G.R. No.

178610               November 17, 2010

HONGKONG AND SHANGHAI BANKING CORP., LTD. STAFF RETIREMENT PLAN,

Retirement Trust Fund, Inc.) Petitioner,
vs.
SPOUSES BIENVENIDO AND EDITHA BROQUEZA, Respondents.

G.R. No. 178610 is a petition for review 1 assailing the Decision2 promulgated on 30 March 2006
by the Court of Appeals (CA) in CA-G.R. SP No. 62685. The appellate court granted the petition
filed by Fe Gerong (Gerong) and Spouses Bienvenido and Editha Broqueza (spouses Broqueza)
and dismissed the consolidated complaints filed by Hongkong and Shanghai Banking
Corporation, Ltd. - Staff Retirement Plan (HSBCL-SRP) for recovery of sum of money. The
appellate court reversed and set aside the Decision 3 of Branch 139 of the Regional Trial Court of
Makati City (RTC) in Civil Case No. 00-787 dated 11 December 2000, as well as its Order 4 dated
5 September 2000. The RTC’s decision affirmed the Decision 5 dated 28 December 1999 of
Branch 61 of the Metropolitan Trial Court (MeTC) of Makati City in Civil Case No. 52400 for
Recovery of a Sum of Money.

The Facts

The appellate court narrated the facts as follows:

Petitioners Gerong and [Editha] Broqueza (defendants below) are employees of Hongkong and
Shanghai Banking Corporation (HSBC). They are also members of respondent Hongkong
Shanghai Banking Corporation, Ltd. Staff Retirement Plan (HSBCL-SRP, plaintiff below). The
HSBCL-SRP is a retirement plan established by HSBC through its Board of Trustees for the
benefit of the employees.

On October 1, 1990, petitioner [Editha] Broqueza obtained a car loan in the amount of
Php175,000.00. On December 12, 1991, she again applied and was granted an appliance loan in
the amount of Php24,000.00. On the other hand, petitioner Gerong applied and was granted an
emergency loan in the amount of Php35,780.00 on June 2, 1993. These loans are paid through
automatic salary deduction.

Meanwhile [in 1993], a labor dispute arose between HSBC and its employees. Majority of HSBC’s
employees were terminated, among whom are petitioners Editha Broqueza and Fe Gerong. The
employees then filed an illegal dismissal case before the National Labor Relations Commission
(NLRC) against HSBC. The legality or illegality of such termination is now pending before this
appellate Court in CA G.R. CV No. 56797, entitled Hongkong Shanghai Banking Corp.
Employees Union, et al. vs. National Labor Relations Commission, et al.

Because of their dismissal, petitioners were not able to pay the monthly amortizations of their
respective loans. Thus, respondent HSBCL-SRP considered the accounts of petitioners
delinquent. Demands to pay the respective obligations were made upon petitioners, but they
failed to pay.6

HSBCL-SRP, acting through its Board of Trustees and represented by Alejandro L. Custodio,
filed Civil Case No. 52400 against the spouses Broqueza on 31 July 1996. On 19 September
1996, HSBCL-SRP filed Civil Case No. 52911 against Gerong. Both suits were civil actions for
recovery and collection of sums of money.

The Metropolitan Trial Court’s Ruling

On 28 December 1999, the MeTC promulgated its Decision7 in favor of HSBCL-SRP. The MeTC
ruled that the nature of HSBCL-SRP’s demands for payment is civil and has no connection to the
ongoing labor dispute. Gerong and Editha Broqueza’s termination from employment resulted in
the loss of continued benefits under their retirement plans. Thus, the loans secured by their future
retirement benefits to which they are no longer entitled are reduced to unsecured and pure civil
obligations. As unsecured and pure obligations, the loans are immediately demandable.

The dispositive portion of the MeTC’s decision reads:

WHEREFORE, premises considered and in view of the foregoing, the Court finds that the plaintiff
was able to prove by a preponderance of evidence the existence and immediate demandability of
the defendants’ loan obligations as judgment is hereby rendered in favor of the plaintiff and
against the defendants in both cases, ordering the latter:

1. In Civil Case No. 52400, to pay the amount of Php116,740.00 at six percent interest
per annum from the time of demand and in Civil Case No. 52911, to pay the amount of
Php25,344.12 at six percent per annum from the time of the filing of these cases, until the
amount is fully paid;

2. To pay the amount of Php20,000.00 each as reasonable attorney’s fees;

3. Cost of suit.

SO ORDERED.8

Gerong and the spouses Broqueza filed a joint appeal of the MeTC’s decision before the RTC.
Gerong’s case was docketed Civil Case No. 00-786, while the spouses Broqueza’s case was
docketed as Civil Case No. 00-787.

The Regional Trial Court’s Ruling

The RTC initially denied the joint appeal because of the belated filing of Gerong and the spouses
Broqueza’s memorandum. The RTC later reconsidered the order of denial and resolved the
issues in the interest of justice.

On 11 December 2000, the RTC affirmed the MeTC’s decision in toto.9

The RTC ruled that Gerong and Editha Broqueza’s termination from employment disqualified
them from availing of benefits under their retirement plans. As a consequence, there is no longer
any security for the loans. HSBCL-SRP has a legal right to demand immediate settlement of the
unpaid balance because of Gerong and Editha Broqueza’s continued default in payment and their
failure to provide new security for their loans. Moreover, the absence of a period within which to
pay the loan allows HSBCL-SRP to demand immediate payment. The loan obligations are
considered pure obligations, the fulfillment of which are demandable at once.

