G.R. No. L-30204 October 29, 1976 PACIFIC MERCHANDISING CORPORATION, plaintiff-appellee, vs.

CONSOLACION INSURANCE & SURETY CO., INC., defendant-appellee, CONSOLACION INSURANCE & SURETY CO., INC., third party plaintiff-appellee, vs. GREGORIO V. PAJARILLO, third party defendant-appellant.

Vicente T. Velasco, Jr. & Associates for plaintiff-appellee. Castro, Panlaque& De Pano for defendant and third-party plaintiff-appellee. Yuseco, Abdon&Yuseco for third-party defendant-appellant.

ANTONIO, J.:

Appeal, on a question of law, from the judgment of the Court of First Instance Of Manila, dated August 8, 1964, affirming the decision of the City Court in Civil Case No. 117811. The issue arose from the following facts: In Civil Case No. 117811, which was an action instituted by Pacific Merchandising Corporation (plaintiff-appellee) to collect the sum of P2,562.88 from Consolacion Insurance & Surety Co., Inc., (defendant- appellee) who in turn filed a third-party complaint against Gregorio V. Pajarillo (third-party defendant-appellant). the City Court of Manila rendered judgment on April 6, 1964, the dispositive portion of which reads, in part, thus: WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay the former the sum of P2,562.88 with interest thereon at the rate of 12% per annum from May 30, 1963 until fully paid, P100.00 as for attorney's fees, plus the costs of suit; condemning third defendant to pay third-party plaintiff for whatever sums or amounts tlie latter paid the plaintiff on account of this judgment. By virtue of the appeal interposed by the third-party defendant Gregorio V. Pajarillo, the case was elevated, on May 12, 1964, to the Court of First Instance of Manila. On July 21, 1964, the parties, through their respective counsel, submitted the following Stipulation of Facts: 1. That on the 19th day of October, 1962, a Writ of Executionwas issued by the Court of First Instance of Manila under Civil Case No. 49691, entitled Pacific Merchandising Corporation vs. Leo Enterprises, Inc., a copy of the said Writ of Execution is attached as ANNEX Ato the complaint;

2. That by virtue of the aforesaid Writ of Execution, the Sheriff of Manila levied and attached the following: 'l. Second Hand AUTOMATICKET Machine No. MG-31833;and '2. Cinema Projectors Complete, trademark SIMPLEX PEERLESS MAGNARC NOS. 52625 and 62387' which items were advertised for sale on March 2, 1963, copy of Notice of sale attached as ANNEX 'B' to the Complaint; 3. That Atty. Greg V. Pajarillo was appointed on March 2, 1963 as Receiver of all the assets, properties and equipment of Paris Theatre, olwrated by Leo Enterprises, Inc. under Civil Case No. 50201 entitled Gregorio V. Pajarillo vs. Leo Enterprises, Inc.; 4. That the sale at public auction of the above described properties was postponed and was later cancelled due to the representation of Atty. Greg V. Pajarillo as Receiver of Paris Theatre operated by Leo Enterprises, Inc. in which he undertook the 1anient of the judgment rendered in favor of the plaintiff against Leo Enterprises, Inc. as their undertaking dated March 11, 1963, copy of which is attached as ANNEX 'C' to the complaint; 5. That on or about the third of March, 1963, third-party defendant Pajarillo approached the third-party plaintiff and applied for a surety bond in the amount of P5,000.00 to be rated in favor of the abovenamed plaintiff in order to guarantee to said plaintiff the payment of obligations in its favor by the Leo Enterprises, Inc.; 6. That the bond applied for was in fact executed in favor of the pIaintiffrith third-party defendant Pajarillo as principal and third-party plaintiff as surety in the context of the allegations of the preceding paragraph and a copy of the said bond is attached a ANNEX 'A' to the third party complaint; 7. That to protect thirrd party plaintiff against damage and injury, the third party defendant Pajarillo executed in favor of the former an INDEMNITY AGREEMENT, copy of which is attached as ANNEX 'B' to third party complaint; tlietrms of which aie incorporated by reference; 8. That the plaintiff received from hie aid principal, Greg V. Pajarillo the sum of P2,000.00 leaving a balance of P2,562.88 still unpaid aside from interest at the rate of 1% per month and attolnen s f cluiaient to 25% of tht amount due as provided for in said undertaking (ANNEX 'C' to tlie complaint); 9. That on July 1, 1963, a decision was rendered tne court of First Instance of Manila in Civil case No. 50201, copy of' which is attached its ANNEX 'A' to Answer to Third Party Complaint, by virtue of which Greg V. Pajarillo, as said Received stololcl making payments to plaintiff; 10. That the said decision in Civl Case No. 50201 dated July 1, 1963 was appealed lix defendant Leo Enterprises, Inc. to the court of Appeals and that the records kereeleattd to the aid ApiIiat court on August 27, 1963;

11. That on October 9, 1963, plaintiff's counsel demanded from the said principal, Greg V. Paiarillo, the payment of the installments corresponding to the months of May, June, July, August and September, 1963, which remain unpaid in spite of said demand, copy of said letter being, attached as ANNEX 'E' to the complaint; 12. That the defendant was duly notified of the demand made on the principal, Greg V. Pajarillo and in spite of said notice the defendant has failed and refused to pay the unpaid obligation; 13. That on December 19, 1963, plaintiff's counsel demanded from the defendant the payment of the unpaid obligation of the principal, Greg V. Pajarillo but refused and failed to pay the same in spite of said demand; 14. That when reminded by third-party plaintiff regarding his obligations in favor of the plaintiff, the third-party defendant, Greg V. Pajarillo replied that he no longer was bound to pay because he had ceased to be the receiver of Paris Theatre operated by Leo Enterprises, Inc. by virtue of the decision of the Court in Civil Case No. 50201 cited above, and for this reason, third- party plaintiff refused to pay the demand of the plaintiff 2 On the basis of the foregoing Stipulation of Facts, the Court of First Instance rendered judgment on August 8, 1964, which judgment was amended on August 25, 1964, affirming the appealed decision of the City Court . 2* The trial court predicated its judgment on the following considerations: (1) Since the unpaid claim represents the cost of certain materials used in the construction of the Paris Theatre, the possession of which reverted to Gregorio V. Pajarillo as owner of said property by virtue of the judgment in Civil Case No. 50201, "it is only simple justice that Pajarillo should pay for the said claim. otherwise he would be enriching himself by having the said building without paying plaintiff for the cost of certain materials that went into its construction"; (2) "under Section 7 of Rule 61 of the former Rules of Court, one of the powers of a receiver i8 to pay outstanding debts, and since the said plaintiff's claim has been outstanding since August 27, 1962, if not before, Pajarillo should have paid the same long before the alleged termination of the receivership on July 1, 1963"; (3) the procedure outlined in Section 8 of the Rule, namely, that whenever the court "shall determine that the necessity for a receiver no longer exists, it shall, after due notice to all interested parties and hearing, settle the accounts of the receiver, direct the delivery of the funds and other property in his hands to the persons adjudged entitled to receive them, and order the discharge of the receiver from further duty as such," has not been followed; and (4) when Gregorio V. Pajarillo undertook to pay the amount owed to plaintiff (Annex "C") and executed the surety bond (Annex "D") in favor of plaintiff, he 4 6 stepped into the shoes" of the dr Leo Enterprises, Inc., .4 and the properties of the said debtor having all subsequently passed on to Pajarillo, there is no reason, legal or otherwise, for relieving defendants of their said undertaking." The court a quo likewise declared that (1) "the receivership was not terminated by virtue of the appeal interposed by Leo Enterprises, Inc., one of the defendants in Civil Case No. 50201, because a decision which is appealed cannot be the subject of execution"; (2) "granting arguendo that the decision is final and executory, the said decision cannot bind nor can it be enforced against the plaintiff in the present case because it is not a party in

