Torts and Damages

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CHAPTER 1 TORT “A wrong a which has a remedy in common law.” – Salmond

Tort defined and explained Tort in American law is equivalent to “quasi-delict and culpa aquiliana.”1 It is much broader in Anglo-American jurisprudence than the Spanish-Philippine concept of obligations arising from contractual negligence but intentional criminal acts.2 Latin source of the word torts explained The word “torts” comes from the Latin tortus or twisted.3 Tort is a civil wrong for which a remedy may be obtained usually in the form of damages, a breach of duty that the law imposes in the form of damages, a breach of duty that the law imposes on everyone in the same relation to one another involved in a given transaction. It is the branch of law dealing with such wrongs.4 According to Houston, “we may define a tort as a civil wrong for which the remedy is a common law action for unliquidated damages,

1

Quintao v. Victorias Milling Co., 61 OC 5380. Sec Moreno, Philippine Law Dictionary, 3rd Edition, p. 955. Barron’s Law Dictionary, 5th Edition, citing Prosser & Keeten, Torts, Section 1, 1981 Edition. Black’s Law Dictionary, 7th Edition, p. 196. Houston, Salmond on the Law on Torts, p. 13. 2 Sec Moreno, Philippine Law Dictionary, 3rd Edition, p. 955. 3 Barron’s Law Dictionary, 5th Edition, citing Prosser & Keeten, Torts, Section 1, 1981 Edition. 4 Black’s Law Dictionary, 7th Edition, p. 196. 1

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and which is not exclusively the breach of a contract or the breach of a trust or other obligation.”5 The different kinds of tort enumerated and explained There are different kinds of tort, namely: (1) constitutional tort — A violation of one’s constitutional right by a government officer, redressable by a civil action against the officer. (2) government tort — A tort committed by the government through an agent, employee or instrumentality under its control. It may not be actionable because the State may not be sued without its consent. (3) mass tort — a civil wrong that injures many people like tort emissions from a factory. (4) intentional tort — a tort committed by someone acting with general or specific intent. (5) prenatal tort — a tort committed against a fetus. (6) prima facie tort — an unjustified infliction of harm on another person resulting in damages. (7) personal tort — a tort involving injury to one’s person. (8) property tort — a tort involving damage to property. (9) quasi-tort — a tort for which a non-perpetrator is held responsible.6 Tortious interference with contractual relations explained A third party’s intentional inducement of a contracting party to break a contract, causing damage to the relationship between the contracting parties.7 Tortious interference with prospective advantage explained An intentional damaging intrusion into another’s potential business relationship, such as obtaining customers or employment. Tortfeasor defined A tortfeasor is one who commits a tort, a wrongdoer. Tortious defined Tortious means constituting a tort.8

5

Houston, Salmond on the Law on Torts, p. 13. Black’s Law Dictionary, 7th Edition, pp. 1196-1197. 7 Ibid. 8 Ibid. 6

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Negotiorum gestio defined and explained A Philippine authority correctly defined negotiorum gestio as a quasi-contract whereby a person who voluntarily takes over the management of the business of the another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or require the person concerned to substitute him, if the owner is in a position to do so.9 Having its origin from the original Latin phrase which means “management of affairs,”10 the Supreme Court has called it in short as the “the management of another’s business.’’11 It is termed as negotium in Latin, or a matter concerning an absent person.12 Indeed, negotiorum gestion is a quasi-contractual situation in which an actor (called negoriorum gestor or oficious manager) interferes in the business transaction of another person (dominus negotii) in that person’s absence, done without authority but out of concern or friendship.13 By such conduct, the actor was bound to conduct the matter to a conclusion and to deliver the transactions proceeds to the absent person, who likewise was bound to reimburse the actor for any expenses incurred.14 When negotiorum gestio shall not exist explained Negotiorum gestio shall not exist: (1) if the gestor acts selfinterestedly; or (2) if the owner forbids the gestor from acting on the owner’s behalf.15 Instances when the juridical relation of negotiorum shall not arise enumerated and explained The instances when the juridical relation of negotiorum gestio shall not arise are enumerated and partly explained in the latter part of Article 2144, Civil Code. Those instances are: (1) when the property is not neglected or abandoned. If the property is not neglected or abandoned, the owner thereof is still taking care

9

See Moreno, Philippine Law Dictionary, 2nd Edition, p. 4118. Black’s Law Dictionary, 7th Edition, p. 1060. 11 Rivera v. Rivera, 44 OG 3847. 12 Black, supra. 13 Ibid. 14 Ibid. 15 Ibid. 10

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thereof. (2) if in fact the manager has been tacitly authorized by the owner. An agency would have arisen between the parties then. Under Article 1317, Civil Code, “A contract entered into in the name of another by one who has no authority or legal representation, or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person in whose behalf it is executed, before it is revoked by the other contracting party.” Duties of the gestor or officious manager in negotiorum gestor enumerated The gestor or officious manager in the quasi-contract of negotiorum gestio have a two-fold duty, namely: (1) To perform his duty as officious manager in good faith with all the diligence of a good father of the family; and (2) To pay the damages which through his fault or negligence shall be suffered by the owner of the property or business under management. The case Republic v. Unimex Micro Electronics GmBH In this case, the Supreme Court held inter alia that: “Although it may be gainsaid that the satisfaction of respondent’s demand will ultimately fall on the government, and that under the doctrine of “state immunity,” it cannot be held liable for governmental acts, (jus imperii), we still hold that petitioner cannot escape liability. The circumstances of the case warrant its exclusion from the purview of the state immunity doctrine. Moreover, “what is convenient and contrary to reason is not allowed in law. Justice and equity now demand that the State’s cloak of invincibility be shredded.” The decision follows: This is an appeal by certiorari under Rule 45 of the Rules of Court seeking to nullify and set aside the decision of the Court of Appeals (CA) dated August 30, 200416 and its amended decision of November 30, 200417 in CA-G.R. SP No. 75359 and CA-G.R. SP No. 75366.

16 Penned by Justice Perlita J. Tria-Tirona (retired), with the concurrence of Justices Ruben T. Reyes and Jose C. Reyes, of the Sixth Division of the Court of Appeals. Rollo, pp. 68-80. 17 Id., pp. 81-88.

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The antecedent facts follows: Sometime in April 1985, respondent Unimex Micro-Electronics GmBH (Unimex) shipped a 40-foot container and 171 cartons of Atari game computer cartridges, duplicators, expanders, remote controllers, parts and accessories to Handyware Phils., Inc. (Handyware). Don Tim Shipping Corporation transported the goods with Evergreen Marine Corporation as shipping agent. After the shipment arrived in the Port of Manila on July 9, 1985, the Bureau of Customs (BOC) agents discovered that it did not tally with the description appearing on the cargo manifest. As a result, BOC instituted seizure proceedings against Handyware and later issued a warrant of seizure and detention against the shipment. On June 5, 1987, the Collector of Customs issued a default order against Handyware for failing to appear in the seizure proceedings. After an ex parte hearing, the Collector of Customs forfeited the goods in favor of the government. Subsequently, on June 15, 1987, respondent Unimex (as shipper and owner of the goods) filed a motion to intervene in the seizure proceedings. The Collector of Customs granted the motion but later on declared the June 5, 1987 default order against Handyware as final and executory, thus affirming the goods’ forfeiture in favor of the government. Respondent filed a petition for review against petitioner Commissioner of Customs (BOC Commissioner) in the Court of Tax Appeals (CTA). This case was docketed as CTA Case No. 4317.18 In a decision19 dated June 15, 1992, the CTA reversed the forfeiture decree and ordered the release of the subject shipment to respondent subject to the payment of customs duties. The CTA decision became final and executory on July 20, 1992. The decision read: “WHEREFORE, the decree of forfeiture of [petitioner] Commissioner of Customs is hereby reversed and the subject shipment is hereby ordered released to [respondent] subject to the condition that the correct duties, taxes, fees and other

18 Entitled “Unimex Micro-Electronics GmBH v. Commissioner of Customs.” Id., pp. 124-128. 19 Id., pp. 98-123.

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charges thereon be paid to the Bureau of Customs based on the actual quality and condition of the shipments at the time of the filing of the corresponding import entry in compliance with this decision and further subject to the presentation of Central Bank Release Certificate.”20

Unfortunately, however, respondent’s counsel failed to secure a writ of execution to enforce the CTA decision. Instead, it filed separate claims for damages against Don Tim Shipping Corporation and Evergreen Marine Corporation21 but both cases were dismissed. On September 5, 2001, respondent filed in the CTA a petition for the revival of its June 15, 1992 decision. It prayed for the immediate release by BOC of its shipment or, in the alternative, payment of the shipment’s value plus damages. The BOC Commissioner failed to file his answer, hence, he was declared in default. During the ex parte presentation of respondent’s evidence, BOC informed the court that the subject shipment could no longer be found at its warehouses. In its decision of September 19, 2002,22 the CTA declared that its June 15, 1992 decision could no longer be executed due to the loss of respondent’s shipment so it ordered the BOC Commissioner to pay respondent the commercial value of the goods based on the prevailing exchange rate at the time of their importation. The dispositive portion of the decision read: “WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. Accordingly, [petitioner] is ORDERED to PAY [respondent] the amount of P8,675,200.22 representing the commercial value of the shipment at the time of importation subject, however, to the payment of the proper taxes, duties, fees and other charges thereon. The payment shall be taken from the sale or sales of the goods or properties seized or forfeited by the Bureau of Customs.”23

The BOC Commissioner and respondent filed their respective motions for reconsideration (MRs) of the above decision.

20

Id., p. 123. Supra at p. 1. 22 Rollo, pp. 129-144. 23 Id., p. 144. 21

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In his MR, the BOC Commissioner argued that the CTA altered its June 15, 1992 decision by converting it from an action for specific performance into a money judgment.24 On the other hand, respondent contended that the exchange rate prevailing at the time of actual payment should apply. It also argued that the CTA erred in not imposing legal interest on BOC’s obligation. The CTA denied both MRs. The BOC Commissioner and the respondent then filed separate petitions in the CA. The BOC Commissioner’s appeal was docketed as CA-G.R. SP No. 75359 and respondent’s as CA-G.R. SP No. 75366. The CA consolidated the two cases. On August 30, 2004, the CA dismissed the BOC Commissioner’s appeal and granted respondent’s. In CA-G.R. SP No. 75359, the CA held that the BOC Commissioner was liable for the value of the subject shipment as the same was lost while in its custody. On the other hand, in CA-G.R. SP No. 75366, it ruled that the CTA erred in using as basis the prevailing peso-dollar exchange rate at the time of the importation instead of the prevailing rate at the time of actual payment pursuant to R.A. 4100.25 It added that respondent was also entitled to legal interest. According to the CA: “. . . Considering that the BOC was grossly negligent in handling the subject shipment, this Court finds Unimex entitled to legal interests. Accordingly, the actual damages thus awarded shall be subject to 6% interest per annum. Be that as it may, such interest shall accrue only from the date of the CTA Decision on 19 September 2002 since it is from that the quantification of Unimex’s damages have been reasonably ascertained. . . xxx

xxx

xxx

Finally, Unimex is likewise entitled to 12% interest per annum in lieu of 6% per annum from the time this Decision becomes final and executory until fully paid, in as much as the interim period is equivalent to a forbearance of credit.

24 The June 15, 1992 CTA Decision ordered the BOC Commissioner to release to respondent the goods while the CTA Amended Decision dated September 19, 2002 directed the payment of the (sic) its value. 25 An Act to Assure the Uniform Value of Philippine Coin and Currency.

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xxx

xxx

xxx

WHEREFORE, the appealed Decision, dated 19 September 2002, is hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is adjudged liable to Unimex for the value of the subject shipment in the amount of $466,885.54. The Bureau of Customs’ liability may be paid in Philippine currency, computed at the exchange rate prevailing at the time of actual payment with legal interest thereon at the rate of 6% per annum from 19 September 2002 up to its finality. Upon finality of this Decision, the rate of legal interest shall be 12% per annum until the value of the subject shipment is fully paid.”26

The BOC Commissioner and respondent again filed their respective MRs of the above decision. The Commissioner insisted that the BOC was not liable to respondent. On the other hand, respondent’s MR sought payment of the goods’ value in euros, not in US dollars.27 It also demanded that the 6% legal interest be reckoned from the date of its judicial demand on June 15, 1987. On November 30, 2004, the CA denied the BOC Commissioner’s MR and granted respondent’s. Accordingly, the decretal portion of its amended decision read: “WHEREFORE, the appealed Decision, dated 19 September 2002, is hereby AFFIRMED WITH MODIFICATION in that the Bureau of Customs is adjudged liable to Unimex for the value of the subject shipment in the amount of Euro 669,982.565. The Bureau of Custom’s liability [may be] paid in the Philippine currency, computed at the exchange rate prevailing at the time of actual payment with legal interests thereon at the rate of 6% per annum from 15 June 1987 up to the finality of this Decision. In lieu of the 6% interest, the rate of legal interest shall be 12% per annum upon finality of this Decision until the value of the subject shipment is fully paid.”28

The Republic of the Philippines, represented by the BOC Commissioner, now comes to us via this petition assailing the CTA decision on the following grounds: (1) the June 15, 1992 CTA judgment

26

Supra note 1. The shipment was paid initially in German Deutschmark. Per certification issued by the First Secretary of the Embassy of the Federal Republic of Germany in Manila, Hon. Dietmar Wenger, the Euro replaced Deutschmark on 01 January 1999 as common currency of eleven (11) European countries including Germany. 28 Rollo, pp. 81-88. 27

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could not be altered after it became final and executory; (2) laches has already set in, hence, respondent’s case (reviving the June 15, 1992 CTA judgment) should have been dismissed outright; (3) the legal interest imposed was erroneous; and (4) the government funds cannot be charged with respondent’s claim without a corresponding appropriation. Modification of a Final And Executory Judgment In support of its first argument, petitioner contends that once a judgment becomes final and executory, it becomes immutable and unalterable, thus the CTA erred in changing the tenor of its June 15, 1992 decision by ordering it to instead pay the value of the goods.29 We disagree. Indeed, the general rule is that once a decision becomes final and executory, it cannot be altered or modified. However, this rule is not absolute. In some cases,30 we held that where facts or events transpire after a decision has become executory, which facts constitute a supervening cause rendering the final judgment unenforceable, said judgment may be modified. Also, a final judgment may be altered when its execution becomes impossible or unjust. In the case at bar, parties do not dispute the fact that after the June 15, 1992 CTA decision became final and executory, respondent’s goods were inexplicably lost while under the BOC’s custody. Certainly, this fact presented a supervening event warranting the modification of the CTA decision. Even if the CTA had maintained its original decision, still petitioner would have been unable to comply with it for the obvious reason that there was nothing more to deliver to respondent. Laches Did Not Set in to Frustrate Respondent’s Petition to Revive The June 15, 1992 CTA Decision Regarding petitioner’s second argument, we hold that it cannot impugn respondent’s claim on the basis of laches. Laches is the failure or negligence to assert a right within a reasonable time, giving

29

Petition, Id., p. 53. Balanoba v. Madriaga, G.R. No. 160109, November 22, 2005, 475 SCRA 688; Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1; 391 SCRA 370 (2002); Abalos v. Philex Mining Corporation, 441 Phil. 386; 393 SCRA 134 (2002). 30

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rise to a presumption that a party has abandoned it or declined to assert it.31 It is not a mere question of lapse or passage of time but is principally a question of the inequity or unfairness of permitting a right or claim to be asserted.32 It is clear from the records that respondent was not guilty of negligence or omission. Neither did it abandon its claim against petitioner. We agree with the CTA (as later affirmed by the CA) that: “There was never negligence or omission to assert its right within a reasonable period of time on the part of [respondent]. In fact, from the moment it intervened in the proceedings before the Bureau of Customs up to the present time, [respondent] is diligently trying to fight for what it believes is right. [Respondent] may have failed to secure a writ of execution with this court when the [CTA decision] became final and executory due to wrong legal advice, yet it does not mean that it was sleeping on its right for it filed a case against the shipping agent and/or the sub-agent. Therefore, there [was never] an occasion wherein petitioner had abandoned or declined to assert its right.”33

The rule is that the findings of fact by the lower court,34 if affirmed by the CA, are conclusive on us.35 Absent any reason that compels us to deviate from the rule, as in this case, we shall not disturb such findings. Moreover, the doctrine of laches is based upon grounds of public policy and equity. It is invoked to discourage stale claims but is entirely addressed to the sound discretion of the court.36 Since it is an equitable doctrine, its application is likewise controlled by reasonable considerations. Thus, the better rule is that courts, under the principle of equity, should not be bound by the doctrine of laches if wrong or injustice will result.37

31 Lopez v. Court of Appeals, 446 Phil. 722; 398 SCRA 550 (2003); Domingo v. Roces, 449 Phil. 189; 401 SCRA 197 (2003). 32 Republic v. Sandiganbayan, 453 Phil. 1059; 406 SCRA 190 (2003). 33 Rollo, p. 147. 34 Pursuant to R.A. 9282 which took effect on March 30, 2004, the CTA was elevated to the level of a collegiate court with special jurisdiction. 35 Bulay-og, et al. v. Bacalso, G.R. No. 148795, July 17, 2006, 495 SCRA 308; Cruz v. Cristobal, G.R. No. 140422, August 7, 2006, 498 SCRA 37. 36 Bogo-Medellin Milling Co., Inc. v. Court of Appeals, 455 Phil. 285; 407 SCRA 518 (2003). 37 Imperial Victor Shipping Agency v. National Labor Relations Commission, G.R. No. 84672, August 5, 1991, 200 SCRA 178.

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Given the attendant circumstances, laches cannot stall respondent’s right to recover what is due to it especially where BOC’s negligence in the safekeeping of the goods appears indubitable. There is no denying that BOC exhibited gross carelessness and ineptitude in the performance of its duty as it could not even explain why or how the goods vanished while in its custody. With this, it is difficult to exonerate petitioner from liability; otherwise, we would countenance a wrong and exacerbate respondent’s loss which to this day has remained unrecompensed. More importantly, laches never set in because respondent filed its petition for revival of judgment within the period set by the Rules. In particular, Rule 39, Section 6 states: “SEC. 6. Execution by motion or by independent action. — A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. The revived judgment may also be enforced by motion within five (5) years from the date of its entry and thereafter by action before it is barred by the statute of limitations.”

Furthermore, Article 1144 of the Civil Code, an action “upon a judgment” may be brought within ten (10) years from the time the right of action accrues. The CTA judgment sought to be revived became final and executory on July 20, 199238 and was accordingly entered into the book of judgments on the same date. On the other hand, the petition to revive said judgment was filed on September 5, 2001. Clearly, the filing of the petition for the revival of judgment was well within the reglementary period provided by law. Legal Interest May Be Imposed for Use of Money or as Compensatory Damages Petitioner likewise argues that the CA erred in imposing the 6% p.a. legal interest. According to petitioner, the obligation to pay legal interest only arises by virtue of a contract or on account of damages due to delay or failure to pay the principal on which the interest is exacted. It added that since the June 15, 1992 CTA decision did not involve a monetary award but merely the release of 38

Supra at p. 3.