Gerong and the spouses Broqueza then filed a Petition for Review under Rule 42 before the CA.

The Ruling of the Court of Appeals

On 30 March 2006, the CA rendered its Decision10 which reversed the 11 December 2000
Decision of the RTC. The CA ruled that the HSBCL-SRP’s complaints for recovery of sum of
money against Gerong and the spouses Broqueza are premature as the loan obligations have
not yet matured. Thus, no cause of action accrued in favor of HSBCL-SRP. The dispositive
portion of the appellate court’s Decision reads as follows:

WHEREFORE, the assailed Decision of the RTC is REVERSED and SET ASIDE. A new one is
hereby rendered DISMISSING the consolidated complaints for recovery of sum of money.
SO ORDERED.11

HSBCL-SRP filed a motion for reconsideration which the CA denied for lack of merit in its
Resolution12 promulgated on 19 June 2007.

On 6 August 2007, HSBCL-SRP filed a manifestation withdrawing the petition against Gerong
because she already settled her obligations. In a Resolution13 of this Court dated 10 September
2007, this Court treated the manifestation as a motion to withdraw the petition against Gerong,
granted the motion, and considered the case against Gerong closed and terminated.

Issues

HSBCL-SRP enumerated the following grounds to support its Petition:

I. The Court of Appeals has decided a question of substance in a way not in accord with
law and applicable decisions of this Honorable Court; and

II. The Court of Appeals has departed from the accepted and usual course of judicial
proceedings in reversing the decision of the Regional Trial Court and the Metropolitan
Trial Court.14

The Court’s Ruling

The petition is meritorious. We agree with the rulings of the MeTC and the RTC.

The Promissory Notes uniformly provide:

PROMISSORY NOTE

P_____ Makati, M.M. ____ 19__

FOR VALUE RECEIVED, I/WE _____ jointly and severally promise to pay to THE HSBC
RETIREMENT PLAN (hereinafter called the "PLAN") at its office in the Municipality of Makati,
Metro Manila, on or before until fully paid the sum of PESOS ___ (P___) Philippine Currency
without discount, with interest from date hereof at the rate of Six per cent (6%) per annum,
payable monthly.

I/WE agree that the PLAN may, upon written notice, increase the interest rate stipulated in this
note at any time depending on prevailing conditions.

I/WE hereby expressly consent to any extensions or renewals hereof for a portion or whole of the
principal without notice to the other(s), and in such a case our liability shall remain joint and
several. 1avvphi1

In case collection is made by or through an attorney, I/WE jointly and severally agree to pay ten
percent (10%) of the amount due on this note (but in no case less than P200.00) as and for
attorney’s fees in addition to expenses and costs of suit.

In case of judicial execution, I/WE hereby jointly and severally waive our rights under the
provisions of Rule 39, Section 12 of the Rules of Court.15

In ruling for HSBCL-SRP, we apply the first paragraph of Article 1179 of the Civil Code:

Art. 1179. Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once.
x x x. (Emphasis supplied.)

We affirm the findings of the MeTC and the RTC that there is no date of payment indicated in the
Promissory Notes. The RTC is correct in ruling that since the Promissory Notes do not contain a
period, HSBCL-SRP has the right to demand immediate payment. Article 1179 of the Civil Code
applies. The spouses Broqueza’s obligation to pay HSBCL-SRP is a pure obligation. The fact that
HSBCL-SRP was content with the prior monthly check-off from Editha Broqueza’s salary is of no
moment. Once Editha Broqueza defaulted in her monthly payment, HSBCL-SRP made a demand
to enforce a pure obligation.

In their Answer, the spouses Broqueza admitted that prior to Editha Broqueza’s dismissal from
HSBC in December 1993, she "religiously paid the loan amortizations, which HSBC collected
through payroll check-off."16 A definite amount is paid to HSBCL-SRP on a specific date. Editha
Broqueza authorized HSBCL-SRP to make deductions from her payroll until her loans are fully
paid. Editha Broqueza, however, defaulted in her monthly loan payment due to her dismissal.
Despite the spouses Broqueza’s protestations, the payroll deduction is merely a convenient mode
of payment and not the sole source of payment for the loans. HSBCL-SRP never agreed that the
loans will be paid only through salary deductions. Neither did HSBCL-SRP agree that if Editha
Broqueza ceases to be an employee of HSBC, her obligation to pay the loans will be suspended.
HSBCL-SRP can immediately demand payment of the loans at anytime because the obligation to
pay has no period. Moreover, the spouses Broqueza have already incurred in default in paying
the monthly installments.

Finally, the enforcement of a loan agreement involves "debtor-creditor relations founded on

contract and does not in any way concern employee relations. As such it should be enforced
through a separate civil action in the regular courts and not before the Labor Arbiter."17

WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CA-G.R. SP No.
62685 promulgated on 30 March 2006 is REVERSED and SET ASIDE. The decision of Branch
139 of the Regional Trial Court of Makati City in Civil Case No. 00-787, as well as the decision of
Branch 61 of the Metropolitan Trial Court of Makati City in Civil Case No. 52400 against the
spouses Bienvenido and Editha Broqueza, are AFFIRMED. Costs against respondents.

SO ORDERED.
G.R. No. L-29900 June 28, 1974

IN THE MATTER OF THE INTESTATE ESTATE OF JUSTO PALANCA, Deceased, GEORGE

PAY, petitioner-appellant,
vs.
SEGUNDINA CHUA VDA. DE PALANCA, oppositor-appellee.

Florentino B. del Rosario for petitioner-appellant.

Manuel V. San Jose for oppositor-appellee.