Civil Case No. 50201"; and (3) "when Atty. Pajarillo assumed the obligation of Leo Enterprises, Inc., as a Receiver, there was a subrogation of the party liable and, therefore, the plaintiff cannot enforce the judgment in Civil Case No. 49691 against Leo Enterprises, Inc." From the foregoing judgment, third-party defendant Gregorio V. Pajarillo interposed an appeal to the Court of Appeals. The aforesaid Appellate Court, in turn certified the same to this Court on the ground that there is no question of fact involved, but only one of law. The legal question is whether or not third party defendant-appellant Gregorio V. Pajarillo is, under the facts and circumstances obtaining, liable to plaintiff for the unpaid amount claimed. Upon the resolution of this issue will in turn depend the liability of defendantthird-party plaintiff Consolacion Insurance & surety Co., Inc. under the Surety Bond, on the basis of which it was ordered by the court a quo to pay the amount involved to plaintiffappellee. 1. A receiver is not an agent or representative of any party to the action. He is an officer of the court exercising his functions in the interest of neither plaintiff nor defendant, but for the common benefit of all the parties in interest. 3He performs his duties "subject to the control of the Court," and every question involved in the receivership may be determined by the court taking cognizance of the receivership proceedings. 4 Thus, "a receiver, strictly speaking, has no right or power to make any contract binding the property or fund in his custody or to pay out funds in his hands without the authority or approval of the court ... . 5 As explained by Justice Moran, speaking for the Court in a 1939 case 6 ... The custody of the receiver is the custody of the court. His acts and possession are the acts and possession of the court, and his contracts and liabilities are, in contemplation of law, the contractsand liabilities of the court. As a necessary consequence, receiver is f subject to the control and supervision of the court at every step in his management of the property or funds placed in his hands. ... 7 He cannot operate independently of the court, and cannot enter into any contract without its approval. ... El depositario no puedeobrarindependientementedeljusgado; contratabajo el control del mismo; sin suautorizacion o aprobaci6n expresa, el depositario no puedeperfeccionarninguncontrato. ... 8 2. In the case at bar, appellant Pajarillo does not dispute the fact that he never secured the court's approal of either the agreement of March 11, 1963, with Pacific Merchandising Corporation or of his Indemnity Agreement with the Consolacion Insurance & Surety Co., Inc. on March 14, 1963, in consideration of the performance bond submitted by the latter to Pacific Merchandising Corporation to guarantee the payment of the obligation. As the person to whom the possession of the theater and its equipment was awarded by the court in Civil Case No. 50201, it was certainly to his personal profit and advantage that the sale at public auction of the liquipment of the theater was prevented by his execution of the aforesaid agreement and submission of the afore-mentioned bond. In order to bind the property or fund in his hands as receiver, he should have applied for and obtained from the court authority to enter into the aforesaid contract. 9 Unauthorized contracts of a receiver do not bind the court in charge of receivership. They are the receiver's own contracts and are not recognized by the courts as contracts of the receivership. 10 Consequently, the aforesaid agreement and undertaking entered into by appellant Pajarillo not having been approved or authorized by the receivership court should, therefore, be considered as his

personal undertaking or obligation. Certainly, if such agreements were known by the receivership court, it would not have terminated the receivership without due notice to the judgment creditor as required by Section 8 of Rule 59 of the Rules of Court. This must be assumed because of the legal presumption that official duty has been regularly performed. 11 Indeed, if it were true that he entered into the agreement and undertaking as a receiver, he should have, as such receiver, submitted to the court an account of the status of the properties in his hands including the outstanding obligations of the receivership. 12 Had he done so, it is reasonable to assume that the judgment creditor would have opposed the termination of the receivership, unless its claim was paid. Having failed to perform his duty, to the prejudice of the creditor, appellant should not be permitted to take advantage of his own wrong. The judgment creditor having been induced to enter into the aforesaid agreement by appellant Pajarillo it was the duty of the latter to comply with is end of the bargain. He not only failed to perform his undertaking, but now attempts to evade completely his liability. Under such circumstances, appellant is not entitled to equitable relief. No ground for equitable relief can be found in a case where a party has not only failed to perform the conditions upon which he alone obtained the execution of the contract, but where it is clear that he never, at any time, intended to perform them. 13 3. Moreover, it will be recalled that the obligation due the Pacific Merchandising Corporation represented the cost of materials used in the construction of the Paris Theatre. There can not be any question that such improvements, in the final analysis, redounded to the advantage and personal profit of appellant Pajarillo because the judgment in Civil Case No. 50201, which was in substance affirmed by the Appellate Court, ordered that the "possession of the lands, building equipment, furniture, and accessories ..." of the theater be transferred to said appellant as owner thereof. As the trial court aptly observed "... it is only simple justice that Pajarillo should pay for the said claim, otherwise he would be enriching himself without paying plaintiff for the cost of certain materials that went into its construction. ... It is argLicd however, that he did so only as a receiver of Leo Pajarillo by virtue of the judgment in Civil Case No. 50201 all of the properties of Leo Enterprises, Inc. passed on to Pajarillo by virtue of the judgment in Civil Case No. %201 ...". This Roman Law principle of "Nemo Cum alteriousdetrimentolocupletari protest" is embodied in Article 22 (Human Relations), 14 and Articles 2142 to 2175 (QuasiContracts) of the New Civil Code. Long before the enactment of this Code, however, the principle of unjust enrichment which is basic in every legal system, was already expressly recognized in this jurisdiction. As early as as 1903, in Perez v. Pomar, 15 this Court ruled that where one has rendered services to another, and these services are accepted by the latter, in the absence of proof that the service ",as rendered gratuitously, it is but just that he should pay a reasonable remuneration therefore because "it is a wellknown principle of law, that no one should be permitted to enrich himself to the damage of another." Similarly in 1914, this Court declared that in this jurisdiction, even in the absence of statute," ... under the general principle that one person may not enrich himself at the expense of another, a judgment creditor would not be permitted to retain the purchase price of land sold as the property of the judgment debtor after it has been made to appear that the judgment debtor had no title to the land and that the purchaser had failed to secure title thereto ... 16 The foregoing equitable principle which springs from hie fountain of good conscience are applicable to the case at bar.

ACCORDINGLY, in view of the foregoing, the judgment unirilleal is httcf AFFIRMED. Costs against appellant. Fernando (Chairman), Barredo, Aquino and Concepcion, Jr., JJ., concur.
G.R. No. L-31897 June 30, 1972 LUIS T. RAMOS, petitioner, vs. HONORABLE COURT OF APPEALS, FELISA LAGOS, for herself and in behalf of minors FERNANDO LAGOS and LORRAINE LAGOS, respondents.

CeferinoInciong for petitioner. Jerry P. Rebutoc for private respondents.

CONCEPCION, C.J.:p

This is an original action for certiorari to annul an order of the Court of Appeals. It appears that, assisted by their mother, Felisa Lagos, the minors Fernando and Lorraine Lagos filed, with the Court of First Instance of Batangas, a complaint against Luis T. Ramos, the petitioner herein, for support and damages, alleging that she bore said children, born on August 27, 1963 and June 21, 1965, respectively, in consequence of illicit relations with said Ramos, who had failed and refused to support said minors, notwithstanding repeated demands, and despite the fact that he has, as a municipal mayor, the means therefor, which she does not have. Ramos having denied the main allegations of the complaint and set up a counterclaim for damages, the case proceeded to trial, after which, on December 18, 1967, said court rendered judgment for the plaintiffs, sentencing Ramos to pay each of said minors the sum of P75.00 monthly, in addition to the aggregate sum of "P2,075.00 representing the support in arrears for the elder child, that is, from July 17, 1964, when defendant stopped giving him the support, up to the filing of the complaint on September 3, 1965," and "the support in arrears in the amount of P180.00 for the younger child, or from June 21, 1965, when she was born, up to September 3, 1965, when the complaint for support was filed," apart from "the sum of P500.00 representing attorney's fees and costs of suit suffered by the plaintiffs." Ramos having appealed to the Court of Appeals, plaintiffs-appellees moved therein for support pendente lite. In a reasoned and signed resolution dated November 21, 1969, Ramos was ordered by the Court of Appeals to deposit with its Clerk the sum of P4,727.50 representing one-half of the amount due under the appealed decision to the aforesaid plaintiffs "within 15 days from notice, otherwise he will be cited for contempt. Once the amount is deposited, the Clerk of this Court is directed to deliver the same to plaintiffappellee Felisa Lagos." A reconsideration having been denied, Ramos commenced the present action, alleging that the Court of Appeals had abused its discretion in issuing the aforementioned resolution: (a) "there having been neither a recognition of paternity by the petitioner nor its establishment by final judgment"; (b) his motion for reconsideration having been denied without an oral argument requested by him; (c) the Court of Appeals

