaid sales be declared final and not subject to legal redemption.
portion shall only be in the form of land aforesaid;
In its Answer,8 petitioner countered that respondents have no cause of action against it since it
2. Immediately upon the execution of this agreement (and [the] receipt of the P1.5 had fully paid its obligation to the latter. It further claimed that the alleged delay in the payment
Million), plaintiff Santos shall cause the dismissal with prejudice of Civil Cases Nos. of the balance was due to its valid exercise of its rights to protect its interests as provided under
88-743, 1413OR, TC-1024, 45366 and 18166 and voluntarily withdraw the appeals the Rules. Petitioner counterclaimed for attorney's fees and exemplary damages.
in Civil Cases Nos. 4968 (C.A.-G.R. No. 26598) and 88-45366 (C.A.-G.R. No. 24304)
respectively and for the immediate lifting of the aforesaid various notices of lis pendens
on the real properties aforementioned (by signing herein attached corresponding On October 4, 1996, the trial court rendered a Decision9 dismissing herein respondents'
documents, for such lifting); provided, however, that in the event that defendant complaint and ordering them to pay attorney's fees and exemplary damages to petitioner.
Foundation shall sell or dispose of any of the lands previously subject of lis pendens,

92
Respondents then appealed to the Court of Appeals. The appellate court reversed the ruling of Lastly, petitioner alleges that since the compromise agreement did not provide for a period within
the trial court: which the obligation will become due and demandable, it is incumbent upon respondent Santos
to ask for judicial intervention for purposes of fixing the period. It is only when a fixed period
exists that the legal interests can be computed.
WHEREFORE, finding merit in the appeal, the appealed Decision is hereby
REVERSED and judgment is hereby rendered ordering appellee SVHFI to pay
appellants Santos and Riverland, Inc.: (1) legal interest on the principal amount of Respondents profer that their right to damages is based on delay in the payment of the obligation
P13 million at the rate of 12% per annum from the date of demand on October 28, provided in the Compromise Agreement. The Compromise Agreement provides that payment
1992 up to the date of actual payment of the whole obligation; and (2) P20,000 as must be made within the two-year period from its execution. This was approved by the trial court
attorney's fees and costs of suit. and became the law governing their contract. Respondents posit that petitioner's failure to
comply entitles them to damages, by way of interest. 14

SO ORDERED.
The petition lacks merit.
Hence this petition for review on certiorari where petitioner assigns the following issues:
A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a
litigation or put an end to one already commenced. 15 It is an agreement between two or more
I persons, who, for preventing or putting an end to a lawsuit, adjust their difficulties by mutual
consent in the manner which they agree on, and which everyone of them prefers in the hope of
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR gaining, balanced by the danger of losing.16
WHEN IT AWARDED LEGAL INTEREST IN FAVOR OF THE RESPONDENTS, MR.
SANTOS AND RIVERLAND, INC., NOTWITHSTANDING THE FACT THAT NEITHER IN The general rule is that a compromise has upon the parties the effect and authority of res
THE COMPROMISE AGREEMENT NOR IN THE COMPROMISE JUDGEMENT OF judicata, with respect to the matter definitely stated therein, or which by implication from its
HON. JUDGE DIOKNO PROVIDES FOR PAYMENT OF INTEREST TO THE terms should be deemed to have been included therein. 17 This holds true even if the agreement
RESPONDENT has not been judicially approved.18

II In the case at bar, the Compromise Agreement was entered into by the parties on October 26,
1990.19 It was judicially approved on September 30, 1991.20 Applying existing jurisprudence, the
WHETHER OF NOT THE COURT OF APPEALS ERRED IN AWARDING LEGAL compromise agreement as a consensual contract became binding between the parties upon its
IN[T]EREST IN FAVOR OF THE RESPONDENTS, MR. SANTOS AND RIVERLAND, INC., execution and not upon its court approval. From the time a compromise is validly entered into,
NOTWITHSTANDING THE FACT THAT THE OBLIGATION OF THE PETITIONER TO it becomes the source of the rights and obligations of the parties thereto. The purpose of the
RESPONDENT SANTOS TO PAY A SUM OF MONEY HAD BEEN CONVERTED TO AN compromise is precisely to replace and terminate controverted claims. 21
OBLIGATION TO PAY IN KIND DELIVERY OF REAL PROPERTIES OWNED BY THE
PETITIONER WHICH HAD BEEN FULLY PERFORMED In accordance with the compromise agreement, the respondents asked for the dismissal of the
pending civil cases. The petitioner, on the other hand, paid the initial P1.5 million upon the
III execution of the agreement. This act of the petitioner showed that it acknowledges that the
agreement was immediately executory and enforceable upon its execution.

WHETHER OR NOT RESPONDENTS ARE BARRED FROM DEMANDING PAYMENT OF


INTEREST BY REASON OF THE WAIVER PROVISION IN THE COMPROMISE As to the remaining P13 million, the terms and conditions of the compromise agreement are clear
AGREEMENT, WHICH BECAME THE LAW AMONG THE PARTIES10 and unambiguous. It provides:

The only issue to be resolved is whether the respondents are entitled to legal interest. ...

Petitioner SVHFI alleges that where a compromise agreement or compromise judgment does not b. The balance of P13 Million shall be paid, whether in one lump sum or in
provide for the payment of interest, the legal interest by way of penalty on account of fault or installments, at the discretion of the Foundation, within a period of not more than two
delay shall not be due and payable, considering that the obligation or loan, on which the payment (2) years from the execution of this agreement22[Emphasis supplied.]
of legal interest could be based, has been superseded by the compromise
agreement.11 Furthermore, the petitioner argues that the respondents are barred by res judicata ...
from seeking legal interest on account of the waiver clause in the duly approved compromise
agreement.12 Article 4 of the compromise agreement provides:
The two-year period must be counted from October 26, 1990, the date of execution of the
compromise agreement, and not on the judicial approval of the compromise agreement on
Plaintiff Santos waives and renounces any and all other claims that he and his family September 30, 1991. When respondents wrote a demand letter to petitioner on October 28, 1992,
may have on the defendant Foundation arising from and in connection with the the obligation was already due and demandable. When the petitioner failed to pay its due
aforesaid civil cases, and defendant Foundation, on the other hand, also waives and obligation after the demand was made, it incurred delay.
renounces any and all claims that it may have against plaintiff Santos in connection
with such cases.13 [Emphasis supplied.]
Article 1169 of the New Civil Code provides:

93
Those obliged to deliver or to do something incur in delay from the time the obligee
judicially or extrajudicially demands from them the fulfillment of their obligation.
[Emphasis supplied]

Delay as used in this article is synonymous to default or mora which means delay in the
fulfillment of obligations. It is the non-fulfillment of the obligation with respect to time. 23

In order for the debtor to be in default, it is necessary that the following requisites be present:
(1) that the obligation be demandable and already liquidated; (2) that the debtor delays
performance; and (3) that the creditor requires the performance judicially or extrajudicially. 24

In the case at bar, the obligation was already due and demandable after the lapse of the two-
year period from the execution of the contract. The two-year period ended on October 26, 1992.
When the respondents gave a demand letter on October 28, 1992, to the petitioner, the obligation
was already due and demandable. Furthermore, the obligation is liquidated because the debtor
knows precisely how much he is to pay and when he is to pay it.

The second requisite is also present. Petitioner delayed in the performance. It was able to fully
settle its outstanding balance only on February 8, 1995, which is more than two years after the
extra-judicial demand. Moreover, it filed several motions and elevated adverse resolutions to the
appellate court to hinder the execution of a final and executory judgment, and further delay the
fulfillment of its obligation.

Third, the demand letter sent to the petitioner on October 28, 1992, was in accordance with an
extra-judicial demand contemplated by law.

Verily, the petitioner is liable for damages for the delay in the performance of its obligation. This
is provided for in Article 117025 of the New Civil Code.

When the debtor knows the amount and period when he is to pay, interest as damages is
generally allowed as a matter of right. 26 The complaining party has been deprived of funds to
which he is entitled by virtue of their compromise agreement. The goal of compensation requires
that the complainant be compensated for the loss of use of those funds. This compensation is in
the form of interest.27 In the absence of agreement, the legal rate of interest shall prevail. 28 The
legal interest for loan as forbearance of money is 12% per annum 29 to be computed from default,
i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of
the Civil Code.30

WHEREFORE, the petition is DENIED for lack of merit. The Decision dated January 30, 2002 of
the Court of Appeals and its April 12, 2002 Resolution in CA-G.R. CV No. 55122 are AFFIRMED.
Costs against petitioner.

SO ORDERED.

Davide, Jr. C.J. (Chairman), Ynares-Santiago and Carpio, JJ., concur.


Azcuna, J., on leave.

94
Republic of the Philippines catch a 3:00 p.m. ferry at Calais, Belgium to London. 5 Mrs. Pantaleon ended up weeping, while
SUPREME COURT her husband had to take a tranquilizer to calm his nerves.
Manila

It later emerged that Pantaleons purchase was first transmitted for approval to respondents
SECOND DIVISION Amsterdam office at 9:20 a.m., Amsterdam time, then referred to respondents Manila office at
9:33 a.m, then finally approved at 10:19 a.m., Amsterdam time. 6 The Approval Code was
transmitted to respondents Amsterdam office at 10:38 a.m., several minutes after petitioner had
G.R. No. 174269 May 8, 2009 already left Coster, and 78 minutes from the time the purchases were electronically transmitted
by the jewelry store to respondents Amsterdam office.
POLO S. PANTALEON, Petitioner,
vs. After the star-crossed tour had ended, the Pantaleon family proceeded to the United States before
AMERICAN EXPRESS INTERNATIONAL, INC., Respondent. returning to Manila on 12 November 1992. While in the United States, Pantaleon continued to
use his AmEx card, several times without hassle or delay, but with two other incidents similar
DECISION to the Amsterdam brouhaha. On 30 October 1991, Pantaleon purchased golf equipment
amounting to US $1,475.00 using his AmEx card, but he cancelled his credit card purchase and
borrowed money instead from a friend, after more than 30 minutes had transpired without the
TINGA, J.: purchase having been approved. On 3 November 1991, Pantaleon used the card to purchase
childrens shoes worth $87.00 at a store in Boston, and it took 20 minutes before this transaction
was approved by respondent.
The petitioner, lawyer Polo Pantaleon, his wife Julialinda, daughter Anna Regina and son Adrian
Roberto, joined an escorted tour of Western Europe organized by Trafalgar Tours of Europe, Ltd.,
in October of 1991. The tour group arrived in Amsterdam in the afternoon of 25 October 1991, On 4 March 1992, after coming back to Manila, Pantaleon sent a letter 7 through counsel to the
the second to the last day of the tour. As the group had arrived late in the city, they failed to respondent, demanding an apology for the "inconvenience, humiliation and embarrassment he
engage in any sight-seeing. Instead, it was agreed upon that they would start early the next day and his family thereby suffered" for respondents refusal to provide credit authorization for the
to see the entire city before ending the tour. aforementioned purchases.8 In response, respondent sent a letter dated 24 March 1992, 9 stating
among others that the delay in authorizing the purchase from Coster was attributable to the
circumstance that the charged purchase of US $13,826.00 "was out of the usual charge purchase
The following day, the last day of the tour, the group arrived at the Coster Diamond House in pattern established."10 Since respondent refused to accede to Pantaleons demand for an apology,
Amsterdam around 10 minutes before 9:00 a.m. The group had agreed that the visit to Coster the aggrieved cardholder instituted an action for damages with the Regional Trial Court (RTC) of
should end by 9:30 a.m. to allow enough time to take in a guided city tour of Amsterdam. The Makati City, Branch 145.11 Pantaleon prayed that he be awarded P2,000,000.00, as moral
group was ushered into Coster shortly before 9:00 a.m., and listened to a lecture on the art of damages; P500,000.00, as exemplary damages; P100,000.00, as attorneys fees; and P50,000.00
diamond polishing that lasted for around ten minutes. 1 Afterwards, the group was led to the as litigation expenses.12
stores showroom to allow them to select items for purchase. Mrs. Pantaleon had already planned
to purchase even before the tour began a 2.5 karat diamond brilliant cut, and she found a
diamond close enough in approximation that she decided to buy.2 Mrs. Pantaleon also selected On 5 August 1996, the Makati City RTC rendered a decision13 in favor of Pantaleon, awarding
for purchase a pendant and a chain, 3 all of which totaled U.S. $13,826.00. him P500,000.00 as moral damages, P300,000.00 as exemplary damages, P100,000.00 as
attorneys fees, and P85,233.01 as expenses of litigation. Respondent filed a Notice of Appeal,
while Pantaleon moved for partial reconsideration, praying that the trial court award the
To pay for these purchases, Pantaleon presented his American Express credit card together with increased amount of moral and exemplary damages he had prayed for. 14The RTC denied
his passport to the Coster sales clerk. This occurred at around 9:15 a.m., or 15 minutes before Pantaleons motion for partial reconsideration, and thereafter gave due course to respondents
the tour group was slated to depart from the store. The sales clerk took the cards imprint, and Notice of Appeal.15
asked Pantaleon to sign the charge slip. The charge purchase was then referred electronically to
respondents Amsterdam office at 9:20 a.m.
On 18 August 2006, the Court of Appeals rendered a decision16 reversing the award of damages
in favor of Pantaleon, holding that respondent had not breached its obligations to petitioner.
Ten minutes later, the store clerk informed Pantaleon that his AmexCard had not yet been Hence, this petition.
approved. His son, who had already boarded the tour bus, soon returned to Coster and informed
the other members of the Pantaleon family that the entire tour group was waiting for them. As it
was already 9:40 a.m., and he was already worried about further inconveniencing the tour group, The key question is whether respondent, in connection with the aforementioned transactions,
Pantaleon asked the store clerk to cancel the sale. The store manager though asked plaintiff to had committed a breach of its obligations to Pantaleon. In addition, Pantaleon submits that even
wait a few more minutes. After 15 minutes, the store manager informed Pantaleon that assuming that respondent had not been in breach of its obligations, it still remained liable for
respondent had demanded bank references. Pantaleon supplied the names of his depositary damages under Article 21 of the Civil Code.
banks, then instructed his daughter to return to the bus and apologize to the tour group for the
delay.
The RTC had concluded, based on the testimonial representations of Pantaleon and respondents
credit authorizer, Edgardo Jaurigue, that the normal approval time for purchases was "a matter
At around 10:00 a.m, or around 45 minutes after Pantaleon had presented his AmexCard, and of seconds." Based on that standard, respondent had been in clear delay with respect to the three
30 minutes after the tour group was supposed to have left the store, Coster decided to release subject transactions. As it appears, the Court of Appeals conceded that there had been delay on
the items even without respondents approval of the purchase. The spouses Pantaleon returned the part of respondent in approving the purchases. However, it made two critical conclusions in
to the bus. It is alleged that their offers of apology were met by their tourmates with stony favor of respondent. First, the appellate court ruled that the delay was not attended by bad faith,
silence.4 The tour groups visible irritation was aggravated when the tour guide announced that malice, or gross negligence. Second, it ruled that respondent "had exercised diligent efforts to
the city tour of Amsterdam was to be canceled due to lack of remaining time, as they had to effect the approval" of the purchases, which were "not in accordance with the charge pattern"
petitioner had established for himself, as exemplified by the fact that at Coster, he was "making