FERNANDO, J.:p

There is no difficulty attending the disposition of this appeal by petitioner on questions of law. While several points were raised, the
decisive issue is whether a creditor is barred by prescription in his attempt to collect on a promissory note executed more than fifteen
years earlier with the debtor sued promising to pay either upon receipt by him of his share from a certain estate or upon demand, the
basis for the action being the latter alternative. The lower court held that the ten-year period of limitation of actions did apply, the note
being immediately due and demandable, the creditor admitting expressly that he was relying on the wording "upon demand." On the
above facts as found, and with the law being as it is, it cannot be said that its decision is infected with error. We affirm.

From the appealed decision, the following appears: "The parties in this case agreed to submit the
matter for resolution on the basis of their pleadings and annexes and their respective memoranda
submitted. Petitioner George Pay is a creditor of the Late Justo Palanca who died in Manila on
July 3, 1963. The claim of the petitioner is based on a promissory note dated January 30, 1952,
whereby the late Justo Palanca and Rosa Gonzales Vda. de Carlos Palanca promised to pay
George Pay the amount of P26,900.00, with interest thereon at the rate of 12% per annum.
George Pay is now before this Court, asking that Segundina Chua vda. de Palanca, surviving
spouse of the late Justo Palanca, he appointed as administratrix of a certain piece of property
which is a residential dwelling located at 2656 Taft Avenue, Manila, covered by Tax Declaration
No. 3114 in the name of Justo Palanca, assessed at P41,800.00. The idea is that once said
property is brought under administration, George Pay, as creditor, can file his claim against the
administratrix."  It then stated that the petition could not prosper as there was a refusal on the part
1

of Segundina Chua Vda. de Palanca to be appointed as administratrix; that the property sought to
be administered no longer belonged to the debtor, the late Justo Palanca; and that the rights of
petitioner-creditor had already prescribed. The promissory note, dated January 30, 1962, is
worded thus: " `For value received from time to time since 1947, we [jointly and severally promise
to] pay to Mr. [George Pay] at his office at the China Banking Corporation the sum of [Twenty Six
Thousand Nine Hundred Pesos] (P26,900.00), with interest thereon at the rate of 12% per annum
upon receipt by either of the undersigned of cash payment from the Estate of the late Don Carlos
Palanca or upon demand'. . . . As stated, this promissory note is signed by Rosa Gonzales Vda.
de Carlos Palanca and Justo Palanca."  Then came this paragraph: "The Court has inquired
2

whether any cash payment has been received by either of the signers of this promissory note
from the Estate of the late Carlos Palanca. Petitioner informed that he does not insist on this
provision but that petitioner is only claiming on his right under the promissory note ."  After which, 3

came the ruling that the wording of the promissory note being "upon demand," the obligation was
immediately due. Since it was dated January 30, 1952, it was clear that more "than ten (10) years
has already transpired from that time until to date. The action, therefore, of the creditor has
definitely prescribed."  The result, as above noted, was the dismissal of the petition.
4

In an exhaustive brief prepared by Attorney Florentino B. del Rosario, petitioner did assail the
correctness of the rulings of the lower court as to the effect of the refusal of the surviving spouse
of the late Justo Palanca to be appointed as administratrix, as to the property sought to be
administered no longer belonging to the debtor, the late Justo Palanca, and as to the rights of
petitioner-creditor having already prescribed. As noted at the outset, only the question of
prescription need detain us in the disposition of this appeal. Likewise, as intimated, the decision
must be affirmed, considering the clear tenor of the promissory note.

From the manner in which the promissory note was executed, it would appear that petitioner was
hopeful that the satisfaction of his credit could he realized either through the debtor sued
receiving cash payment from the estate of the late Carlos Palanca presumptively as one of the
heirs, or, as expressed therein, "upon demand." There is nothing in the record that would indicate
whether or not the first alternative was fulfilled. What is undeniable is that on August 26, 1967,
more than fifteen years after the execution of the promissory note on January 30, 1952, this
petition was filed. The defense interposed was prescription. Its merit is rather obvious. Article
1179 of the Civil Code provides: "Every obligation whose performance does not depend upon a
future or uncertain event, or upon a past event unknown to the parties, is demandable at once."
This used to be Article 1113 of the Spanish Civil Code of 1889. As far back as Floriano v.
Delgado,  a 1908 decision, it has been applied according to its express language. The well-known
5

Spanish commentator, Manresa, on this point, states: "Dejando con acierto, el caracter mas
teorico y grafico del acto, o sea la perfeccion de este, se fija, para determinar el concepto de la
obligacion pura, en el distinctive de esta, y que es consecuencia de aquel: la exigibilidad
immediata." 6

The obligation being due and demandable, it would appear that the filing of the suit after fifteen
years was much too late. For again, according to the Civil Code, which is based on Section 43 of
Act No. 190, the prescriptive period for a written contract is that of ten years.  This is another
7

instance where this Court has consistently adhered to the express language of the applicable
norm.  There is no necessity therefore of passing upon the other legal questions as to whether or
8

not it did suffice for the petition to fail just because the surviving spouse refuses to be made
administratrix, or just because the estate was left with no other property. The decision of the
lower court cannot be overturned.

WHEREFORE, the lower court decision of July 24, 1968 is affirmed. Costs against George Pay.

Zaldivar (Chairman), Barredo, Antonio, Fernandez and Aquino, JJ., concur.

G.R. No. L-16570             March 9, 1922

SMITH, BELL & CO., LTD., plaintiff-appellant,

vs.
VICENTE SOTELO MATTI, defendant-appellant.