having granted the minors the sum of P4,727.50, despite the fact that their mother had merely requested "a monthly support of P75.00 for each child;" (d) said Court having denied petitioner's request for "a 10-day abeyance in the implementation of the resolution" granting support pendente lite; (e) the trial court having denied the motion therein filed by the plaintiffs-appellees for support pendente lite; and (f) the Court of Appeals not having required Felisa Lagos to file a bond, despite the fact that she had offered to put one. Upon the filing of the petition herein and approval of the requisite bond, We issued a writ of preliminary injunction restraining the enforcement of the contested resolution of the Court of Appeals. The first ground invoked by the petitioner is predicated upon Yangco vs. Rohde 1 which is not in point, alimonypendente lite having been granted in that case without any evidence, on the status of the plaintiff as alleged wife of the defendant, who had denied such allegation, unlike the case at bar in which said evidence was introduced and found to be sufficient, although the trial court's decision is still pending appeal. Francisco vs. Zandueta. 2 on which petitioner, likewise, relies merely reiterated the stand taken in the Yangco case, on the impropriety of granting alimony pendente lite on the basis of the bare allegations of the complaint, which are disputed by the defendant. It, however, pointed out the "substantial difference between the capacity of a person after the rendition of a final judgment in which that person is declared to be in possession of the status of a son and his capacityprior to such time when nothing exists other than his suit or claim to be declared in possession of such a status." InSanchez vs. Zulueta 3 in which the defendant had been compelled to pay a monthly allowance pendente lite to his wife, the plaintiff, and her child, after denying him the opportunity, requested by him, to introduce evidence in support of his defense to the effect that the child had been the product of her adulterous relations with another man, after she had abandoned the conjugal dwelling this Court went farther and said: We are of the opinion that the Court of Appeals erred in not allowing the defendant to present his evidence for the purpose of determining whether it is sufficient prima facie to overcome the application. Adultery on the part of the wife is a valid defense against an action for support (Quintana vs. Lerma, 24 Phil., 285). Consequently, as to the child, it is also a defense that it is the fruit of such adulterous relations, for in that case, it would not be the child of the defendant and, hence would not be entitled to support as such. But as this defense should be established, and not merely alleged, it would be unavailing if proof thereof is not permitted. It is not of course necessary to go fully into merits of the case, it being sufficient that the court ascertain the kind of amount of evidence which it may deem sufficient to enable it to justly resolve the application, one way or take other, in view of the merely provisional character of take resolution to be entered. 4 In the subsequent case of Garcia vs. Court of Appeals, 5 this Court reversed an order of the Court of Appeals annulling an order of the trial court granting alimony during the pendency of an appeal from the latter's decision sentencing the defendant therein and petitioner in the Court of Appeals to acknowledge a natural child. Speaking through then Chief Justice Bengzon, the Court used the following language: The appellate tribunal held that the Cavite court had no jurisdiction to issue the questioned order because the relationship of paternity between petitioner and his alleged natural father had not yet been established by final judgment. Petitioner, on the other hand, claims that support pendentelitebeing in the

nature of a temporary relief, final judgment as to the relationship of the natural father and child is not essential. Arguing his point, he cites propositions from some decisions of this Court; that only prima facie evidence indicative of such family relation is necessary; that even an authoritative declaration would be sufficient and that the obligation to support begins after one is compelled to acknowledge by decree of the Court. We think the petitioner's contention accords with reason and authority. Although the law gives the right of support to acknowledged natural children, and although Laureano Garcia has not yet been actually acknowledged because the decision has not yet become executory, still as the confirmation of the order of recognition may be said to relate back to the date of the original decision, it lies within the discretion of the trial court to direct the father to give support pending the appeal. Indeed, there may be instance where, in view of the poverty of the child, it would be a travesty of justice to refuse him support until the decision of the judge is sustained on appeal. There being at least prima facie evidence of the child's right to support, the Cavite court acted within its power and discretion. 6 As above indicated, not only had evidence on the alleged relation between the minors and Ramos been introduced in the case at bar. Judgment had, moreover, been rendered finding that said relation had been duly established, although an appeal from said judgment was and is still pending in the Court of Appeals. Indeed, the Rules of Court clearly authorizes the granting of support pendente lite, even prior to the rendition of judgment by the trial court. Sections 1 and 5 of Rule 61 provide: SEC. 1. Application. The plaintiff, at the commencement of the proper action, or at any time afterwards but prior to final judgment, may file an application for support pendente lite, stating the grounds for the claim and the financial conditions of both parties, and shall be accompanied by affidavits, depositions or other authentic documents in support thereof. xxxxxxxxx SEC. 5. Order. The court shall determine provisionally the pertinent facts, and shall render such order as equity and justice may require, having due regard to the necessities of the applicant, the means of the adverse party, the probable outcome of the case, and such other circumstances as may aid in the proper elucidation of the question involved. If the application is granted, the court shall fix the amount of money to be provisionally paid, and the terms of payment. ... . 7 It goes without saying that if, before the rendition of judgment, the trial court may "provisionally" grant alimonypendente lite, with more reason may an appellate court exercise a similar authority, after a full dress trial and a decision of the trial court on the merits finding that the claim of filiation and support has been adequately proven in the case at bar, beyond doubt even if such decision were still pending appeal taken by the party adjudged to be bound to give such support.

Needless to say, the refusal of the trial court to grant, said alimony pendente lite did not and cannot deprive the appellate court of said authority, or even dent the wisdom of the action taken by the latter, considering that the former did not give any plausible reason for its aforementioned refusal and that the same may have, in fact, been due to the appeal taken by the defendant, whose record on appeal had already been approved. Neither did the failure of the Court of Appeals to hear petitioner herein on oral argument before denying his motion for reconsideration or to grant him "a 10-day abeyance in the implementation" of said resolution constitute a grave abuse of discretion, for petitioner is not entitled as a matter of right to said oral argument, which was discretionary for said appellate court, as was its authority to grant or deny the aforementioned period of ten (10) days. Furthermore, petitioner has not shown that he could have adduced substantial reasons to warrant a reversal of the contested resolution had this period been granted or said oral argument taken place. Again, the grant to the minors who had merely asked "a monthly support of P75.00 for each child," or P150.00 a month for both, and, through their mother, had offered to file a bond of the aggregate sum of P4,727.50, without requiring a bond therefor, did not constitute a grave abuse of discretion amounting to excess of jurisdiction, in the light of the circumstances surrounding the case. Indeed, as stated in the appealed decision of the trial court: From the evidence presented in this case, the Court does not entertain a doubt that plaintiff and defendant had illicit relationship and that the two children, namely, Fernando and Lorraine, both surnamed Lagos, are the result of this illicit relationship. It will be remembered that although defendant denied having written any letter to plaintiff, yet when the letters Exhibits "C" to "L", were shown to him the defendant admitted that the writings in said letters are similar to his. Moreover, if the defendant's allegation that Exhibits "C" to "L" were not written by him, he could easily hire a handwriting expert to prove that those letters are not his handwriting. The fact that he did not present a handwriting expert, to prove his contention that the letters exhibited are not his, only goes to show that he is not really serious in disproving plaintiff's claims. In fact, it is not improbable that he did not take the trouble of presenting a handwriting expert because he is afraid that the handwriting expert if presented would only tell the truth, that is, that those letters are really defendant's own handwriting. Secondly, the Court cannot believe the evidence presented by the defendant to the effect that it was defendant's legal wife who recommended the employment of the plaintiff in Manila sometime in 1962 or 1963, because according to the evidence of the plaintiff, which has not been rebutted by defendant, the latter and his legal wife were then separated. In fact, from the letters Exhibits "F", "H" and "J" it appears that it was the defendant who had been promising the plaintiff a job and he visits her in Dakota (Exhibit "L"). Thirdly, the defendant has not adduced an iota of evidence to explain why plaintiff would demand from him the support of her children. Neither has defendant presented evidence to explain why the father of the plaintiff had testified against him when according to the defendant he and the father of the plaintiff were good friends.Finally, there seems to be no valid reason why the plaintiff would choose a Mayor, who under ordinary circumstances is difficult to fight with, in his own municipality. The fact, therefore, that the defendant is