95
his very first single charge purchase of US$13,826," and "the record of [petitioner]s past Defendants credit authorizer Edgardo Jaurique likewise testified:
spending with [respondent] at the time does not favorably support his ability to pay for such
purchase."17
Q. You also testified that on normal occasions, the normal approval time for charges
would be 3 to 4 seconds?
On the premise that there was an obligation on the part of respondent "to approve or disapprove
with dispatch the charge purchase," petitioner argues that the failure to timely approve or
disapprove the purchase constituted mora solvendi on the part of respondent in the performance A. Yes, Maam.
of its obligation. For its part, respondent characterizes the depiction by petitioner of its obligation
to him as "to approve purchases instantaneously or in a matter of seconds." Both parties likewise presented evidence that the processing and approval of plaintiffs charge
purchase at the Coster Diamond House was way beyond the normal approval time of a "matter
Petitioner correctly cites that under mora solvendi, the three requisites for a finding of default of seconds".
are that the obligation is demandable and liquidated; the debtor delays performance; and the
creditor judicially or extrajudicially requires the debtors performance. 18 Petitioner asserts that Plaintiff testified that he presented his AmexCard to the sales clerk at Coster, at 9:15 a.m. and
the Court of Appeals had wrongly applied the principle of mora accipiendi, which relates to delay by the time he had to leave the store at 10:05 a.m., no approval had yet been received. In fact,
on the part of the obligee in accepting the performance of the obligation by the obligor. The the Credit Authorization System (CAS) record of defendant at Phoenix Amex shows that
requisites of mora accipiendi are: an offer of performance by the debtor who has the required defendants Amsterdam office received the request to approve plaintiffs charge purchase at 9:20
capacity; the offer must be to comply with the prestation as it should be performed; and the a.m., Amsterdam time or 01:20, Phoenix time, and that the defendant relayed its approval to
creditor refuses the performance without just cause.19 The error of the appellate court, argues Coster at 10:38 a.m., Amsterdam time, or 2:38, Phoenix time, or a total time lapse of one hour
petitioner, is in relying on the invocation by respondent of "just cause" for the delay, since while and [18] minutes. And even then, the approval was conditional as it directed in computerese [sic]
just cause is determinative of mora accipiendi, it is not so with the case of mora solvendi. "Positive Identification of Card holder necessary further charges require bank information due to
high exposure. By Jack Manila."
We can see the possible source of confusion as to which type of mora to appreciate. Generally,
the relationship between a credit card provider and its card holders is that of creditor- The delay in the processing is apparent to be undue as shown from the frantic successive queries
debtor,20 with the card company as the creditor extending loans and credit to the card holder, of Amexco Amsterdam which reads: "US$13,826. Cardmember buying jewels. ID seen. Advise
who as debtor is obliged to repay the creditor. This relationship already takes exception to the how long will this take?" They were sent at 01:33, 01:37, 01:40, 01:45, 01:52 and 02:08, all times
general rule that as between a bank and its depositors, the bank is deemed as the debtor while Phoenix. Manila Amexco could be unaware of the need for speed in resolving the charge purchase
the depositor is considered as the creditor.21 Petitioner is asking us, not baselessly, to again shift referred to it, yet it sat on its hand, unconcerned.
perspectives and again see the credit card company as the debtor/obligor, insofar as it has the
obligation to the customer as creditor/obligee to act promptly on its purchases on credit.
xxx
Ultimately, petitioners perspective appears more sensible than if we were to still regard
respondent as the creditor in the context of this cause of action. If there was delay on the part of To repeat, the Credit Authorization System (CAS) record on the Amsterdam transaction shows
respondent in its normal role as creditor to the cardholder, such delay would not have been in how Amexco Netherlands viewed the delay as unusually frustrating. In sequence expressed in
the acceptance of the performance of the debtors obligation (i.e., the repayment of the debt), but Phoenix time from 01:20 when the charge purchased was referred for authorization, defendants
it would be delay in the extension of the credit in the first place. Such delay would not fall under own record shows:
mora accipiendi, which contemplates that the obligation of the debtor, such as the actual
purchases on credit, has already been constituted. Herein, the establishment of the debt itself
(purchases on credit of the jewelry) had not yet been perfected, as it remained pending the 01:22 the authorization is referred to Manila Amexco
approval or consent of the respondent credit card company.
01:32 Netherlands gives information that the identification of the cardmember has
Still, in order for us to appreciate that respondent was in mora solvendi, we will have to first been presented and he is buying jewelries worth US $13,826.
recognize that there was indeed an obligation on the part of respondent to act on petitioners
purchases with "timely dispatch," or for the purposes of this case, within a period significantly
01:33 Netherlands asks "How long will this take?"
less than the one hour it apparently took before the purchase at Coster was finally approved.

02:08 Netherlands is still asking "How long will this take?"


The findings of the trial court, to our mind, amply established that the tardiness on the part of
respondent in acting on petitioners purchase at Coster did constitute culpable delay on its part
in complying with its obligation to act promptly on its customers purchase request, whether The Court is convinced that defendants delay constitute[s] breach of its contractual obligation to
such action be favorable or unfavorable. We quote the trial court, thus: act on his use of the card abroad "with special handling." 22 (Citations omitted)

As to the first issue, both parties have testified that normal approval time for purchases was a xxx
matter of seconds.

Notwithstanding the popular notion that credit card purchases are approved "within seconds,"
Plaintiff testified that his personal experience with the use of the card was that except for the there really is no strict, legally determinative point of demarcation on how long must it take for
three charge purchases subject of this case, approvals of his charge purchases were always a credit card company to approve or disapprove a customers purchase, much less one
obtained in a matter of seconds. specifically contracted upon by the parties. Yet this is one of those instances when "youd know
it when youd see it," and one hour appears to be an awfully long, patently unreasonable length

96
of time to approve or disapprove a credit card purchase. It is long enough time for the customer A. Yes, sir.
to walk to a bank a kilometer away, withdraw money over the counter, and return to the store.

Mr. Jaurique further testified that there were no "delinquencies" in plaintiffs account. 25
Notably, petitioner frames the obligation of respondent as "to approve or disapprove" the
purchase "in timely dispatch," and not "to approve the purchase instantaneously or within
seconds." Certainly, had respondent disapproved petitioners purchase "within seconds" or It should be emphasized that the reason why petitioner is entitled to damages is not simply
within a timely manner, this particular action would have never seen the light of day. Petitioner because respondent incurred delay, but because the delay, for which culpability lies under Article
and his family would have returned to the bus without delay internally humiliated perhaps 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages
over the rejection of his card yet spared the shame of being held accountable by newly-made are remunerative.26 Moral damages do not avail to soothe the plaints of the simply impatient, so
friends for making them miss the chance to tour the city of Amsterdam. this decision should not be cause for relief for those who time the length of their credit card
transactions with a stopwatch. The somewhat unusual attending circumstances to the purchase
at Coster that there was a deadline for the completion of that purchase by petitioner before any
We do not wish do dispute that respondent has the right, if not the obligation, to verify whether delay would redound to the injury of his several traveling companions gave rise to the moral
the credit it is extending upon on a particular purchase was indeed contracted by the cardholder, shock, mental anguish, serious anxiety, wounded feelings and social humiliation sustained by
and that the cardholder is within his means to make such transaction. The culpable failure of the petitioner, as concluded by the RTC.27Those circumstances are fairly unusual, and should
respondent herein is not the failure to timely approve petitioners purchase, but the more not give rise to a general entitlement for damages under a more mundane set of facts.
elemental failure to timely act on the same, whether favorably or unfavorably. Even assuming
that respondents credit authorizers did not have sufficient basis on hand to make a judgment,
we see no reason why respondent could not have promptly informed petitioner the reason for the We sustain the amount of moral damages awarded to petitioner by the RTC. There is no hard-
delay, and duly advised him that resolving the same could take some time. In that way, petitioner and-fast rule in determining what would be a fair and reasonable amount of moral damages,
would have had informed basis on whether or not to pursue the transaction at Coster, given the since each case must be governed by its own peculiar facts, however, it must be commensurate
attending circumstances. Instead, petitioner was left uncomfortably dangling in the chilly to the loss or injury suffered.28 Petitioners original prayer for P5,000,000.00 for moral damages
autumn winds in a foreign land and soon forced to confront the wrath of foreign folk. is excessive under the circumstances, and the amount awarded by the trial court of P500,000.00
in moral damages more seemly.1avvphi1

Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in
bad faith, and the court should find that under the circumstances, such damages are due. The Likewise, we deem exemplary damages available under the circumstances, and the amount
findings of the trial court are ample in establishing the bad faith and unjustified neglect of of P300,000.00 appropriate. There is similarly no cause though to disturb the determined award
respondent, attributable in particular to the "dilly-dallying" of respondents Manila credit of P100,000.00 as attorneys fees, and P85,233.01 as expenses of litigation.
authorizer, Edgardo Jaurique.23 Wrote the trial court:
WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals is
While it is true that the Cardmembership Agreement, which defendant prepared, is silent as to REVERSED and SET ASIDE. The Decision of the Regional Trial Court of Makati, Branch 145 in
the amount of time it should take defendant to grant authorization for a charge purchase, Civil Case No. 92-1665 is hereby REINSTATED. Costs against respondent.
defendant acknowledged that the normal time for approval should only be three to four seconds.
Specially so with cards used abroad which requires "special handling", meaning with priority. SO ORDERED.
Otherwise, the object of credit or charge cards would be lost; it would be so inconvenient to use
that buyers and consumers would be better off carrying bundles of currency or travellers checks,
which can be delivered and accepted quickly. Such right was not accorded to plaintiff in the DANTE O. TINGA
instances complained off for reasons known only to defendant at that time. This, to the Courts Associate Justice
mind, amounts to a wanton and deliberate refusal to comply with its contractual obligations, or
at least abuse of its rights, under the contract. 24

xxx

The delay committed by defendant was clearly attended by unjustified neglect and bad faith,
since it alleges to have consumed more than one hour to simply go over plaintiffs past credit
history with defendant, his payment record and his credit and bank references, when all such
data are already stored and readily available from its computer. This Court also takes note of the
fact that there is nothing in plaintiffs billing history that would warrant the imprudent
suspension of action by defendant in processing the purchase. Defendants witness Jaurique
admits:

Q. But did you discover that he did not have any outstanding account?

A. Nothing in arrears at that time.

Q. You were well aware of this fact on this very date?

97
Republic of the Philippines In its Answer with Counterclaim,5 respondent insisted that, as early as April 3, 1998, it had
SUPREME COURT already completed production of the 36,500 boxes, contrary to petitioners allegation. According
Manila to respondent, petitioner, in fact, made an additional order of 24,000 boxes, out of which, 14,000
had been completed without waiting for petitioners payment. Respondent stated that petitioner
was to pick up the boxes at the factory as agreed upon, but petitioner failed to do so. Respondent
SECOND DIVISION averred that, on October 8, 1998, petitioners representative, Bobby Que (Que), went to the
factory and saw that the boxes were ready for pick up. On February 20, 1999, Que visited the
G.R. No. 176868 July 26, 2010 factory again and supposedly advised respondent to sell the boxes as rejects to recoup the cost
of the unpaid 14,000 boxes, because petitioners transaction to ship bananas to China did not
materialize. Respondent claimed that the boxes were occupying warehouse space and that
SOLAR HARVEST, INC., Petitioner, petitioner should be made to pay storage fee at P60.00 per square meter for every month from
vs. April 1998. As counterclaim, respondent prayed that judgment be rendered ordering petitioner
DAVAO CORRUGATED CARTON CORPORATION, Respondent. to pay $15,400.00, plus interest, moral and exemplary damages, attorneys fees, and costs of the
suit.

DECISION
In reply, petitioner denied that it made a second order of 24,000 boxes and that respondent
already completed the initial order of 36,500 boxes and 14,000 boxes out of the second order. It
NACHURA, J.: maintained that

Petitioner seeks a review of the Court of Appeals (CA) Decision1 dated September 21, 2006 and respondent only manufactured a sample of the ordered boxes and that respondent could not
Resolution2dated February 23, 2007, which denied petitioners motion for reconsideration. The have produced 14,000 boxes without the required pre-payments.6
assailed Decision denied petitioners claim for reimbursement for the amount it paid to
respondent for the manufacture of corrugated carton boxes.
During trial, petitioner presented Que as its sole witness. Que testified that he ordered the boxes
from respondent and deposited the money in respondents account. 7 He specifically stated that,
The case arose from the following antecedents: when he visited respondents factory, he saw that the boxes had no print of petitioners logo. 8 A
few months later, he followed-up the order and was told that the company had full production,
and thus, was promised that production of the order would be rushed. He told respondent that
In the first quarter of 1998, petitioner, Solar Harvest, Inc., entered into an agreement with
it should indeed rush production because the need for the boxes was urgent. Thereafter, he
respondent, Davao Corrugated Carton Corporation, for the purchase of corrugated carton boxes,
asked his partner, Alfred Ong, to cancel the order because it was already late for them to meet
specifically designed for petitioners business of exporting fresh bananas, at US$1.10 each. The
their commitment to ship the bananas to China.9 On cross-examination, Que further testified
agreement was not reduced into writing. To get the production underway, petitioner deposited,
that China Zero Food, the Chinese company that ordered the bananas, was sending a ship to
on March 31, 1998, US$40,150.00 in respondents US Dollar Savings Account with Westmont
Davao to get the bananas, but since there were no cartons, the ship could not proceed. He said
Bank, as full payment for the ordered boxes.
that, at that time, bananas from Tagum Agricultural Development Corporation (TADECO) were
already there. He denied that petitioner made an additional order of 24,000 boxes. He explained
Despite such payment, petitioner did not receive any boxes from respondent. On January 3, that it took three years to refer the matter to counsel because respondent promised to pay. 10
2001, petitioner wrote a demand letter for reimbursement of the amount paid.3 On February 19,
2001, respondent replied that the boxes had been completed as early as April 3, 1998 and that
For respondent, Bienvenido Estanislao (Estanislao) testified that he met Que in Davao in October
petitioner failed to pick them up from the formers warehouse 30 days from completion, as agreed
1998 to inspect the boxes and that the latter got samples of them. In February 2000, they
upon. Respondent mentioned that petitioner even placed an additional order of 24,000 boxes,
inspected the boxes again and Que got more samples. Estanislao said that petitioner did not pick
out of which, 14,000 had been manufactured without any advanced payment from petitioner.
up the boxes because the ship did not arrive.11 Jaime Tan (Tan), president of respondent, also
Respondent then demanded petitioner to remove the boxes from the factory and to pay the
testified that his company finished production of the 36,500 boxes on April 3, 1998 and that
balance of US$15,400.00 for the additional boxes and P132,000.00 as storage fee.
petitioner made a second order of 24,000 boxes. He said that the agreement was for respondent
to produce the boxes and for petitioner to pick them up from the warehouse. 12 He also said that
On August 17, 2001, petitioner filed a Complaint for sum of money and damages against the reason why petitioner did not pick up the boxes was that the ship that was to carry the
respondent. The Complaint averred that the parties agreed that the boxes will be delivered within bananas did not arrive.13According to him, during the last visit of Que and Estanislao, he asked
30 days from payment but respondent failed to manufacture and deliver the boxes within such them to withdraw the boxes immediately because they were occupying a big space in his plant,
time. It further alleged but they, instead, told him to sell the cartons as rejects. He was able to sell 5,000 boxes at P20.00
each for a total of P100,000.00. They then told him to apply the said amount to the unpaid
balance.
6. That repeated follow-up was made by the plaintiff for the immediate production of the ordered
boxes, but every time, defendant [would] only show samples of boxes and ma[k]e repeated
promises to deliver the said ordered boxes. In its March 2, 2004 Decision, the Regional Trial Court (RTC) ruled that respondent did not
commit any breach of faith that would justify rescission of the contract and the consequent
reimbursement of the amount paid by petitioner. The RTC said that respondent was able to
7. That because of the failure of the defendant to deliver the ordered boxes, plaintiff ha[d] to produce the ordered boxes but petitioner failed to obtain possession thereof because its ship did
cancel the same and demand payment and/or refund from the defendant but the latter refused not arrive. It thus dismissed the complaint and respondents counterclaims, disposing as follows:
to pay and/or refund the US$40,150.00 payment made by the former for the ordered
boxes.41avvphi1
WHEREFORE, premises considered, judgment is hereby rendered in favor of defendant and
against the plaintiff and, accordingly, plaintiffs complaint is hereby ordered DISMISSED without
pronouncement as to cost. Defendants counterclaims are similarly dismissed for lack of merit.
98
SO ORDERED.14 (3) When demand would be useless, as when the obligor has rendered it beyond his
power to perform.

Petitioner filed a notice of appeal with the CA.


In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready
to comply in a proper manner with what is incumbent upon him. From the moment one of the
On September 21, 2006, the CA denied the appeal for lack of merit. 15 The appellate court held parties fulfills his obligation, delay by the other begins.
that petitioner failed to discharge its burden of proving what it claimed to be the parties
agreement with respect to the delivery of the boxes. According to the CA, it was unthinkable that,
over a period of more than two years, petitioner did not even demand for the delivery of the boxes. In reciprocal obligations, as in a contract of sale, the general rule is that the fulfillment of the
The CA added that even assuming that the agreement was for respondent to deliver the boxes, parties respective obligations should be simultaneous. Hence, no demand is generally necessary
respondent would not be liable for breach of contract as petitioner had not yet demanded from because, once a party fulfills his obligation and the other party does not fulfill his, the latter
it the delivery of the boxes.16 automatically incurs in delay. But when different dates for performance of the obligations are
fixed, the default for each obligation must be determined by the rules given in the first paragraph
of the present article,19 that is, the other party would incur in delay only from the moment the
Petitioner moved for reconsideration,17 but the motion was denied by the CA in its Resolution of other party demands fulfillment of the formers obligation. Thus, even in reciprocal obligations,
February 23, 2007.18 if the period for the fulfillment of the obligation is fixed, demand upon the obligee is still necessary
before the obligor can be considered in default and before a cause of action for rescission will
In this petition, petitioner insists that respondent did not completely manufacture the boxes and accrue.
that it was respondent which was obliged to deliver the boxes to TADECO.
Evident from the records and even from the allegations in the complaint was the lack of demand
We find no reversible error in the assailed Decision that would justify the grant of this petition. by petitioner upon respondent to fulfill its obligation to manufacture and deliver the boxes. The
Complaint only alleged that petitioner made a "follow-up" upon respondent, which, however,
would not qualify as a demand for the fulfillment of the obligation. Petitioners witness also
Petitioners claim for reimbursement is actually one for rescission (or resolution) of contract testified that they made a follow-up of the boxes, but not a demand. Note is taken of the fact
under Article 1191 of the Civil Code, which reads: that, with respect to their claim for reimbursement, the Complaint alleged and the witness
testified that a demand letter was sent to respondent. Without a previous demand for the
fulfillment of the obligation, petitioner would not have a cause of action for rescission against
Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the respondent as the latter would not yet be considered in breach of its contractual obligation.
obligors should not comply with what is incumbent upon him.

Even assuming that a demand had been previously made before filing the present case,
The injured party may choose between the fulfillment and the rescission of the obligation, with petitioners claim for reimbursement would still fail, as the circumstances would show that
the payment of damages in either case. He may also seek rescission, even after he has chosen respondent was not guilty of breach of contract.
fulfillment, if the latter should become impossible.

The existence of a breach of contract is a factual matter not usually reviewed in a petition for
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing review under Rule 45.20 The Court, in petitions for review, limits its inquiry only to questions of
of a period. law. After all, it is not a trier of facts, and findings of fact made by the trial court, especially when
reiterated by the CA, must be given great respect if not considered as final.21 In dealing with this
petition, we will not veer away from this doctrine and will thus sustain the factual findings of the
This is understood to be without prejudice to the rights of third persons who have acquired the
CA, which we find to be adequately supported by the evidence on record.
thing, in accordance with Articles 1385 and 1388 and the Mortgage Law.

As correctly observed by the CA, aside from the pictures of the finished boxes and the production
The right to rescind a contract arises once the other party defaults in the performance of his
report thereof, there is ample showing that the boxes had already been manufactured by
obligation. In determining when default occurs, Art. 1191 should be taken in conjunction with
respondent. There is the testimony of Estanislao who accompanied Que to the factory, attesting
Art. 1169 of the same law, which provides:
that, during their first visit to the company, they saw the pile of petitioners boxes and Que took
samples thereof. Que, petitioners witness, himself confirmed this incident. He testified that Tan
Art. 1169. Those obliged to deliver or to do something incur in delay from the time the obligee pointed the boxes to him and that he got a sample and saw that it was blank. Ques absolute
judicially or extrajudicially demands from them the fulfillment of their obligation. assertion that the boxes were not manufactured is, therefore, implausible and suspicious.