Ross and Lawrence and Ewald E. Selph for plaintiff-appellant.

Ramon Sotelo for defendant-appellant.

ROMUALDEZ, J.:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into
contracts whereby the former obligated itself to sell, and the latter to purchase from it, two steel
tanks, for the total price of twenty-one thousand pesos (P21,000), the same to be shipped from
New York and delivered at Manila "within three or four months;" two expellers at the price of
twenty five thousand pesos (P25,000) each, which were to be shipped from San Francisco in the
month of September, 1918, or as soon as possible; and two electric motors at the price of two
thousand pesos (P2,000) each, as to the delivery of which stipulation was made, couched in
these words: "Approximate delivery within ninety days. — This is not guaranteed."

The tanks arrived at Manila on the 27th of April, 1919: the expellers on the 26th of October, 1918;
and the motors on the 27th of February, 1919.

The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr.
Sotelo refused to receive them and to pay the prices stipulated.

The plaintiff brought suit against the defendant, based on four separate causes of action,
alleging, among other facts, that it immediately notified the defendant of the arrival of the goods,
and asked instructions from him as to the delivery thereof, and that the defendant refused to
receive any of them and to pay their price. The plaintiff, further, alleged that the expellers and the
motors were in good condition. (Amended complaint, pages 16-30, Bill of Exceptions.)

In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining and By-
Products Co., Inc., denied the plaintiff's allegations as to the shipment of these goods and their
arrival at Manila, the notification to the defendant, Mr. Sotelo, the latter's refusal to receive them
and pay their price, and the good condition of the expellers and the motors, alleging as special
defense that Mr. Sotelo had made the contracts in question as manager of the intervenor, the
Manila Oil Refining and By-Products Co., Inc which fact was known to the plaintiff, and that "it
was only in May, 1919, that it notified the intervenor that said tanks had arrived, the motors and
the expellers having arrived incomplete and long after the date stipulated." As a counterclaim or
set-off, they also allege that, as a consequence of the plaintiff's delay in making delivery of the
goods, which the intervenor intended to use in the manufacture of cocoanut oil, the intervenor
suffered damages in the sums of one hundred sixteen thousand seven hundred eighty-three
pesos and ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and twenty-one
thousand two hundred and fifty pesos (P21,250) on account of the expellers and the motors not
having arrived in due time.

The case having been tried, the court below absolved the defendants from the complaint insofar
as the tanks and the electric motors were concerned, but rendered judgment against them,
ordering them to "receive the aforesaid expellers and pay the plaintiff the sum of fifty thousand
pesos (P50,00), the price of the said goods, with legal interest thereon from July 26, 1919, and
costs."

Both parties appeal from this judgment, each assigning several errors in the findings of the lower
court.

The principal point at issue in this case is whether or not, under the contracts entered into and the
circumstances established in the record, the plaintiff has fulfilled, in due time, its obligation to
bring the goods in question to Manila. If it has, then it is entitled to the relief prayed for; otherwise,
it must be held guilty of delay and liable for the consequences thereof.

To solve this question, it is necessary to determine what period was fixed for the delivery of the
goods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and in
both of them we find this clause:

To be delivered within 3 or 4 months — The promise or indication of shipment carries with

it absolutely no obligation on our part — Government regulations, railroad embargoes,
lack of vessel space, the exigencies of the requirement of the United States Government,
or a number of causes may act to entirely vitiate the indication of shipment as stated. In
other words, the order is accepted on the basis of shipment at Mill's convenience, time of
shipment being merely an indication of what we hope to accomplish.

In the contract Exhibit C (page 63 of the record), with reference to the expellers, the following
stipulation appears:

The following articles, hereinbelow more particularly described, to be shipped at San

Francisco within the month of September /18, or as soon as possible. — Two Anderson
oil expellers . . . .

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:

Approximate delivery within ninety days. — This is not guaranteed. — This sale is subject
to our being able to obtain Priority Certificate, subject to the United States Government
requirements and also subject to confirmation of manufactures.

In all these contracts, there is a final clause as follows:

The sellers are not responsible for delays caused by fires, riots on land or on the sea,
strikes or other causes known as "Force Majeure" entirely beyond the control of the
sellers or their representatives.

Under these stipulations, it cannot be said that any definite date was fixed for the delivery of the
goods. As to the tanks, the agreement was that the delivery was to be made "within 3 or 4
months," but that period was subject to the contingencies referred to in a subsequent clause.
With regard to the expellers, the contract says "within the month of September, 1918," but to this
is added "or as soon as possible." And with reference to the motors, the contract contains this
expression, "Approximate delivery within ninety days," but right after this, it is noted that "this is
not guaranteed."

The oral evidence falls short of fixing such period.

From the record it appears that these contracts were executed at the time of the world war when
there existed rigid restrictions on the export from the United States of articles like the machinery
in question, and maritime, as well as railroad, transportation was difficult, which fact was known to
the parties; hence clauses were inserted in the contracts, regarding "Government regulations,
railroad embargoes, lack of vessel space, the exigencies of the requirements of the United States
Government," in connection with the tanks and "Priority Certificate, subject to the United State
Government requirements," with respect to the motors. At the time of the execution of the
contracts, the parties were not unmindful of the contingency of the United States Government not
allowing the export of the goods, nor of the fact that the other foreseen circumstances therein
stated might prevent it.

Considering these contracts in the light of the civil law, we cannot but conclude that the term
which the parties attempted to fix is so uncertain that one cannot tell just whether, as a matter of
fact, those articles could be brought to Manila or not. If that is the case, as we think it is, the
obligations must be regarded as conditional.