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the goods to respondent, there was no basis for the computation and/ or imposition of the 6% p.a. legal interest. We agree with petitioner. Interest may be paid only either as compensation for the use of money (monetary interest)39 or as damages (compensatory interest).40 We quote in agreement the CTA’s disquisition in its decision dated September 19, 2002: “Interest may be paid either as compensation for the use of money (monetary interest) referred to in Article 1956 of the New Civil Code or as damages (compensatory interest) under Article 2209 above cited. As clearly provided in [Article 2209], interest is demandable if: a) there is monetary obligation and b) debtor incurs delay. This case does not involve a monetary obligation to be covered by Article 2209. There is no dispute that this case was originally filed questioning the seizure of the shipment by the Bureau of Customs. Our decision subject of this action for revival [of judgment] did not refer to any monetary obligation by [petitioner] towards the [respondent]. In fact, if there was any monetary obligation mentioned, it referred to the obligation of [respondent] to pay the correct taxes, duties, fees and other charges before the release of the goods can be had. In one case, the Supreme Court held: “In a comprehensive sense, the term “debt” embraces not merely money due by contract, but whatever one is bound to render to another, either for contract or the requirement of the law, such as tax where the law imposes personal liability therefor.” Therefore, the government was never a debtor to the petitioner in order that [Article] 2209 could apply. Nor was it in default for there was no monetary obligation to pay in the first place. There is default when after demand is made either judicially or extrajudicially. In other words, for interest to be demandable under Article 2209, there should be a monetary obligation and the debtor was in default. . . In the instant case, [petitioner] was never under monetary obligation to [respondent], no demand can be made either judicially or extrajudicially. Parallel thereto, there could be no default . . .”41 39

See Article 1956 of the Civil Code. See Article 2209, Id. 41 Rollo, pp. 139-140. 40

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No doubt, the present case does not fall within the first situation. Neither can it be considered as one involving interest based on damages under the second situation. More importantly, interest is not chargeable against petitioner except when it has expressly stipulated to pay it or when interest is allowed by the legislature or in eminent domain cases where damages sustained by the owner take the form of interest at the legal rate.42 Consequently, the CA’s imposition of the 12% p.a. legal interest upon the finality of the decision of this case until the value of the goods is fully paid (as forbearance of credit) is likewise bereft of any legal anchor. Government Liability For Actual Damages Finally, petitioner argues that a money judgment or any charge against the government requires a corresponding appropriation and cannot be decreed by mere judicial order. Although it may be gainsaid that the satisfaction of respondent’s demand will ultimately fall on the government, and that, under the political doctrine of “state immunity,” it cannot be held liable for governmental acts (jus imperii),43 we still hold that petitioner cannot escape its liability. The circumstances of this case warrant its exclusion from the purview of the state immunity doctrine. As previously discussed, the Court cannot turn a blind eye to BOC’s ineptitude and gross negligence in the safekeeping of respondent’s goods. We are not likewise unaware of its lackadaisical attitude in failing to provide a cogent explanation on the goods’ disappearance, considering that they were in its custody and that they were in fact the subject of litigation. The situation does not allow us to reject respondent’s claim on the mere invocation of the doctrine of state immunity. Succinctly, the doctrine must be fairly observed and the State should not avail itself of this prerogative to take undue advantage of parties that may have legitimate claims against it.44

42 Cruz, PHILIPPINE POLITICAL LAW, citing Arasola v. Trinidad (40 Phil. 252), 1995 Ed., p. 46. 43 Id., p. 39, citing United States of America v. Ruiz (136 SCRA 487). 44 Id., p. 35.

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In Department of Health v. C.V. Canchela & Associates,45 we enunciated that this Court, as the staunch guardian of the people’s rights and welfare, cannot sanction an injustice so patent in its face, and allow itself to be an instrument in the perpetration thereof. Over time, courts have recognized with almost pedantic adherence that what is inconvenient and contrary to reason is not allowed in law.46 Justice and equity now demand that the State’s cloak of invincibility against suit and liability be shredded. Accordingly, we agree with the lower courts’ directive that, upon payment of the necessary customs duties by respondent, petitioner’s “payment shall be taken from the sale or sales of goods or properties seized or forfeited by the Bureau of Customs.”47 WHEREFORE, the assailed decisions of the Court of Appeals in CA-G.R. SP Nos. 75359 and 75366 are hereby AFFIRMED with MODIFICATION. Petitioner Republic of the Philippines, represented by the Commissioner of the Bureau of Customs, upon payment of the necessary customs duties by respondent Unimex Micro-Electronics GmBH, is hereby ordered to pay respondent the value of the subject shipment in the amount of Euro 669,982.565. Petitioner’s liability may be paid in Philippine currency, computed at the exchange rate prevailing at the time of actual payment. SO ORDERED. Rescission of lease contracts under Article 1650 different from resolution of reciprocal obligations under Article 1101, Civil Code Rescision of lease contracts under Article 1650 is different from resolution of reciprocal obligations under Article 1101, Civil Code. The former is not one that requires an independent action, the latter does. The doctrine of res ipsa loquitur does not apply to a physician surgeon explained The doctrine of res ipsa loquitur can have no application in a suit against a physician or a surgeon which involves the merits of a diagnosis or a scientific treatment. 45

G.R. Nos. 151373-74, November 16, 2005, 475 SCRA 218. Republic v. Court of Appeals, G.R. No. 108926, July 12, 1996, 258 SCRA 712. 47 Supra note 8. 46

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The case College Assurance Plan v. Belfranlt Development, Inc. (538 SCRA 41) Temperate or moderate damages may be availed when the pecuniary less has been suffered but its amount cannot, in the nature of the case, can be proved with certainty. The amount thereof is usually left to the courts but the same should be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory. The decision follows: Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the February 28, 2002 Decision48 of the Court of Appeals (CA) in CA-G.R. CV No. 63283, which modified the April 14, 1999 Decision49 of the Regional Trial Court (Branch 221), Quezon City (RTC) in Civil Case No. Q-9523118. The antecedent facts are as summarized by the RTC. Belfranlt Development, Inc. (respondent) is the owner of Belfranlt Building in Angeles City, Pampanga. It leased to petitioners College Assurance Plan Phil., Inc. (CAP) and Comprehensive Annuity Plans and Pension Corporation (CAPP) several units on the second and third floors of the building.50 On October 8, 1994, fire destroyed portions of the building, including the third floor units being occupied by petitioners. An October 20, 1994 field investigation report by an unnamed arson investigator assigned to the case disclosed: 0.5

Origin of Fire: Store room occupied by CAP, located at the 3rd floor of the bldg.

0.6

Cause of Fire: Accidental (overheated coffee percolator).51

These findings are reiterated in the October 21, 1994 certification which the BFP City Fire Marshal, Insp. Teodoro D. Del Rosario issued to petitioners as supporting document for the latter’s insurance claim.52

48 Penned by Associate Justice Edgardo P. Cruz, and concurred in by Associate Justices Hilarion L. Aquino and Amelita G. Tolentino, Rollo, p. 42. 49 Rollo, p. 52. 50 RTC Decision, Rollo, p. 52. 51 Exh. “P-2,” id., at p. 89. 52 Exh. “P-3,” id., at p. 91.

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Citing the foregoing findings, respondent sent petitioners on November 3, 1994 a notice to vacate the leased premises to make way for repairs, and to pay reparation estimated at P1.5 million. On November 11, 1994, petitioners vacated the leased premises, including the units on the second floor,53 but they did not act on the demand for reparation. Respondent wrote petitioners another letter, reiterating its claim for reparation, this time estimated by professionals to be no less than P2 million.54 It also clarified that, as the leased units on the second floor were not affected by the fire, petitioners had no reason to vacate the same; hence, their lease on said units is deemed still subsisting, along with their obligation to pay for the rent.55 In reply, petitioners explained that they could no longer reoccupy the units on the second floor of the building for they had already moved to a new location and entered into a binding contract with a new lessor. Petitioners also disclaimed liability for reparation, pointing out that the fire was a fortuitous event for which they could not be held responsible.56 After its third demand57 went unheeded, respondent filed with the RTC a complaint against petitioners for damages. The RTC rendered a Decision dated April 14, 1999, the dispositive portion of which reads: “WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff [respondent] and against the herein defendants [petitioners]. Defendants are ordered to pay the plaintiff joint [sic] and severally the following amounts: 1) P2.2 Million Pesos cost of rehabilitation (repairs, replacements and renovations) of the Belfranlt building by way of Actual and Compensatory damages; 2) P14,000.00 per month of unpaid rentals on the third floor of the Belfranlt building for the period from October 1994 until the end of the two year lease contract on May 10, 1996 by way of Actual and Compensatory damages;

53

Id., at p. 71. Id., at p. 81. 55 Rollo, p. 81. 56 Id., at p. 84. 57 Id., at p. 86. 54

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3) P18,000.00 per month of unpaid rentals on the second floor of the Belfanlt building for the period from October 1994 until the end of the two year lease contract on May 10, 1996 by way of Actual or Compensatory damages; 4) P8,400.00 per month as reimbursement of unpaid rentals on the other leased areas occupied by other tenants for the period from October 1994 until the time the vacated leased areas were occupied by new tenants; 5)

P200,000.00 as moral damages;

6)

P200,000.00 as exemplary damages;

7) P50,000.00 plus 20% of Actual damages awarded as reasonable Attorney’s fees; and 8)

Costs of suit.

SO ORDERED.”58

Petitioners appealed to the CA which, in its February 28, 2002 Decision, modified the RTC Decision, thus: “WHEREFORE, the appealed decision is MODIFIED in that the award of (i) actual and compensatory damages in the amounts of P2.2 Million as cost of rehabilitation of Belfranlt Building and P8,400.00 per month as reimbursement of unpaid rentals on the areas leased by other tenants, (ii) moral damages, (iii) exemplary damages, and (iv) attorney’s fees is DELETED, while defendants-appellants are ordered to pay to plaintiffappellee, jointly and severally, the amount of P500,000.00 as temperate damages. The appealed judgment is AFFIRMED in all other respects. SO ORDERED.”59

Respondent did not appeal from the CA decision.60 Petitioners filed the present petition, questioning the CA decision on the following grounds: I THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT THE FIRE THAT PARTIALLY BURNED RESPONDENT’S BUILDING WAS A FORTUITOUS EVENT. 58

Id., at p. 68. Rollo, p. 49. 60 Id., at pp. 232-234. 59

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II THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER FAILED TO OBSERVE THE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY. III THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE FOR CERTAIN ACTUAL DAMAGES DESPITE PLAINTIFFS’ FAILURE TO PROVE THE DAMAGE AS ALLEGED. IV THE HONORABLE COURT OF APPEALS ERRED IN HOLDING PETITIONERS LIABLE FOR TEMPERATE DAMAGES.61 The petition lacks merit. Article 1667 of the Civil Code, which provides: “The lessee is responsible for the deterioration or loss of the thing leased, unless he proves that it took place without his fault. This burden of proof on the lessee does not apply when the destruction is due to earthquake, flood, storm or other natural calamity.”

creates the presumption that the lessee is liable for the deterioration or loss of a thing leased. To overcome such legal presumption, the lessee must prove that the deterioration or loss was due to a fortuitous event which took place without his fault or negligence.62 Article 1174 of the Civil Code defines a fortuitous event as that which could not be foreseen, or which, though foreseen, was inevitable. Whether an act of God63 or an act of man,64 to constitute a fortuitous event, it must be shown that: a) the cause of the unforeseen and unexpected occurrence or of the failure of the obligor

61

Id., at p. 17. Mindex v. Morillo, 428 Phil. 934, 943; 379 SCRA 144, 153 (2002). 63 Guevent Industrial Development Corporation v. Philippine Lexus Amusement Corporation, G.R. No. 159279, July 11, 2006, 494 SCRA 555, 558. 64 Philippine Communications Satellite Corp. v. Globe Telecom, Inc., G.R. No. 147324, May 25, 2004, 429 SCRA 153, 160. 62

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to comply with its obligations was independent of human will; b) it was impossible to foresee the event or, if it could have been foreseen, to avoid it; c) the occurrence rendered it impossible for the obligor to fulfill its obligations in a normal manner; and d) said obligor was free from any participation in the aggravation of the injury or loss.65 If the negligence or fault of the obligor coincided with the occurrence of the fortuitous event, and caused the loss or damage or the aggravation thereof, the fortuitous event cannot shield the obligor from liability for his negligence.66 In the present case, it was fire that caused the damage to the units being occupied by petitioners. The legal presumption therefore is that petitioners were responsible for the damage. Petitioners insist, however, that they are exempt from liability for the fire was a fortuitous event that took place without their fault or negligence.67 The RTC saw differently, holding that the proximate cause of the fire was the fault and negligence of petitioners in using a coffee percolator in the office stockroom on the third floor of the building and in allowing the electrical device to overheat: “Plaintiff has presented credible and preponderant evidence that the fire was not due to a fortuitous event but rather was due to an overheated coffee percolator found in the leased premises occupied by the defendants. The certification issued by the Bureau of Fire Protection Region 3 dated October 21, 1994 clearly indicated that the cause of the fire was an overheated coffee percolator. This documentary evidence is credible because it was issued by a government office which conducted an investigation of the cause and circumstances surrounding the fire of October 8, 1994. Under Section 4, Rule 131 of the Revised Rules of Court, there is a legal presumption that official duty has been regularly performed. The defendants have failed to present countervailing evidence to rebut or dispute this presumption. The defendants did not present any credible evidence to impute any wrongdoing or false motives on the part of Fire Department Officials and Arson investigators in the preparation and finalization of this certification. This Court is convinced that the Certification is genuine, authentic, valid and issued in the proper exercise and regular performance of the issuing authority’s official duties. The written certification 65

Real v. Belo, G.R. No. 146224, January 26, 2007, 513 SCRA 111, 124. Sicam v. Jorge, G.R. No. 159617, August 8, 2007, 529 SCRA 443; MIAA v. Ala Industries Corporation, 467 Phil. 229, 247; 422 SCRA 603, 615 (2004). 67 RTC Decision, Rollo, p. 54. 66

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cannot be considered self-serving to the plaintiff because as clearly indicated on its face the same was issued not to the plaintiff but to the defendant’s representative Mr. Jesus V. Roig for purposes of filing their insurance claim. This certification was issued by a government office upon the request of the defendant’s authorized representative. The plaintiff also presented preponderant evidence that the fire was caused by an overheated coffee percolator when plaintiff submitted in evidence not only photographs of the remnants of a coffee percolator found in the burned premises but the object evidence itself. Defendants did not dispute the authenticity or veracity of these evidence. Defendants merely presented negative evidence in the form of denials that defendants maintained a coffee percolator in the premises testified to by employees of defendants who cannot be considered totally disinterested.”68 (Citations omitted)

The CA concurred with the RTC and noted additional evidence of the negligence of petitioners: ‘The records disclose that the metal base of a heating device which the lower court found to be the base of a coffee percolator, was retrieved from the stockroom where the fire originated. The metal base contains the inscription “CAUTION DO NOT OPERATE WHEN EMPTY,” which is a warning against the use of such electrical device when empty and an indication that it is a water-heating appliance. Its being an instrument for preparing coffee is demonstrated by its retrieval from the stockroom, particularly beside broken drinking glasses, Nescafe bottle, metal dish rack and utensils. Appellants assert that it had an airpot — not a coffee percolator — near the Administration Office on the third floor. For unexplained reasons, however, they did not present the airpot to disprove the existence of the coffee percolator. The fire did not raze the entire third floor and the objects therein. Even the stack of highly combustible paper on the third floor was not totally gutted by the fire. Consequently, it is not farfetched that the burnt airpot, if any, could have been recovered by appellants from the area where it was supposedly being kept. xxxx The defense that the fire was a fortuitous event is untenable. It is undisputed that the fire originated from appellants’

68

Id., at pp. 333-334.

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stockroom located on the third floor leased premises. Said stockroom was under the control of appellants which, on that fateful day (a Saturday), conducted a seminar in the training room which was adjoining the stockroom. Absent an explanation from appellants on the cause of the fire, the doctrine of res ipsa loquitur applies.’69

Petitioners impugn both findings. They claim that the BFP field investigation report (Exh. “P-2”) and the BFP certification (Exh. “P-3”) are hearsay evidence because these were presented during the testimony of Fireman Gerardo Sitchon (Fireman Sitchon) of the Bureau of Fire Protection (BFP), Angeles City, who admitted to having no participation in the investigation of the fire incident or personal knowledge about said incident,70 making him incompetent to testify thereon. Petitioners argue that, with Exh. “P2” and Exh. “P-3” and the testimony of Fireman Sitchon that are flawed, there is virtually no evidence left that the cause of the fire was an overheated coffee percolator. Petitioners insist that they own no such percolator.71 We find no cogent reason to disturb the finding of the RTC and CA. The finding that the negligence of petitioners was the proximate cause of the fire that destroyed portions of the leased units is a purely factual matter which we cannot pass upon,72 lest we overstep the restriction that review by certiorari under Rule 45 be limited to errors of law only.73 Moreover, the established rule is that the factual findings of the CA affirming those of the RTC are conclusive and binding on us.74 We are not wont to review them, save under exceptional circumstances as: (1) when the inference made is manifestly mistaken, absurd or impossible; (2) when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations, surmises or conjectures; (4) when the judgment of the CA is based on 69

CA Decision, Rollo, pp. 46-47. Petition, Rollo, p. 26. 71 Id., at pp. 18-19. 72 Philippine National Railways v. Brunty, G.R. No. 169891, November 2, 2006, 506 SCRA 685, 697. 73 Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo, Inc., G.R. No. 159831, October 14, 2005, 473 SCRA 151, 161. 74 Quezon City Government v. Dacara, G.R. No. 150304, June 15, 2005, 460 SCRA 243, 253. 70

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misapprehension of facts; (5) when the CA, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee; (6) when the findings of fact are conclusions without citation of specific evidence on which they are based; (7) when the CA manifestly overlooked certain relevant facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (8) when the findings of fact of the CA are premised on the absence of evidence and are contradicted by the evidence on record.75 The exceptions do not obtain in the present case. In fact, the findings of the RTC and CA are fully supported by the evidence. Contrary to petitioners’ claim, Fireman Sitchon is competent to identify and testify on Exh. “P-2” and Exh. “P-3” because, although he did not sign the said documents, he personally prepared the same.76 What Fireman Sitchon did not prepare were the documents which his investigation witnesses presented.77 However, Fireman Sitchon emphasized that he interviewed said investigation witnesses namely, Ronald Estanislao, the security guard on duty at the time of fire; and Dr. Zenaida Arcilla, manager of CAPP, before he prepared Exh. “P-2” and Exh. “P-3.”78 Hence, while Fireman Sitchon may have had no personal knowledge of the fire incident, Exh. “P-2” and Exh. “P-3,” which he prepared based on the statements of his investigation witnesses, especially that of Ronald Estanislao whose official duty it was to report on the incident, are exceptions to the hearsay rule because these are entries in official records.79 Consequently, his testimony on said documents are competent evidence of the contents thereof. 80 Furthermore, the petitioners are estopped from contesting the veracity of Exh. “P-3” because, as the CA correctly pointed out, “the aforesaid certification was used by appellants [petitioners] in claiming insurance for their office equipment which were destroyed by the fire.”81 75

Estacion v. Bernardo, G.R. No. 144724, February 27, 2006, 483 SCRA 222, 231-232. 76 TSN, March 19, 1996, p. 9, Rollo, p. 157. 77 TSN, March 19, 1996, pp. 10-11, Rollo, pp. 158-159. 78 Id., at pp. 160-161. 79 DBP Pool of Accredited Insurance Companies v. Radio Mindanao Network, Inc., G.R. No. 147039, January 27, 2006, 480 SCRA 314, 326. 80 Country Bankers Insurance Corporation v. Lianga Bay and Community Multi-Purpose Cooperative, Inc., 425 Phil. 511, 521; 374 SCRA 653 (2002). 81 CA Decision, Rollo, pp. 46-47.