named in the instant complaint as the father of plaintiff's two children only indicates that plaintiff is merely stating the truth. The evidence adduced by plaintiff, more particularly the letters Exhibits "C" to "L", corroborate the testimony of plaintiff that she was constrained to have amorous relationship with defendant after she lost herself to him. Specifically, in defendant's letter Exhibit "F", he fixed the hour and place of their rendezvous for Manila, when said letter states "Darling, mahalnamahalkita kaya pagako ay iyongkalilimutan ay hindikomalalamanangakinggagawin." Defendant's letter of July 30, 1962 Exhibit "L", clearly reveals that he often saw Felisa at Dakota St., Manila, when he asked in said letter for understanding in not seeing her everyday. In short, the evidence presented, clearly shows that there was an amorous relationship between plaintiff and defendant, the latter being a married man, and that the two children were conceived and born at the time of this relationship. These two children possess the status of illegitimate children other than natural, who are entitled to support and other successional rights as granted in the Civil Code (Article 287, New Civil Code). As such illegitimate children, defendant has the obligation to support them. 8 Then, too, the sum of P4,727.50, stated in the resolution complained of, represented merely one-half () of the aggregate amount due under the decision of the trial court, as of the date of the contested resolution of the Court of Appeals, and the reasons therein adduced by petitioner herein, as well as those given by him in this petition and memorandum herein are basically weak, feeble and insubstantial. Besides, the relief which may be given to a party depends, not so much upon the prayer in his motion, as upon the allegations thereof and the pertinent facts. 9 In the present case, it is not disputed that one of the plaintiffs was born on August 27, 1963 and the other on June 21, 1965. On the date of the contested resolution, 10 they were, therefore, 6 and 4 years of age, respectively. The minors are now, therefore, around 9 and 7 years old, respectively, or of school age. In addition thereto, they have been litigating since September 5, 1965, or almost seven (7) years, and the decision in their favor is still pending appeal. Paraphrasing Garcia v. Court of Appeals, 11the circumstances obtaining in the present case suggest that this is an instance where, in view of the poverty of herein private respondents, "it would be a travesty of justice" to refuse them support until the decision of the trial judge "is sustained on appeal." All these factors considered, We do not feel that the Court of Appeals has gravely abused its discretion or exceeded its jurisdiction in acting as it did. WHEREFORE, the petition herein should be, as it is hereby, dismissed, and the writ prayed for denied, with costs against herein petitioner, Luis T. Ramos. The writ of preliminary injunction issued on May 20, 1970 is hereby set aside. It is so ordered. Reyes, J.B.L., Makalintal, Zaldivar, Castro, Fernando, Teehankee, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.

G.R. No. L-59213 November 27, 1986 CONGRESSIONAL COMMERCIAL CORPORATION and BIENVENIDO LIM, petitioners, vs. COURT OF APPEALS, COURT OF FIRST INSTANCE OF RIZAL [QUEZON ClTY], BRANCH XVIII, HONORABLE ERNANI CRUZ-PAO, CITY SHERIFF OF QUEZON CITY, HIGINO FRANCISCO and NORBERTA GANArespondents.

San Juan, Africa, Gonzales and San Agustin for petitioners. Francisco & Francisco Law Office for respondents.

FERNAN, J.:

Spouses Higino R. Francisco and NorbertaGana are the owners of two adjoining lots with a total area of 1,450 square meters located at 721 Epifanio de los Santos Avenue, Cubao, Quezon City, covered by Transfer Certificates of Title Nos. 30713-A and 140132. On October 20, 1970, the Francisco spouses entered into a lease contract over said lots with Congressional Commercial Corporation thru its president, Bienvenido Lim. 1 The lease was for a period of twenty [20] years from and after August 31, 1971, at a staggered monthly rental rate as follows: [3] RentalLESSEE agrees to pay the following monthly rental for said premises:TWO THOUSAND THREE HUNDRED PESOS (P2,300) from lst to 5th year; TWO THOUSAND EIGHT HUNDRED PESOS (P2,800) from 6th to 10th year; THREE THOUSAND THREE HUNDRED PESOS (P3,300) from 11 th to 15th year; and THREE THOUSAND FIVE HUNDRED PESOS (P3,500) from 16th to 20th year; payable within the first five (5) days of the month. All in Philippine currency. LESSEE agrees that if any amount thereof shall be due and unpaid thirty (30) days after written notice of such default has actually been delivered to the General Manager of CONGRESSIONAL COMMERCIAL CORPORATION, LESSORS shall have the right to terminate this lease on thirty (30) days' written notice to LESSEE. Any building and other improvements which cannot be removed by LESSEE without damage to the building of the LESSEE shall accrue to the LESSORS if this contract is duly terminated under this paragraph or after the termination of this twenty years lease contract. Under paragraph 6 of the lease contract, the parties likewise agreed that "In case of any official inflation or deflation which in the future may be declared by the Central Bank of the Philippines regarding the exchange value of Philippine Pesos to U.S. Dollars, then the monthly rental shall be based on the changes of the entrance per ticket price to the movie house of the LESSEE caused by such new Peso/Dollar exchange rate] and that "the present entrance price for orchestra is P1.75 per individual. " Thereafter, the lessee Congressional Commercial Corporation constructed and operated the Cubao Cinema on the lots.

On January 9, 1973, Higino Francisco wrote to Bienvenido Lim, requesting for an upward adjustment of the agreed monthly rentals. He stated that while it was not within the realm of any possible expectation that the Central Bank would make an official declaration of inflation within the foreseeable future, an upward adjustment of the rent is justified by the fact that the peso, in relation to the dollar as well as the Japanese yen and English pound sterling, had gone down in value and that from the beginning, the lessee had been charging P2.00 per orchestra seat and not P1.75 as agreed upon. On the basis of the more than 14% difference between the agreed entrance price and the actual price of P2.25 being charged by the lessee, he requested that he be paid the adjusted monthly rental of P2,950 effective January, 1973. The lessee refused to heed Francisco's request for a rental adjustment on the ground that the Central Bank had not officially declared the existence of inflation or deflation in the Philippines, nor was it expected to do so as a matter of policy. On July 17, 1974, Francisco wrote the Director of the Central Bank's Legal Department for an opinion on whether the government's "floating rate policy" was equivalent to an official declaration of the exchange rate value of the peso, together with a request for information on the official exchange rate of the peso to the dollar in October 1970 and in July 1974. In answer to his query, Director F.E. Evangelista replied: Central Bank Circular No. 289 which took effect on February 21, 1970, together with other implementing regulations did not fix the official rate of our currency. The exchange rate is not administratively fixed. On the contrary, the Central Bank has left the determination of the foreign exchange rate to the exchange market on a day-to-day basis. Section 8 of said Central Bank Circular No. 289 provides as follows: Section 8. The free market rate shall not be administratively fixed but shall be determined through transactions in the foreign exchange market on a day to day basis. The authorities shall not intervene in the market except to the extent necessary to compensate for excessive fluctuations but shall not operate against the trend in the market. The foregoing provision specifically states that 'the free market rate shall not be administratively fixed.' The Central Bank may intervene only when there is excessive fluctuation of the peso value in order to counteract such excessive fluctuation. This is a clear indication of its intention not to fix the official rate. The official exchange rate of the peso to the dollar in October, 1970 was P3.90 to $1.00 as fixed by Executive Order No. 195 dated November 6, 1965. Today, this is the same official exchange rate. 2 Thereafter, or on September 20, 1976, the Francisco spouses filed before the Court of First Instance of Rizal a petition for declaratory relief [Civil Case No. Q-22056]. Alleging, among others, that the orchestra tickets for all moviehouses had been increased to P2.25 and as of 1975 to P3.00, and that inspite of the fact that the leased lots were valued at P1.5 million,

the rental was still pegged at a ridiculously low P2,800 a month, the Franciscos submitted to the court the following questions: [a] Is the existence of inflation not only worldwide, but also in the Philippines, not a matter of both judicial as well as public knowledge? [b] In the affirmativeor even otherwise, provided the fact of inflation is provenis an official declaration of its existence by the Central Bank indispensable in the enforcement of a contractual provision which would seem to require such an official declaration for its enforcement? or [c] Considering that the policy of the Central Bank is NOT to make any official declaration regarding the fact of inflation, may such a qualification in the contractual provision be considered as not written, and therefore, dispensed with under the principles enunciated in Arts. 1359, 1362 and 1365 of the Civil Code of the Philippines regarding reformation of contracts? They prayed that respondents Congressional Commercial Corporation and Bienvenido Lim be ordered: [1] To pay petitioners adjusted monthly rental rates proportionate to the increases in the admission prices of orchestra tickets to moviehouses, specifically, in the following manner, to wit: (a) a monthly rental rate of P2,950.00 [or an increase of P650.00] from January, 1973, when petitioner first requested for the adjustment, and when the admission price was increased to P2.25; (b) From January, 1974, when admission prices were further increased to P'3.00, a monthly rental rate of P3,940.00; and (c) From September, 1976, when under the lease contract, Annex 'A' hereof, an increase of P500.00 is provided for a monthly rental of P4,800; [2] To pay petitioners the sum of P5,000.00 as and for attorney's fees; and [3] To pay the costs of the suit. In their answer, Congressional Commercial Corporation and Lim alleged that they had incorporated paragraphs 3 and 6 in the lease contract because both parties had foreseen the occurence of inflation or deflation They contended that there was no legal basis and justification to revise the agreed rentals because the Central Bank had not officially declared the existence of inflation or deflation and the lease contract, for all intents and purposes, reflected the true intention of the parties. They further averred that the "asking price" for lots around the Cubao Cinema area had been the same for the past five years; that paragraph 3, specifically the provisions that there would be an increase in rentals every five years and an automatic transfer of ownership to the lessor of the building constructed on the leased premises, was agreed