However, the demand by the creditor shall not be necessary in order that delay may exist: In fact, we note that respondents counsel manifested in court, during trial, that his client was
willing to shoulder expenses for a representative of the court to visit the plant and see the
boxes.22 Had it been true that the boxes were not yet completed, respondent would not have been
(1) When the obligation or the law expressly so declares; or so bold as to challenge the court to conduct an ocular inspection of their warehouse. Even in its
Comment to this petition, respondent prays that petitioner be ordered to remove the boxes from
its factory site,23 which could only mean that the boxes are, up to the present, still in
(2) When from the nature and the circumstances of the obligation it appears that the respondents premises.
designation of the time when the thing is to be delivered or the service is to be rendered
was a controlling motive for the establishment of the contract; or

99
We also believe that the agreement between the parties was for petitioner to pick up the boxes A. Sir, because when I checked the plant, I have not seen any carton. I asked Mr. Tan
from respondents warehouse, contrary to petitioners allegation. Thus, it was due to petitioners to rush the carton but not26
fault that the boxes were not delivered to TADECO.

Q. Did you give any authority for Mr. Tan to deliver these boxes to TADECO?
Petitioner had the burden to prove that the agreement was, in fact, for respondent to deliver the
boxes within 30 days from payment, as alleged in the Complaint. Its sole witness, Que, was not
even competent to testify on the terms of the agreement and, therefore, we cannot give much A. Because I have not seen any of my carton.
credence to his testimony. It appeared from the testimony of Que that he did not personally place
the order with Tan, thus: Q. You dont have any authority yet given to Mr. Tan?

Q. No, my question is, you went to Davao City and placed your order there? A. None, your Honor.27

A. I made a phone call. Surely, without such authority, TADECO would not have allowed respondent to deposit the boxes
within its premises.
Q. You made a phone call to Mr. Tan?
In sum, the Court finds that petitioner failed to establish a cause of action for rescission, the
A. The first time, the first call to Mr. Alf[re]d Ong. Alfred Ong has a contact with Mr. evidence having shown that respondent did not commit any breach of its contractual obligation.
Tan. As previously stated, the subject boxes are still within respondents premises. To put a rest to
this dispute, we therefore relieve respondent from the burden of having to keep the boxes within
its premises and, consequently, give it the right to dispose of them, after petitioner is given a
Q. So, your first statement that you were the one who placed the order is not true? period of time within which to remove them from the premises.

A. Thats true. The Solar Harvest made a contact with Mr. Tan and I deposited the WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated
money in the bank. September 21, 2006 and Resolution dated February 23, 2007 are AFFIRMED. In addition,
petitioner is given a period of 30 days from notice within which to cause the removal of the 36,500

Q. You said a while ago [t]hat you were the one who called Mr. Tan and placed the
order for 36,500 boxes, isnt it? boxes from respondents warehouse. After the lapse of said period and petitioner fails to effect
such removal, respondent shall have the right to dispose of the boxes in any manner it may deem
fit.
A. First time it was Mr. Alfred Ong.

SO ORDERED.
Q. It was Mr. Ong who placed the order[,] not you?

ANTONIO EDUARDO B. NACHURA


A. Yes, sir.24 Associate Justice

Q. Is it not a fact that the cartons were ordered through Mr. Bienvenido Estanislao?

A. Yes, sir.25

Moreover, assuming that respondent was obliged to deliver the boxes, it could not
have complied with such obligation. Que, insisting that the boxes had not been
manufactured, admitted that he did not give respondent the authority to deliver the
boxes to TADECO:

Q. Did you give authority to Mr. Tan to deliver these boxes to TADECO?

A. No, sir. As I have said, before the delivery, we must have to check the carton, the
quantity and quality. But I have not seen a single carton.

Q. Are you trying to impress upon the [c]ourt that it is only after the boxes are
completed, will you give authority to Mr. Tan to deliver the boxes to TADECO[?]

100
Republic of the Philippines on September 29, 1981 for $5.3 million.8 On December 3, 1981, respondent corporation Sterling
SUPREME COURT Shipping Lines, Inc. through respondent Ruperto V. Tankeh executed a Deed of Assignment in
Manila favor of Development Bank of the Philippines. The deed stated that the assignor, Sterling
Shipping Lines, Inc.:

THIRD DIVISION
x x x does hereby transfer and assign in favor of the ASSIGNEE (DBP), its successors and assigns,
future earnings of the mortgaged M/V "Sterling Ace," including proceeds of charter and shipping
G.R. No. 171428 November 11, 2013 contracts, it being understood that this assignment shall continue to subsist for as long as the
ASSIGNORS obligation with the herein ASSIGNEE remains unpaid. 9
ALEJANDRO V. TANKEH, Petitioner,
vs. On June 16, 1983, petitioner wrote a letter to respondent Ruperto V. Tankeh saying that he was
DEVELOPMENT BANK OF THE PHILIPPINES, STERLING SHIPPING LINES, INC., RUPERTO severing all ties and terminating his involvement with Sterling Shipping Lines, Inc. 10 He required
V. TANKEH, VICENTE ARENAS, and ASSET PRIVATIZATION TRUST, Respondents. that its board of directors pass a resolution releasing him from all liabilities, particularly the loan
contract with Development Bank of the Philippines. In addition, petitioner asked that the private
DECISION respondents notify Development Bank of the Philippines that he had severed his ties with Sterling
Shipping Lines, Inc.11

LEONEN, J.:
The accounts of respondent Sterling Shipping Lines, Inc. in the Development Bank of the
Philippines were transferred to public respondent Asset Privatization Trust on June 30, 1986. 12
This is a Petition for Review on Certiorari praying that the assailed October 25, 2005 Decision
and the February 9, 2006 Resolution of the Court of Appeals1 be reversed, and that the January
4, 1996 Decision of the Regional Trial Court of Manila Branch 32 be affirmed. Petitioner prays Presently, respondent Asset Privatization Trust is known as the Privatization and Management
that this Court grant his claims for moral damages and attorneys fees, as proven by the evidence. Office. Asset Privatization Trust was a government agency created through Presidential
Proclamation No. 50, issued in 1986. Through Administrative Order No. 14, issued by former
President Corazon Aquino dated February 3, 1987, assets including loans in favor of
Respondent Ruperto V. Tankeh is the president of Sterling Shipping Lines, Inc. It was Development Bank of the Philippines were ordered to be transferred to the national government.
incorporated on April 23, 1979 to operate ocean-going vessels engaged primarily in foreign In turn, the management and facilitation of these assets were delegated to Asset Privatization
trade.2 Ruperto V. Tankeh applied for a $3.5 million loan from public respondent Development Trust, pursuant to Presidential Proclamation No. 50. In 1999, Republic Act No. 8758 was signed
Bank of the Philippines for the partial financing of an ocean-going vessel named the M/V Golden into law, and it provided that the corporate term of Asset Privatization Trust would end on
Lilac. To authorize the loan, Development Bank of the Philippines required that the following December 31, 2000. The same law empowered the President of the Philippines to determine
conditions be met: which office would facilitate the management of assets held by Asset Privatization Trust. Thus,
on December 6, 2000, former President Joseph E. Estrada signed Executive Order No. 323,
creating the Privatization Management Office. Its present function is to identify disposable assets,
1) A first mortgage must be obtained over the vessel, which by then had been renamed the M/V monitor the progress of privatization activities, and approve the sale or divestment of assets with
Sterling Ace; respect to price and buyer.13

2) Ruperto V. Tankeh, petitioner Dr. Alejandro V. Tankeh, Jose Marie Vargas, as well as On January 29, 1987, the M/V Sterling Ace was sold in Singapore for $350,000.00 by
respondents Sterling Shipping Lines, Inc. and Vicente Arenas should become liable jointly and Development Bank of the Philippines legal counsel Atty. Prospero N. Nograles. When petitioner
severally for the amount of the loan; came to know of the sale, he wrote respondent Development Bank of the Philippines to express
that the final price was inadequate, and therefore, the transaction was irregular. At this time,
petitioner was still bound as a debtor because of the promissory note dated May 12, 1981, which
3) The future earnings of the mortgaged vessel, including proceeds of Charter and Shipping
petitioner signed in December of 1981. The promissory note subsisted despite Sterling Shipping
Contracts, should be assigned to Development Bank of the Philippines; and
Lines, Inc.s assignment of all future earnings of the mortgaged M/V Sterling Ace to Development
Bank of the Philippines. The loan also continued to bind petitioner despite Sterling Shipping
4) Development Bank of the Philippines should be assigned no less than 67% of the total Lines, Inc.s cash equity contribution of P13,663,200.00 which was used to cover part of the
subscribed and outstanding voting shares of the company. The percentage of shares assigned acquisition cost of the vessel, pre-operating expenses, and initial working capital. 14
should be maintained at all times, and the assignment was to subsist as long as the assignee,
Development Bank of the Philippines, deemed it necessary during the existence of the loan.3
Petitioner filed several Complaints15 against respondents, praying that the promissory note be
declared null and void and that he be absolved from any liability from the mortgage of the vessel
According to petitioner Dr. Alejandro V. Tankeh, Ruperto V. Tankeh approached him sometime and the note in question.
in 1980.4 Ruperto informed petitioner that he was operating a new shipping line business.
Petitioner claimed that respondent, who is also petitioners younger brother, had told him that
In the Complaints, petitioner alleged that respondent Ruperto V. Tankeh, together with Vicente
petitioner would be given one thousand (1,000) shares to be a director of the business. The shares
L. Arenas, Jr. and Jose Maria Vargas, had exercised deceit and fraud in causing petitioner to
were worth P1,000,000.00.5
bind himself jointly and severally to pay respondent Development Bank of the Philippines the
amount of the mortgage loan.16 Although he had been made a stockholder and director of the
On May 12, 1981, petitioner signed the Assignment of Shares of Stock with Voting respondent corporation Sterling Shipping Lines, Inc., petitioner alleged that he had never
Rights.6 Petitioner then signed the May 12, 1981 promissory note in December 1981. He was the invested any amount in the corporation and that he had never been an actual member of the
last to sign this note as far as the other signatories were concerned.7 The loan was approved by board of directors.17 He alleged that all the money he had supposedly invested was provided by
respondent Development Bank of the Philippines on March 18, 1981. The vessel was acquired respondent Ruperto V. Tankeh.18 He claimed that he only attended one meeting of the board. In