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Even without the testimony of Fireman Sitchon and the documents he prepared, the finding of the RTC and CA on the negligence of petitioners cannot be overturned by petitioners’ bare denial. The CA correctly applied the doctrine of res ipsa loquitur under which expert testimony may be dispensed with82 to sustain an allegation of negligence if the following requisites obtain: a) the accident is of a kind which does not ordinarily occur unless someone is negligent; b) the cause of the injury was under the exclusive control of the person in charge; and c) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured.83 The fire that damaged Belfranlt Building was not a spontaneous natural occurrence but the outcome of a human act or omission. It originated in the store room which petitioners had possession and control of. Respondent had no hand in the incident. Hence, the convergence of these facts and circumstances speaks for itself: petitioners alone having knowledge of the cause of the fire or the best opportunity to ascertain it, and respondent having no means to find out for itself, it is sufficient for the latter to merely allege that the cause of the fire was the negligence of the former and to rely on the occurrence of the fire as proof of such negligence.84 It was all up to petitioners to dispel such inference of negligence, but their bare denial only left the matter unanswered. The CA therefore correctly affirmed the RTC in holding petitioners liable to respondent for actual damages consisting of unpaid rentals for the units they leased. The CA deleted the award of actual damages of P2.2 million which the RTC had granted respondent to cover costs of building repairs. In lieu of actual damages, temperate damages in the amount of P500,000.00 were awarded by the CA. We find this in order.85 Temperate or moderate damages may be availed when some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.86 The amount thereof is usually left to the discretion of the courts but the same should 82

Reyes v. Sisters of Mercy Hospital, 396 Phil. 87, 96; 341 SCRA 760, 771 (2000). DM Consunji v. Court of Appeals, G.R. No. 137873, April 20, 2001, 357 SCRA 249, 259. 84 Perla Compania de Seguros v. Sarangaya III, G.R. No. 147746, October 25, 2005, 474 SCRA 191, 199. 85 Victory Liner v. Gammad, G.R. No. 159636, November 25, 2004, 444 SCRA 355, 370. 86 Republic v. Tuvera, G.R. No. 148246, February 16, 2007, 516 SCRA 113, 152. 83

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be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory.87 Without a doubt, respondent suffered some form of pecuniary loss for the impairment of the structural integrity of its building as a result of the fire. However, as correctly pointed out by the CA, because of respondent’s inability to present proof of the exact amount of such pecuniary loss, it may only be entitled to temperate damages in the amount of P500,000.00,88 which we find reasonable and just. WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED. The case People v. Domingo (538 SCRA 733) In this case, the Supreme Court held inter alia that: “On the civil aspect, the court rightly awarded P50,000.00 as civil indemnity and another P50,000 moral damages, but failed to award exemplary damages.” Moreover, “as we held in People v. Malones, 425 SCRA 315 (2005) this is not the first time that a child has been snatched from the cradle of innocence by some beast to sate its deviant sexual appetite. To curb this disturbing trend, appellant should likewise be made to pay exemplary damages which is pegged at P25,000.00. The decision follows: For review is the Decision89 of the Court of Appeals (CA) in CA-G.R. CR-H.C. No. 02098 dated July 6, 2006 which affirmed the Decision90 of the Regional Trial Court of Imus, Cavite, Branch 21 in Criminal Cases Nos. 7427-99 and 7428-99. The trial court convicted Geronimo Domingo of rape in Criminal Case No. 7428-99 but acquitted him in Criminal Case No. 7427-99. Sometime in 1997, AAA, then ten years of age being born on July 17, 1987, was inside her residence located at Block 17, Lot 29, Dasmariñas, Cavite. At 2:00 in the afternoon, while sleeping on the sofa in their living room, AAA was awakened by the appellant, the son of AAA’s maid. He told her to transfer to her bed which she did. While inside the room, she was asked to remove her shorts which she again did; then appellant subsequently inserted his

87

Hernandez v. Dolor, G.R. No. 160286, July 30, 2004, 435 SCRA 668, 677-678. CA Decision, Rollo, pp. 47-48. 89 Penned by Associate Justice Vicente S.E. Veloso, with Associate Justices Conrado M. Vasquez, Jr. and Mariano C. Del Castillo, concurring, Rollo, pp. 3-17. 90 Penned by Executive Judge Norberto J. Quisumbing, Jr., CA Rollo, pp. 25-31. 88

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penis into her private organ until the satisfaction of his bestial act. He, thereafter, warned her not to tell anybody about the incident, otherwise, something bad would happen to her. The rape incident was repeated sometime in February 1998.91 BBB, the mother of AAA, noticed that the latter was always crying and not happy. She thus confronted AAA but she refused to answer. Later, BBB found out that there was a stain in AAA’s panty.92 On June 20, 1998, BBB thus brought AAA to the medicolegal office for examination. The examination revealed that AAA’s vagina admitted a finger with ease; and there were fresh lacerations at 12:00 and 6:00 positions.93 AAA subsequently admitted to BBB that she was raped twice by the appellant.94 Appellant was separately charged with two counts of rape in the following Information: Criminal Case No. 7427-99 “That on or about and sometime in the year 1997, in the Municipality of Dasmariñas, Province of Cavite, Philippines, and within the jurisdiction of this Honorable Court, the abovenamed accused, with intent to have carnal knowledge of eleven (11) years old AAA and with threat and intimidation, did, there and then, willfully, unlawfully and feloniously have sexual intercourse with said AAA, an 11 year old girl, without her consent and against her will, to her damage and prejudice. CONTRARY TO LAW.”95 Criminal Case No. 7428-99 “That on or about the month of February 1998, in the Municipality of Dasmariñas, Province of Cavite, Philippines and within the jurisdiction of this Honorable Court, the abovenamed accused, with intent to have carnal knowledged (sic) of eleven (11) year old AAA, and with threat and intimidation, did, there and then, willfully, unlawfully and feloniously have sexual intercourse with said eleven (11) year old AAA, against the latter’s will and consent, to her damage and prejudice. CONTRARY TO LAW.”96

91

Rollo, p. 5. Id. 93 CA Rollo, p. 27. 94 Rollo, pp. 5-6. 95 CA Rollo, p. 11. 96 Id., at p. 12. 92

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For his part, appellant denied the charges. He instead claimed that AAA fell in love with him. As evidence of his relationship with her, he claimed to have received love letters from her.97 Appellant’s mother testified that it was impossible for appellant to have raped AAA because she was with her son twenty-four hours a day.98 On November 11, 2003, the RTC rendered a Decision convicting the appellant of rape in Criminal Case No. 7428-99 while acquitting him in Criminal Case No. 7427-99. The pertinent portion of the decision reads: “WHEREFORE, finding the accused guilty beyond reasonable doubt of the felony of rape as charged in the information in criminal case no. 7428-99, said accused is hereby sentenced to suffer the penalty of reclusion perpetua and to pay the private complainant the amount of P50,000.00 as indemnity and another amount of P50,000.00 as moral damages and the costs of this suit. The accused, however, is hereby acquitted of the felony of rape as charged in the information in criminal case no. 7427-99. SO ORDERED.”99

The trial court acquitted appellant of the first count of rape (in Criminal Case No. 7427-99) because of the defect in the information as to the time of the commission of the offense—sometime in 1997. As to the second count of rape which was committed in February 1998, the court gave credence to the evidence of the prosecution and did not consider the sweetheart theory offered by the appellant. Assuming that there was consent on the part of AAA, still, the act committed by the appellant constituted statutory rape, considering the age of the victim.100 Appellant was, thus, sentenced to suffer the penalty of reclusion perpetua. The court further awarded P50,000.00 as civil indemnity and P50,000.00 as moral damages. The case was initially elevated to this Court but the same was transferred to the CA pursuant to the Court’s directive in People v. Mateo.101

97

Rollo, pp. 6-7. Id., at p. 7. 99 CA Rollo, p. 31. 100 Id., at p. 30. 101 G.R. Nos. 147678-87, July 7, 2004, 433 SCRA 640. 98

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On July 6, 2006, the CA affirmed the trial court’s decision. The fallo reads: “WHEREFORE, the instant appeal is DISMISSED. The assailed Decision dated November 11, 2003 of the Regional Trial Court of Imus, Cavite, Branch 21, in Criminal Case No. 7428-99 is AFFIRMED. SO ORDERED.”102

On appeal before the Court, instead of filing their supplemental briefs, the parties opted to adopt their respective briefs filed before the CA. We find no merit in the appeal. The only issue raised by the appellant is the alleged defect in the Information charging him with the second count of rape in Criminal Case No. 7428-99, for failure to state therein the precise date and time when the offense was committed. An information is valid as long as it distinctly states the elements of the offense and the acts or omissions constitutive thereof.103 The precise time or date of the commission of an offense need not be alleged in the complaint or information, unless it is an essential element of the crime charged. In rape, it is not.104 The gravamen of rape is carnal knowledge of a woman through force and intimidation. In fact, the precise time when the rape takes place has no substantial bearing on its commission. As such, the date or time need not be stated with absolute accuracy. It is sufficient that the complaint or information states that the crime has been committed at any time as near as possible to the date of its actual commission.105 The Information clearly alleged and the prosecution sufficiently established the commission by the appellant of statutory rape. We reiterate the findings of the CA in this wise: “We are convinced that the prosecution was able to establish the fact that the accused-appellant had carnal knowledge of AAA in February 1998 when she was only 10 years old. AAA’s birth certificate admittedly shows that she was 102

Rollo, p. 16. People v. Espejon, 427 Phil. 672, 680; 377 SCRA 412, 420 (2002). 104 People v. Mangubat, G.R. No. 172068, August 7, 2007, 529 SCRA 377; People v. Latag, 463 Phil. 492, 502; 418 SCRA 122, 130 (2003); People v. Espejon, supra. 105 People v. Espejon, supra note 15, at p. 681; p. 421. 103

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born on July 17, 1987. At the time she had carnal knowledge of accused-appellant in February 1998, she was only 10 years and five months old. The gravamen of statutory rape is carnal knowledge of a woman below twelve years of age. AAA, in this regard, categorically testified that she in fact was raped, and that she, as shown by her birth certificate was under twelve years old at the time. More importantly, she positively identified the accused-appellant as her rapist.”106

In view of the foregoing, the appellant was correctly sentenced to suffer the penalty of reclusion perpetua for statutory rape. Appellant shall not be eligible for parole pursuant to the Indeterminate Sentence Law.107 On the civil aspect, the court rightly awarded P50,000.00 as civil indemnity and another P50,000.00 for moral damages, but failed to award exemplary damages. As we held in People v. Malones,108 this is not the first time that a child has been snatched from the cradle of innocence by some beast to sate its deviant sexual appetite. To curb this disturbing trend, appellant should, likewise, be made to pay exemplary damages which is pegged at P25,000.00. WHEREFORE, premises considered, the appeal is DENIED. The Decision of the Court of Appeals in CA-G.R. CR-H.C. No. 02098 is AFFIRMED with MODIFICATION. Appellant Geronimo Domingo is sentenced to suffer the penalty of reclusion perpetua with no eligibility for parole. In addition to the award of civil indemnity and moral damages, AAA is hereby awarded P25,000.00 for exemplary damages. SO ORDERED.

106

Rollo, p. 11. The Court has consistently held that the Indeterminate Sentence Law does not apply to persons sentenced to reclusion perpetua (See: People v. Enriquez, Jr., G.R. No. 158797, July 29, 2005, 465 SCRA 407, 418; People v. Tan, 411 Phil. 813, 841-842; 359 SCRA 283, 306-307 (2001); and People v. Lampaza, 377 Phil. 119, 137; 319 SCRA 112, 130 (1999). 108 469 Phil. 301, 333; 425 SCRA 318, 342 (2004). 107

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CHAPTER 2 EXTRA-CONTRACTUAL OBLIGATIONS “A benefit obtained from another not intended as a gift, and not legally justifiable, for which the beneficiary must make restitution or recompense.” – Henry Black Extra-contractual obligations defined and explained Extra-contractual obligations are obligations incurred outside of a contract. They are obligations without a contract but are considered as legally binding between the parties to a non-unilateral, contractual transaction because: (1) the law makes it binding; or (2) it has been the usual practice in trade or business under the doctrine of unjust enrichment. Quasi defined and explained Quasi is a word or prefix placed in front of a legal term to mean “resembling,” but different from it in some legally insignificant respect. It comes from the Latin “as if.”1 CHAPTER I — QUASI-CONTRACTS Quasi-contract is a licit and purely voluntary act which creates an obligation on the part of the actor in favor of a third person concerned.2 It is also called an implied in law contract which is not actually a contract, but instead a remedy that allows the plaintiff to recover a benefit conferred on the defendant.3 “Adventurous courts have turned into a contract implied in law, a quasi-contract — not really a contract, a legal fiction necessary 1

Clapp, Dictionary of the Law, p. 355. Article 1587, Spanish Code. 3 Black’s Law Dictionary, 7th Edition, p. 322. 2

29

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to promote the ends of justice and, in particular to prevent ‘unjust enrichment.’”4 Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. (n) Art. 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article. (n) Unjust enrichment defined and explained Unjust enrichment is a principle which provides that every person who, through an act or performance by another, or any other means comes into possession of something at the expense of the latter without just or legal ground shall return the same to him.5 It may also refer to a benefit obtained from another, not intended as a gift and not legally justifiable for which the beneficiary must make restitution or recompense.6 Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances: (1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern. In the second case, the rules on agency in Title X of this Book shall be applicable. (1888a)

4

Gilmore, The Death of Contract, pp. 73-74. See Moreno, Philippine Law Dictionary, p 640, citing Marsman & Co. v. First Coconut Central Co., 42151-R, September 16, 1974. 6 Black’s Law Dictionary, 7th Edition, p. 1536. 5

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Origin of the word “tort” and its essential elements explained The word “tort” as now known in the English language is derived from the Latin “tortus” which means “twisted.”7 The essential elements of a tort are the existence of a legal duty owed by a defendant to a plaintiff, breach of that duty, and a causal relation between the defendant’s conduct and the resulting damage to plaintiff.8 Constitutional tort defined and explained A constitutional tort refers to an unconstitutional conduct by a public official causing injury to a private individual. It has been held that under certain constitutional provisions – notably the ban on unreasonable searches and seizures – a person harmed by official conduct in violation of his constitutional rights may sue the official for damages.9 Nature of obligations arising from tort explained Obligations arising from tort are, by their nature, always solidary.10 Thus, the fact that the liability sought against the corporation is for specific performance and tort, while that sought against the individual respondents is based solely on tort does not negate the solidary nature of their liability for alleged tortious acts.11 Art. 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management. The courts may, however, increase or moderate the indemnity according to the circumstances of each case. (1889a)

7

Prosser & Keeton, Section 1 (5th ed., 1984). Ibid. 9 See Clapp, Dictionary of the Law, p. 431. 10 Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, 443 SCRA 532. 11 Ibid. 8

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Discretion granted the courts to increase or moderate indemnity to the owner explained Under the 2nd paragraph, Article 2145, Civil Code, discretion is granted to the courts to: (1) increase; or (2) moderate indemnity to the owner for damages on the property or business of the owner taken over by the gestor or officious manager. Art. 2146. If the officious manager delegates to another person all or some of his duties, he shall be liable for the acts of the delegate, without prejudice to the direct obligation of the latter toward the owner of the business. The responsibility of two or more officious managers shall be solidary, unless the management was assumed to save the thing or business from imminent danger. (1890a) Responsibility for delegation of functions by officious manager to another explained The responsibility for delegation of functions by the officious manager to another person shall be shouldered by him, without prejudice to the direct obligation of the delegate to the owner of the business. At any rate, “the responsibility of two or more officious managers shall be solidary.” The only exception to this general rule is “if the management was assumed to save the thing or business from danger.”12 Art. 2147. The officious manager shall be liable for any fortuitous event: (1) If he undertakes risky operations which the owner was not accustomed to embark upon; (2) owner;

If he has preferred his own interest to that of the

(3) If he fails to return the property or business after demand by the owner; (4)

12

If he assumed the management in bad faith. (1891a)

Art. 2146, Civil Code.

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Liability of officious manager for fortuitous events enumerated The liability of the officious manager for any fortuitous event are enumerated in Article 2147, Civil Code.13 In a legal sense, and, consequently, in relation to contracts, a caso fortuito is an event that cannot be forseen, or which though foreseen, were inevitable.14 As a general rule, the officious manager shall be liable for fortuitous event.15 The only exception to that general rule is “when the management was assumed to save the property or business from imminent danger.”16 Art. 2148. Except when the management was assumed to save property or business from imminent danger, the officious manager shall be liable for fortuitous events: (1)

If he is manifestly unfit to carry on the management;

(2) If by his intervention he prevented a more competent person from taking up the management. (n) Imminent danger defined and explained Imminent danger is an immediate real threat to one’s safety that justifies the use of force in self-defense.17 It is the danger resulting from an immediate threatened injury sufficient to cause a reasonable and prudent person to defend himself or herself.18 Absent an immediate threatened injury to the business, any takeover by the officious manager renders him liable even for any fortuitous event.19 Art. 2149. The ratification of the management by the owner of the business produces the effects of an express agency, even if the business may not have been successful. (1892a) Ratification defined and explained Ratification is the adoption of, and assent to be bound by, the act of another.20 In other words, it is the recognition and adoption 13

Art. 2147, Ibid. Republic v. Luzon Stevedoring, 21 SCRA 279. 15 Art. 2148, Civil Code. 16 Ibid. 17 Black’s Law Dictionary, 7th Edition, p. 308. 18 Ibid. 19 See 2nd Sentence, Art. 2148, Civil Code. 20 Hongkong & Shanghai Banking Corporation v. Aldecoa & Co., 30 Phil. 283. 14

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by the principal, as his own, the act of his agent, done beyond the latter’s authority or without any authority at all.21 Effect of ratification by the owner explained Article 2149, Civil Code, provides for the effects of ratification by the owner of the management of the business by the officious manager. This ratification by the owner has the effect of an express agency, whether or not the business has been successful. Art. 2150. Although the officious management may not have been expressly ratified, the owner of the property or business who enjoys the advantages of the same shall be liable for obligations incurred in his interest, and shall reimburse the officious manager for the necessary and useful expenses and for the damages which the latter may have suffered in the performance of his duties. The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an imminent and manifest loss, although no benefit may have been derived. (1893) Obligations of the owner who enjoys the advantages of the management explained The owner who has enjoyed the advantages of the management has the following obligations: (1) Liability for the obligations incurred in his interest; (2) Reimburse the officious manager for necessary and useful expense; and (3) Reimburse the officious manager for the damages which the latter may have suffered in the performance of his duties; and (4) Reimburse the officious manager for the prevention of an imminent or manifest loss although no benefit have been actually derived therefrom. Art. 2151. Even though the owner did not derive any benefit and there has been no imminent and manifest danger to the property or business, the owner is liable as under the first paragraph of the preceding article, provided: (1)

The officious manager has acted in good faith, and

(2) The property or business is intact, ready to be returned to the owner. (n) 21

Catalina v. Espitero, 61 O.G. 90.