upon because of an expected worldwide inflation; that there was no cause for the reformation of the lease contract because not only were its terms clear and unequivocal but also because the lessor was himself a lawyer; and that the court could not validly assume jurisdiction over the case in the absence of an official declaration by the Central Bank of the existence of inflation in the Philippines. As counterclaim they prayed for the total award of P150,000 as damages and P20,000 as attorney's fees. At the pre-trial conference on February 17, 1977, only the Franciscos appeared. On motion of Higino Francisco, who appeared for himself and his wife, the lower court declared respondents therein as in default and authorized the petitioners to present evidence exparte. The Fransiscos henceforth presented before a commissioner the lease contract as Exhibit A, Francisco's letter to respondents dated January 9, 1973 as Exhibit B, Francisco's letter to the Central Bank's Legal Department as Exhibit C, and the reply dated July 19, 1974 of the Director of the Central Bank's Legal Department as Exhibit D. On June 30, 1977 the lower court rendered a decision stating that reformation of the lease contract was not caned for as the case was simply one for specific performance and interpretation of said contract, particularly paragraph 6 thereof. In resolving the issue of whether or not petitioners were entitled to an adjustment of rental under paragraph 6 "independently of the rental adjustment provided for by paragraph 3 of the lease contract," the lower court ruled that an official declaration of inflation or deflation did not appear to be mandatory under paragraph 6 as the parties seemed to have agreed that "the increase in admission charges indicate the existence of such inflation. 3 Thus, judgment was rendered in favor of the petitioners [Franciscos] sentencing therein respondents to pay them the following adjusted rentals: 1. A monthly rental of P2,950.00 from January 1973 to December 1973; 2. A monthly rental of P3,940.00 from January l973 to August 1976; 3. A monthly rental of P4,800.00 from September 1976 until September 1980; thereafter, the increase in rental under paragraph 3 of the lease contract shall be observed. Respondents are also ordered to pay attorney's fees of P1,000.00. The counterclaim is dismissed. SO ORDERED. On August 25, 1977 the lessee corporation and Lim filed a verified petition for relief from the order of default and the decision of the lower court alleging that their counsel was not served with notice of the pre-trial held on February 17, 1977. Contending that the decision of the lower court was not in complete accord with applicable jurisprudence, they argued that the lower court should have dismissed the case when it found that it was not one for either reformation of contract or declaratory relief because an action for specific performance, by which the lower court characterized the Franciscos' complaint, is a different remedy.

The lower court denied the petition. It stated that the notice of pre-trial was sent to the lessee's counsel but was returned unclaimed. The lower court also noted that the inaction of the lessee from the time it received a copy of the order of default until it filed the petition for relief from judgment, foreclosed any effort on its part to seek relief. The lessee corporation and Lim appealed to the Court of Appeals, the appeal being docketed as CA-G.R. No. 62924-R. While the case was pending decision in said appellate court, the Franciscos moved for the immediate execution of the decision of the lower court noting that as of March 30, 1979, the accumulated judgment debt of the lessee had amounted to P119,280.00. 4 The Court of Appeals denied said motion. 5 On December 8, 1980, the Court of Appeals promulgated a decision affirming that of the lower court with the modification that the third paragraph of its dispositive portion, which directs the observance of paragraph 3 of the lease contract, was dispensed with as the rental increase under paragraph 6 had outpaced or exceeded that provided for in paragraph 3, thereby making the latter paragraph functusoficio. Noting that the parties had agreed to consider the price of the admission tickets as the index of any inflation or qqqdeflation the appellate court stated that "to close one's eyes to the fact that inflation does exist, as evidenced by the general increase in the prices of commodities, including movie tickets, simply because there has been no 'official declaration' to that effect, would be to sacrifice fact for more form." 6 The appellate court also c that the "respondents" referred to in the dispositive portion of the lower court's decision should refer only to the lessee corporation to the exclusion of its president who cannot be made personally liable for a transaction he entered into for the lessee corporation. On the fifteenth day from receipt of a copy of the Court of Appeals' decision, the appellants filed a motion for an extension of fifteen days within which to file a motion for reconsideration After it was granted, they filed a second motion for another extension of ten days to file said motion for reconsideration. The Court of Appeals granted the same but with warning that no further extension would be granted thereafter. When instead of filing the motion for reconsideration, appellants filed a third motion for extension of time to file motion for reconsideration, the Court of Appeals, in its resolution of February 20, 1981, denied the same, declared its decision final and executory, and directed the clerk of court to make an entry of judgment and to remand the records of the case to the court of origin for execution of the judgment. 7 Accordingly, entry of judgment was made on the date said resolution was issued records of the case were remanded to the lower court on February 23, 1981. 9
8

and the

Two days later, the Court of Appeals received the appellants' motion for reconsideration. After the Franciscos had filed their opposition thereto or on March 9, 1981 and notwithstanding that entry of judgment had been made, the Court of Appeals book cognizance of said motion for reconsideration and issued a resolution denying it for having been filed late and for lack of merit. 10 In its resolution, the Court of Appeals stated that Presidential Decree No. 1642 which appellants invoked, cannot be applied in this case because the graduated rentals agreed

upon by the parties were fixed in a written contract and said decree may not apply retroactively. Said court also ruled out the applicability of Proclamation No. 1967 because it was not proven that the leased lots are included in the urban land reform areas. Consequently, the Franciscos secured a writ for the execution of the Court of Appeals decision. The appellants moved to quash said writ on the ground that the modified decision was not yet executory as there was still no computation of the rentals in proportion to a future increase in the price of an admission ticket to the orchestra section of the lessee's moviehouse, as prescribed in paragraph 6 of the contract. The lower court denied the motion to quash and ordered the issuance of a second writ of execution although it found that the Franciscos' computation was not in accordance with the judgment. Hence, the Franciscos returned to the Court of Appeals to seek clarification on their computation of the rentals. 11 In their motion, they alleged that in computing the rental increase, they used as guidepost the admission price to orchestra seats of first class moviehouses inasmuch as the lessesmoviehouse had "meanwhile degenerated into a lowclass movie house specializing in lewd [bomba] films and shows charging only P2.00 for an orchestra Seat." 12 According to the Franciscos, should their computation be disregarded, they would be constrained to go to court every time there is an increase in the price of tickets. They also underscored the fact that the contracting parties really intended to use the admission price to first class moviehouses as the guidepost for future rental adjustments. They, therefore, prayed that the decision be clarified in the sense that the rental adjustments should be based on the proportionate increases in the admission price of orchestra seats to first class moviehouses. In its resolution of October 19, 1981, the Court of Appeals ruled that the computation of rental adjustment presented by the Franciscos was not wholly in accordance with its decision. it cited as basis for its decision Section 5, Rule 18 of the Rules of Court which states that "a judgment entered against a party in default shall not exceed the amount or be different in kind from that prayed for." 13 It ruled that the rental increases from January 1973 to September 1980 should be computed as follows: 1. From January 1973 to December 1973, the adjudged increased monthly rental of P2,950 minus the monthly rent of P2,300 fixed in par. 3 of the contract gives a difference of P650, multiplied by twelve months. Amount of unpaid rent still due......................................................................... P7,800 2. From January 1974 to August 1976, the adjudged increased monthly rent of P3,940 minus basic monthly rent of P2,300 fixed in par. 3 of the contract gives a difference of P1,640 multiplied by thirty-two months. Amount of unpaid rent due................................................................................ P52,480 3. From September 1976 to September 1980, the adjudged increased monthly rent of P4,800 minus the monthly rent of P2,800 fixed in par. 3 of the contract gives a difference of P2,800 [sic] multiplied by forty-eight months.