101
that meeting, he was introduced to two directors representing Development Bank of the all its rights, titles, and interests in favor of the national government in accordance with
Philippines, namely, Mr. Jesus Macalinag and Mr. Gil Corpus. Other than that, he had never Administrative Order No. 14. In line with that, Asset Privatization Trust was constituted as
been notified of another meeting of the board of directors. trustee of the assets transferred to the national government to effect privatization of these assets,
including respondent Sterling Shipping Lines, Inc. 32 Respondent Asset Privatization Trust also
filed a compulsory counterclaim against petitioner and its co-respondents Sterling Shipping
Petitioner further claimed that he had been excluded deliberately from participating in the affairs Lines, Inc., Ruperto V. Tankeh, and Vicente L. Arenas, Jr. for the amount of P264,386,713.84.
of the corporation and had never been compensated by Sterling Shipping Lines, Inc. as a director
and stockholder.19According to petitioner, when Sterling Shipping Lines, Inc. was organized,
respondent Ruperto V. Tankeh had promised him that he would become part of the Respondent Arenas did not file an Answer to any of the Complaints of petitioner but filed a Motion
administration staff and oversee company operations. Respondent Ruperto V. Tankeh had also to Dismiss that the Regional Trial Court denied. Respondent Asset Privatization Trust filed a
promised petitioner that the latters son would be given a position in the company. 20 However, Cross Claim against Arenas. In his Answer33 to Asset Privatization Trusts Cross Claim, Arenas
after being designated as vice president, petitioner had not been made an officer and had been claimed that he had been released from any further obligation to Development Bank of the
alienated from taking part in the respondent corporation. 21 Philippines and its successor Asset Privatization Trust because an extension had been granted
by the Development Bank of the Philippines to the debtors of Sterling Shipping Lines, Inc. and/or
Ruperto V. Tankeh, which had been secured without Arenas consent.
Petitioner also alleged that respondent Development Bank of the Philippines had been
inexcusably negligent in the performance of its duties. 22 He alleged that Development Bank of
the Philippines must have been fully aware of Sterling Shipping Lines, Inc.s financial situation. The trial proceeded with the petitioner serving as a sole witness for his case. In a January 4,
Petitioner claimed that Sterling Shipping Lines, Inc. was controlled by the Development Bank of 1996 Decision,34 the Regional Trial Court ruled:
the Philippines because 67% of voting shares had been assigned to the latter. 23 Furthermore, the
mortgage contracts had mandated that Sterling Shipping Lines, Inc. "shall furnish the DBP with
copies of the minutes of each meeting of the Board of Directors within one week after the meeting. Here, we find
Sterling Shipping Lines Inc. shall likewise furnish DBP its annual audited financial statements
and other information or data that may be needed by DBP as its accommodations [sic] with DBP 1. Plaintiff being promised by his younger brother, Ruperto V. Tankeh, 1,000 shares
are outstanding."24Petitioner further alleged that the Development Bank of the Philippines had with par value of P1 Million with all the perks and privileges of being stockholder and
allowed "highly questionable acts"25 to take place, including the gross undervaluing of the M/V director of SSLI, a new international shipping line;
Sterling Aces.26 Petitioner alleged that one day after Development Bank of the Philippines Atty.
Nograles sold the vessel, the ship was re-sold by its buyer for double the amount that the ship
had been bought.27 2. That plaintiff will be part of the administration and operation of the business, so
with his son who is with the law firm Romulo Ozaeta Law Offices;
As for respondent Vicente L. Arenas, Jr., petitioner alleged that since Arenas had been the
treasurer of Sterling Shipping Lines, Inc. and later on had served as its vice president, he was 3. But this was merely the come-on or appetizer for the Real McCoy or the primordial
also responsible for the financial situation of Sterling Shipping Lines, Inc. end of congregating the incorporators proposed - - that he sign the promissory note
(Exhibit "C"), the mortgage contract (Exhibit "A"), and deed of assignment so SSLI
could get the US $3.5 M loan from DBP to partially finance the importation of vessel
Lastly, in the Amended Complaint dated April 16, 1991, petitioner impleaded respondent Asset M.V. "Golden Lilac" renamed M.V. "Sterling ACE";
Privatization Trust for being the agent and assignee of the M/V Sterling Ace.

4. True it is, plaintiff was made a stockholder and director and Vice-President in 1979
In their Answers28 to the Complaints, respondents raised the following defenses against but he was never notified of any meeting of the Board except only once, and only to be
petitioner: Respondent Development Bank of the Philippines categorically denied receiving any introduced to the two (2) directors representing no less than 67% of the total
amount from Sterling Shipping Lines, Inc.s future earnings and from the proceeds of the subscribed and outstanding voting shares of the company. Thereafter, he was
shipping contracts. It maintained that equity contributions could not be deducted from the excluded from any board meeting, shorn of his powers and duties as director or Vice-
outstanding loan obligation that stood at P245.86 million as of December 31, 1986. Development President, and was altogether deliberately demeaned as an outsider.
Bank of the Philippines also maintained that it is immaterial to the case whether the petitioner
is a "real stockholder" or merely a "pseudo-stockholder" of the corporation.29 By affixing his
signature to the loan agreement, he was liable for the obligation. According to Development Bank 5. What kind of a company is SSLI who treated one of their incorporators, one of their
of the Philippines, he was in pari delicto and could not be discharged from his obligation. Directors and their paper Vice-President in 1979 by preventing him access to
Furthermore, petitioner had no cause of action against Development Bank of the Philippines corporate books, to corporate earnings, or losses, and to any compensation or
since this was a case between family members, and earnest efforts toward compromise should remuneration whatsoever? Whose President and Treasurer did not submit the
have been complied with in accordance with Article 222 of the Civil Code of the Philippines. 30 required SEC yearly report? Who did not remit to DBP the proceeds on charter
mortgage contracts on M/V Sterling Ace?
Respondent Ruperto V. Tankeh stated that petitioner had voluntarily signed the promissory note
in favor of Development Bank of the Philippines and with full knowledge of the consequences. 6. The M/V Sterling Ace was already in the Davao Port when it was then diverted to
Respondent Tankeh also alleged that he did not employ any fraud or deceit to secure petitioners Singapore to be disposed on negotiated sale, and not by public bidding contrary to
involvement in the company, and petitioner had been fully aware of company operations. Also, COA Circular No. 86-264 and without COAs approval. Sterling Ace was seaworthy but
all that petitioner had to do to avoid liability had been to sell his shareholdings in the company. 31 was sold as scrap in Singapore. No foreclosure with public bidding was made in
contravention of the Promissory Note to recover any deficiency should DBP seeks [sic]
to recover it on the outstanding mortgage loan. Moreover the sale was done after the
Respondent Asset Privatization Trust raised that petitioner had no cause of action against them account and asset (nay, now only a liability) were transferred to APT. No approval of
since Asset Privatization Trust had been mandated under Proclamation No. 50 to take title to SSLI Board of Directors to the negotiated sale was given.
and provisionally manage and dispose the assets identified for privatization or deposition within
the shortest possible period. Development Bank of the Philippines had transferred and conveyed

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7. Plaintiffs letter to his brother President, Ruperto V. Tankeh, dated June 15, 1983 delicadeza, katapatan, kaayusan, pagkamasinop at kagalingan" Where is the vision banking they
(Exhibit "D") his letter thru his lawyer to DBP (Exhibit "J") and another letter to it have for our country?
(Exhibit "K") show no estoppel on his part as he consistently and continuously assailed
the several injurious acts of defendants while assailing the Promissory Note itself x x
x (Citations omitted) applying the maxim: Rencintiatio non praesumitur. By this Dr. Had DBP listened to a cry in the wilderness that of the voice of the doctor the doctor would
Tankeh never waived the right to question the Promissory Note contract terms. He did not have allowed the officers and board members to defraud DBP and he would demand of them
not ratify, by concurring acts, express or tacit, after the reasons had surfaced entitling to hew and align themselves to the deed of assignment.
him to render the contract voidable, defendants acts in implementing or not the
conditions of the mortgage, the promissory note, the deed of assignment, the lack of Prescinding from the above, plaintiffs consent to be with SSLI was vitiated by fraud. The fact
audit and accounting, and the negotiated sale of MV Sterling Ace. He did not ratify that defendant Ruperto Tankeh has not questioned his liability to DBP or that Jose Maria Vargas
defendants [sic] defective acts (Art. 1396, New Civil Code (NCC). has been declared in default do not detract from the fact that there was attendant fraud and that
there was continuing fraud insofar as plaintiff is concerned.
The foregoing and the following essays, supported by evidence, the fraud committed by plaintiffs
brother before the several documents were signed (SEC documents, Promissory Note, Mortgage Ipinaglaban lang ni Doctor ang karapatan niya. Kung wala siyang sense of righteous indignation
(MC) Contract, assignment (DA)), namely: and fairness, tatahimik na lang siya, sira naman ang pinangangalagaan niyang pangalan, honor
and family prestige [sic] (Emphasis provided). 35
1. Ruperto V. Tankeh approaches his brother Alejandro to tell the latter of his new
shipping business. The project was good business proposal [sic]. xxxx

2. Ruperto tells Alejandro hes giving him shares worth P1 Million and hes going to be All of the defendants counterclaims and cross-claims x x x including plaintiffs and the other
a Director. defendants prayer for damages are not, for the moment, sourced and proven by substantial
evidence, and must perforce be denied and dismissed.
3. He tells his brother that he will be part of the companys Administration and
Operations and his eldest son will be in it, too. WHEREFORE, this Court, finding and declaring the Promissory Note (Exhibit "C") and the
Mortgage Contract (Exhibit "A") null and void insofar as plaintiff DR. ALEJANDRO V. TANKEH is
4. Ruperto tells his brother they need a ship, they need to buy one for the business, concerned, hereby ANNULS and VOIDS those documents as to plaintiff, and it is hereby further
and they therefore need a loan, and they could secure a loan from DBP with the vessel ordered that he be released from any obligation or liability arising therefrom.
brought to have a first mortgage with DBP but anyway the other two directors and
comptroller will be from DBP with a 67% SSLI shares voting rights. All the defendants counterclaims and cross-claims and plaintiffs and defendants prayer for
damages are hereby denied and dismissed, without prejudice.
Without these insidious, devastating and alluring words, without the machinations used by
defendant Ruperto V. Tankeh upon the doctor, without the inducement and promise of SO ORDERED.36
ownership of shares and the exercise of administrative and operating functions, and the partial
financing by one of the best financial institutions, the DBP, plaintiff would not have agreed to
join his brother; and the safeguarding of the Banks interest by its nominated two (2) directors Respondents Ruperto V. Tankeh, Asset Privatization Trust, and Arenas immediately filed their
in the Board added to his agreeing to the new shipping business. His consent was vitiated by the respective Notices of Appeal with the Regional Trial Court. The petitioner filed a Motion for
fraud before the several contracts were consummated. Reconsideration with regard to the denial of his prayer for damages. After this Motion had been
denied, he then filed his own Notice of Appeal.
This alone convenes [sic] this Court to annul the Promissory Note as it relates to plaintiff himself.
In a Decision37 promulgated on October 25, 2005, the Third Division of the Court of Appeals
reversed the trial courts findings. The Court of Appeals held that petitioner had no cause of
Plaintiff also pleads annulment on ground of equity. Article 19, NCC, provides him the way as it action against public respondent Asset Privatization Trust. This was based on the Court of
requires every person, in the exercise of his rights and performance of his duties, to act with Appeals assessment of the case records and its findings that Asset Privatization Trust did not
justice, give everyone his due, and observe honesty and good faith (Velayo vs. Shell Co. of the commit any act violative of the right of petitioner or constituting a breach of Asset Privatization
Phils., G.R. L-7817, October 31, 1956). Not to release him from the clutch of the Promissory Note Trusts obligations to petitioner. The Court of Appeals found that petitioners claim for damages
when he was never made a part of the operation of the SSLI, when he was not notified of the against Asset Privatization Trust was based merely on his own self-serving allegations.38
Board Meetings, when the corporation nary remitted earnings of M/V Sterling Ace from charter
or shipping contracts to DBP, when the SSLI did not comply with the deed of assignment and
mortgage contract, and when the vessel was sold in Singapore (he, learning of the sale only from As to the finding of fraud, the Court of Appeals held that:
the newspapers) in contravention of the Promissory Note, and which he questioned, will be an
injustice, inequitable, and even iniquitous to plaintiff. SSLI and the private defendants did not
observe honesty and good faith to one of their incorporators and directors. As to DBP, the Court xxxx
cannot put demerits on what plaintiffs memorandum has pointed out:
In all the complaints from the original through the first, second and third amendments, the
While defendant DBP did not exercise the caution and prudence in the discharge of their plaintiff imputes fraud only to defendant Ruperto, to wit:
functions to protect its interest as expected of them and worst, allowed the perpetuation of the
illegal acts committed in contrast to the virtues they publicly profess, namely: "palabra de honor,

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4. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, plaintiff, witness stand, the plaintiff signed the promissory note voluntarily. No pressure, force or
together with Vicente L. Arenas, Jr. and Jose Maria Vargas signed a promissory note in favor of intimidation was made to bear upon him. In fact, according to him, only a messenger brought
the defendant, DBP, wherein plaintiff bound himself to jointly and severally pay the DBP the the paper to him for signature. The promised shares of stock were given and recorded in the
amount of the mortgage loan. This document insofar as plaintiff is concerned is a simulated plaintiffs name. He was made a director and Vice-President of SSLI. Apparently, only the promise
document considering that plaintiff was never a real stockholder of Sterling Shipping Lines, Inc. that his son would be given a position in the company remained unfulfilled. However, the same
(Emphasis provided) should have been threshed out between the plaintiff and his brother, defendant Ruperto, and its
non-fulfillment did not amount to fraud or deceit, but was only an unfulfilled promise.