Obligations for the performance of which a day certain has been fixed shall be
demandable only when the day arrives.

A day certain is understood to be one which must necessarily arrive, even though its date
be unknown.

If the uncertainty should consist in the arrival or non-arrival of the day, the obligation is
conditional and shall be governed by the rules of the next preceding section. (referring to
pure and conditional obligations). (Art. 1125, Civ. Code.)

And as the export of the machinery in question was, as stated in the contract, contingent upon
the sellers obtaining certificate of priority and permission of the United States Government,
subject to the rules and regulations, as well as to railroad embargoes, then the delivery was
subject to a condition the fulfillment of which depended not only upon the effort of the herein
plaintiff, but upon the will of third persons who could in no way be compelled to fulfill the
condition. In cases like this, which are not expressly provided for, but impliedly covered, by the
Civil Code, the obligor will be deemed to have sufficiently performed his part of the obligation, if
he has done all that was in his power, even if the condition has not been fulfilled in reality.

In such cases, the decisions prior to the Civil Code have held that the obligee having
done all that was in his power, was entitled to enforce performance of the obligation. This
performance, which is fictitious — not real — is not expressly authorized by the Code,
which limits itself only to declare valid those conditions and the obligation thereby
affected; but it is neither disallowed, and the Code being thus silent, the old view can be
maintained as a doctrine. (Manresa's commentaries on the Civil Code [1907], vol. 8, page
132.)

The decisions referred to by Mr. Manresa are those rendered by the supreme court of Spain on
November 19, 1896, and February 23, 1871.

In the former it is held:

First. That when the fulfillment of the conditions does not depend on the will of the obligor,
but on that of a third person who can in no way be compelled to carry it out, and it is
found by the lower court that the obligor has done all in his power to comply with the
obligation, the judgment of the said court, ordering the other party to comply with his part
of the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10, of the
"Novísima Recopilación," or Law 12, Tit. 11, of Partida 5, when in the said finding of the
lower court, no law or precedent is alleged to have been violated. (Jurisprudencia
Civil published by the directors of the Revista General de Legislacion y
Jurisprudencia [1866], vol. 14, page 656.)
In the second decision, the following doctrine is laid down:

Second. That when the fulfillment of the condition does not depend on the will of the
obligor, but on that of a third person, who can in no way be compelled to carry it out, the
obligor's part of the contract is complied withalf Belisario not having exercised his right of
repurchase reserved in the sale of Basilio Borja mentioned in paragraph (13) hereof, the
affidavit of Basilio Borja for the consolidacion de dominio was presented for record in the
registry of deeds and recorded in the registry on the same date.

(32) The Maximo Belisario left a widow, the opponent Adelina Ferrer and three minor
children, Vitaliana, Eugenio, and Aureno Belisario as his only heirs.

(33) That in the execution and sales thereunder, in which C. H. McClure appears as the
judgment creditor, he was represented by the opponent Peter W. Addison, who prepared
and had charge of publication of the notices of the various sales and that in none of the
sales was the notice published more than twice in a newspaper.

The claims of the opponent-appellant Addison have been very fully and ably argued by
his counsel but may, we think, be disposed of in comparatively few words. As will be seen
from the foregoing statement of facts, he rest his title (1) on the sales under the
executions issued in cases Nos. 435, 450, 454, and 499 of the court of the justice of the
peace of Dagupan with the priority of inscription of the last two sales in the registry of
deeds, and (2) on a purchase from the Director of Lands after the land in question had
been forfeited to the Government for non-payment of taxes under Act No. 1791.

The sheriff's sales under the execution mentioned are fatally defective for what of
sufficient publication of the notice of sale. Section 454 of the Code of civil Procedure
reads in part as follows:

SEC. 454. Before the sale of property on execution, notice thereof must be given, as
follows:

1. In case of perishable property, by posing written notice of the time and place of the sale
in three public places of the municipality or city where the sale is to take place, for such
time as may be reasonable, considering the character and condition of the property;

2. *     *     *     *     *     *     *

3. In cases of real property, by posting a similar notice particularly describing the property,
for twenty days in three public places of the municipality or city where the property is
situated, and also where the property is to be sold, and publishing a copy thereof once a
week, for the same period, in some newspaper published or having general circulation in
the province, if there be one. If there are newspaper published in the province in both the
Spanish and English languages, then a like publication for a like period shall be made in
one newspaper published in the Spanish language, and in one published in the English
language: Provided, however, That such publication in a newspaper will not be required
when the assessed valuation of the property does not exceed four hundred pesos;

4. *     *     *     *     *     *     *

Examining the record, we find that in cases Nos. 435 and 450 the sales took place on October
14, 1916; the notice first published gave the date of the sale as October 15th, but upon
discovering that October 15th was a Sunday, the date was changed to October 14th. The correct
notice was published twice in a local newspaper, the first publication was made on October 7th
and the second and last on October 14th, the date of the sale itself. The newspaper is a weekly
periodical published every Saturday afternoon.
In case No. 454 there were only two publications of the notice in a newspaper, the first
publication being made only fourteen days before the date of the sale. In case No. 499, there
were also only two publications, the first of which was made thirteen days before the sale. In the
last case the sale was advertised for the hours of from 8:30 in the morning until 4:30 in the
afternoon, in violation of section 457 of the Code of Civil Procedure. In cases Nos. 435 and 450
the hours advertised were from 9:00 in the morning until 4.30 in the afternoon. In all of the cases
the notices of the sale were prepared by the judgment creditor or his agent, who also took
charged of the publication of such notices.