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35

Liability of the owner who did not benefit, without imminent danger to his property, the same as if he benefited therefrom if the officious manager has acted under the following circumstances (1)

The officious manager has acted in good faith; and

(2) The property or business if intact is ready to be returned to the owner. Art. 2152. The officious manager is personally liable for contracts which he has entered into with third persons, even though he acted in the name of the owner, and there shall be no right of action between the owner and third persons. These provisions shall not apply: (1) If the owner has expressly or tacitly ratified the management, or (2) When the contract refers to things pertaining to the owner of the business. (n) Instances when the officious manager is personally liable explained The officious manager is personally liable for contracts which he entered into with third persons, even if he acted in the name of the owner. The exceptions are those provided in Article 2151(1) and 2151(2). Art. 2153. The management is extinguished: (1) When the owner repudiates it or puts an end thereto; (2) When the officious manager withdraws from the management, subject to the provisions of Article 2144; (3) By the death, civil interdiction, insanity or insolvency of the owner or the officious manager. (n) Extinguishment defined and explained Extinguishment is the destruction of a right or contract.22 An extinguishment may be a matter of right or a matter of law.23 Article 22 23

Bouvier’s Law Dictionary, p. 1167. Ibid.

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2153, Civil Code, enumerates how the management of the officious manager is extinguished. Section 2. — Solutio Indebiti Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. (1895) Art. 2155. Payment by reason of a mistake in the construction or application of a doubtful or difficult question of law may come within the scope of the preceding article. (n) Art. 2156. If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. (n) Solutio indebiti defined and explained Solutio indebiti is a Latin phrase which literally means “payment of what is not owing.”24 Thus, if the payment was made by a mistake of fact, the recipient has a duty to give the money back.25 Solutio indebiti has been accurately defined in the Philippines as a quasi-contract whereby, if something is received, and it was unduly delivered by mistake, or if payment is made by reason of a mistake in the construction or application of a doubtful or difficult question of law, an obligation to return the thing or the payment arises. It is consistent with the time-honored principle that “no one shall enrich himself at the expense of another.” Art. 2157. The responsibility of two or more payees, when there has been payment of what is not due, is solidary. (n) Art. 2158. When the property delivered or money paid belongs to a third person, the payee shall comply with the provisions of Article 1984. (n) Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money is involved, or shall be liable for fruits received or which should have been received if the thing produces fruits.

24 25

Black’s Law Dictionary, 7th Edition, p. 1399. See Ibid.

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He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for damages to the person who delivered the thing, until it is recovered. (1896a) Effect of payment of what is not due by two or more persons explained When two or more persons pay another with what is not due, the responsibility of these persons, according to Article 2157, Civil Code, is solidary. However, when the property delivered or money paid does not belong to them but to a third person, the person paid, the payee shall comply with the provisions of Article 1884, Civil Code which provides that: “The agent is bound by his acceptance to carry out the agency, and is liable for the damage which, through his performance, the principal may suffer. “He must also finish the business already begun on the death of his principal, should delay entail any danger.”

But whoever in bad faith accepts an undue payment, under Article 2150, Civil Code, “shall pay legal interest if a sum of money is involved or shall be liable for the fruits received if the thing should produce fruits.” If no fruits are produced, there will be no liability. The liability of the recipient shall extend to loss or improvement of the thing, aside from damages. Art. 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum. (1897) Art. 2161. As regards the reimbursement for improvements and expenses incurred by him who unduly received the thing, the provisions of Title V of Book II shall govern. (1898) Good faith defined and explained Good faith means honesty of intention;26 or honest lawful intent. It connotes freedom from knowledge and circumstances which ought 26

Leong Yee v. Strong Machinery Co., 37 Phil. 651.

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to put a person in inquiry. Moreover, in good faith, there exists an honest intention to abstain from taking unconscientious advantage of another.27 It involves a total absence of any intention to seek an unfair advantage or defraud another party. It includes an honest and sincere intention to fulfill one’s obligations.28 Responsibilities of an accestor in good faith explained An accepter in good faith, under Article 2160, Civil Code, shall be liable for loss or impairment of the thing accepted or its accessions and accessories, if he has been benefited by them. However, if he has alienated it, he is obliged (1) to return the price; or (2) assign the action for collection. Title V of Book II shall govern the reimbursement for improvements explained Reimbursement for improvements and expenses for the thing unduly received shall be governed by Title V of Book II of the Civil Code. Art. 2162. He shall be exempt from the obligation to restore who, believing in good faith that the payment was being made of a legitimate and subsisting claim, destroyed the document, or allowed the action to prescribe, or gave up the pledges, or cancelled the guaranties for his right. He who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective. (1899) Instances when the recipient exempted from the obligation to restore what was received explained There is an instance when the recipient of what was unduly received is exempted from the obligation of restoring the thing received. However, in this instance, several requisites must concur, namely: (1) the recipient must believe in good faith that the payment was bring made of a legitimate and subsisting claim; (2) the recipient

27 28

Fule v. Legaro, 117 Phil. 374. Barron’s Law Dictionary, p. 224.

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must have destroyed the document, or allowed the claim to prescribe or gave up the pledges or guarantee for his right.29 To whom may the creditor or payor by mistake proceed in case the recipient is exempted from his obligation to restore explained In the event that the recipient of the thing paid by mistake is exempted from the obligation to restore under Article 2162 of the Civil Code, the creditor or payor by mistake may still proceed against the true debtor or the guarantors with regard to whom the action is still effective.30 Art. 2163. It is presumed that there was a mistake in the payment if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause. (1901) When there is a presumption “that there was a mistake in the payment” explained There is a presumption “that there was a mistake in the payment”; (1) if something which had never been due; or (2) if something which had already been paid was delivered.31 Things that may be proven by the person from whom the return is claimed explained The things that may be proven by the person from whom the return of something delivered by mistake may prove the following: (1) that the delivery was made out of liberality; or (2) that the delivery was made for any other just cause.32 An example of a just cause is a previous debt of the person who delivered the thing. SECTION 3. — Other Quasi-Contracts “Other quasi-contracts, in general, refers to the unilateral, non-contractual performance of the legal obliga-

29

See 1st sentence Art. 2162, Civil Code. See 2nd sentence, Ibid. 31 See 1st sentence, Art. 2163, Ibid. 32 See 2nd sentence, Ibid. 30

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tion of another, which gives rise to a right to claim reimbursement of expenses incurred by the former from the latter.” – Anonymous Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid. (1894a) Effect of support given by a stranger upon the person obliged to give support explained When support is given by a stranger, without the knowledge of the person obliged to give it, the stranger “shall have a right to claim the support given” from the person obliged by law to give support except: (1) that the support was given out of piety; and (2) without intention of the stranger of being repaid.33 Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement. (1894a) Effect of bearing funeral expenses by a third person, on relatives obliged to give support to the deceased explained Bearing funeral expenses for a person, without the knowledge of the person(s) obliged to give support to the deceased, gives rise to the obligation of the person(s) obliged by law to give support to the deceased to reimburse the third person the expenses incurred for the said funeral expenses if he decides to claim it.34 Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from 33 34

See Art. 2164, Civil Code. See Art. 2165, Ibid.

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the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him.

Title V, Book II, Civil Code shall govern reimbursement for improvements and expenses for him who unduly received the thing explained Article 2161, Civil Code, provides that Title V, Book II, Civil Code shall govern reimbursement for improvements and expenses by him who unduly received the thing improved. Title V, Book II, Civil Code deals about Trusts. They are Articles 1440 to 1457, Civil Code and, therefore, quoted in toto hereunder, to wit: Title V. — TRUSTS (n) CHAPTER 1 GENERAL PROVISIONS Art. 1440. A person who establishes a trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary. Art. 1441. Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties. Implied trusts come into being by operation of law. Art. 1442. The principles of the general law of trusts, insofar as they are not in conflict with this Code, the Code of Commerce, the Rules of Court and special laws are hereby adopted. CHAPTER 2 EXPRESS TRUSTS Art. 1443. No express trusts concerning an immovable or any interest therein may be proved by parol evidence. Art. 1444. No particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended.

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Art. 1445. No trust shall fail because the trustee appointed declines the designation, unless the contrary should appear in the instrument constituting the trust. Art. 1446. Acceptance by the beneficiary is necessary. Nevertheless, if the trust imposes no onerous condition upon the beneficiary, his acceptance shall be presumed, if there is no proof to the contrary. CHAPTER 3 IMPLIED TRUSTS Art. 1447. The enumeration of the following cases of implied trust does not exclude others established by the general law of trust, but the limitation laid down in Article 1442 shall be applicable. Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. Art. 1449. There is also an implied trust when a donation is made to a person but it appears that although the legal estate is transmitted to the donee, he nevertheless is either to have no beneficial interest or only a part thereof. Art. 1450. If the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to the lender or payor to secure the payment of the debt, a trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid. The latter may redeem the property and compel a conveyance thereof to him. Art. 1451. When land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication of law for the benefit of the true owner.

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Art. 1452. If two or more persons agree to purchase property and by common consent the legal title is taken in the name of one of them for the benefit of all, a trust is created by force of law in favor of the others in proportion to the interest of each. Art. 1453. When property is conveyed to a person in reliance upon his declared intention to hold it for, or transfer it to another or the grantor, there is an implied trust in favor of the person whose benefit is contemplated. Art. 1454. If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him. Art. 1455. When any trustee, guardian or other person holding a fiduciary relationship uses trust funds for the purchase of property and causes the conveyance to be made to him or to a third person, a trust is established by operation of law in favor of the person to whom the funds belong. Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. Art. 1457. An implied trust may be proved by oral evidence.

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CHAPTER 3 OTHER QUASI-CONTRACTS “The other kinds of QUASI-CONTRACTS referred, Section 3, Chapter 1, Title XVIII, of the Civil Code on quasi-contracts are quasi-contracts other than named quasi-contracts.” – The Author Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid. (1894a) The provisions of law on other quasi-contracts enumerated The provisions of law on other quasi-contracts are stated from Article 2164 to Article 2175, Civil Code. Obligation of person obliged to give support to the one who gives it without the former’s knowledge explained The person obliged to give support is bound to reimburse stranger who gives support to one entitled to receive it, even without his knowledge. Because in this case, the stranger voluntarily performed the obligation of the person obliged to give support anyway. If the person obliged to give support will not be required to reimburse the stranger, the former shall be unjustly enriched at the expense of the latter. That is what the law seeks to avoid. Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement. (1894a) 44

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Third persons who advances funeral expense of a dead person without the knowledge of relatives, said relatives must reimburse the expenses of the third person explained In this case, the third person who spent for the funeral expenses must be reimbursed by the relatives. Otherwise, the relatives will be unjustly enriched by the third person. Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him. Consequences of unjust refusal to support a minor or an orphan to the person obliged to support them explained When a person obliged to support a minor orphan, or indigent unjustly refuses to give the minor, orphan or other indigent person such support, any person who furnishes such support to the needy individual has the right of reimbursement from the person obliged by law to give support. Art. 2167. When through an accident or other cause a person is injured or becomes seriously ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the physician or other person aiding him, unless the service has been rendered out of pure generosity. Effect of aiding an accidentally injured or seriously ill person unable to contract explained The accidentally injured or seriously ill person aided is bound to pay physician’s and other persons aiding him, except those services given out of pure generosity. No reimbursement is due to any person who helped out of liberality. Art. 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation.

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Effect of saving property from destruction without the knowledge of the property owner explained The property owner is bound to pay the person, who saved the property from destruction, just compensation. Art. 2169. When the government, upon the failure of any person to comply with health or safety regulations concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the expenses. Effect of failure of any person to comply with government health or safety regulations concerning property, and the government has to undertake the necessary work, over the person’s objection, explained Under Article 2169, Civil Code, the delinquent person has to pay the expenses for the necessary work undertaken by the government. Art. 2170. When by accident or other fortuitous event, movables separately pertaining to two or more persons are commingled or confused, the rules on co-ownership shall be applicable. Effect of confusion or commingling of movables separately belonging to two or more persons accidentally or during a fortuitous event explained Under Article 2170, Civil Code, the rules on co-ownership shall apply to the confused or commingled movables. The same shall belong to both or all persons for whom the confused or commingled movables as co-owners. Art. 2171. The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and 720. Finders of person property which is not treasure governed by Articles 719 and 720, Civil Code explained Under Article 2171, Civil Code, the finders of personal property which is not treasure shall be pertinently governed by Articles 719 and 720, Civil Code. With respect to hidden treasure, Article 439, Civil Code, shall govern. Thus, Articles 719, 720 and 439 are reproduced hereunder, to wit:

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Art. 719. Whoever finds a movable, which is not treasure, must return it to its previous possessor. If the latter is unknown, the finder shall immediately deposit it with the mayor of the city or municipality where the finding has taken place. The finding shall be publicly announced by the mayor for two consecutive weeks in the way he deems best. If the movable cannot be kept without deterioration, or without expenses which considerably diminish its value, it shall be sold at public auction eight days after the publication. Six months from the publication having elapsed without the owner having appeared, the thing found, or its value, shall be awarded to the finder. The finder and the owner shall be obliged, as the case may be, to reimburse the expenses. (615a) Art. 720. If the owner should appear in time, he shall be obliged to pay, as a reward to the finder, one-tenth of the sum or of the price of the thing found. (616a) Art. 439. By treasure is understood, for legal purposes, any hidden and unknown deposit of money, jewelry, or other precious objects, the lawful ownership of which does not appear. (352) Distinction on rules governing finders of personal property, not belonging to the class of treasure and personal property which is considered as “hidden treasurer” explained It is important to classify personal property into two, namely: (1) personal property not treasure; and (2) personal property classified as “hidden treasure.” While the finder of personal property classified as “not treasure” is governed by Articles 719 and 720, Civil Code, the finder of hidden treasure is governed by Article 439, Civil Code. Art. 2172. The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by Article 546. Possessor in good faith defined and explained A possessor in good faith is one who is not aware that there

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exists in his title or mode of acquisition any flaw which invalidates it.1 In other words, that he may not be the legal owner of the property.2 Rights of every possessor in good faith to reimbursement for necessary and useful expenses governed by Article 546, Civil Code explained Article 2172, Civil Code refers to Article 546, Civil Code the rights of every possessor in good faith to reimbursement for necessary and useful expenses incurred for the thing possessed in good faith from any subsequent possessor in bad faith. Article 546 of the Civil Code pertinently provides that: Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith may retain the thing until he has been reimbursed therefor. Useful expenses shall be refunded only to the possessor in good faith with the same right of retention, the person who has defeated him in the possession having the option of refunding the amount of the expenses or of paying the increase in value which the thing may have acquired by reason thereof. (453a) Art. 2173. When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are governed by Articles 1236 and 1237. Rights of a third person who pays the debt of another explained Under Article 2173, Civil Code, a third person who pays the debt of another (the original debtor) shall be governd by Articles 1236 and 1237, Civil Code. Art. 2174. When in a small community a nationality of the inhabitants of age decide upon a measure for protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses.

1 2

Art. 526, Civil Code. See Lopez, Inc. v. Phil. and Eastern Trading Co., Inc., 98 Phil. 348, 353-355.

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Art. 2175. Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. Effect of a community measure for protection against lawlessness, flood, storm or other calamity explained The principle under Article 2174 of the Civil Code is that everyone in the community should contribute to the measure. And anyone who objects to contribute, but is benefited thereby shall be liable to pay his share of the expenses. Effect of payment of taxes for another explained The rule is that taxes are the personal liability of a person. However, when one is constrained to pay for the taxes of another, the person who is constrained to pay the taxes of another shall be entitled “re reimbursement from the latter” under Article 2175, Civil Code. Malicious prosecution defined and explained Malicious prosecution means prosecution through the misuse or abuse of judicial processes or the institution and pursuit of legal proceedings for the purpose of harassing, annoying, or injuring an innocent person. The case Metropolitan Bank and Trust Company v. Court of Appeals (508 SCRA 215) In this case, the Supreme Court held inter alia that: “when the institution and pursuit of a legal proceeding is without probable cause, the only purpose thereof being to harass, annoy or injure an innocent person who is then compelled to defend himself in court, it amounts to malicious prosecution.” Moreover, “the party who is injured by such an abuse may, at the termination of such frivolous suit file a civil action for damages based on the provisions of the Civil Code on human relations.” The case follows in toto. By Petition for Review on Certiorari under Rule 45 of the Rules of Court, Metropolitan Bank and Trust Co. (Metrobank), its Asst. Vice President Ricardo Gella, and Manager Teofilo Fiesta (Fiesta) assail the March 13, 2002 Decision3 and August 12, 2002 Resolu3 Penned by Associate Justice Alicia L. Santos with the concurrence of Associate Justice (now Supreme Court Associate Justice) Cancio C. Garcia and Associate Justice Marina L. Buzon.

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tion4 of the Court of Appeals (CA) in CA-G.R. CV No. 393435 holding them liable for damages in favor of Antonio Laiño (Laiño). Below are the material facts. Thirty-years back, Fiesta filed with City Fiscal Raymundo Ponteras (Fiscal Ponteras) a Letter-Complaint6 accusing Laiño of swindling Metrobank. After preliminary investigation, Fiscal Ponteras issued a Resolution7 dated December 28, 1976, finding probable cause to charge Laiño for estafa, thus: “xxx the facts borne on the records of the case show that the Bank has been misrepresented [sic] by Eduardo Tambis, Jr. to open his personal account No. 123 with Metro Bank, because of his assurance that the supporting authority of Mr. Antonio Laiño will be submitted later. Being the son of the Secretary of the Manager of San Carlos Milling Co., Inc. and a known dealer of spare parts with aforesaid Central x x x, he was allowed by Metro Bank x x x to open his account and to have Checks Nos. 1910 for P24,900.00 and 12450 for P10,500.00, to be deposited in his name in trust for ACL Engine Consultant,8 with the instruction to secure the authority from ACL Consultant Engine, [sic] which Tambis, Jr. agreed and promised to submit to Metro Bank. Mr. Eduardo Tambis, Jr. as an agent or sales representative of Mr. Antonio Laiño withdrew from Metro Bank the amount of P24,551.08 and out of this withdrawal was deducted the amount of P22,900.00, in payment to Caspin Trading thru Mr. Delfin Castro from Manila for the spare parts purchased by Eduardo Tambis, Jr., in the name of ACL and thereafter sold to San Carlos Milling Co., Inc. for P25,400.00. Caspin Trading issued to Eduardo Tambis, Jr. a receipt for the payment of P22,900.00 in the name of ACL Engine Consultant x x x. From all appearances, it is clear that the P22,900.00 withdrawn by Eduardo Tambis, Jr., from the Metro Bank, was paid in good faith to the creditor of ACL Engine Consultant, thereby inuring to the benefit of the partnership. Since the total

4

CA Rollo, p. 154. Entitled “Antonio Laiño, Plaintiff-Appellant versus Metropolitan Bank & Trust Company, et al., Defendants-Appellants.” 6 Records, p. 209. 7 Id., at p. 9. 8 Sole proprietorship of Laiño, as shown by Certificate of Registration, Exhibits “M,” “M-1,” “N” and “O,” Records, pp. 214-218. 5