Total unpaid rent due......................................................................................... P96,000 4. Thereafter, any future adjustment of the rental shall be in proportion to the increase in the price of an admission ticket to the orchestra section computed as follows: the agreed rent under par. 3 of the contract multiplied by the current price of an orchestra ticket in the defendant's movie theater divided by Pl.75. The appellants filed a motion for the reconsideration of the October 19, 1981 resolution "on the ground that the clarification made therein on the manner of computing the rental increases from January 1973 to September 1980 is a substantial departure from its original decision of December 8, 1980." 14They averred that based on the official reports of the City Treasurer of Quezon City and the computation formulated by the Franciscos, the total liability of the appellants amounted to only P41,958.00. Pursuant to that claim on November 26, 1981 the lessee corporation consigned to the lower court said amount under Associated Citizens Bank cashier's check No. CC 000398 dated November 25, 1981 payable to Higino R. Francisco. 15 Meanwhile, the Franciscos opposed the aforesaid motion for reconsideration of the resolution of October 19, 1981. On December 7, 1981, the Court of Appeals denied it on the ground that the reports of the Taxes and License Division of the Office of the Treasurer of Quezon City were entirely new matters which should have been alleged either in the lessee's answer, in a timely motion for new trial or petition for relief from judgment, or in the appellant's brief, or proven at the trial in the lower court, and not at such a late stage of the case. 16 On December 28, 1981, the lessee and its president filed the instant petition, with prayer for a writ of preliminary injunction. That the nature of the present petition is not clear even to petitioner's counsel is evident from a reading of page 10 of the petition, the pertinent portion of which states: Appeal by certiorari. Thus the respondent Court of Appeals has decided a question of substance and has decided it in a way probably not in accord with the decisions of this Honorable Court, to the prejudice of the rights of the petitioners, from which the petitioners have no adequate remedy in the ordinary course of law except only this instant petition. Original certiorari. Thus also have both the respondent trial court and the respondent Court of Appeals, both tribunals exercising judicial functions, acted with grave abuse of discretion tantamount to lack of jurisdiction if not outright lack of jurisdiction, to the prejudice of the rights of the petitioners, from which they have no adequate remedy in the ordinary course of law, except only this instant petition. 17

Be that as it may, on the basis of petitioners' allegation that the contractual stipulation in question refers to "changes of the entrance per price [sic] to the moviehouse of the lessee" and not to the general increase among moviehouses, and it appearing that the decision of the Court of Appeals has not touched on that point, this Court issued on January 18, 1982 a temporary restraining order effective immediately, enjoining the execution of the judgments of the respondent courts and setting for January 25, 1982 the hearing on the motion for preliminary injunction. 18 In this petition for review on certiorari [appeal by certiorari] and/or original petition for certiorari, petitioners seek to set aside the decisions of both the trial and appellate courts as being null and void. They argue that said decisions, having been rendered on the basis of the Franciscos' prayer alone without evidence to support the same, were "fatally tainted with a denial of substantive due process." 19 The "shot-gun" method employed by petitioners in coming before this Court did not do them any good. Either as an appeal by certiorari certiorari or as an original petition for certiorari, the instant petition must fait It must be noted that the decision of the Court of Appeals in C.A.-G.R. No. 62924-R was promulgated on December 8, 1980. After failure of petitioners to file their motion for reconsideration despite the two extensions granted by the appellate court, the decision was declared final and executory on February 20, 1981. Entry of judgment was made on the same date and the records of the case were remanded to the lower court on February 23, 1981. It was only when the decision was to be executed that a dispute as to the correct amount due the Franciscos arose, prompting the latter to seek clarification of the decision of the Court of Appeals. By taking cognizance of said motion for clarification, the Court of Appeals, however did not revive the case. It merely exercised its inherent power to clarify its own decision, in the same manner that it may order an accounting after the complete adjudication and determination of the rights and obligations of the parties, so long as the order is only incidental to its judgment and does not affect its final character. [See Lagunzad vs. Soto Vda. de Gonzales, L-32066, August 6, 1979, 92 SCRA 476]. Thus, when petitioners filed their appeal on December 28, 1981, the decision sought to be reviewed had long become final and executory. Besides, under the principle of estoppel, petitioners are precluded from appealing the decision of the Court of Appeals. Estopper set in on November 26, 1981, during the pendency Of petitioners' motion for reconsideration of the October 19, 1981 resolution of the Court of Appeals, when they consigned to the lower court the amount of P41,958 under Associated Citizens Bank Cashier's Check No. C.C-000398 dated November 25, 1981 payable to Higino Francisco for and "in satisfaction of the Honorable Court's judgment." 20 By this act, petitioners recognized private respondents' entitlement to an increase in rentals, subject only to the reservation that such increase should have been based on the actual admission price to the orchestra section of petitioners' moviehouse and not on the general orchestra entrance price of first-run moviehouses. Except perhaps on said reservation, petitioners can no longer appeal from the decision of the Court of Appeals, for the rule recognized in this jurisdiction is that "a party who voluntarily executes, either partially or in to a judgment rendered for or against him, or who voluntarily acquiesces in, or ratifies, either partially or in toto, the execution of that judgment is not permitted to appeal from 21 it."

Neither is the remedy of certiorari available, to petitioners. We have stated in dela Cruz vs. Intermediate Appellate Court, 134 SCRA 417: Time and again we have dismissed petitions for certiorari to annul decisions or orders which could have, but have not, been appealed Where the Court has jurisdiction over the subject matter, as respondent judge has in this case, the orders or decision upon all questions pertaining to the cause are orders or decision within its jurisdiction, and however erroneous they may be, they cannot be corerected by certiorari This special civil action does not lie where the remedy by appeal has been lost because said remedy cannot take the place of an appeal. Even if We were to take the instant petition as one directed against the appellate court's resolution of December 7, 1981, the same result obtains for the reason that the appellate court's denial of petitioner's motion for reconsideration was neither erroneous nor done with grave abuse of discretion. Indeed, the new matters raised by petitioners in their motion for reconsideration were matters of defense which should have been raised earlier in their petition for relief from judgment, their appeal or at any stage thereof, but not at such belated stage. For the result thus obtained, petitioners have only themselves to blame. They had all the opportunities to controvert private respondents' claim Yet. through negligence or design, they failed to avail themselves of these opportunities. Even at the earliest instance, i.e., after receiving their copy of the petition for declaratory relief, petitioners filed three motions for extension of time to file their answer, so that almost three months elapsed before they actually filed it. 22 Notice of the pre-trial was received by petitioners but was returned unclaimed by their counsel. At this point, petitioner Lim should have exercised ordinary diligence by informing his counsel about the notice and its contents. In having been remissed in this regard, petitioners were declared as in default, losing their chance to successfully set aside the judgment of default for it is mandatory that a defendant who wants to nullify a default judgment must not only demonstrate that he has a meritorious defense, but must likewise be able to cleanse himself of negligence. 23 In the Court of Appeals, petitioners filed a motion for a 90 day extension of their period to file brief, but failed to meet the deadline just the same because the printing of said brief was allegedly delayed as their counsel was victimized by someone who representing himself as a Court of Appeals employee, demanded and received P525 from said counsel for the printing of the brief and disappeared without delivering said brief. 24 After the promulgation of the decision of the Court of Appeals, petitioners filed two motions for extension of time to file a motion for reconsideration. These were granted but with warning that no further extension would be given. 25 Petitioners filed a third motion for extension which was, expectedly, denied by the Court of Appeals, which also declared its decision final and executory. 26 Nevertheless, petitioners filed their motion for reconsideration. It was denied.27 Petitioners then attempted to elevate the case to this Court. On March 24, 1981 and April 3, 1981, they filed two separate, motions for extension of time to file a petition for review on certiorari. Both entitled, "Congressional Commercial Corporation vs. Court of Appeals, Higino Francisco and Norberta GANA said motions were docketed as G.R. Nos. 56491 and 56579,

respectively. For unexplained reasons, however, the movant corporation failed to file any petition in both cases. 28 After the Franciscos had filed their motion for clarification of the Court of Appeals decision, petitioners, now represented by a new counsel, filed a motion for reconsideration of the Court of Appeals' resolution on said motion for clarification. The Court of Appeals denied it. The petitioners then seized the opportunity to elevate the case once more to this Court. Hence, the instant petition which petitioners' new and third counsel even failed to clearly categorize as one under either Rule 45 or Rule 65. 29 But as earlier stated, the shot-gun method employed was to no avail. It is worth noting that the lease contract signed by the parties was merely copied from "long-term" contracts of Caltex" and modified only to suit their purposes. 30 Had the parties been more circumspect in drafting the lease contract and more explicit in expressing their intention to provide for a graduated increase in rentals, then, perhaps, the the filing of this case could have been averted. WHEREFORE, the instant petition is hereby dismissed and the restraining order dated January 18, 1982 is lifted. Costs against petitioners, SO ORDERED. Feria (Chairman), Alampay, Gutierrez, Jr. and Paras, JJ., concur.
G.R. No. L-23851 March 26, 1976 WACK WACK GOLF & COUNTRY CLUB, INC., plaintiff-appellant, vs. LEE E. WON alias RAMON LEE and BIENVENIDO A. TAN, defendants-appellees.