More allegations of deceit were added in the Second Amended Complaint, but they are also
attributed against Ruperto: It should be pointed out that the plaintiff is a doctor of medicine and a seasoned businessman.
It cannot be said that he did not understand the import of the documents he signed. Certainly
he knew what he was signing. He should have known that being an officer of SSLI, his signing
6. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE FACT THAT of the promissory note together with the other officers of the corporation was expected, as the
when the Sterling Shipping Lines, Inc. was organized in 1980, Ruperto V. Tankeh promised other officers also did. It cannot therefore be said that the promissory note was simulated. The
plaintiff that he would be a part of the administration staff so that he could oversee the operation same is a contract validly entered into, which the parties are obliged to comply with. 40(Citations
of the company. He was also promised that his son, a lawyer, would be given a position in the omitted)
company. None of these promsies [sic] was complied with. In fact he was not even allowed to find
out the data about the income and expenses of the company.
The Court of Appeals ruled that in the absence of any competent proof, Ruperto V. Tankeh did
not commit any fraud. Petitioner Alejandro V. Tankeh was unable to prove by a preponderance
7. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT of evidence that fraud or deceit had been employed by Ruperto to make him sign the promissory
PLAINTIFF WAS INVITED TO ATTEND THE BOARD MEETING OF THE STERLING SHIPPING note. The Court of Appeals reasoned that:
LINES INC. ONLY ONCE, WHICH WAS FOR THE SOLE PURPOSE OF INTRODUCING HIM TO
THE TWO DIRECTORS OF THE DBP IN THE BOARD OF THE STERLING SHIPPING LINES, INC.,
NAMELY, MR. JESUS MACALINAG AND MR. GIL CORPUS. THEREAFTER HE WAS NEVER Fraud is never presumed but must be proved by clear and convincing evidence, mere
INVITED AGAIN. PLAINTIFF WAS NEVER COMPENSATED BY THE STERLING SHIPPING LINES, preponderance of evidence not even being adequate. Contentions must be proved by competent
INC. FOR HIS BEING A SO-CALLED DIRECTOR AND STOCKHOLDER. evidence and reliance must be had on the strength of the partys evidence and not upon the
weakness of the opponents defense. The plaintiff clearly failed to discharge such
burden.41 (Citations omitted)
xxxx

With that, the Court of Appeals reversed and set aside the judgment and ordered that plaintiffs
8-A THAT A WEEK AFTER SENDING THE ABOVE LETTER PLAINTIFF MADE EARNEST Complaint be dismissed. Petitioner filed a Motion for Reconsideration dated October 25, 2005
EFFORTS TOWARDS A COMPROMISE BETWEEN HIM AND HIS BROTHER RUPERTO V. that was denied in a Resolution42promulgated on February 9, 2006.
TANKEH, WHICH EFFORTS WERE SPURNED BY RUPERTO V. TANKEH, AND ALSO AFTER THE
NEWS OF THE SALE OF THE STERLING ACE WAS PUBLISHED AT THE NEWSPAPER,
PLAINTIFF TRIED ALL EFFORTS TO CONTACT RUPERTO V. TANKEH FOR THE PURPOSE OF Hence, this Petition was filed.
ARRIVING AT SOME COMPROMISE, BUT DEFENDANT RUPERTO V. TANKEH AVOIDED ALL
CONTACTS WITH THE PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL ASSISTANCE
FROM HIS LAWYER. In this Petition, Alejandro V. Tankeh stated that the Court of Appeals seriously erred and gravely
abused its discretion in acting and deciding as if the evidence stated in the Decision of the
Regional Trial Court did not exist. He averred that the ruling of lack of cause of action had no
In the absence of any allegations of fraud and/or deceit against the other defendants, namely, leg to stand on, and the Court of Appeals had unreasonably, whimsically, and capriciously
the DBP, Vicente Arenas, Sterling Shipping Lines, Inc., and the Asset Privatization Trust, the ignored the ample evidence on record proving the fraud and deceit perpetrated on the petitioner
plaintiffs evidence thereon should only be against Ruperto, since a plaintiff is bound to prove by the respondent. He stated that the appellate court failed to appreciate the findings of fact of
only the allegations of his complaint. In any case, no evidence of fraud or deceit was ever the lower court, which are generally binding on appellate courts. He also maintained that he is
presented against defendants DBP, Arenas, SSLI and APT. entitled to damages and attorney's fees due to the deceit and machinations committed by the
respondent.
As to the evidence against Ruperto, the same consists only of the testimony of the plaintiff. None
of his documentary evidence would prove that Ruperto was guilty of fraud or deceit in causing In his Memorandum, respondent Ruperto V. Tankeh averred that petitioner had chosen the
him to sign the subject promissory note.39 wrong remedy. He ought to have filed a special civil action of certiorari and not a Petition for
Review. Petitioner raised questions of fact, and not questions of law, and this required the review
or evaluation of evidence. However, this is not the function of this Court, as it is not a trier of
xxxx facts. He also contended that petitioner had voluntarily entered into the loan agreement and the
position with Sterling Shipping Lines, Inc. and that he did not fraudulently induce the petitioner
Analyzing closely the foregoing statements, we find no evidence of fraud or deceit. The mention to enter into the contract.
of a new shipping lines business and the promise of a free 1,000-share and directorship in the
corporation do not amount to insidious words or machinations. In any case, the shipping Respondents Development Bank of the Philippines and Asset Privatization Trust also contended
business was indeed established, with the plaintiff himself as one of the incorporators and that petitioner's mode of appeal had been wrong, and he had actually sought a special civil action
stockholders with a share of 4,000, worth P4,000,000.00 of which P1,000,000.00 was reportedly of certiorari. This alone merited its dismissal.
paid up. As such, he signed the Articles of Incorporation and the corporations By-Laws which
were registered with the Securities and Exchange Commission in April 1979. It was not until
May 12, 1981 that he signed the questioned promissory note. From his own declaration at the

104
The main issue in this case is whether the Court of Appeals erred in finding that respondent Types of Fraud in Contracts
Rupert V. Tankeh did not commit fraud against the petitioner.

Fraud is defined in Article 1338 of the Civil Code as:


The Petition is partly granted.
x x x fraud when, through insidious words or machinations of one of the contracting parties, the
Before disposing of the main issue in this case, this Court needs to address a procedural issue other is induced to enter into a contract which, without them, he would not have agreed to.
raised by respondents. Collectively, respondents argue that the Petition is actually one of
certiorari under Rule 65 of the Rules of Court43 and not a Petition for Review on Certiorari under
Rule 45.44 Thus, petitioners failure to show that there was neither appeal nor any other plain, This is followed by the articles which provide legal examples and illustrations of fraud.
speedy or adequate remedy merited the dismissal of the Complaint.
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties are
Contrary to respondents imputation, the remedy contemplated by petitioner is clearly that of a bound by confidential relations, constitutes fraud. (n)
Rule 45 Petition for Review. In Tagle v. Equitable PCI Bank, 45 this Court made the distinction
between a Rule 45 Petition for Review on Certiorari and a Rule 65 Petition for Certiorari: Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know
the facts, are not in themselves fraudulent. (n)
Certiorari is a remedy designed for the correction of errors of jurisdiction, not errors of
judgment.1wphi1 In Pure Foods Corporation v. NLRC, we explained the simple reason for the Art. 1341. A mere expression of an opinion does not signify fraud, unless made by an expert and
rule in this light: When a court exercises its jurisdiction, an error committed while so engaged the other party has relied on the former's special knowledge. (n)
does not deprive it of the jurisdiction being exercised when the error is committed x x x.
Consequently, an error of judgment that the court may commit in the exercise of its jurisdiction
is not correctable through the original civil action of certiorari. Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual. (n)
xxxx
Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitute error. (n)
Even if the findings of the court are incorrect, as long as it has jurisdiction over the case, such
correction is normally beyond the province of certiorari. Where the error is not one of jurisdiction, The distinction between fraud as a ground for rendering a contract voidable or as basis for an
but of an error of law or fact a mistake of judgment, appeal is the remedy. award of damages is provided in Article 1344:

In this case, what petitioner seeks to rectify may be construed as errors of judgment of the Court In order that fraud may make a contract voidable, it should be serious and should not have been
of Appeals. These errors pertain to the petitioners allegation that the appellate court failed to employed by both contracting parties.
uphold the findings of facts of the lower court. He does not impute any error with respect to the
Court of Appeals exercise of jurisdiction. As such, this Petition is simply a continuation of the
appellate process where a case is elevated from the trial court of origin, to the Court of Appeals, Incidental fraud only obliges the person employing it to pay damages. (1270)
and to this Court via Rule 45.
There are two types of fraud contemplated in the performance of contracts: dolo incidente or
Contrary to respondents arguments, the allegations of petitioner that the Court of Appeals incidental fraud and dolo causante or fraud serious enough to render a contract voidable.
"committed grave abuse of discretion"46 did not ipso facto render the intended remedy that of
certiorari under Rule 65 of the Rules of Court. 47
In Geraldez v. Court of Appeals,50 this Court held that:

In any case, even if the Petition is one for the special civil action of certiorari, this Court has the
This fraud or dolo which is present or employed at the time of birth or perfection of a contract
discretion to treat a Rule 65 Petition for Certiorari as a Rule 45 Petition for Review on Certiorari.
may either be dolo causante or dolo incidente. The first, or causal fraud referred to in Article
This is allowed if (1) the Petition is filed within the reglementary period for filing a Petition for
1338, are those deceptions or misrepresentations of a serious character employed by one party
review; (2) when errors of judgment are averred; and (3) when there is sufficient reason to justify
and without which the other party would not have entered into the contract. Dolo incidente, or
the relaxation of the rules.48 When this Court exercises this discretion, there is no need to comply
incidental fraud which is referred to in Article 1344, are those which are not serious in character
with the requirements provided for in Rule 65.
and without which the other party would still have entered into the contract. Dolo causante
determines or is the essential cause of the consent, while dolo incidente refers only to some
In this case, petitioner filed his Petition within the reglementary period of filing a Petition for particular or accident of the obligation. The effects of dolo causante are the nullity of the contract
Review.49 His Petition assigns errors of judgment and appreciation of facts and law on the part and the indemnification of damages, and dolo incidente also obliges the person employing it to
of the Court of Appeals. Thus, even if the Petition was designated as one that sought the remedy pay damages.51
of certiorari, this Court may exercise its discretion to treat it as a Petition for Review in the
interest of substantial justice.
In Solidbank Corporation v. Mindanao Ferroalloy Corporation, et al., 52 this Court elaborated on
the distinction between dolo causante and dolo incidente:
We now proceed to the substantive issue, that of petitioners imputation of fraud on the part of
respondents. We are required by the circumstances of this case to review our doctrines of fraud
Fraud refers to all kinds of deception -- whether through insidious machination, manipulation,
that are alleged to be present in contractual relations.
concealment or misrepresentation -- that would lead an ordinarily prudent person into error after
105
taking the circumstances into account. In contracts, a fraud known as dolo causante or causal We conclude from the above that while the representation that plaintiff had the exclusive
fraud is basically a deception used by one party prior to or simultaneous with the contract, in franchise did not vitiate defendant's consent to the contract, it was used by plaintiff to get from
order to secure the consent of the other. Needless to say, the deceit employed must be serious. defendant a share of 30 per cent of the net profits; in other words, by pretending that he had the
In contradistinction, only some particular or accident of the obligation is referred to by incidental exclusive franchise and promising to transfer it to defendant, he obtained the consent of the
fraud or dolo incidente, or that which is not serious in character and without which the other latter to give him (plaintiff) a big slice in the net profits. This is the dolo incidente defined in
party would have entered into the contract anyway. 53 article 1270 of the Spanish Civil Code, because it was used to get the other party's consent to a
big share in the profits, an incidental matter in the agreement. 57

Under Article 1344, the fraud must be serious to annul or avoid a contract and render it voidable.
This fraud or deception must be so material that had it not been present, the defrauded party Thus, this Court held that the original agreement may not be declared null and void. This Court
would not have entered into the contract. In the recent case of Spouses Carmen S. Tongson and also said that the plaintiff had been entitled to damages because of the refusal of the defendant
Jose C. Tongson, et al., v. Emergency Pawnshop Bula, Inc., 54 this Court provided some examples to enter into the partnership. However, the plaintiff was also held liable for damages to the
of what constituted dolo causante or causal fraud: defendant for the misrepresentation that the former had the exclusive franchise to soft drink
bottling operations.