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withdrawal with the bank amounted to P24,551.08 and what was paid to Caspin Trading was only P22,900.00, there is a difference of P1,651.08, which Mr. Eduardo Tambis, Jr. is personally liable to ACL Engine Consultant, but which Mr. Eduardo Tambis, Jr. argued that the said amount was necessary for his operational expenses in Manila for the benefit of the partnership. On January 26, 1976, Mr. Antonio Laiño x x x protested before Metro Bank the actuations of Mr. Eduardo Tambis, Jr. in depositing the two checks x x x and the withdrawals made for the reason that the same were without his authority. Assuming arguendo as true that the deposit of Eduardo Tambis, Jr. on the said checks were without his (Laiño) authority, however, he cannot deny and ignore that on the day he protested to the bank, he had already known that the amount of P22,900.00 was withdrawn by Eduardo Tambis, Jr. and paid to Caspin Trading in the name of the partnership (ACL) x x x. xxxx On February 17, 1976, Mr. Antonio Laiño withdrew the full amount of P35,400.00 from the Metro Bank, in complete and absolute disregard of the payment of his partner Eduardo Tambis, Jr. to Caspin Trading x x x. It appearing that the present case arose from the unauthorized acts taken by Eduardo Tambis, Jr. which constitutes a felony; and, it resulting that Antonio Laiño withdrew the full amount of P35,400.00 in utter disregard of the amount of P22,900.00 validly paid to his creditor Delfin Castro on January 23, 1976 by Eduardo Tambis. Jr., thereby defrauding Metro Bank in the amount of P24,275.08 thru such a heinous strategy and scheme, it is the considered view of the investigating Fiscal that both are liable for Violation of General Order No. 26, dated March 31, 1973, for Estafa.”9

Laiño did not appeal from the foregoing Resolution. Hence, an Information10 was filed with the Regional Trial Court (RTC), Branch 57, San Carlos City, docketed as Criminal Case No. RTC1015, charging Laiño and Eduardo Tambis (Tambis) with estafa. However, upon Demurrer to Evidence filed by Laiño, the RTC (Br. 57), in an Order11 dated April 12, 1989, dismissed Criminal Case No. RTC-1015 but only as against him: 9

Records, pp. 25-31. Id., at p. 283. 11 Id., at pp. 33-35. 10

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“The evidence on record after the prosecution had presented their evidence does not show any document or proof of partnership between Tambis and Laiño. The mere allegation of partnership in an extrajudicial confession will not suffice considering that the extrajudicial confession is violative of the constitutional right of the accused and therefore has no probative value. xxxx From the evidence on record, this Court agrees with counsel of Antonio Laiño that the evidence of the prosecution against Antonio Laiño is lamentably inadequate even to establish a mere preponderance of guilt.”12 (Emphasis ours)

Thereafter, the RTC (Br. 57) rendered a Decision13 dated February 28, 1990 also dismissing Criminal Case No. RTC-1015 as against Tambis. However, it held the latter civilly liable to Metrobank for P16,900.00 only.14 Meanwhile, on April 27, 1989, Laiño filed with the RTC, Branch 45, Bacolod City a Complaint15 for Damages against Metrobank, Gella and Fiesta (Metrobank, et al.) and Fiscal Ponteras on the ground of malicious prosecution. In their Answer,16 Metrobank, et al. countered with a claim for damages.17 The RTC dismissed the Complaint in a Decision18 dated July 28, 1992, the dispositive portion of which reads: “WHEREFORE, premises considered, the instant complaint is hereby DISMISSED. On the counterclaim, defendants having proved the same, plaintiff is hereby ordered to pay the defendants the following amounts: P70,000.00 as actual damages; P10,000.00 as exemplary damages; P25,000.00 as attorney’s fees, and P500.00 per appearance; and to return to defendant bank the amount of P24,900.00 amount withdrawn by Eduardo Tambis, Jr.; and to pay the cost. SO ORDERED.”19 12

Id., at p. 34. Id., at p. 179. 14 Id., at pp. 199-200. 15 Id., at p. 1. 16 Id., at p. 48. 17 Id., at p. 52. 18 Id., at p. 330. 19 Id., at p. 341. 13

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Laiño appealed to the CA which issued the March 13, 2002 Decision20 awarding him damages, thus: “WHEREFORE, the decision of the Regional Trial Court dated July 28, 1992 in Civil Case No. 5397 is hereby SET ASIDE and another one is rendered holding defendant-appellant Metropolitan Bank & Trust Company, et al. liable for the following damages in favor of plaintiff-appellant Antonio Laiño: P200,000.00 as moral damages P100,000.00 as exemplary damages P 50,000.00 as attorney’s fees. SO ORDERED.” 21

Metrobank, et al. filed a Motion for Reconsideration22 but the CA denied the same in its August 12, 2002 Resolution.23 Petitioners Metrobank, et al. now question before this Court the foregoing CA Decision and Resolution on the sole ground that the CA erred in holding them liable for malicious prosecution. The petition has no merit. Sec. 11, Art. III of the Constitution guarantees right of access to the courts. This right is coupled with the responsibility to show that a suit is impelled by a legitimate cause of action.24 The exercise of such legal right with responsibility does no injury. However, when the institution and pursuit of a legal proceeding is without probable cause, the only purpose thereof being to harass, annoy, vex or injure an innocent person who is then compelled to defend himself in court, it amounts to malicious prosecution.25 Denuncia falsa or malicious prosecution is misuse or abuse of judicial processes. The party who is injured by such abuse may, at the termination of the frivolous suit, file a civil action for damages based on the provisions of the

20

CA Rollo, p. 116. Id., at p. 123. 22 Id., at p. 125. 23 See note 2. 24 Lucas v. Royo, 398 Phil. 400, 409; 344 SCRA 481, 488 (2000). 25 Yasoña v. De Ramos, G.R. No. 156339, October 6, 2004, 440 SCRA 154, 157158; Villanueva v. United Coconut Planters Bank, 384 Phil. 130, 140; 327 SCRA 391, 400 (2000). 21

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TORTS AND DAMAGES SIMPLIFIED

Civil Code on human relations.26 But to merit an award of damages, he must prove that: (a) the defendant was himself the prosecutor or at least instigated the prosecution; (b) the prosecution finally terminated in the acquittal of plaintiff; (c) in bringing the action, the prosecutor acted without probable cause, and (d) the prosecutor was actuated by malice, i.e., by improper and sinister motives.27 He must also prove the damages he has suffered.28 Herein petitioners instigated the commencement of the prosecution of respondent for estafa. It was their Letter-Complaint filed with Fiscal Ponteras that led to the institution of Criminal Case No. RTC-1015.29 It is also of record that when respondent filed Civil Case No. 5397 for damages on April 27, 1989, Criminal Case No. RTC-1015 had already been finally terminated with the issuance by the RTC of its April 12, 1989 Order dismissing the Information against respondent. The only issue to be resolved is whether the CA was correct in holding that the prosecution of respondent in Criminal Case No. RTC-1015 was not founded on probable cause but was carried out to harass him.30 Petitioners insist that the better view was that of the RTC (Br. 45) which held that Criminal Case No. RTC-1015 was instituted based on a finding of probable cause by Fiscal Ponteras in his December 28, 1976 Resolution,31 that such finding of probable cause was not overturned by RTC (Br. 57) even when it ordered the case dismissed upon Demurrer to Evidence; that such dismissal was only due to insufficiency of evidence which does not mean that the case was merely trumped up or fabricated; and that the existence of probable cause rules out malice.32

26

Bayani v. Panay Electric Co., Inc., 386 Phil. 980, 986; 330 SCRA 759, 764-765

(2000). 27

Lao v. Court of Appeals, 382 Phil. 583, 608; 325 SCRA 694, 715 (2000). Martires v. Cokieng, G.R. No. 150192, February 17, 2005, 451 SCRA 696, 705. 29 Villanueva v. United Coconut Planters Bank, supra, citing Lagman v. Intermediate Appellate Court, No. L-72281, October 28, 1988, 166 SCRA 734, 739. 30 Rollo, p. 14. 31 Id., at p. 17. 32 Records, pp. 335-337. 28

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55

In its March 13, 2002 Decision, the CA rejected such view, thus: “In this case, it was shown that defendant-appellee Bank had repeatedly required Eduardo Tambis, Jr. to present his authorization from plaintiff-appellant before they could release the amount. Yet, despite Tambis’ failure to present any written authorization, defendant-appellee Bank still encashed the check and handed the money to Tambis, Jr. The fact that Tambis, Jr. may have the money to pay another client does not make herein plaintiff-appellant guilty of any form of Estafa against defendant Bank. From the resolution of the City Fiscal, it was shown that his only basis for finding probable cause against herein plaintiff-appellant is the latter’s act of withdrawing the amount of the check. Without, however, being able to link said act of withdrawal to the previous act of Tambis, Jr. in encashing the check without any authorization. The fact is there is nothing in the records to show that plaintiff-appellant had lifted a finger to convince the officers of defendant-appellee to release the amount of the checks to Tambis, Jr. Clearly, the repeated request of defendant-appellee Bank for any form of authorization from Tambis, Jr. only proves that the act of releasing the money to Tambis, Jr. was not a regular transaction of the bank with their client, plaintiffappellant, thereby justifying plaintiff-appellant’s action of demanding from them a reimbursement of the amount of the checks. Besides, there was even no evidence shown to prove that plaintiff-appellant had in fact benefited from the unauthorized release of the amount of the check to Tambis, Jr. Undoubtedly, the fault was with the officers of defendant-appellee Bank and the filing of the criminal case for estafa against plaintiffappellant was in fact malicious on their part.”33

We sustain the CA. Probable cause implies mere reasonable belief of guilt. While it requires more than bare suspicion or speculation, probable cause needs only to rest on evidence of the likelihood that a crime has been committed and that the person suspected is probably guilty thereof.34 It need not be based on clear and convincing evidence,35 nor

33

CA Rollo, pp. 121-122. Villanueva v. Secretary of Justice, G.R. No. 162187, November 18, 2005, 475 SCRA 495, 511. 35 Preferred Homes Specialties, Inc. v. Court of Appeals, G.R. No. 163593, December 16, 2005, 478 SCRA 387, 410. 34

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TORTS AND DAMAGES SIMPLIFIED

evidence sufficient to procure a conviction.36 Thus, as a general rule, acquittal is not to be equated with lack of probable cause.37 Be that as it may, it does not follow that the finding of Fiscal Ponteras in his December 28, 1976 Resolution as to the existence of probable cause is conclusive. While as a matter of policy, courts refrain from interfering with the assessment by the executive department of the existence of probable cause,38 this does not preclude us from evaluating the facts and circumstances upon which the determination of probable cause may have been based, if only to decide a case of malicious prosecution. As we held in Cometa v. Court of Appeals,39 the determination of lack of probable cause as an element in malicious prosecution cannot be made to rely on the finding of the Department of Justice to file the criminal case for such practice will render obsolete the remedy of damages for malicious prosecution. In the present case, the CA disregarded the finding of Fiscal Ponteras and declared that petitioners had absolutely no cause to drag respondent to court for estafa. And rightly so. A closer examination of the December 28, 1976 Resolution of Fiscal Ponteras reveals that his own findings tend to discount the probability that respondent committed estafa. For one, the December 28, 1976 Resolution of Fiscal Ponteras states that Tambis was allowed by petitioner Metrobank to open Account No. 123 and deposit therein Check Nos. 1910 and 12450, even when these were payable to ACL, only because Tambis is the son of the secretary of the manager of San Carlos Milling Co., Inc.40 Thus, petitioners on their own allowed Tambis to conduct said bank transactions. Respondent did not in any way lead them to believe that he authorized Tambis to open a personal account nor deposit there the checks of ACL.

36

Fabia v. Court of Appeals, 437 Phil. 389, 399; 388 SCRA 574, 581 (2002). Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28, 2005, 464 SCRA 409, 429; Villanueva v. United Coconut Planters Bank, supra. 38 First Women’s Credit Corporation v. Perez, G.R. No. 169026, June 15, 2006, 490 SCRA 774. 39 Cometa v. Court of Appeals, 378 Phil. 1187; 301 SCRA 459 (1999), citing Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 587. See also Saber v. Court of Appeals, G.R. No. 132981, August 31, 2004, 437 SCRA 259. 40 Records, pp. 25-26. 37

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57

Further, Fiscal Ponteras’s Resolution, shows that petitioners did not believe that the business relationship of Tambis and respondent was anything close to a partnership. Before allowing Tambis to open Account No. 123 and deposit ACL checks, petitioners required Tambis to submit a written authorization,41 a requirement which they would not have demanded had they been certain that Tambis and respondent were partners. Thus, it is bewildering that petitioners filed the Letter-Complaint against respondent based merely on the bare claim of Tambis in his Affidavit42 dated May 3, 1976 that he was a partner of respondent. Moreover, based on the evaluation of Fiscal Ponteras of the testimony of Metrobank Cashier Ernesto Qui, it likewise appears that petitioners themselves allowed Tambis to withdraw part of the value of the two ACL checks which he had deposited earlier into his account, thus: “It appears that at the time when the deposit was made, a certain Mr. Delfin Castro of Caspin Trading, Manila, was in company with Mr. Eduardo Tambis, Jr. Mr. Eduardo Tambis, Jr. informed the bank that Mr. Delfin Castro of Caspin Trading is a spare parts dealer from Manila. He is with him (Tambis) to receive payment for P16,400.00 from Tambis, Jr. in payment for a certain spare-parts bought on credit by ACL. The Check No. 1910 for P24,900.00 and Check No. 12454 for P10,500.00, in the name of ACL were presented to Mr. Ernesto Qui for deposit with Metro Bank, San Carlos City Branch. It was at first refused for deposit for the reason that they were payable to ACL and not to Eduardo Tambis, Jr. However, on the insistence of Mr. Tambis, Jr., and with his assurance that the supporting papers from ACL will follow as the same will be submitted by him, said checks mentioned herein was accepted for deposit. The amount of P16,400.00 in a form of a bank draft was purchased by Eduardo Tambis, Jr. and paid to Caspin Trading thru Delfin Castro, Sr., for the account of ACL. xxxx Mr. Eduardo Tambis, Jr. [made] a withdrawal from Metro Bank, San Carlos City Branch x x x the total amount of P24,551.08, as the records show.”43 41

Id., at pp. 16-17. Id., at p. 276. 43 Id., at pp. 17-18. 42

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From the foregoing evaluation of Fiscal Ponteras, it is obvious that petitioners allowed Tambis to make the withdrawal without the latter showing them any document to support his claim that the amount to be withdrawn was in payment of an account of ACL with Caspin Trading. In fact, despite the assurance of Tambis, no such document was presented to petitioners. More important, petitioners allowed Tambis to withdraw the amount of P24,551.08. This is certainly more than the P16,400.00 which they claimed was the amount ACL owed to Caspin Trading. Thus, if it were true that petitioners allowed Tambis to make the withdrawal only because they believed it was in payment of an account of ACL, then they should have limited the amount withdrawn to P16,400.00, the amount allegedly due to Caspin Trading. By allowing Tambis to withdraw more than that amount, petitioners therefore tolerated Tambis to treat Account No. 123 and the funds therein as his own. Evidently, the December 28, 1976 Resolution of Fiscal Ponteras failed to link respondent to the transactions of Tambis. On the contrary, it succeeded in revealing that it was by the complacency, if not negligence, of petitioners that Tambis managed to withdraw a portion of the value of the checks of ACL. The only connection Fiscal Ponteras perceived respondent had to the transactions was that the latter purportedly insisted on being paid the value of the ACL checks even when he allegedly knew that petitioners allowed Tambis to withdraw the same to pay for an account of ACL with Caspin Trading. Such perception, however, was based purely on speculation. The Resolution does not cite any evidence to substantiate the assumption that the payment made to Caspin Trading was for an account of ACL, or that respondent or ACL benefited from the payment made to Caspin Trading. The receipts cited in the said Resolution do not indicate that the transactions covered by the payments were between ACL and Caspin Trading. Instead, said receipts all indicate that the sale was made by Caspin Trading to Tambis.44 All told, the December 28, 1976 Resolution of Fiscal Ponteras failed to make out even the slightest probable cause to indict respondent for estafa. The next question then is whether the CA erred in finding that petitioners were motivated by malice when they initiated the filing

44

Id., at pp. 13-14.

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59

of Criminal Case No. RTC-1015 against respondent even without probable cause. The CA is correct. There is preponderant evidence that petitioners acted with malice when they included respondent in the criminal case. As already discussed, the only reason petitioners had for filing the Letter-Complaint against respondent was that Tambis purportedly issued an Affidavit claiming that he was a partner of respondent. This was such a frivolous excuse, coming as it did in the heels of petitioners’ insistence that Tambis furnish them written proof of partnership. No such written proof was ever presented by Tambis, not even when he executed the Affidavit. It is perplexing then that petitioners, who are presumably steeped in the rules of due diligence in banking practice, suddenly discarded the requirement of written proof of partnership and settled for the bare statement of Tambis, as basis for filing of a complaint for estafa against respondent. Petitioners had actually nothing to hold against respondent, and this explains why they were, for a time, pressing Tambis alone for restoration of the amount withdrawn.45 In pressing charges against respondent, despite knowledge that they had no cause against him, petitioners acted with ill-intent and abused the processes of the court. WHEREFORE, finding no reversible error in the decision of the CA, the same is AFFIRMED. No costs. SO ORDERED. General rule on the award of damages in contacts explained The general rule is that when the terms of an agreement are clear and leaves no doubt as to the intention of the contracting parties, the literal interpretation shall prevail. When the terms of an agreement have been reduced to writing, it is considered to be containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement.46

45

Id., at pp. 285-286. Milwaukee Industries Corporation v. Pampanga III Electric Cooperative, Inc., 430 SCRA 380. 46

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TORTS AND DAMAGES SIMPLIFIED

The case Anselmo v. Hernandez (533 SCRA 122) In this case, the Supreme Court held inter alia that: “With regard to the award of damages, attorney’s fees and litigation costs, however, the Court believes that the same is not warranted under the circumstances. Respondents failed to show proof or actual basis of moral injury. Likewise, where there is no showing that petitioner acted in a wanton, fraudulent, reckless or malevolent manner, the award of exemplary damages cannot be granted. Finally, attorney’s fees and expenses of litigation cannot, according to Article 2208 of the Civil Code, be recovered in this case, there being no stipulation to that effect and the case does not fall under any of the exceptions provided by law.” The decision follows: Petitioner and his wife and the spouses Manuel San Diego and Azucena Anselmo San Diego were the registered owners of a 712-square meter lot covered by Transfer Certificate of Title No. 95064, located in San Francisco del Monte, Quezon City where petitioner and his wife likewise maintained their residence and place of business. On April 24, 1991, the parcel of land and the improvements erected thereon, namely, petitioner’s house and garments factory, were allegedly sold by petitioner and his wife and the San Diegos to respondents for the sum of P2,500,000 as evidenced by a deed of absolute sale. The sale was registered and on April 29, 1991, the Register of Deeds issued Transfer Certificate of Title No. 36791 in the name of respondents. The sale allegedly came with an understanding that petitioner and his wife, while searching for a place to transfer, will be permitted to stay on the property temporarily or until April 30, 1991. Petitioner and his wife, however, did not move out on April 30, 1991. Respondents sent a letter to them on May 13, 1991 ordering them to vacate the premises. Another demand letter was sent on August 21, 1991, giving petitioner and his wife fifteen (15) days from receipt to leave the property. Despite the demands, they remained on the property. Consequently, on February 13, 1992, respondents filed against petitioner and his wife a Complaint for Specific Performance and Damages with the Regional Trial Court (RTC) of Quezon City47

47

Docketed as Civil Case No. Q-92-11368.