Leonardo Abola for appellant. Alfonso V. Agcaoli& Ramon A. Barcelona for appellee Lee E. Won. Bienvenido A. Tan in his own behalf.

CASTRO, C.J.:

This is an appeal from the order of the Court of First Instance of Rizal, in civil case 7656, dismissing the plaintiff-appellant's complaint of interpleader upon the grounds of failure to state a cause of action and res judicata. In its amended and supplemental complaint of October 23, 1963, the WackWack Golf & Country Club, Inc., a non-stock, civic and athletic corporation duly organized under the laws of the Philippines, with principal office in Mandaluyong, Rizal (hereinafter referred to as the Corporation), alleged, for its first cause of action, that the defendant Lee E. Won claims ownership of its membership fee certificate 201, by virtue of the decision rendered in civil case 26044 of the CFI of Manila, entitled "Lee E. Won alias Ramon Lee vs.

WackWackGolf & Country Club, Inc." and also by virtue of membership fee certificate 201serial no. 1478 issued on October 17, 1963 by Ponciano B. Jacinto, deputy clerk of court of the said CFI of Manila, for and in behalf of the president and the secretary of the Corporation and of the People's Bank & Trust Company as transfer agent of the said Corporation, pursuant to the order of September 23, 1963 in the said case; that the defendant Bienvenido A. Tan, on the other hand, claims to be lawful owner of its aforesaid membership fee certificate 201 by virtue of membership fee certificate 201-serial no. 1199 issued to him on July 24, 1950 pursuant to an assignment made in his favor by "Swan, Culbertson and Fritz," the original owner and holder of membership fee certificate 201; that under its articles of incorporation and by-laws the Corporation is authorized to issue a maximum of 400 membership fee certificates to persons duly elected or admitted to proprietary membership, all of which have been issued as early as December 1939; that it claims no interest whatsoever in the said membership fee certificate 201; that it has no means of determining who of the two defendants is the lawful owner thereof; that it is without power to issue two separate certificates for the same membership fee certificate 201, or to issue another membership fee certificate to the defendant Lee, without violating its articles of incorporation and by-laws; and that the membership fee certificate 201-serial no. 1199 held by the defendant Tan and the membership fee certificate 201-serial No. 1478 issued to the defendant Lee proceed from the same membership fee certificate 201, originally issued in the name of "Swan, Culbertson and Fritz". For its second cause of action. it alleged that the membership fee certificate 201-serial no. 1478 issued by the deputy clerk of court of court of the CFI of Manila in behalf of the Corporation is null and void because issued in violation of its by-laws, which require the surrender and cancellation of the outstanding membership fee certificate 201 before issuance may be made to the transferee of a new certificate duly signed by its president and secretary, aside from the fact that the decision of the CFI of Manila in civil case 26044 is not binding upon the defendant Tan, holder of membership fee certificate 201-serial no. 1199; that Tan is made a party because of his refusal to join it in this action or bring a separate action to protect his rights despite the fact that he has a legal and beneficial interest in the subject matter of this litigation; and that he is made a part so that complete relief may be accorded herein. The Corporation prayed that (a) an order be issued requiring Lee and Tan to interplead and litigate their conflicting claims; and (b) judgment. be rendered, after hearing, declaring who of the two is the lawful owner of membership fee certificate 201, and ordering the surrender and cancellation of membership fee certificate 201-serial no. 1478 issued in the name of Lee. In separate motions the defendants moved to dismiss the complaint upon the grounds of res judicata, failure of the complaint to state a cause of action, and bar by prescription. 1 These motions were duly opposed by the Corporation. Finding the grounds of bar by prior judgment and failure to state a cause of action well taken, the trial court dismissed the complaint, with costs against the Corporation. In this appeal, the Corporation contends that the court a quo erred (1) in finding that the allegations in its amended and supplemental complaint do not constitute a valid ground for an action of interpleader, and in holding that "the principal motive for the present action is to reopen the Manila Case and collaterally attack the decision of the said Court"; (2) in finding that the decision in civil case 26044 of the CFI of Manila constitutes res

judicata and bars its present action; and (3) in dismissing its action instead of compelling the appellees to interplead and litigate between themselves their respective claims. The Corporations position may be stated elsewise as follows: The trial court erred in dismissing the complaint, instead of compelling the appellees to interplead because there actually are conflicting claims between the latter with respect to the ownership of membership fee certificate 201, and, as there is not Identity of parties, of subject-matter, and of cause of action, between civil case 26044 of the CFI of Manila and the present action, the complaint should not have been dismissed upon the ground of res judicata. On the other hand, the appellees argue that the trial court properly dismissed the complaint, because, having the effect of reopening civil case 26044, the present action is barred by res judicata. Although res judicata or bar by a prior judgment was the principal ground availed of by the appellees in moving for the dismissal of the complaint and upon which the trial court actually dismissed the complaint, the determinative issue, as can be gleaned from the pleadings of the parties, relates to the propriety and timeliness of the remedy of interpleader. The action of interpleader, under section 120 of the Code of Civil Procedure, 2 is a remedy whereby a person who has personal property in his possession, or an obligation to render wholly or partially, without claiming any right to either, comes to court and asks that the persons who claim the said personal property or who consider themselves entitled to demand compliance with the obligation, be required to litigate among themselves in order to determine finally who is entitled to tone or the one thing. The remedy is afforded to protect a person not against double liability but against double vexation in respect of one liability. 3 The procedure under the Rules of Court 4 is the same as that under the Code of Civil Procedure, 5 except that under the former the remedy of interpleader is available regardless of the nature of the subject-matter of the controversy, whereas under the latter an interpleader suit is proper only if the subject-matter of the controversy is personal property or relates to the performance of an obligation. There is no question that the subject matter of the present controversy, i.e., the membership fee certificate 201, is proper for an interpleader suit. What is here disputed is the propriety and timeliness of the remedy in the light of the facts and circumstances obtaining. A stakeholder 6 should use reasonable diligence to hale the contending claimants to court. 7 He need not await actual institution of independent suits against him before filing a bill of interpleader. 8 He should file an action of interpleader within a reasonable time after a dispute has arisen without waiting to be sued by either of the contending claimants. 9 Otherwise, he may be barred by laches 10 or undue delay. 11 But where he acts with reasonable diligence in view of the environmental circumstances, the remedy is not barred. 12 Has the Corporation in this case acted with diligence, in view of all the circumstances, such that it may properly invoke the remedy of interpleader? We do not think so. It was aware of the conflicting claims of the appellees with respect to the membership fee certificate 201 long before it filed the present interpleader suit. It had been recognizing Tan as the lawful

owner thereof. It was sued by Lee who also claimed the same membership fee certificate. Yet it did not interplead Tan. It preferred to proceed with the litigation (civil case 26044) and to defend itself therein. As a matter of fact, final judgment was rendered against it and said judgment has already been executed. It is not therefore too late for it to invoke the remedy of interpleader. It has been held that a stakeholder's action of interpleader is too late when filed after judgment has been rendered against him in favor of one of the contending claimants, 13 especially where he had notice of the conflicting claims prior to the rendition of the judgment and neglected the opportunity to implead the adverse claimants in the suit where judgment was entered. This must be so, because once judgment is obtained against him by one claimant he becomes liable to the latter. 14 In once case, 15 it was declared: The record here discloses that long before the rendition of the judgment in favor of relators against the Hanover Fire Insurance Company the latter had notice of the adverse claim of South to the proceeds of the policy. No reason is shown why the Insurance Company did not implead South in the former suit and have the conflicting claims there determined. The Insurance Company elected not to do so and that suit proceeded to a final judgment in favor of relators. The Company thereby became independently liable to relators. It was then too late for such company to invoke the remedy of interpleader The Corporation has not shown any justifiable reason why it did not file an application for interpleader in civil case 26044 to compel the appellees herein to litigate between themselves their conflicting claims of ownership. It was only after adverse final judgment was rendered against it that the remedy of interpleader was invoked by it. By then it was too late, because tohe entitled to this remedy the applicant must be able to show that lie has not been made independently liable to any of the claimants. And since the Corporation is already liable to Lee under a final judgment, the present interpleader suit is clearly improper and unavailing. It is the general rule that before a person will be deemed to be in a position to ask for an order of intrepleader, he must be prepared to show, among other prerequisites, that he has not become independently liable to any of the claimants. 25 Tex. Jur.p. 52, Sec. 3; 30 Am. Jur.p. 218, Section 8. It is also the general rule that a bill of interpleader comes too late when it is filed after judgment has been rendered in favor of one of the claimants of the fund, this being especially true when the holder of the funds had notice of the conflicting claims prior to the rendition of the judgment and had an opportunity to implead the adverse claimants in the suit in which the judgment was rendered. United Procedures Pipe Line Co. v. Britton, Tex. Civ. App. 264 S.W. 176; Nash v. McCullum, Tex. Civ. 74 S.W. 2d 1046; 30 Am. Jur. p. 223, Sec. 11; 25 Tex. Jur.p. 56, Sec. 5; 108 A.L.R., note 5, p. 275. 16 Indeed, if a stakeholder defends a suit filed by one of the adverse claimants and allows said suit to proceed to final judgment against him, he cannot later on have that part of the litigation repeated in an interpleader suit. In the case at hand, the Corporation allowed civil case 26044 to proceed to final judgment. And it offered no satisfactory explanation for its