In the case of Campomanes vs. Bartolome and Germann & Co. (38 Phil., 808), this court held
that if a sheriff sells without the notice prescribe by the Code of Civil Procedure induced thereto
by the judgment creditor and the purchaser at the sale is the judgment creditor, the sale is
absolutely void and not title passes. This must now be regarded as the settled doctrine in this
jurisdiction whatever the rule may be elsewhere.

It appears affirmatively from the evidence in the present case that there is a newspaper published
in the province where the sale in question took place and that the assessed valuation of the
property disposed of at each sale exceeded P400. Comparing the requirements of section
454, supra, with what was actually done, it is self-evident that notices of the sales mentioned
were not given as prescribed by the statute and taking into consideration that in connection with
these sales the appellant Addison was either the judgment creditor or else occupied a position
analogous to that of a judgment creditor, the sales must be held invalid.

The conveyance or reconveyance of the land from the Director of Lands is equally invalid. The
provisions of Act No. 1791 pertinent to the purchase or repurchase of land confiscated for non-
payment of taxes are found in section 19 of the Act and read:

. . . In case such redemption be not made within the time above specified the Government
of the Philippine Islands shall have an absolute, indefeasible title to said real property.
Upon the expiration of the said ninety days, if redemption be not made, the provincial
treasurer shall immediately notify the Director of Lands of the forfeiture and furnish him
with a description of the property, and said Director of Lands shall have full control and
custody thereof to lease or sell the same or any portion thereof in the same manner as
other public lands are leased or sold: Provided, That the original owner, or his legal
representative, shall have the right to repurchase the entire amount of his said real
property, at any time before a sale or contract of sale has been made by the director of
Lands to a third party, by paying therefore the whole sum due thereon at the time of
ejectment together with a penalty of ten per centum . . . .

The appellant Addison repurchased under the final proviso of the section quoted and was allowed
to do so as the successor in interest of the original owner under the execution sale above
discussed. As we have seen, he acquired no rights under these sales, was therefore not the
successor of the original owner and could only have obtained a valid conveyance of such titles as
the Government might have by following the procedure prescribed by the Public Land Act for the
sale of public lands. he is entitled to reimbursement for the money paid for the redemption of the
land, with interest, but has acquired no title through the redemption.

The question of the priority of the record of the sheriff's sales over that of the sale from Belisario
to Borja is extensively argued in the briefs, but from our point of view is of no importance; void
sheriff's or execution sales cannot be validated through inscription in the Mortgage Law registry.

The opposition of Adelina Ferrer must also be overruled. She maintained that the land in question
was community property of the marriage of Eulalio Belisario and Paula Ira: that upon the death of
Paula Ira inealed from is modified, and the defendant Mr. Vicente Sotelo Matti, sentenced to
accept and receive from the plaintiff the tanks, the expellers and the motors in question, and to
pay the plaintiff the sum of ninety-six thousand pesos (P96,000), with legal interest thereon from
July 17, 1919, the date of the filing of the complaint, until fully paid, and the costs of both
instances. So ordered.

ROSENDO O. CHAVES, Plaintiff-Appellant, v. FRUCTUOSO GONZALES, Defendant-Appellee.

Chaves, Elio, Chaves & Associates, for Plaintiff-Appellant.

Sulpicio E. Platon, for Defendant-Appellee.

SYLLABUS

1. CIVIL LAW; CONTRACTS; BREACH OF CONTRACT FOR NON-PERFORMANCE; FIXING OF PERIOD

BEFORE FILING OF COMPLAINT FOR NON-PERFORMANCE, ACADEMIC.— Where the time for
compliance had expired and there was breach of contract by non-performance, it was academic for
the plaintiff to have first petitioned the court to fix a period for the performance of the contract
before filing his complaint.

2. ID.; ID.; ID.; DEFENDANT CANNOT INVOKE ARTICLE 1197 OF THE CIVIL CODE OF THE PHILIPPINES.—
Where the defendant virtually admitted non-performance of the contract by returning the typewriter
that he was obliged to repair in a non-working condition, with essential parts missing, Article 1197 of
the Civil Code of the Philippines cannot be invoked. The fixing of a period would thus be a mere
formality and would serve no purpose than to delay.

3. ID.; ID.; ID.; DAMAGES RECOVERABLE; CASE AT BAR.— Where the defendant-appellee contravened
the tenor of his obligation because he not only did not repair the typewriter but returned it "in
shambles,’’ he is liable for the cost of the labor or service expended in the repair of the typewriter,
which is in the amount of P58.75, because the obligation or contract was to repair it. In addition, he
is likewise liable under Art. 1170 of the Code, for the cost of the missing parts, in the amount of
P31.10, for in his obligation to repair the typewriter he was bound, but failed or neglected, to return
it in the same condition it was when he received it.
4. ID.; ID.; ID.; CLAIMS FOR DAMAGES OR ATTORNEY’S FEES NOT RECOVERABLE; NOT ALLEGED OR
PROVED IN INSTANT CASE.— Claims for damages and attorney’s fees must be pleaded, and the
existence of the actual basis thereof must be proved. As no findings of fact were made on the claims
for damages and attorney’s fees, there is no factual basis upon which to make an award therefor.

5. REMEDIAL LAW; APPEALS; APPEAL FROM COURT OF FIRST INSTANCE TO SUPREME COURT; ONLY
QUESTIONS OF LAW REVIEWABLE.— Where the appellant directly appeals from the decision of the
trial court to the Supreme Court on questions of law, he is bound by the judgment of the court a quo
on its findings of fact.