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61

praying that they deliver the physical possession of the property to them. In their Answer with Counterclaim, petitioner and his wife contended: 1) that they did not sell the subject property to respondents, and that the deed of sale and other documents were obtained fraudulently; 2) that the sale is void for want of consideration because their supposed transaction with respondents was for a loan of money in the amount of P2,500,000; 3) that the house and lot served as collateral for the loan; 4) that they have received P300,000 from respondents; 5) that they paid the corresponding interest on the loan; 6) that contrary to respondents’ assertion, they did not have any business transaction with or indebtedness to Boston Equity Resources, Inc. (hereafter, Boston Equity); and 7) that respondents use Boston Equity, with intent to gain, in their dealings with unsuspecting borrowers. On February 23, 1995, the RTC of Quezon City rendered a Decision upholding the validity of the sale and ordering petitioners to deliver the physical possession of the property to respondents, thus: “At the outset, it must be pointed out that the defendants have the burden of proof . . . to present evidence on the facts in issue necessary to establish their defense . . . by preponderance of evidence. [T]here is a disputable presumption that private transactions have been fair and regular, that the ordinary course of business has been followed, and that there is sufficient consideration for a contract (Sec. 3, Rule 131, Rules of Court) . . . A simple scrutiny of defendant’s evidence will readily reveal that they have miserably failed to discharge or fulfill their burden of proof. Defendant Emerlinda Mercado-Anselmo, in her own testimony under cross-examination, admitted that plaintiff William Hernandez paid her P350,000.00 in cash and assumed and actually paid her obligation to a certain Mr. Choa. It is not true, therefore, that the Deed of Absolute Sale was not supported by a sufficient consideration. Mrs. Anselmo herself acknowledge[d] that Mr. Hernandez paid a total of P2,250,000.00 in connection with the Deed of Absolute Sale. The fact that the latter state[d] [that] the consideration [was] P2.5 Million is of little moment. The difference is so minute as to command an overpowering importance. Besides, Mr. Hernandez testified that the obligation of the defendant which he settled amounted to more than P2.2 Million. The defendants insist that their indebtedness (which Mr. Hernandez paid) was not to BOSTON but to a certain Mr.

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TORTS AND DAMAGES SIMPLIFIED

Chua. However, said person was not presented to corroborate defendant’ bare assertion. Worse, said claim is belied by the documents admittedly signed by defendant Emerlinda Anselmo . . . which either refer to BOSTON or are written on its stationery. As such, this court is more inclined to believe Mr. Hernandez’ testimony that defendants’ creditor was BOSTON . . . But whether it was to Mr. Chua or to BOSTON that the defendants were indebted matters little, if at all. The fact remains that Mr. Hernandez assumed the obligation and paid it as part of the consideration for the Deed of Absolute Sale. That the defendants were consequently relieved from their obligation is not denied by them, but is in effect admitted. In [the] light of the foregoing findings of fact, there is no way by which the questioned Deed of Absolute Sale can be categorized as void for want of consideration. Let us now examine if defendant’s contention that it is invalid for being simulated and having been secured through fraud and false representation has any factual and legal basis. . . . In this case, the defendants claim that the real agreement between them and the plaintiffs was one of equitable mortgage but they were induced by the latter to sign a Deed of Absolute Sale instead over the property intended to secure the loan on the pretext (albeit false or fraudulent) that Mr. Hernandez needed such instrument to obtain from his Chinese friends the money he was going to lend to them (the defendants). This is of course strongly controverted and denied by the plaintiffs. But granting arguendo that the said allegation of the defendants were true, the resulting contract would not be simulated or fictitious but only fraudulent (Pangadil v. CFI of Cotabato, 116 SCRA 347), pursuant to Article 1338 of the Civil Code of the Philippines, which thus renders the said Deed of Absolute Sale merely voidable at the most (Arts. 1334 and 1390, Civil Code of the Philippines). As such, said Deed is valid until it is set aside, and its validity may be assailed only in action for that purpose (Llacer v. Muñoz, 12 Phil. 328), which shall be brought within four years from the time of the discovery of the fraud (Art. 1591, ibid.). In other words, the attack against its validity must be directly made in an action or in a counterclaim for that purpose . . . . In their “Answer with Compulsory Counterclaim,” the defendants patently failed to allege and pray for the annulment of the said Deed of Absolute Sale as a counterclaim, but limited their allegations and prayer to actual, moral and exemplary damages. To emphasize, the fraud and false representation alleged by the defendants would not have rendered the questioned Deed

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of Absolute Sale simulated and void, but only voidable, and only if they had successfully proven the existence of the [said] fraud or false representation, which they actually have not. While defendant Emerlinda Anselmo testified on this matter, the probative value of her testimony does not outweigh the contrary declaration of plaintiff Mr. Hernandez. Not only is the latter more consistent with human behavior and ordinary experience, it [plaintiff’s declaration] is more importantly supported by the documentary evidence admittedly signed or executed by Mrs. Anselmo. In contrast, we only have her naked assertion shot through and through with glaring inconsistencies. The weak and puerile corroborative testimony of her sister-in-law miserably failed to bolster Mrs. Anselmo’s case, proceeding as it was from a biased and polluted source. Because of the foregoing considerations and conclusions, the first issue in this case is hereby resolved in favor of the validity and legality of the Deed of Absolute Sale executed by the parties herein on April 24, 1991 . . . The second issue is likewise resolved in the affirmative, that is, that the defendants had transacted with Boston Equity Resources, Inc. as clearly borne [out] by the documentary evidence admittedly signed and executed by the defendants. As regards the third issue, suffice it to state that plaintiffs’ version of the circumstances surrounding and leading to the execution of the Deed of Absolute Sale conforms to usual business practice much more than that of the defendants’. It is not uncommon for debtors in default to sell their mortgaged property, rather than have it foreclosed, so that they can fetch a higher price therefore. As Mrs. Anselmo herself testified, she received P350,000 from Mr. Hernandez aside from the latter’s assumption of her obligation to a certain Mr. Chua. Obviously, the cash she received represented an additional amount over and above what would have been realized [had the property been] foreclosed and sold at public auction. On the other hand, defendants’ version is simply incredible. This Court cannot imagine how a businesswoman of Mrs. Anselmo’s stature and standing would willingly sign a document she fully knew to be an Absolute Deed of Sale if her real agreement with Mr. Hernandez was only for a loan secured by a real estate mortgage. The ploy supposedly employed by Mr. Hernandez, that of using the instrument to obtain the money to be loaned to the defendants from his Chinese friends, is too pat and transparent as to deceive and mislead even an ordinary [man], much less an established businesswoman engaged in the manufacturing and export of garments like Mrs. Anselmo. If only on this score, the latter’s version must perforce be rejected.

63

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TORTS AND DAMAGES SIMPLIFIED

Accordingly, said third issue is resolved to the effect that the agreement between the parties was indeed a sale (of the property in question) and not merely an equitable mortgage. It necessarily follows [therefore] that the defendants are bound to deliver the possession of said property to the plaintiffs . . . . From all the above, it becomes obvious that the plaintiffs are the ones entitled to the reliefs prayed for in their Complaint . . . It goes without saying that the defendants wrongfully retained possession and use of subject property after the last demand of the plaintiffs, thereby entitling the latter to reasonable compensation for the deprivation of their right to the use and enjoyment thereof. WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs, and against the defendants, as follows: 1) Ordering the defendants to forthwith deliver the physical possession of the subject property to the plaintiffs; 2) Ordering the defendants to pay to the plaintiffs the following: (i) Compensation at the rate of P2,000.00 a month, with legal interest, for the use and occupation of subject property, computed from 1 September 1991 until date of actual delivery thereof to the plaintiffs; (ii)

P50,000.00 as moral damages;

(iii)

P30,000.00 as exemplary damages;

(iv)

P30,000.00 as and by way of attorney’s fees;

(v)

Costs of suit.

and Defendants’ counterclaims are DISMISSED. SO ORDERED.”48

The ruling of the RTC was affirmed by the CA in a Decision dated April 3, 2002. The dispositive portion thereof reads: “WHEREFORE, premises considered, the Decision dated February 23, 1995 of the Regional Trial Court, Branch 82, Quezon City, in Civil Case No. Q92-11368, is hereby AFFIRMED. Costs against the appellants. SO ORDERED.”49 48 49

Rollo, pp. 116-125. Id., at p. 82.

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Petitioner’s motion for reconsideration was denied. Hence, this petition raising the following issues:50 I WHETHER THE LOWER COURT AND THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING THE DEED OF ABSOLUTE SALE AS NULL AND VOID FOR BEING FICTITIOUS AND SIMULATED; II WHETHER THE LOWER COURT AND THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING THE DEED OF ABSOLUTE SALE AS AN EQUITABLE MORTGAGE; III WHETHER THE LOWER COURT AND THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING THE TRANSACTION BETWEEN THE PETITIONERS AND RESPONDENTS AS A LOAN; AND IV WHETHER THE LOWER COURT AND THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING THAT THE LOWER COURT DID NOT HAVE JURISDICTION OVER THE COMPLAINT FOR SPECIFIC PERFORMANCE WHICH, IN REALITY, IS A COMPLAINT FOR EJECTMENT. Petitioner argues, as follows: One, the transaction between the parties was principally a loan with equitable mortgage, and that the sale was merely a ruse to circumvent the prohibition against pactum commissorium; Two, the deed of sale was executed on April 24, 1991. The loan vouchers of Boston Equity in the sum of P2,500,000 evidencing the indebtedness of petitioner’s deceased wife, Emerlinda, were executed on November 16, 1990. This shows that the sale was a convenient scheme of respondents to circumvent the legal requirement of foreclosure; 50

Id., at pp. 14-15.

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TORTS AND DAMAGES SIMPLIFIED

Three, notwithstanding the deed of absolute sale, petitioner and his wife and respondent William, along with the co-owners of the property, had a verbal agreement that the transaction was a loan. Petitioner and his wife agreed to sign the deed of sale because, according to respondent William, it would be easier for him to borrow money from his Chinese friends, on petitioner’s behalf, if the title to the property were in his name; Petitioner never had the intention of selling his property to respondents because the loan that he and his wife wanted to obtain from respondent William was to be used for the expansion of their garments business. They signed the documents in the name of Boston Equity under the instruction of respondent William who likewise serves as President of Boston Equity. Petitioner claims that he and his wife never received any amount from Boston Equity. Their property was given as security for the loan of P2,500,000 that they obtained from respondent William;51 Four, respondents’ evidence made it appear that petitioner and his wife were indebted to two parties: Mr. Bonifacio Choa and Boston Equity. During the trial, respondents averred that petitioner and his wife had to borrow money from Boston Equity in order to pay their obligation to Mr. Choa. Respondents’ Exhibits “J” and “K” show on their face that the obligation of petitioner and his wife was to a certain Mr. Bonifacio Choa in whose favor the sum of P1,900,000 as loan granted by Boston Equity was applied. This demonstrates that the property was not sold to respondents but was mortgaged to Boston Equity. That the property was mortgaged to Boston Equity is further bolstered by the fact that respondent William testified that petitioner and his wife offered that he buy the subject property because they obtained a loan from Boston Equity and they were unable to pay the interest so the latter was going to foreclose the property; Five, it is highly surprising that the lower court dismissed “as of little moment” the difference (P250,000) between what petitioner and his wife received (P2,250,000) as against the consideration of the alleged sale (P2,500,000) as “so minute as to command an overpowering importance.” The lower court

51

Id., at pp. 69-71.

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should have held the difference of P250,000 as evidence that respondents retained for themselves a part of the purchase price indicative of an equitable mortgage. Moreover, the peculiar circumstances surrounding the execution of the deed of sale give rise to a fair inference that the real intention of the parties is that the transaction shall secure the payment of a debt, evidencing equitable mortgage rather than a contract of sale; and Six, the appealed decisions should be nullified for want of jurisdiction. The complaint should have been treated as one for Unlawful Detainer. The pertinent allegations of the complaint are reproduced as follows: “7. However, notwithstanding the lapse of four (4) months, more or less, from receipt of the aforesaid demand letter (“to vacate the subject property and surrender possession thereof”) . . . defendants still failed and/or refused to deliver the subject property to plaintiffs.”

Section 1, Rule 70 of the Rules of Court, provides: “. . . such . . . vendee . . . may, at anytime within one year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession . . . for the restitution of such possession together with damages and costs.”52

The issue is whether the parties truly entered into a contract of sale, a resolution of which requires an examination of the facts and the evidence presented in the case. This Court is not a trier of facts.53 The findings of facts of the CA, especially when these agree with those of the trial court, are accorded respect and seldom disturbed. From the records, the Court considers the following: 1) the promissory note evidencing a loan of P2,500,00054 prepared by Boston

52

Id., at pp. 16-29 (emphasis supplied). Only in instances when a miscarriage of justice could probably result from the trial court’s and/or the Court of Appeals’ oversight of significant facts which could materially alter the determination of the case does this Court step in and evaluate evidentiary matters. 54 Maturity date of the loan was December 16, 1990 with an interest rate of 7%. 53

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Equity was signed by petitioner and his wife on November 16, 1990; 2) a loan voucher issued by Boston Equity on November 16, 1990 showed that petitioner and his wife received the total amount of P2,250,000 (P1,900,000 of which was indicated to have been applied to petitioner and his wife’s indebtedness to Mr. Bonifacio M. Choa); 3) petitioner’s wife Emerlinda wrote on March 12, 1991 and June 24, 1991 letters of extension for the payment of the loan, addressed to Boston Equity; 4) Boston Equity issued a Statement of Account in the name of petitioner’s wife Emerlinda; 5) the Deed of Absolute Sale was executed on April 24, 1991; 6) respondent William Hernandez was the President of Boston Equity at the time the alleged loan was extended by the latter to petitioner and his wife, and when the purported contract of sale was executed; 7) petitioner’s residence and garments business are situated in the lot covered by the deed of sale; 8) no real estate mortgage was shown to have been executed by petitioner in favor of Boston Equity to secure the loan; 9) petitioner received P300,000 in cash from respondents; and 10) the San Diego spouses, the co-owners of the property, did not receive anything from the proceeds of the sale. While the circumstances of the case and the parties’ testimonies may appear to give various possibilities, it is not the Court’s function to speculate. The evidence points to the fact that petitioner and his wife obtained a loan from Boston Equity, and entered into a contract of sale with respondents. The Court finds no reason, therefore, to overturn the findings of the RTC and the CA. Pertinent portions of the CA decision read: “[A] contract, according to Article 1305 of the Civil Code, ‘is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Once the minds of the contracting parties meet, a valid contract exists, whether it is reduced to writing or not. And, when the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors-ininterest, no evidence of such terms other than the contents of the written agreement, except when it fails to express the true intent and agreement of the parties thereto, in which case, one of the parties may bring an action for reformation of an instrument to the end that such true intention may be expressed . . . For an action for reformation of an instrument as provided for in Article 1359 to prosper, the following requisites must concur, to wit: (1) there must have been a meeting of the

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minds of the parties to the contract; (2) the instrument does not express the true intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to mistake, fraud, inequitable conduct or accident . . . In the case at bench, appellants [petitioners] had not shown or established the presence of the afore-stated requirements for the reformation of the deed in question. In fact, as correctly pointed out by the court a quo, appellants failed to allege and pray for the annulment of the deed of absolute sale as a counterclaim, but limited their allegations and prayer to actual, moral and exemplary damages. As earlier stressed, the subject deed of absolute sale was couched in clear terms and conditions. Finally, the claim of the appellants that their indebtedness was not to Boston Equity Resources, Inc. but to a certain Mr. Choa is unsubstantiated. It bears stressing that said person was not presented to corroborate appellant’s bare assertion, and besides, said claim is belied by the documents . . . admittedly signed by appellant Emerlinda Anselmo, which either refer to Boston or written on its stationery. Also, Mrs. Anselmo herself testified that she received P350,000.00 from Mr. Hernandez aside from the latter’s assumption of her obligation to Mr. Choa . . . In light of the foregoing, it cannot be said that the deed of absolute sale can be categorized as void for want of consideration. In addition, the voluntary, written and unconditional acceptance of contractual commitments negated the theory of equitable mortgage.”55

With regard to the award of damages, attorney’s fees and litigation costs, however, the Court believes that the same is not warranted under the circumstances. Respondents failed to show proof or factual basis of the alleged moral injury.56 Likewise, where there is no showing that petitioner acted in a wanton, fraudulent, reckless, oppressive or malevolent manner, the award of exemplary damages cannot be granted.57 Finally, attorney’s fees and expenses of litigation cannot, according to Article 2208 of the Civil Code,58 be

55

Rollo, pp. 80-82. While no proof of pecuniary loss is necessary, it is essential that the claimant should satisfactorily provide factual basis for the alleged moral injury (People v. Villamor, G.R. Nos. 111313-14, January 16, 1988, 284 SCRA 184). 57 Xentrex Automobile, Inc. v. Court of Appeals, G.R. No. 121559, June 18, 1998, 291 SCRA 66. 58 In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded; 56

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recovered in this case, there being no stipulation to that effect and the case does not fall under any of the exceptions provided by law. WHEREFORE, the petition is PARTIALLY GRANTED. The award of moral and exemplary damages, and attorney’s fees and litigation costs is DELETED, and the Decision and Resolution of the Court of Appeals, dated April 3, 2002 and July 11, 2002, respectively, in CA-G.R. CV No. 49437 are MODIFIED accordingly. No costs. SO ORDERED.

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; ... (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; ... (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.

71

CHAPTER 4 QUASI-DELICTS “Negligence in law ranges from inadvertence that is hardly accidental to useful disregard of the rights of others.” – Patrick Devlin Quasi-delict defined and explained A quasi-delict is a tort or a wrong. It is the infringement of another’s interests that is wrongful, irrespective of any prior contractual undertaking.1 Elements of a quasi-delict under Articles 2176-2194, Civil Code enumerated The elements of a quasi-delict under Articles 2176-2194 has been enumerated by the Supreme Court as follows: (1) act or omission by defendant; (2) presence of fault or negligence or lack of due care of defendant; (3) physical injuries or other damages sustained by plaintiff; (4) existence of direct causal connection between the damage and prejudice and the fault or negligence of defendant; and (5) the absence of a pre-existing contractual relations between the parties.2 Quasi-delict or culpa aquiliana as a separate legal institution explained A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a substantiality all its own, and individuality that is entirely apart and independent from a delict or crime — a distinction exists between the liability arising from 1 2

Tawag v. Alcantara, 98 SCRA 728. Garcia v. Florido, 52 SCRA 421. 71

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a crime and the responsibility for quasi-delicts or culpa extra contractual. It is now settled that the acquittal of the accused based on a finding that he is not guilty, does not carry with it extinction of civil liability based on quasi-delict.3 Requisites of a quasi-delictual action enumerated As held by the Supreme Court, in one case, the requisites of a quasi-delictual action are the following essential elements: (1) an act or omission constituting fault or negligence of respondent; (2) damage caused by said act or omission; (3) direct causal relation between the damage and the act or omission; and (4) no pre-existing contractual relation between the parties.4 An action based on a quasi-delict may be proceed independently of a criminal action explained An action based on a quasi-delict may proceed independently from the criminal action.5 Thus, in case of negligence, the offended party has the choice to enforce civil liability arising from a crime under the Revised Penal Code and an action for quasi-delict under the Civil Code. An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, for example: (1) civil liability ex-delicto under Article 100 of the Revised Penal Code; and (2) independent civil liabilities.6 Moreover, the prescription of actions ex-quasi-delicto does not operate as a bar to enforce the civil action arising from the crime.7 Two separate civil liabilities for the same act or omission explained An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, namely: (1) an action ex-delicto under Article 100 of the Revised Penal Code; (2) independent civil liabilities such as these arising from culpa contractual under Article; (3) intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code, or those where the injured party is granted a right to file an action or suit under the law to govern is to be determined, not the claim of the

3

Manliclic v. Calauanan, 512 SCRA 612. Heirs of Pedro Tayag v. Alcantara, 98 SCRA 728. 5 Cereza v. Tuazon, 426 SCRA 307. 6 Santos v. Pizarro, 465 SCRA 332. 7 Ibid. 4

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party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for relief.8 Responsibility for personal acts or omission explained The responsibility for: (1) one’s personal acts or omission; and that of another (respondent superior) usually, the principal for the acts of his agent, such as (a) parents or guardians over their minor children; (b) owners and managers over their employees and household helpers; (c) the State over special agents; and (d) teachers or heads of establishments of arts and trades over their pupils and students. The principles can avail of the defense “diligence of a good father of the family” to exculpate themselves from any responsibility under Article 2180, Civil Code. Extraordinary diligence explained That degree of extraordinary diligence: (1) in the selection of employees or subordinates; and (2) supervision of their employees or agents in the performance of their duties. It is also called “diligentissimi paris familias” in Latin. Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. (1902a) Art. 2176, Civil Code, is the statutory definition of quasi-delict explained Article 2176, Civil Code, is the statutory definition of a quasidelict, the requisites or essential elements thereof being as abovestated. It is governed by Chapter 2, Title XVII, Civil Code. Fault defined and explained Fault “is an error or defect of judgment or conduct.” It may also refer to any deviation from prudence or duty resulting from inattention, incapacity, perversion, bad faith or mismanagement.9 8 9

Safeguard Security Agency, Inc. v. Tangco, 511 SCRA 57. See Black’s Law Dictionary, 7th Edition, p. 623.