Some of the instances where this Court found the existence of causal fraud include: (1) when the
seller, who had no intention to part with her property, was "tricked into believing" that what she To summarize, if there is fraud in the performance of the contract, then this fraud will give rise
signed were papers pertinent to her application for the reconstitution of her burned certificate of to damages. If the fraud did not compel the imputing party to give his or her consent, it may not
title, not a deed of sale; (2) when the signature of the authorized corporate officer was forged; or serve as the basis to annul the contract, which exhibits dolo causante. However, the party
(3) when the seller was seriously ill, and died a week after signing the deed of sale raising doubts alleging the existence of fraud may prove the existence of dolo incidente.
on whether the seller could have read, or fully understood, the contents of the documents he
signed or of the consequences of his act.55 (Citations omitted)
This may make the party against whom fraud is alleged liable for damages.

However, Article 1344 also provides that if fraud is incidental, it follows that this type of fraud is
not serious enough so as to render the original contract voidable. Quantum of Evidence to Prove the Existence of Fraud and the Liability of the Parties

A classic example of dolo incidente is Woodhouse v. Halili. 56 In this case, the plaintiff Charles The Civil Code, however, does not mandate the quantum of evidence required to prove actionable
Woodhouse entered into a written agreement with the defendant Fortunato Halili to organize a fraud, either for purposes of annulling a contract (dolo causante) or rendering a party liable for
partnership for the bottling and distribution of soft drinks. However, the partnership did not damages (dolo incidente). The definition of fraud is different from the quantum of evidence needed
come into fruition, and the plaintiff filed a Complaint in order to execute the partnership. The to prove the existence of fraud. Article 1338 provides the legal definition of fraud. Articles 1339
defendant filed a Counterclaim, alleging that the plaintiff had defrauded him because the latter to 1343 constitute the behavior and actions that, when in conformity with the legal provision,
was not actually the owner of the franchise of a soft drink bottling operation. Thus, defendant may constitute fraud.
sought the nullification of the contract to enter into the partnership. This Court concluded that:
Jurisprudence has shown that in order to constitute fraud that provides basis to annul contracts,
x x x from all the foregoing x x x plaintiff did actually represent to defendant that he was the it must fulfill two conditions. First, the fraud must be dolo causante or it must be fraud in
holder of the exclusive franchise. The defendant was made to believe, and he actually believed, obtaining the consent of the party. Second, this fraud must be proven by clear and convincing
that plaintiff had the exclusive franchise. x x x The record abounds with circumstances indicative evidence. In Viloria v. Continental Airlines, 58 this Court held that:
that the fact that the principal consideration, the main cause that induced defendant to enter
into the partnership agreement with plaintiff, was the ability of plaintiff to get the exclusive Under Article 1338 of the Civil Code, there is fraud when, through insidious words or
franchise to bottle and distribute for the defendant or for the partnership. x x x The defendant machinations of one of the contracting parties, the other is induced to enter into a contract
was, therefore, led to the belief that plaintiff had the exclusive franchise, but that the same was which, without them, he would not have agreed to. In order that fraud may vitiate consent, it
to be secured for or transferred to the partnership. The plaintiff no longer had the exclusive must be the causal (dolo causante), not merely the incidental (dolo incidente), inducement to the
franchise, or the option thereto, at the time the contract was perfected. But while he had already making of the contract. In Samson v. Court of Appeals, causal fraud was defined as "a deception
lost his option thereto (when the contract was entered into), the principal obligation that he employed by one party prior to or simultaneous to the contract in order to secure the consent of
assumed or undertook was to secure said franchise for the partnership, as the bottler and the other." Also, fraud must be serious and its existence must be established by clear and
distributor for the Mission Dry Corporation. We declare, therefore, that if he was guilty of a false convincing evidence. (Citations omitted)59
representation, this was not the causal consideration, or the principal inducement, that led
plaintiff to enter into the partnership agreement.
In Viloria, this Court cited Sierra v. Court of Appeals60 stating that mere preponderance of
evidence will not suffice in proving fraud.
But, on the other hand, this supposed ownership of an exclusive franchise was actually the
consideration or price plaintiff gave in exchange for the share of 30 percent granted him in the
net profits of the partnership business. Defendant agreed to give plaintiff 30 per cent share in Fraud must also be discounted, for according to the Civil Code:
the net profits because he was transferring his exclusive franchise to the partnership. x x x.

Art. 1338. There is fraud when, through insidious words or machinations of one of the
Plaintiff had never been a bottler or a chemist; he never had experience in the production or contracting parties, the other is induced to enter into a contract which without them, he would
distribution of beverages. As a matter of fact, when the bottling plant being built, all that he not have agreed to.
suggested was about the toilet facilities for the laborers.

Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not
have been employed by both contracting parties.

106
To quote Tolentino again, the "misrepresentation constituting the fraud must be established by the admissions of both appellant and appellee; (7) When the findings are contrary to those of the
full, clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must trial court; (8) When the findings of fact are conclusions without citation of specific evidence on
be serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent which they are based; (9) When the facts set forth in the petition as well as in the petitioners
person into error; that which cannot deceive a prudent person cannot be a ground for nullity. main and reply briefs are not disputed by the respondents; and (10) When the findings of fact of
The circumstances of each case should be considered, taking into account the personal the Court of Appeals are premised on the supposed absence of evidence and contradicted by the
conditions of the victim."61 evidence on record. (Emphasis provided)63

Thus, to annul a contract on the basis of dolo causante, the following must happen: First, the The trial court and the Court of Appeals had appreciated the facts of this case differently.
deceit must be serious or sufficient to impress and lead an ordinarily prudent person to error. If
the allegedly fraudulent actions do not deceive a prudent person, given the circumstances, the
deceit here cannot be considered sufficient basis to nullify the contract. In order for the deceit to The Court of Appeals was not correct in saying that petitioner could only raise fraud as a ground
be considered serious, it is necessary and essential to obtain the consent of the party imputing to annul his participation in the contract as against respondent Rupert V. Tankeh, since the
fraud. To determine whether a person may be sufficiently deceived, the personal conditions and petitioner did not make any categorical allegation that respondents Development Bank of the
other factual circumstances need to be considered. Philippines, Sterling Shipping Lines, Inc., and Asset Privatization Trust had acted fraudulently.
Admittedly, it was only in the Petition before this Court that the petitioner had made the
allegation of a "well-orchestrated fraud"64 by the respondents. However, Rule 10, Section 5 of the
Second, the standard of proof required is clear and convincing evidence. This standard of proof Rules of Civil Procedure provides that:
is derived from American common law. It is less than proof beyond reasonable doubt (for criminal
cases) but greater than preponderance of evidence (for civil cases). The degree of believability is
higher than that of an ordinary civil case. Civil cases only require a preponderance of evidence Amendment to conform to or authorize presentation of evidence. When issues not raised by
to meet the required burden of proof. However, when fraud is alleged in an ordinary civil case the pleadings are tried with the express or implied consent of the parties they shall be treated in
involving contractual relations, an entirely different standard of proof needs to be satisfied. The all respects as if they had been raised in the pleadings. Such amendment of the pleadings as
imputation of fraud in a civil case requires the presentation of clear and convincing evidence. may be necessary to cause them to conform to the evidence and to raise these issues may be
Mere allegations will not suffice to sustain the existence of fraud. The burden of evidence rests made upon motion of any party at any time, even after judgment; but failure to amend does not
on the part of the plaintiff or the party alleging fraud. The quantum of evidence is such that fraud effect the result of the trial of these issues. If evidence is objected to at the trial on the ground
must be clearly and convincingly shown. that it is not within the issues made by the pleadings, the court may allow the pleadings to be
amended and shall do so with liberality if the presentation of the merits of the action and the
ends of substantial justice will be subserved thereby. The court may grant a continuance to
The Determination of the Existence of Fraud in the Present Case enable the amendment to be made. (5a)

We now determine the application of these doctrines regarding fraud to ascertain the liability, if In this case, the commission of fraud was an issue that had been tried with the implied consent
any, of the respondents. of the respondents, particularly Sterling Shipping Lines, Inc., Asset Privatization Trust,
Development Bank of the Philippines, and Arenas. Hence, although there is a lack of a categorical
allegation in the pleading, the courts may still be allowed to ascertain fraud.
Neither law nor jurisprudence distinguishes whether it is dolo incidente or dolo causante that
must be proven by clear and convincing evidence. It stands to reason that both dolo incidente
and dolo causante must be proven by clear and convincing evidence. The only question is The records will show why and how the petitioner agreed to enter into the contract with
whether this fraud, when proven, may be the basis for making a contract voidable (dolo respondent Ruperto V. Tankeh:
causante), or for awarding damages (dolo incidente), or both.
ATTY. VELAYO: How did you get involved in the business of the Sterling Shipping Lines,
Hence, there is a need to examine all the circumstances thoroughly and to assess the personal Incorporated" [sic]
circumstances of the party alleging fraud. This may require a review of the case facts and the
evidence on record.
DR. TANKEH: Sometime in the year 1980, I was approached by Ruperto Tankeh mentioning to
me that he is operating a new shipping lines business and he is giving me free one thousand
In general, this Court is not a trier of facts. It makes its rulings based on applicable law and on shares (1,000) to be a director of this new business which is worth one million pesos
standing jurisprudence. The findings of the Court of Appeals are generally binding on this Court (P1,000,000.00.),
provided that these are supported by the evidence on record. In the recent case of Medina v.
Court of Appeals,62 this Court held that:
ATTY. VELAYO: Are you related to Ruperto V. Tankeh?

It is axiomatic that a question of fact is not appropriate for a petition for review on certiorari
under Rule 45. This rule provides that the parties may raise only questions of law, because the DR. TANKEH: Yes, sir. He is my younger brother.
Supreme Court is not a trier of facts. Generally, we are not duty-bound to analyze again and
weigh the evidence introduced in and considered by the tribunals below. When supported by ATTY. VELAYO: Did you accept the offer?
substantial evidence, the findings of fact of the Court of Appeals are conclusive and binding on
the parties and are not reviewable by this Court, unless the case falls under any of the following
recognized exceptions: (1) When the conclusion is a finding grounded entirely on speculation, DR. TANKEH: I accepted the offer based on his promise to me that I will be made a part of the
surmises and conjectures; (2) When the inference made is manifestly mistaken, absurd or administration staff so that I can oversee the operation of the business plus my son, the eldest
impossible; (3) Where there is a grave abuse of discretion; (4) When the judgment is based on a one who is already a graduate lawyer with a couple of years of experience in the law firm of
misapprehension of facts; (5) When the findings of fact are conflicting; (6) When the Court of Romulo Ozaeta Law Offices (TSN, April 28, 1988, pp. 10-11.).65
Appeals, in making its findings, went beyond the issues of the case and the same is contrary to

107
The Second Amended Complaint of petitioner is substantially reproduced below to ascertain the In his Answer, respondent Ruperto V. Tankeh stated that:
claim:

COMES NOW defendant RUPERTO V. TANKEH, through the undersigned counsel, and to the
xxxx Honorable Court, most respectfully alleges:

2. That on May 12, 1981, due to the deceit and fraud exercised by Ruperto V. Tankeh, xxxx
plaintiff, together with Vicente L. Arenas, Jr. and Jose Maria Vargas, signed a
promissory note in favor of the defendant DBP, wherein plaintiff bound himself to
jointly and severally pay the DBP the amount of the mortgage loan. This document 3. That paragraph 4 is admitted that herein answering defendant together with the
insofar as plaintiff is concerned is a simulated document considering that plaintiff was plaintiff signed the promissory note in favor of DBP but specifically denied that the
never a real stockholder of the Sterling Shipping Lines, Inc. same was done through deceit and fraud of herein answering defendant the truth
being that plaintiff signed said promissory note voluntarily and with full knowledge of
the consequences thereof; it is further denied that said document is a simulated
3. That although plaintiffs name appears in the records of Sterling Shipping Lines, document as plaintiff was never a real stockholder of the company, the truth being
Inc. as one of its incorporators, the truth is that he had never invested any amount in those alleged in the special and affirmative defenses;
said corporation and that he had never been an actual member of said corporation.
All the money supposedly invested by him were put by defendant Ruperto V. Tankeh.
Thus, all the shares of stock under his name in fact belongs to Ruperto V. Tankeh. 4. That paragraphs 5,6,7,8 and 8-A are specifically denied specially the imputation of
Plaintiff was invited to attend the board meeting of the Sterling Shipping Lines, Inc. deceit and fraud against herein answering defendant, the truth being those alleged in
only once, which was for the sole purpose of introducing him to the two directors of the special and affirmative defenses;
the DBP, namely, Mr. Jesus Macalinag and Mr. Gil Corpus. Thereafter he was never
invited again. Plaintiff was never compensated by the Sterling Shipping Lines, Inc. for xxxx
his being a so-called director and stockholder. It is clear therefore that the DBP knew
all along that plaintiff was not a true stockholder of the company.
SPECIAL AND AFFIRMATIVE DEFENSES x x x
4. That THE DECEIT OF DEFENDANT RUPERTO V. TANKEH IS SHOWN BY THE
FACT THAT when the Sterling Shipping Lines, Inc. was organized in 1980, Ruperto V. 8. The complaint states no cause of action as against herein answering defendant;
Tankeh promised plaintiff that he would be a part of the administration staff so that
he could oversee the operation of the company. He was also promised that his son, a
lawyer, would be given a position in the company. None of these promises was 9. The Sterling Shipping Lines, Inc. was a legitimate company organized in accordance
complied with. In fact, he was not even allowed to find out the data about the income with the laws of the Republic of the Philippines with the plaintiff as one of the
and expenses of the company. incorporators;

5. THAT THE DECEIT OF RUPERTO V. TANKEH IS ALSO SHOWN BY THE FACT THAT 10. Plaintiff as one of the incorporators and directors of the board was fully aware of
PLAINTIFF WAS INVITED TO ATTEND THE BOARD MEETING OF THE STERLING the by-laws of the company and if he attended the board meeting only once as alleged,
SHIPPING LINES, INC. ONLY ONCE, WHICH WAS FOR THE SOLE PUPOSE OF the reason thereof was known only to him;
INTRODUCING HIM TO THE TWO DIRECTORS OF THE DBP IN THE BOARD OF THE
STERLING SHIPPING LINES, INC., NAMELY, MR. JESUS MACALINAG AND MR. GIL
11. The Sterling Shipping Lines, Inc. being a corporation acting through its board of
CORPUS. THEREAFTER HE WAS NEVER INVITED AGAIN. PLAINTIFF WAS NEVER
directors, herein answering defendant could not have promised plaintiff that he would
COMPENSATED BY THE STERLING SHIPPING LINES, INC. FOR HIS BEING A SO-
be a part of the administration staff;
CALLED DIRECTOR AND STOCKHOLDER.

12. As member of the board, plaintiff had all the access to the data and records of the
6. That in 1983, upon realizing that he was only being made a tool to realize the
company; further, as alleged in the complaint, plaintiff has a son who is a lawyer who
purposes of Ruperto V. Tankeh, plaintiff officially informed the company by means of
could have advised him;
a letter dated June 15, 1983 addressed to the company that he has severed his
connection with the company, and demanded among others, that the company board
of directors pass a resolution releasing him from any liabilities especially with 13. Assuming plaintiff wrote a letter to the company to sever his connection with the
reference to the loan mortgage contract with the DBP and to notify the DBP of his company, he should have been aware that all he had to do was sell all his holdings in
severance from the Sterling Shipping Lines, Inc. the company;

8-A. THAT A WEEK AFTER SENDING THE ABOVE LETTER, PLAINTIFF MADE 14. Herein answering defendant came to know only of plaintiffs alleged predicament
EARNEST EFFORTS TOWARDS A COMPROMISE BETWEEN HIM AND HIS BROTHER when he received the summons and copy of the complaint; x x x. 67
RUPERTO V. TANKEH, WHICH EFFORTS WERE SPURNED BY RUPERTO V. TANKEH,
AND ALSO AFTER THE NEWS OF THE SALE OF THE "STERLING ACE" WAS
PUBLISHED AT THE NEWSPAPER [sic], PLAINTIFF TRIED ALL EFFORTS TO An assessment of the allegations in the pleadings and the findings of fact of both the trial court
CONTACT RUPERTO V. TANKEH FOR THE PURPOSE OF ARRIVING AT SOME and appellate court based on the evidence on record led to the conclusion that there had been
COMPROMISE, BUT DEFENDANT RUPERTO V. TANKEH AVOIDED ALL CONTACTS no dolo causante committed against the petitioner by Ruperto V. Tankeh.
[sic] WITH THE PLAINTIFF UNTIL HE WAS FORCED TO SEEK LEGAL ASSISTANCE
FROM HIS LAWYER.66

108
The petitioner had given his consent to become a shareholder of the company without full as he chooses to make it, the purchaser cannot afterwards allege that the seller made
contributing a single peso to pay for the shares of stock given to him by Ruperto V. Tankeh. This misrepresentations. (National Cash Register Co. vs. Townsend, 137 N. C., 652, 70 L. R. A., 349;
fact was admitted by both petitioner and respondent in their respective pleadings submitted to Williamson vs. Holt, 147 N. C., 515.)
the lower court.

We are aware that where one party to a contract, having special or expert knowledge, takes
In his Amended Complaint,68 the petitioner admitted that "he had never invested any amount in advantage of the ignorance of another to impose upon him, the false representation may afford
said corporation and that he had never been an actual member of said corporation. All the money ground for relief, though otherwise the injured party would be bound. But we do not think that
supposedly invested by him were put up by defendant Ruperto V. Tankeh." 69 This fact alone the fact that Songco was an experienced farmer, while Sellner was, as he claims, a mere novice
should have already alerted petitioner to the gravity of the obligation that he would be in the business, brings this case within that exception. 71
undertaking as a member of the board of directors and the attendant circumstances that this
undertaking would entail. It also does not add any evidentiary weight to strengthen petitioners
claim of fraud. If anything, it only strengthens the position that petitioners consent was not The following facts show that petitioner was fully aware of the magnitude of his undertaking:
obtained through insidious words or deceitful machinations.
First, petitioner was fully aware of the financial reverses that Sterling Shipping Lines, Inc. had
Article 1340 of the Civil Code recognizes the reality of some exaggerations in trade which negates been undergoing, and he took great pains to release himself from the obligation.
fraud. It reads:
Second, his background as a doctor, as a bank organizer, and as a businessman with experience
Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know in the textile business and real estate should have apprised him of the irregularity in the contract
the facts, are not in themselves fraudulent. that he would be undertaking. This meant that at the time petitioner gave his consent to become
a part of the corporation, he had been fully aware of the circumstances and the risks of his
participation. Intent is determined by the acts.
Given the standing and stature of the petitioner, he was in a position to ascertain more
information about the contract.
Finally, the records showed that petitioner had been fully aware of the effect of his signing the
promissory note. The bare assertion that he was not privy to the records cannot counteract the
Songco v. Sellner70 serves as one of the key guidelines in ascertaining whether a party is guilty fact that petitioner himself had admitted that after he had severed ties with his brother, he had
of fraud in obtaining the consent of the party claiming that fraud existed. The plaintiff Lamberto written a letter seeking to reach an amicable settlement with respondent Rupert V. Tankeh.
Songco sought to recover earnings from a promissory note that defendant George Sellner had Petitioners actions defied his claim of a complete lack of awareness regarding the circumstances
made out to him for payment of Songcos sugar cane production. Sellner claimed that he had and the contract he had been entering.
refused to pay because Songco had promised that the crop would yield 3,000 piculs of sugar,
when in fact, only 2,017 piculs of sugar had been produced. This Court held that Sellner would
still be liable to pay the promissory note, as follows: The required standard of proof clear and convincing evidence was not met. There was no dolo
causante or fraud used to obtain the petitioners consent to enter into the contract. Petitioner
had the opportunity to become aware of the facts that attended the signing of the promissory
Notwithstanding the fact that Songco's statement as to the probable output of his crop was note. He even admitted that he has a lawyer-son who the petitioner had hoped would assist him
disingenuous and uncandid, we nevertheless think that Sellner was bound and that he must in the administration of Sterling Shipping Lines, Inc. The totality of the facts on record belies
pay the price stipulated. The representation in question can only be considered matter of opinion petitioners claim that fraud was used to obtain his consent to the contract given his personal
as the cane was still standing in the field, and the quantity of the sugar it would produce could circumstances and the applicable law.
not be known with certainty until it should be harvested and milled. Undoubtedly Songco had
better experience and better information on which to form an opinion on this question than
Sellner. Nevertheless the latter could judge with his own eyes as to the character of the cane, However, in refusing to allow petitioner to participate in the management of the business,
and it is shown that he measured the fields and ascertained that they contained 96 1/2 hectares. respondent Ruperto V. Tankeh was liable for the commission of incidental fraud. In Geraldez,
this Court defined incidental fraud as "those which are not serious in character and without
which the other party would still have entered into the contract." 72
xxxx

Although there was no fraud that had been undertaken to obtain petitioners consent, there was
The law allows considerable latitude to seller's statements, or dealer's talk; and experience fraud in the performance of the contract. The records showed that petitioner had been unjustly
teaches that it is exceedingly risky to accept it at its face value. The refusal of the seller to warrant excluded from participating in the management of the affairs of the corporation. This exclusion
his estimate should have admonished the purchaser that that estimate was put forth as a mere from the management in the affairs of Sterling Shipping Lines, Inc. constituted fraud incidental
opinion; and we will not now hold the seller to a liability equal to that which would have been to the performance of the obligation.
created by a warranty, if one had been given.

This can be concluded from the following circumstances.


xxxx

First, respondent raised in his Answer that petitioner "could not have promised plaintiff that he
It is not every false representation relating to the subject matter of a contract which will render would be a part of the administration staff"73 since petitioner had been fully aware that, as a
it void. It must be as to matters of fact substantially affecting the buyer's interest, not as to corporation, Sterling Shipping Lines, Inc. acted through its board of directors. Respondent
matters of opinion, judgment, probability, or expectation. (Long vs. Woodman, 58 Me., 52; Hazard admitted that petitioner had been "an incorporator and member of the board of directors" 74 and
vs. Irwin, 18 Pick. [Mass.], 95; Gordon vs. Parmelee, 2 Allen [Mass.], 212; Williamson vs. that petitioner "was fully aware of the by-laws of the company."75 It was incumbent upon
McFadden, 23 Fla., 143, 11 Am. St. Rep., 345.) When the purchaser undertakes to make an respondent to act in good faith and to ensure that petitioner would not be excluded from the
investigation of his own, and the seller does nothing to prevent this investigation from being as

109
affairs of Sterling Shipping Lines, Inc. After all, respondent asserted that petitioner had entered As such, respondent Ruperto V. Tankeh is liable to his older brother, petitioner Alejandro, for
into the contract voluntarily and with full consent. damages. The obligation to pay damages to petitioner is based on several provisions of the Civil
Code.

Second, respondent claimed that if petitioner was intent on severing his connection with the
company, all that petitioner had to do was to sell all his holdings in the company. Clearly, the Article 1157 enumerates the sources of obligations.
respondent did not consider the fact that the sale of the shares of stock alone did not free
petitioner from his liability to Development Bank of the Philippines or Asset Privatization Trust,
since the latter had signed the promissory and had still been liable for the loan. A sale of Article 1157. Obligations arise from:
petitioners shares of stock would not have negated the petitioners responsibility to pay for the
loan. (1) Law;

Third, respondent Ruperto V. Tankeh did not rebuff petitioners claim that the latter only received (2) Contracts;
news about the sale of the vessel M/V Sterling Ace through the media and not as one of the
board members or directors of Sterling Shipping Lines, Inc.
(3) Quasi-contracts;
All in all, respondent Ruperto V. Tankehs bare assertion that petitioner had access to the records
cannot discredit the fact that the petitioner had been effectively deprived of the opportunity to (4) Acts or omissions punished by law; and
actually engage in the operations of Sterling Shipping Lines, Inc. Petitioner had a reasonable
expectation that the s