failure to implead Tan in the same litigation. In this factual situation, it is clear that this interpleader suit cannot prosper because it was filed much too late. If a stakeholder defends a suit by one claimant and allows it to proceed so far as a judgment against him without filing a bill of interpleader, it then becomes too late for him to do so. Union Bank v. Kerr, 2 Md. Ch. 460; Home Life Ins. Co. v. Gaulk, 86 Md. 385, 390, 38 A. 901; Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. It is one o the main offices of a bill of interpleader to restrain a separate proceeding at law by claimant so as to avoid the resulting partial judgment; and if the stakeholder acquiesces in one claimant's trying out his claim and establishing it at law, he cannot then have that part of the litigation repeated in an interpleader suit. 4 Pomeroy's Eq. Juris. No. 162; Mitfor's Eq. Pleading (Tyler's Ed.) 147 and 236; Langdell's Summary of Eq. Pleading, No. 162' De Zouche v. Garrizon, 140 Pa. 430, 21 A/450. 17 It is the general rule that a bill of interpleader comes too late when application therefore is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and that this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was rendered. (See notes and cases cited 36 Am. Dec. 703, Am. St. Rep. 598, also 5 Pomeroy's Eq. Juris. Sec. 41.) The evidence in the opinion of the majority shows beyond dispute that the appellant permitted the Parker county suit to proceed to judgment in favor of Britton with full notice of the adverse claims of the defendants in the present suit other than the assignees of the judgment (the bank and Mrs. Pabb) and no excuse is shown why he did not implead them in the suit. 18 To now permit the Corporation to bring Lee to court after the latter's successful establishment of his rights in civil case 26044 to the membership fee certificate 201, is to increase instead of to diminish the number of suits, which is one of the purposes of an action of interpleader, with the possibility that the latter would lose the benefits of the favorable judgment. This cannot be done because having elected to take its chances of success in said civil case 26044, with full knowledge of all the fact, the Corporation must submit to the consequences of defeat. The act providing for the proceeding has nothing to say touching the right of one, after contesting a claim of one of the claimants to final judgment unsuccessfully, to involve the successful litigant in litigation anew by bringing an interpleader action. The question seems to be one of first impression here, but, in other jurisdictions, from which the substance of the act was apparently taken, the rule prevails that the action cannot be resorted to after an unsuccessful trial against one of the claimants. It is well settled, both by reasons and authority, that one who asks the interposition of a court of equity to compel others, claiming property in his hands, to interplead, must do so before putting them to the test of trials at law. Yarborough v. Thompson, 3 Smedes& M. 291 (41 Am. Dec. 626); Gornish v. Tanner, 1 You.& Jer. 333; Haseltine v. Brickery, 16 Grat. (Va.) 116. The remedy

by interpleader is afforded to protect the party from the annoyance and hazard of two or more actions touching the same property or demand; but one who, with knowledge of all the facts, neglects to avail himself of the relief, or elects to take the chances for success in the actions at law, ought to submit to the consequences of defeat. To permit an unsuccessful defendant to compel the successful plaintiffs to interplead, is to increase instead of to diminish the number of suits; to put upon the shoulders of others the burden which he asks may be taken from his own. ....' It is urged, however, that the American Surety Company of New York was not in position to file an interpleader until it had tested the claim of relatrix to final judgment, and that, failing to meet with success, it promptly filed the interpleader. The reason why, it urges, it was not in such position until then is that had it succeeded before this court in sustaining its construction of the bond and the law governing the bond, it would not have been called upon to file an interpleader, since there would have been sufficient funds in its hands to have satisfied all lawful claimants. It may be observed, however, that the surety company was acquainted with all of the facts, and hence that it simply took its chances of meeting with success by its own construction of the bond and the law. Having failed to sustain it, it cannot now force relatrix into litigation anew with others, involving most likely a repetition of what has been decided, or force her to accept a pro rata part of a fund, which is far from benefits of the judgment. 19 Besides, a successful litigant cannot later be impleaded by his defeated adversary in an interpleader suit and compelled to prove his claim anew against other adverse claimants, as that would in effect be a collateral attack upon the judgment. The jurisprudence of this state and the common law states is well-settled that a claimant who has been put to test of a trial by a surety, and has establish his claim, may not be impleaded later by the surety in an interpleader suit, and compelled to prove his claim again with other adverse claimants.American Surety Company of New York v. Brim, 175 La. 959, 144 So. 727; American Surety Company of New York v. Brim (In Re Lyong Lumber Company), 176 La. 867, 147 So.18; Dugas v. N.Y. Casualty Co., 181 La. 322, 159 So. 572; 15 Ruling Case Law, 228; 33 Corpus Juris, 477; 4 Pomeroy's Jurisprudence, 1023; Royal Neighbors of America v. Lowary (D.C.) 46 F2d 565; Brackett v. Graves, 30 App. Div. 162, 51 N.Y.S. 895; De Zouche v. Garrison, 140 Pa. 430, 21 A. 450, 451;Manufacturer's Finance Co. v. W.I. Jones Co. 141 Ga., 519, 81 S.E. 1033; Hancock Mutual Life Ins. Co. v. Lawder, 22 R.I. 416, 84 A. 383. There can be no doubt that relator's claim has been finally and definitely established, because that matter was passed upon by three courts in definitive judgments. The only remaining item is the value of the use of the land during the time that relator occupied it. The case was remanded solely and only for the purpose of determining the amount of that credit. In all other aspects the judgment is final. 20 It is generally held by the cases it is the office of interpleader to protect a party, not against double liability, but against double vexation on account of one

liability. Gonia v. O'Brien, 223 Mass. 177, 111 N.E. 787. And so it is said that it is too late for the remedy of interpleader if the party seeking this relef has contested the claim of one of the parties and suffered judgment to be taken. In United P.P.I. Co. v. Britton (Tex. Civ. App.) 264 S.W. 576. 578, it was said: 'It is the general rule that a bill of interpleader comes too late when application therefor is delayed until after judgment has been rendered in favor of one of the claimants of the fund, and this is especially true where the holder of the fund had notice of the conflicting claims prior to the rendition of such judgment and an opportunity to implead the adverse claimants in the suit in which such judgment was rendered. See notes and cases cited 35 Am. Dec. 703; 91 An. St. Rep. 598; also 5 Pomeroy's Equity Jurisprudence No. 41.' The principle thus stated has been recognized in many cases in other jurisdictions, among which may be cited American Surety Co. v. O'Brien, 223 Mass. 177, 111 N.E. 787; Phillips v. Taylor, 148 Md. 157, 129 A. 18; Moore v. Hill, 59 Ga. 760, 761; Yearborough v. Thompson, 3 Smedes& M. (11 Miss.) 291, 41 Am. Dec. 626. See, also, 33 C.J. p. 447, No. 30; Nash v. McCullum, (Tex. Civ. App.) 74 S.W. 2d 1042, 1047. It would seem that this rule should logically follow since, after the recovery of judgment, the interpleading of the judgment creditor is in effect a collateral attack upon the judgment. 21 In fine, the instant interpleader suit cannot prosper because the Corporation had already been made independently liable in civil case 26044 and, therefore, its present application for interpleader would in effect be a collateral attack upon the final judgment in the said civil case; the appellee Lee had already established his rights to membership fee certificate 201 in the aforesaid civil case and, therefore, this interpleader suit would compel him to establish his rights anew, and thereby increase instead of diminish litigations, which is one of the purposes of an interpleader suit, with the possiblity that the benefits of the final judgment in the said civil case might eventually be taken away from him; and because the Corporation allowed itself to be sued to final judgment in the said case, its action of interpleader was filed inexcusably late, for which reason it is barred by laches or unreasonable delay. ACCORDINGLY, the order of May 28, 1964, dismissing the complaint, is affirmed, at appellant's cost. Teehankee, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and Concepcion, Jr., JJ., concur. Barredo and Martin, JJ., took no part. Fernando, J., is on leave.