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Negligence defined and explained Negligence is the want of care required by the circumstances. It is a relation or comparative, not an absolute term and its application depends upon the situation of the parties and the degree of care and vigilance which the circumstances reasonably require.10 Articles 100 and 101, of the Revised Penal Code explained Articles 100 and 101 of the Revised Penal Code are about: (1) the civil liability of a person guilty of a felony; and (2) the rules regarding civil liability in certain cases. Both provisions are quoted in toto hereunder, to wit: Art. 100. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is also civilly liable. Art. 101. Rules regarding civil liability in certain cases. — The exemption from criminal liability established in subdivisions 1, 2, 3, 5 and 6 of Article 12 and in subdivision 4 of Article 11 of this Code does not include exemption from civil liability, which shall be enforced subject to the following rules: First. In cases of subdivisions 1, 2, and 3 of Article 12, the civil liability for acts committed by an imbecile or insane person, and by a person under nine years of age, or by one over nine but under fifteen years of age, who has acted without discernment, shall devolve upon those having such person under their legal authority or control, unless it appears that there was no fault or negligence on their part. Should there be no person having such insane, imbecile or minor under his authority, legal guardianship or control, or if such person be insolvent, said insane, imbecile, or minor shall respond with their own property, excepting property exempt from execution, in accordance with the civil law.

10

See Philippine National Railways v. Bunty, 506 SCRA 685.

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Second. In cases falling within subdivision 4 of Article 11, the persons for whose benefit the harm has been prevented shall be civilly liable in proportion to the benefit which they may have received. The courts shall determine, in sound discretion, the proportionate amount for which each one shall be liable. When the respective shares cannot be equitably determined, even approximately, or when the liability also attaches to the Government, or to the majority of the inhabitants of the town, and, in all events, whenever the damages have been caused with the consent of the authorities or their agents, indemnification shall be made in the manner prescribed by special laws or regulations. Third. In cases falling within subdivisions 5 and 6 of Article 12, the persons using violence or causing the fears shall be primarily liable and secondarily, or, if there be no such persons, those doing the act shall be liable, saving always to the latter that part of their property exempt from execution. Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. (n) Civil liability for fault or negligence separate and distinct from negligence under the Revised Penal Code By express provision of Article 2177, Civil Code, the fault or negligence under Article 2176, Civil Code, is entirely different from that “the civil liability for negligence’’ under the Penal Code. That being the case, a pecuniary recovery of an award of money from a quasi-delictual action is not a bar for a recovery from an award of money for civil liability, which is impliedly instituted with the criminal action arising from a criminal violation of the Revised Penal Code. Art. 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict. (n)

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Articles 1172 to 1174, Civil Code, enumerated By express provision of Article 2178, Civil Code, Articles 1172 to 1174 are reproduced hereunder, these provisions on obligations being made by that provision to quasi-delicts. Art. 1172. Responsibility arising from negligence in the performance of every kind of obligation is also demandable, but such liability may be regulated by the courts, according to the circumstances. (1103) Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of Articles 1171 and 2201, paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in the performance, that which is expected of a good father of a family shall be required. (1104a) Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. (1105a) Art. 2179. When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. (n) Consequence of plaintiff’s own negligence explained If plaintiff himself was guilty of negligence on his own, Article 2179, Civil Code expressly bars any recovery by him. If his negligence, however, as merely contributory with that of the defendant, he may partially recover from a quasi-delictual action against the defendant on the basis of the same legal provision.

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Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. (1903a) Responsibility for personal acts or omission and respondeat superior explained The responsibility for: (1) one’s personal acts or omission; and that of another (respondeat superior) usually, the principal for the acts of his agent, such as (a) Parents or guardians over their minor children; (b) owners and managers over their employees and household helpers; (c) the State over special agents; and (d) teachers

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or heads of establishments of arts and trades over their pupils and students. The principals can avail of the defense “diligence of a good father of a family” to exculpate themselves from any responsibility under Article 2180, Civil Code. Diligence of a good father of a family explained That degree of extraordinary diligence: (1) in the selection of employees or subordinates; and (2) supervision of their employees or agents in the performance of their duties. It is also called “diligentissimi paris familias” in Latin. Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. (1904) The doctrine of respondeat superior explained The doctrine of respondeat superior has its origin in American law whereby the negligence of the employee is presumed to be the negligence of the employer.11 Respondeat superior is a Latin term which means “Let the Superior answer.” In other words, it may refer to one who acts for another or acts as another’s security, such as an employer for an employee.12 Article 2181, Civil Code provides for reimbursement from the employer of quasi-delictual liability of the employee Thus, Article 2181, Civil Code provides, under the doctrine of respondeat superior reimbursement of one who pays for the damage caused by the employee from the employer. Art. 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. (n)

11

Poblete v. Fabros, 93 SCRA 201. See Black’s Law Dictionary, 7th Edition, p. 1315, citing Keeton, The Law on Torts, p. 500. 12

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In case minors or insane persons has no parents or guardians, payor-of their quasi-delictual liability may reimburse themselves from the minors or insane persons’ shall be answerable from their own assets Minor or insane persons are subject to appointment of a guardian ad litem for them. After such appointment, the payor may proceed against their personal assets under Article 2183, Civil Code. Art. 2183. The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage. (1905) Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. (n) Liability of motor vehicle owner in case of accidents explained If the owner is in the vehicle solidary with the driver if by the use of due diligence he could have prevented the accident. If the owner is not in the vehicle joint with the driver if the latter is acting within the scope of the authority as an employee.13 Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. (n) When a driver is presumed negligent explained Unless there is proof to the contrary, a driver is presumed negligent: (1) If at the time of the accident he was violating a traffic 13

See Article 2184, Civil Code.

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regulation; (2) or found guilty of reckless driving;14 or (3) or found guilty at least twice of a traffic regulation within two months after the accident.15 Art. 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and other terms shall be fixed by the competent public official. (n) Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. (n) Bond defined and explained A bond is a written instrument guarenteeing performance of acts or duties contemplated. The bond to answer for damages, as contemplated in Article 2186, Civil Code, is a third party liability insurance bond. The third party liability insurance bond is answerable to any damage sustained by a third party in case of a motor vehicle accident. However, manufacturers and processors of foodstuffs are liable under Article 2187, Civil Code, for any death or injury caused by any noxious or harmful substance used by them in its manufacturing and processing of foodstuffs. Art. 2188. There is prima facie presumption of negligence on the part of the defendant if the death or injury results from his possession of dangerous weapons or substances, such as firearms and poison, except when the possession or use thereof is indispensable in his occupation or business. (n) When presumption of negligence of the defendant arises explained A presumption of negligence arises from defendant if the death or injuries arises from possession of dangerous weapons or substances. 14 15

See Article 2185, Ibid. See Article 2184, supra.

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Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision. (n) Liability for damages of local government units explained Under Article 2180, Civil Code, local government units shall be liable for “the defective conditions of roads, streets or bridges, public buildings and other public works made under its supervision.” Art. 2190. The proprietor of a building or structure is responsible for the damages resulting from its total or partial collapse, if it should be due to the lack of necessary repairs. (1907) Art. 2191. Proprietors shall also be responsible for damages caused: (1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of explosive substances which have not been kept in a safe and adequate place; (2) By excessive smoke, which may be harmful to persons or property; (3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure; (4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions suitable to the place. (1908) Responsibilities of a building owner/proprietor enumerated The responsibilities of a building owner/proprietor are enumerated in Articles 3100 to 2101, Civil Code. Such responsibilities range from partial or total collapse of the building or any harm caused by the structure to persons or property. Art. 2192. If damage referred to in the two preceding articles should be the result of any defect in the construction mentioned in Article 1723, the third person suffering

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damages may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed. (1909) When engineers or architects liable for damages explained Engineers or archirects are liable for damages as a result of defects in the building construction. Art. 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused by things thrown or falling from the same. (1910) Liability for things thrown or falling from a building explained The head of family who lives in the building shall be the one liable. Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary. (n) Solidarity defined and explained The status of being jointly and severally liable for a debt. It is a liability in obligation. In this kind of liability, for instance, in a single debt of P1,000 owing by each of them, in of it. But once the whole amount is paid by either of them, both are discharged from the obligation.16 Joint owner defined and explained A joint owner is a co-owner to a part owner not really a “joint owner” within the meaning of Section 130, Rules of Court. As stated, for emphasis, a co-owner is merely a part owner.17 Effect of concurrence of two or more creditors in the same obligation explained In case of concurrence of two or more creditors and two or more debtors in one and the same obligation, and in the absence of express 16 See Salmond, Jurisprudence, pp. 462-63, cited in Black’s Law Dictionary, 7th Edition, p. 1308. 17 Article 403, Civil Code.

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and indubitable terms characterizing the obligation as solidary, the presumption is that the obligation is only joint.18 The case Corinthian Gardens Association, Inc. v. Tanjunco (558 SCRA 154) In this case the Supreme Court held inter alia that: “A negligent act is one from which an ordinary prudent person in the actor’s position, in the same or similar circumstances, would force such an appreciable risk of harm to others as to cause him not to do the act or to do it in a mere awful manner.” Moreover, the test to determine the existence of negligence in a particular case is: Did the defendant in committing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation? If not, then he is guilty of negligence. The decision follows: Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68 and 69 covered by Transfer Certificates of Title (TCT) No. 24224519 and 28296120 respectively, located at Corinthian Gardens Subdivision, Quezon City, which is managed by petitioner Corinthian Gardens Association, Inc. (Corinthian). On the other hand, respondents-spouses Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is adjacent to the Tanjangcos’ lots. Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As Geodetic Engineer Democrito De Dios (Engr. De Dios), operating under the business name D.M. De Dios Realty and Surveying, conducted all the previous surveys for the subdivision’s developer, Corinthian referred Engr. De Dios to the Cuasos. Before, during and after the construction of the said house, Corinthian conducted periodic ocular inspections in order to determine compliance with the approved plans pursuant to the Manual of Rules and Regulations of Corinthian.21 Unfortunately, after the Cuasos constructed their house employing the services of C.B. Paraz & Construction Co., Inc. (C.B. Paraz) as builder, their perimeter fence encroached on the Tanjangcos’ Lot 69 by 87 square meters. No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded that the Cuasos demolish the perimeter 18

Escano v. Ortigas, Jr., 536 SCRA 36. Rollo, pp. 148-149. 20 Id., at p. 150. 21 Id., at pp. 119-139. 19

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fence but the latter failed and refused, prompting the Tanjangcos to file with the RTC a suit against the Cuasos for Recovery of Possession with Damages.22 Eventually, the Cuasos filed a Third-Party Complaint23 against Corinthian, C.B. Paraz and Engr. De Dios. The Cuasos ascribed negligence to C.B. Paraz for its failure to ascertain the proper specifications of their house, and to Engr. De Dios for his failure to undertake an accurate relocation survey, thereby, exposing them to litigation. The Cuasos also faulted Corinthian for approving their relocation survey and building plans without verifying their accuracy and in making representations as to Engr. De Dios’ integrity and competence. The Cuasos alleged that had Corinthian exercised diligence in performing its duty, they would not have been involved in a boundary dispute with the Tanjangcos. Thus, the Cuasos opined that Corinthian should also be held answerable for any damages that they might incur as a result of such construction. On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the Cuasos’ perimeter wall encroached on the land of the Tanjangos by 87 square meters. It, however, ruled that the Cuasos were builders in good faith, and gave the Tanjangcos the option to sell and the Cuasos the option to buy the encroaching portion of the land, at a price to be agreed upon by the parties within sixty (60) days from receipt of the said Decision. In the event that the Cuasos were unable and unwilling to purchase the said portion, the perimeter wall should be demolished at the latter’s expense. The RTC also ordered the Cuasos to pay monthly rentals of P2,000.00 commencing from the time of the filing of the complaint. The RTC likewise held that C.B. Paraz was grossly negligent in not taking into account the correct boundaries of Cuasos’ lot when it constructed the house. It, thus, ordered C.B. Paraz to pay moral and exemplary damages as well as attorney’s fees to the Tanjangcos and the Cuasos. The third-party complaint against Corinthian and Engr. De Dios, on the other hand, was dismissed for lack of cause of action. The Tanjangcos filed a Motion for Reconsideration24 of the said RTC Decision which the RTC, however, denied in its Order25 dated June 28, 1993.

22

Id., at pp. 143-147. Id., at pp. 153-164. 24 Id., at pp. 200-207. 25 Id., at p. 208. 23

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Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to the CA. On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in bad faith in land-grabbing the 87 square meter-portion of Lot 69 as of April 5, 1989. Correlatively, the CA allowed the Tanjangcos to exercise the rights granted under Articles 449, 450, 451 and 549 of the New Civil Code, which include the right to demand the demolition of the offending perimeter wall after reimbursing the Cuasos the necessary expenses for the preservation of the encroached area. The Cuasos were ordered to pay monthly rentals of P10,000.00 for the use, enjoyment and occupancy of the lot from 1989 up to the time they vacate the property considering the location and category of the same. They were, likewise, ordered to pay the Tanjangcos P100,000.00, as moral damages, P50,000.00 as exemplary damages, and P150,000.00 as attorney’s fees. The CA also imposed six percent (6%) interest per annum on all the awards. The Cuasos’ appeal against the Tanjangcos, on the other hand, was dismissed for lack of merit. On the third-party complaints, Corinthian, C.B. Paraz and Engr. De Dios were all found negligent in performing their respective duties and so they were ordered to contribute five percent (5%) each, or a total of fifteen percent (15%) to all judgment sums and amounts that the Cuasos shall eventually pay under the decision, also with interest of six percent (6%) per annum. Only Corinthian filed a Motion for Reconsideration26 of the CA Decision within the 15-day reglementary period. No motion for reconsideration was filed by the Cuasos, C.B. Paraz and/or Engr. De Dios. About six (6) months later, or on August 12, 2003, the Cuasos filed a Comment/Manifestation27 praying that they be allowed to adopt Corinthian’s Motion for Reconsideration. In its Resolution28 dated November 14, 2003, the CA denied Corinthian’s Motion for Reconsideration. Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision and Resolution, and impleading

26

Id., at pp. 209-216. Id., at pp. 225-227. 28 Id., at pp. 110-115. 27

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the Cuasos as one of the respondents being the third-party plaintiffs in the RTC. This Court gave due course to Corinthian’s petition and required the parties to submit their respective memorandum.29 In compliance, the Cuasos submitted their Memorandum30 and Supplement to Memorandum,31 which were both noted by this Court in its Resolutions dated January 10, 200532 and February 2, 2005,33 respectively. In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which was granted by the CA in its Resolution34 dated May 26, 2006, directing the issuance of an Entry of Judgment and a Certification that its Decision dated January 31 2003 has become final and executory with respect to the Cuasos, C.B. Paraz and Engr. De Dios for their failure to file an appeal assailing the said Decision before this Court. The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically the demolition of the perimeter fence,35 which was also granted by the RTC in its Order36 dated December 18, 2006. Other than the filing of an Opposition37 and a Motion for Reconsideration38 before the RTC, the Cuasos prayed for the issuance of a temporary restraining order (TRO) and/or preliminary injunction before this Court to enjoin the demolition of the perimeter fence. They averred that the premature demolition of the alleged encroaching perimeter wall and other improvements will cause grave and irreparable damage to them, because what is sought to be demolished is part of their residence. They claimed that no amount of money will compensate for the damage they stand to suffer should any demolition subsequently prove to be wrongful. They argued that

29

Resolution dated September 15, 2004; id., at p. 308. Rollo, pp. 310-325. 31 Id., at pp. 419-433. 32 Id., at p. 450. 33 Id., at p. 452. 34 Penned by Associate Justice Renato C. Dacudao (now retired), with Associate Justices Celia C. Librea-Leagogo and Mariflor Punzalan-Castillo, concurring; id., at pp. 457-460. 35 Motion for Execution dated July 10, 2006; id., at pp. 493-501. 36 Rollo, pp. 509-511. 37 Id., at pp. 502-508. 38 Id., at pp. 517-529. 30

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before any execution can be carried out, it is necessary to first determine whether or not Corinthian was negligent in approving the building plan and whether or not it acted in good faith in doing so. Such determination, according to the Cuasos, will in turn determine whether or not they were in good faith in constructing the house.39 The Tanjangcos opposed the Cuasos’ application for TRO. They countered that the only pending matter with this Court is the appeal by Corinthian; hence, the implementation of the January 31, 2003 Decision of the CA against the Cuasos will not preempt the outcome of the said pending incidents. Also, any action taken by this Court on Corinthian’s petition would not benefit the Cuasos for they did not appeal the adverse decision against them. Accordingly, they cannot obtain affirmative relief from this Court by reason or on account of the appeal taken by Corinthian. The appeal, they added, is personal to Corinthian. Finally, they argued that the Cuasos are now estopped from questioning the enforcement of the CA Decision since they issued a manager’s check to pay the money judgment.40 In this Court’s Resolution dated July 18, 2007, we denied the Cuasos’ application for TRO and/or writ of preliminary injunction for lack of merit. The denial was based on sound legal principles. It is axiomatic that to be entitled to the injunctive writ, one must show that there exists a right to be protected which is directly threatened by the act sought to be enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial, that the right of complainant is clear and unmistakable, and that there is an urgent and paramount necessity for the writ to issue in order to prevent serious damage.41 In the Cuasos’ case, their right to injunctive relief had not been clearly and unmistakably demonstrated. They failed to show proof that there is material and substantial invasion of their right to warrant the issuance of an injunctive writ. Indeed, the enforcement of the writ of execution, which would demolish the Cuasos’ perimeter fence, is manifestly prejudicial to their interest. However, they possess no clear and unmistakable legal right that merits protection 39

Application for a Temporary Restraining Order and/or Writ of Preliminary Injunction dated May 4, 2007; id., at pp. 465-491. 40 Opposition dated May 17, 2007; id., at pp. 556-574. 41 Almeida v. Court of Appeals, G.R. No. 159124, January 17, 2005, 448 SCRA 681, 694.