DECISION

REYES, J.B.L., J.:

This is a direct appeal by the party who prevailed in a suit for breach of oral contract and recovery of
damages but was unsatisfied with the decision rendered by the Court of First Instance of Manila, in
its Civil Case No. 65138, because it awarded him only P31.10 out of his total claim of P690 00 for
actual, temperate and moral damages and attorney’s fees.

The appealed judgment, which is brief, is hereunder quoted in full:jgc:chanrobles.com.ph

"In the early part of July, 1963, the plaintiff delivered to the defendant, who is a typewriter repairer,
a portable typewriter for routine cleaning and servicing. The defendant was not able to finish the job
after some time despite repeated reminders made by the plaintiff. The defendant merely gave
assurances, but failed to comply with the same. In October, 1963, the defendant asked from the
plaintiff the sum of P6.00 for the purchase of spare parts, which amount the plaintiff gave to the
defendant. On October 26, 1963, after getting exasperated with the delay of the repair of the
typewriter, the plaintiff went to the house of the defendant and asked for the return of the
typewriter. The defendant delivered the typewriter in a wrapped package. On reaching home, the
plaintiff examined the typewriter returned to him by the defendant and found out that the same was
in shambles, with the interior cover and some parts and screws missing. On October 29, 1963. the
plaintiff sent a letter to the defendant formally demanding the return of the missing parts, the
interior cover and the sum of P6.00 (Exhibit D). The following day, the defendant returned to the
plaintiff some of the missing parts, the interior cover and the P6.00.
"On August 29, 1964, the plaintiff had his typewriter repaired by Freixas Business Machines, and the
repair job cost him a total of P89.85, including labor and materials (Exhibit C).

"On August 23, 1965, the plaintiff commenced this action before the City Court of Manila, demanding
from the defendant the payment of P90.00 as actual and compensatory damages, P100.00 for
temperate damages, P500.00 for moral damages, and P500.00 as attorney’s fees.

"In his answer as well as in his testimony given before this court, the defendant made no denials of
the facts narrated above, except the claim of the plaintiff that the typewriter was delivered to the
defendant through a certain Julio Bocalin, which the defendant denied allegedly because the
typewriter was delivered to him personally by the plaintiff.

"The repair done on the typewriter by Freixas Business Machines with the total cost of P89.85 should
not, however, be fully chargeable against the defendant. The repair invoice, Exhibit C, shows that the
missing parts had a total value of only P31.10.

"WHEREFORE, judgment is hereby rendered ordering the defendant to pay the plaintiff the sum of
P31.10, and the costs of suit.

"SO ORDERED."cralaw virtua1aw library

The error of the court a quo, according to the plaintiff-appellant, Rosendo O. Chaves, is that it
awarded only the value of the missing parts of the typewriter, instead of the whole cost of labor and
materials that went into the repair of the machine, as provided for in Article 1167 of the Civil Code,
reading as follows:jgc:chanrobles.com.ph

"ART. 1167. If a person obliged to do something fails to do it, the same shall be executed at his cost.

This same rule shall be observed if he does it in contravention of the tenor of the obligation.
Furthermore it may be decreed that what has been poorly done he undone."cralaw virtua1aw library

On the other hand, the position of the defendant-appellee, Fructuoso Gonzales, is that he is not
liable at all, not even for the sum of P31.10, because his contract with plaintiff-appellant did not
contain a period, so that plaintiff-appellant should have first filed a petition for the court to fix the
period, under Article 1197 of the Civil Code, within which the defendant appellee was to comply with
the contract before said defendant-appellee could be held liable for breach of contract.
Because the plaintiff appealed directly to the Supreme Court and the appellee did not interpose any
appeal, the facts, as found by the trial court, are now conclusive and non-reviewable. 1

The appealed judgment states that the "plaintiff delivered to the defendant . . . a portable typewriter
for routine cleaning and servicing" ; that the defendant was not able to finish the job after some time
despite repeated reminders made by the plaintiff" ; that the "defendant merely gave assurances, but
failed to comply with the same" ; and that "after getting exasperated with the delay of the repair of
the typewriter", the plaintiff went to the house of the defendant and asked for its return, which was
done. The inferences derivable from these findings of fact are that the appellant and the appellee
had a perfected contract for cleaning and servicing a typewriter; that they intended that the
defendant was to finish it at some future time although such time was not specified; and that such
time had passed without the work having been accomplished, far the defendant returned the
typewriter cannibalized and unrepaired, which in itself is a breach of his obligation, without
demanding that he should be given more time to finish the job, or compensation for the work he had
already done. The time for compliance having evidently expired, and there being a breach of contract
by non-performance, it was academic for the plaintiff to have first petitioned the court to fix a period
for the performance of the contract before filing his complaint in this case. Defendant cannot invoke
Article 1197 of the Civil Code for he virtually admitted non-performance by returning the typewriter
that he was obliged to repair in a non-working condition, with essential parts missing. The fixing of a
period would thus be a mere formality and would serve no purpose than to delay (cf. Tiglao. Et. Al. V.
Manila Railroad Co. 98 Phil. 18l).

It is clear that the defendant-appellee contravened the tenor of his obligation because he not only
did not repair the typewriter but returned it "in shambles", according to the appealed decision. For
such contravention, as appellant contends, he is liable under Article 1167 of the Civil Code. jam quot,
for the cost of executing the obligation in a proper manner. The cost of the execution of the
obligation in this case should be the cost of the labor or service expended in the repair of the
typewriter, which is in the amount of P58.75. because the obligation or contract was to repair it.

In addition, the defendant-appellee is likewise liable, under Article 1170 of the Code, for the cost of
the missing parts, in the amount of P31.10, for in his obligation to repair the typewriter he was
bound, but failed or neglected, to return it in the same condition it was when he received it.

Appellant’s claims for moral and temperate damages and attorney’s fees were, however, correctly
rejected by the trial court, for these were not alleged in his complaint (Record on Appeal, pages 1-5).
Claims for damages and attorney’s fees must be pleaded, and the existence of the actual basis
thereof must be proved. 2 The appealed judgment thus made no findings on these claims, nor on the
fraud or malice charged to the appellee. As no findings of fact were made on the claims for damages
and attorney’s fees, there is no factual basis upon which to make an award therefor. Appellant is
bound by such judgment of the court, a quo, by reason of his having resorted directly to the Supreme
Court on questions of law.
IN VIEW OF THE FOREGOING REASONS, the appealed judgment is hereby modified, by ordering the
defendant-appellee to pay, as he is hereby ordered to pay, the plaintiff-appellant the sum of P89.85,
with interest at the legal rate from the filing of the complaint. Costs in all instances against appellee
Fructuoso Gonzales.

G.R. No. L-264 October 4, 1946

VICENTE SINGSON ENCARNACION, plaintiff-appellee,

vs.

JACINTA BALDOMAR, ET AL., defendants-appellants.

Bausa and Ampil for appellants.

Tolentino and Aguas for appellee.

HILADO, J.:

Vicente Singson Encarnacion, owner of the house numbered 589 Legarda Street, Manila, some six
years ago leased said house to Jacinto Baldomar and her son, Lefrado Fernando, upon a month-to-
month basis for the monthly rental of P35. After Manila was liberated in the last war, specifically on
March 16, 1945, and on April 7, of the same year, plaintiff Singson Encarnacion notified defendants,
the said mother and son, to vacate the house above-mentioned on or before April 15, 1945, because
plaintiff needed it for his offices as a result of the destruction of the building where said plaintiff had
said offices before. Despite this demand, defendants insisted on continuing their occupancy. When
the original action was lodged with the Municipal Court of Manila on April 20, 1945, defendants were
in arrears in the payment of the rental corresponding to said month, the agrees rental being payable
within the first five days of each month. That rental was paid prior to the hearing of the case in the
municipal court, as a consequence of which said court entered judgment for restitution and payment
of rentals at the rate of P35 a month from May 1, 1945, until defendants completely vacate the
premises. Although plaintiff included in said original complaint a claim for P500 damages per month ,
that claim was waived by him before the hearing in the municipal court, on account of which nothing
was said regarding said damages in the municipal court's decision.
When the case reached the Court of First Instance of Manila upon appeal, defendants filed therein a
motion to dismiss (which was similar to a motion to dismiss filed by them in the municipal court)
based upon the ground that the municipal court had no jurisdiction over the subject matter due to
the aforesaid claim for damages and that, therefore, the Court of First Instance had no appellate
jurisdiction over the subject matter of the action. That motion to dismiss was denied by His Honor,
Judge Mamerto Roxas, by order dated July 21, 1945, on the ground that in the municipal court
plaintiff had waived said claim for damages and that, therefore, the same waiver was understood
also to have been made in the Court of First Instance.lawphil.net

In the Court of First Instance the graveman of the defense interposed by defendants, as it was
expressed defendant Lefrado Fernando during the trial, was that the contract which they had
celebrated with plaintiff since the beginning authorized them to continue occupying the house
indefinetly and while they should faithfully fulfill their obligations as respects the payment of the
rentals, and that this agreement had been ratified when another ejectment case between the parties
filed during the Japanese regime concerning the same house was allegedly compounded in the
municipal court. The Court of First Instance gave more credit to plaintiff's witness, Vicente Singson
Encarnacion, jr., who testified that the lease had always and since the beginning been upon a month-
to-month basis. The court added in its decision that this defense which was put up by defendant's
answer, for which reason the Court considered it as indicative of an eleventh-hour theory. We think
that the Court of First Instance was right in so declaring. Furthermore, carried to its logical
conclusion, the defense thus set up by defendant Lefrado Fernando would leave to the sole and
exclusive will of one of the contracting parties (defendants in this case) the validity and fulfillment of
the contract of lease, within the meaning of article 1256 of the Civil Code, since the continuance and
fulfillment of the contract would then depend solely and exclusively upon their free and uncontrolled
choice between continuing paying the rentals or not, completely depriving the owner of all say in the
matter. If this defense were to be allowed, so long as defendants elected to continue the lease by
continuing the payment of the rentals, the owner would never be able to discontinue it; conversely,
although the owner should desire the lease to continue, the lessees could effectively thwart his
purpose if they should prefer to terminate the contract by the simple expedient of stopping payment
of the rentals. This, of course, is prohibited by the aforesaid article of the Civil Code. (8 Manresa, 3d
ed., pp. 626, 627; Cuyugan vs. Santos, 34 Phil., 100.)

During the pendency of the appeal in the Court of First Instance and before the judgment appealed
from was rendered on October 31, 1945, the rentals in areas were those pertaining to the month of
August, 1945, to the date of said judgment at the rate of P35 a month. During the pendency of the
appeal in that court, certain deposits were made by defendants on account of rentals with the clerk
of said court, and in said judgment it is disposed that the amounts thus deposited should be
delivered to plaintiff.

Upon the whole, we are clearly of opinion that the judgment appealed from should be, as it is
hereby, affirmed, with the costs of the three instances to appellants. So ordered.