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through the writ of preliminary injunction.42 Their right to maintain the said fence had been declared inferior to the Tanjangcos’ right to the demolition of the fence, after the CA judgment had become final and executory as to the Cuasos. It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest the CA decision before this Court was fatal to their cause. It had the effect of an admission that they indeed acted in bad faith, as they accepted the CA ruling. The decision of the CA, therefore, became binding and final as to them.43 As a matter of fact, the CA already issued a partial entry of judgment against the Cuasos. An injunction to stay a final and executory decision is unavailing except only after a showing that facts and circumstances exist which would render execution unjust or inequitable, or that a change in the situation of the parties occurred. Here, no such exception exists as shown by the facts earlier narrated.44 While it is true that this Court noted the Memorandum and Supplemental Memorandum filed by the Cuasos, such notation was made only insofar as Corinthian made them respondents in this petition. This Court cannot grant to the Cuasos any affirmative relief as they did not file a petition questioning the CA ruling. Consequently, the Decision of the CA holding that the Cuasos acted in bad faith and that the perimeter fence may now be demolished cannot be put in issue by the Cuasos. It is a fundamental principle that a party who does not appeal, or file a petition for certiorari, is not entitled to any affirmative relief.45 An appellee who is not 42 Philippine School of Business Administration-Quezon City v. Tolentino-Genilo, G.R. No. 159277, December 21, 2004, 447 SCRA 442, 448. 43 In Government Service Insurance System v. Court of Appeals, 368 Phil. 36, 50; 308 SCRA 559, 573 (1999), citing Firestone Tire and Rubber Company of the Philippines v. Tempongko, 27 SCRA 418, 424 (1969) and Singapore Airlines Limited v. Court of Appeals, 243 SCRA 143, 148 (1995), this Court held: The decision of the trial court as affirmed by the Court of Appeals not having been appealed by the insurer (MIGC) of the Toyota Tamaraw, the same is now final as far as that entity is concerned, and may not be modified by this Court. Failure of any parties to appeal the judgment as against him makes such judgment final and executory. By the same token, an appeal by one party from such judgment does not inure to the benefit of the other party who had not appealed nor can it be deemed to be an appeal of such other party from the judgment against him. 44 Philippine Sinter Corporation v. Cagayan Electric Power and Light Co., Inc., 431 Phil. 324, 333; 381 SCRA 582, 590 (2002). 45 Alauya, Jr. v. Commission on Elections, 443 Phil. 893, 907; 395 SCRA 742, 752-753 (2003).

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an appellant may assign errors in his brief where his purpose is to maintain the judgment, but he cannot seek modification or reversal of the judgment or claim affirmative relief unless he has also appealed.46 This applies to C.B. Paraz and Engr. De Dios who likewise failed to assail the aforementioned CA Decision. With this matter put to rest, we now go to the main issues raised by Corinthian, the sole petitioner in this case, to wit: “a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian Gardens Association, Inc. liable to pay 5% of the judgment money to Sps. Tanjangco on account of the encroachment made by Sps. Cuaso[; and] b) Whether or not the Court of Appeals has legal basis to increase unilaterally and without proof the amount prayed for in the Complaint, i.e., P2,000.00, as reasonable compensation for the use and enjoyment of the portion of the lot encroached upon, to P10,000.00.”47

Corinthian claims that the approval of the building plan of the Cuasos was not tainted with negligence as it did not approve the survey relocation plan but merely the architectural, structural and sanitary plans for Cuasos’ house; that the purpose of the said approval is not to ensure that the house to be erected on a particular lot is constructed within its boundaries but only to ensure compliance with the Manual of Rules and Regulations; that while Corinthian conducts actual site inspections, the inspection and approval of the building plans are limited to “table inspection” only; that the survey relocation plan was never submitted for Corinthian’s approval; that the acceptance of the builder’s bond did not make Corinthian automatically liable for the encroachment and for damages; and that Corinthian approved the building plan with the good faith and due diligence required under the circumstances. It, thus, concludes that it cannot be held liable to pay five percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made by the Cuasos. Likewise, it finds no legal basis for the CA to unilaterally increase the amount of the adjudged rent from P2,000.00 to P10,000.00 which was not prayed for by the Tanjangcos in their complaint and in the absence of evidence adduced by the parties.48 46 Acebedo Optical Company, Inc. v. Court of Appeals, 385 Phil. 956, 976; 329 SCRA 314, 334 (2000). 47 Corinthian’s Memorandum dated December 6, 2004, Rollo, pp. 384-385. 48 Id., at pp. 363-407.

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On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was negligent in approving the building plan of the Cuasos. They submit that Corinthian’s claim that it merely conducts “table inspections” of buildings further bolsters their argument that Corinthian was negligent in conveniently and unilaterally restricting and limiting the coverage of its approval, contrary to its own Manual of Rules and Regulations; that the acceptance of a builder’s bond does not automatically make Corinthian liable but the same affirms the fact that a homeowner can hold it liable for the consequences of the approval of a building plan; and that Corinthian, by regularly demanding and accepting membership dues, must be wary of its responsibility to protect the rights and interests of its members. Lastly, the Tanjangcos contend that a court can take judicial notice of the general increase in the rentals of real estate, as in this case, where the CA considered the value of their lot in the “posh-and-swank” Corinthian Gardens Subdivision and the fact that they were deprived of it for almost two decades. The Tanjangcos pray that this Court sustain the ruling of the CA.49 The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which provides: “ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no preexisting contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.”

In every tort case filed under this provision, plaintiff has to prove by a preponderance of evidence: (1) the damages suffered by the plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and (3) the connection of cause and effect between the fault or negligence and the damages incurred.50 Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87 square meters as duly found by both the RTC and the CA in accordance with the evidence on record. As a result, the Tanjangcos suffered damage in having been 49

Tanjangcos’ Memorandum dated November 29, 2004; id., at pp. 331-361. Child Learning Center, Inc. v. Tagorio, G.R. No. 150920, November 25, 2005, 476 SCRA 236, 242. 50

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deprived of the use of that portion of their lot encroached upon. Thus, the primordial issue to be resolved in this case is whether Corinthian was negligent under the circumstances and, if so, whether such negligence contributed to the injury suffered by the Tanjangcos. A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and may be one which creates a situation involving an unreasonable risk to another because of the expectable action of the other, a third person, an animal, or a force of nature. A negligent act is one from which an ordinary prudent person in the actor’s position, in the same or similar circumstances, would foresee such an appreciable risk of harm to others as to cause him not to do the act or to do it in a more careful manner.51 The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used in the same situation? If not, then he is guilty of negligence. The law, in effect, adopts the standard supplied by the imaginary conduct of the discreet paterfamilias in Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in a man of ordinary intelligence and prudence, and determines liability according to that standard.52 By this test, we find Corinthian negligent. While the issue of Corinthian’s alleged negligence is factual in character,53 a review by this Court is proper because the CA’s factual findings differ from those of the RTC’s.54 Thus, after a meticulous review of the evidence on record, we hold that the CA committed no reversible error when it deviated from the findings of fact of the RTC. The CA’s findings and conclusions are substantiated by the evidence on record and are more in accord with law and reason. Indeed, it is clear that Corinthian failed to exercise the requisite diligence in insuring that the Cuasos abide by its Manual of Rules

51 Capili v. Cardaña, G.R. No. 157906, November 2, 2006, 506 SCRA 569, 575, citing 65 C.J.S. §1(14), p. 462. 52 Fernando v. Court of Appeals, G.R. No. 92087, May 8, 1992, 208 SCRA 714, 718, citing Picart v. Smith, 37 Phil. 809, 813 (1918). 53 Pestaño v. Sumayang, 400 Phil. 740, 749; 346 SCRA 870, 878 (2000). 54 Manila Electric Company v. Court of Appeals, 413 Phil. 338, 354; 361 SCRA 35, 49-50 (2001).

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and Regulations, thereby resulting in the encroachment on the Tanjangcos’ property. We agree with the CA when it aptly held: “Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its approval of the Cuasos’ building plans was only limited to a so-called “table inspection;” and not actual site measurement. To accept some such postulate is to put a premium on negligence. Corinthian was not organized solely for the defendants Cuasos. It is also the subdivision of the plaintiffs-spouses Tanjangcos—and of all others who have their dwelling units or abodes therein. Pertinently, its Manual of Rules and Regulations stipulates in Section 3 thereof (under the heading Construction), thus: A.

Rules and Regulations

No new construction can be started unless the building plans are approved by the Association and the appropriate Builder’s cash bond and pre-construction fees are paid. The Association will not allow the entry of construction materials and process identification cards for workers if the above conditions are not complied with. Likewise, all renovations, repairs, additions and improvements to a finished house except electrical wiring, will have to be approved by the Association. Water service connection of a homeowner who undertakes construction work without prior approval of the Association will be cut-off in addition to the sanctions previously mentioned.

It goes without saying that this Manual of Rules and Regulations applies to all — or it does not apply at all. To borrow a popular expression, what is sauce for the gander is sauce for the goose — or ought to be. To put it matter-of-factly and bluntly, thus, its so-called “table inspection” approval of the Cuasos’ building plans is no less of an approval, as approvals come and go. And since it is an approval tainted with negligence, the necessary and inevitable consequences which law and justice attach to such negligence must, as a matter of law and justice, also necessarily attach to Corinthian. And then again third party defendant-appellee Corinthian Garden required the posting of a builder’s cash bond (Exh. “5”-Corinthian) from the defendants-appellants Cuasos and the third-party defendant C.B. Paraz Construction to secure the performance of their undertaking. Surely, Corinthian does not imply that while it may take the benefits from the Builder’s cash bond, it may, Pilate-like, wash its hands of any responsibility

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or liability that would or might arise from the construction or building of the structure for which the cash bond was in the first place posted. That is not only unjust and immoral, but downright unchristian and iniquitous. Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee Corinthian of pre-construction and membership fees in the Association must necessarily entail the creation of certain obligations on the part of Corinthian. For duties and responsibilities always go hand in hand with rights and privileges. That is the law of life — and that is the law of every civilized society. It is an axiom of equity that he who receives the benefits must share the burdens.”55

By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its representative, in the approval of building plans, and in the conduct of periodic inspections of ongoing construction projects within the subdivision, is responsible in insuring compliance with the approved plans, inclusive of the construction of perimeter walls, which in this case is the subject of dispute between the Tanjangcos and the Cuasos.56 It is not just or equitable to relieve Corinthian of any liability when, by its very own rules, it imposes its authority over all its members to the end that “no new construction can be started unless the plans are approved by the Association and the appropriate cash bond and pre-construction fees are paid.” Moreover, Corinthian can impose sanctions for violating these rules. Thus, the proposition that the inspection is merely a “table inspection” and, therefore, should exempt Corinthian from liability, is unacceptable. After all, if the supposed inspection is merely a “table inspection” and the approval granted to every

55 56

Rollo, pp. 104-105 (Citations omitted). Art. IV, Section 3(d) of Corinthian’s Manual of Rules and Regulations pro-

vides: All on-going construction shall be subject to inspection of the Association’s representative for the purpose of determining compliance to the approved plans. It shall be considered a violation if the contractor/lot owner does not permit entry of the Association representative doing inspection works. Such violation will be subject to the sanctions available to the Association such as (a) denial of entry of construction materials (b) renovation of ID’s of construction workers and (c) cutting-off of water service. The schedule of inspection shall be as follows: A. For original construction xxx 2. When the perimeter walls are being constructed. xxx

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member is a mere formality, then the purpose of the rules would be defeated. Compliance therewith would not be mandatory, and sanctions imposed for violations could be disregarded. Corinthian’s imprimatur on the construction of the Cuasos’ perimeter wall over the property of the Tanjangcos assured the Cuasos that everything was in order. In sum, Corinthian’s failure to prevent the encroachment of the Cuasos’ perimeter wall into Tanjangcos’ property — despite the inspection conducted — constitutes negligence and, at the very least, contributed to the injury suffered by the Tanjangcos. On the second issue, our ruling in Spouses Badillo v. Tayag57 is instructive: “Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC may take judicial notice of the reasonable rental or the general price increase of land in order to determine the amount of rent that may be awarded to them. In that case, however, this Court relied on the CA’s factual findings, which were based on the evidence presented before the trial court. In determining reasonable rent, the RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the increase in realty taxes, and 3) the prevailing rate of rentals in the vicinity. Clearly, the trial court relied, not on mere judicial notice, but on the evidence presented before it. Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed property. However, petitioners herein erred in assuming that courts, in determining the amount of rent, could simply rely on their own appreciation of land values without considering any evidence. As we have said earlier, a court may fix the reasonable amount of rent, but it must still base its action on the evidence adduced by the parties. In Herrera v. Bollos [G.R. No. 138258, January 18, 2002, 374 SCRA 107], the trial court awarded rent to the defendants in a forcible entry case. Reversing the RTC, this Court declared that the reasonable amount of rent could be determined not by mere judicial notice, but by supporting evidence: x x x A court cannot take judicial notice of a factual matter in controversy. The court may take judicial notice of matters of public knowledge, or which are capable of unquestionable demonstration, or ought to be known to judges because of their

57

448 Phil. 606, 623; 400 SCRA 494, 507-508 (2003).

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judicial functions. Before taking such judicial notice, the court must “allow the parties to be heard thereon.” Hence, there can be no judicial notice on the rental value of the premises in question without supporting evidence.”

Truly, mere judicial notice is inadequate, because evidence is required for a court to determine the proper rental value. But contrary to Corinthian’s arguments, both the RTC and the CA found that indeed rent was due the Tanjangcos because they were deprived of possession and use of their property. This uniform factual finding of the RTC and the CA was based on the evidence presented below. Moreover, in Spouses Catungal v. Hao,58 we considered the increase in the award of rentals as reasonable given the particular circumstances of each case. We noted therein that the respondent denied the petitioners the benefits, including rightful possession, of their property for almost a decade. Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their property for more than two decades through no fault of their own. Thus, we find no cogent reason to disturb the monthly rental fixed by the CA. All told, the CA committed no reversible error. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED.

58

407 Phil. 309, 323; 355 SCRA 29, 42 (2001).

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CHAPTER 5 DAMAGES “Damages are the sum of money which a person damaged is entitled to receive from the wrongdoer as compensation for the wrong.” — Frank Gohan CHAPTER 1. — GENERAL PROVISIONS Art. 2195. The provisions of this Title shall be respectively applicable to all obligations mentioned in Article 1157. Art. 2196. The rules under this Title are without prejudice to special provisions on damages formulated elsewhere in this Code. Compensation for workmen and other employees in case of death, injury or illness is regulated by special laws. Rules governing damages laid down in other laws shall be observed insofar as they are not in conflict with this Code. Art. 2197. Damages may be: (1)

Actual or compensatory;

(2)

Moral;

(3)

Nominal;

(4)

Temperate or moderate;

(5)

Liquidated; or

(6)

Exemplary or corrective.

Art. 2198. The principles of the general law on damages are hereby adopted insofar as they are not inconsistent with this Code.

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Damage defined and explained Damage means loss or injury to persons or property. If the damage is the result of negligence, it is called an actionable damage.1 Damages mean money claimed, or ordered to be paid to, a person as compensation for loss or injury.2 Kinds of damages explained The kinds of damages are: (1) Nominal damages — a trifling sum awarded when a legal injury is suffered but when there is not substantial loss or injury to be compensated. (2) Pecuniary damages — Damages that can be estimated and monetarily compensated. (3) Punitive damages — Damages awarded in addition to actual damages when the defendant acted with recklessness. (4) Proximate damages — Damages immediately and naturally flowing from the acts complained of. (5) Restitution damages — Damages awarded to a plaintiff when the defendant has been unjustly enriched at plaintiff’s expense. (6) Speculative damages — Damages that are so uncertain that they will not be awarded. (7) Uncertain damages — Damages that are clearly not the result of a wrong. (8) Stipulated damages — liquidated damages. (9) Statutory damages — Damages provided by law, such as wrongful death and survival status. (10) Unliquidated damages. (11) Treble damages — Damages three times the award. (12) Temporary damages — Damages awarded for an intermittent or occassional wrong. (13) Substantial damages — Damages that have been established by a verdict or award. It is a considerable sum.3 When penalty may substitute for damages and interests explained Article 1226 of the Civil Code provides that in an obligation with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of non-compliance, if there is no stipulation to the contrary. In other words, where the contract stipulates the rate of interest and the amount of the penalty to be paid in case of failure to pay the obligation within a 1

Black’s Law Dictionary, 7th Edition, p. 393. Ibid. 3 Ibid., pp. 356-357. 2

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given period, both the penalty and the interest can be collected by the creditor. Rules on penalty on unpaid interest on actual damages and when penalty on interest on actual damages iniquitous and unconcionable explained Penalty on unpaid actual damages is allowed. Based on existing jurisprudence, interest on unpaid actual damages may be awarded, as follows: (1) When the penalty is stipulated or agreed upon in contract, then, the interest shall be as stipulated in writing; (2) When the penalty on interest actual damages is not stipulated, the penalty shall be 12% per annum. (3) But a penalty charge of 5% per month. In addition to regular interest and attorney’s fees is iniquitous and unconscionable. The case Gobonseng v. Unibancard Corporation (539 SCRA 561). In this case, the Supreme Court held inter alia that: “Article 1226 of the Civil Code provides that in obligations with a penal clause, the penalty shall substitute for the indemnity for damages. The case follows in toto: This is a petition for review on certiorari4 seeking the nullification of the Decision rendered by the Court of Appeals (CA) on February 27, 2003, and its Resolution, dated September 2, 2003, in CA-G.R. SP No. 67510 entitled “Edmerito Ang Gobonseng, et al. v. Unibancard Corporation.” The facts are as follows: Respondent Unibancard Corporation (Unicard) is engaged in the credit card business. Petitioner Edmerito Ang Gobonseng applied with Unicard for the issuance of a Unicard credit card in his name with co-petitioner Eduardo Ang Gobonseng as co-obligor. A Unicard credit card5 with a monthly credit limit of P10,000 was issued to petitioners.

4 5

Under Rule 45 of the Rules of Court. Credit Card No. 5-1010-02261-3.

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99

As of May 16, 1995, petitioner Edmerito’s credit card purchases had accumulated to P179,638.74. Petitioner defaulted in his monthly payments, so respondent’s lawyer sent a demand letter to petitioners requiring the payment of the following amounts: Principal Interest Penalty TOTAL

.............................................. .............................................. .............................................. ..............................................

P179,638.74 73,112.97 148,447.17 P401,198.88

Despite repeated demands, Unicard was unable to recover the amounts stated. A complaint for the collection of a sum of money was thus filed by Unicard against petitioners with the Metropolitan Trial Court (MeTC) of Makati City. Petitioners, instead of filing an Answer, filed a motion to dismiss on the ground of improper venue. The motion was denied by the MeTC, and so was the motion for reconsideration. A petition for certiorari was subsequently filed with the Regional Trial Court (RTC) of Makati City. The same was denied, as well as petitioners’ motion for reconsideration. A petition for certiorari was then filed with the CA6 but the same was likewise denied.7 The proceedings before the MeTC continued notwithstanding the pendency of the petition before the CA. Respondent moved to declare petitioners in default for non-filing of an answer within the reglementary period, and upon the court’s approval thereof, the former was allowed to present evidence ex parte. The RTC rendered a decision on January 22, 1998, the dispositive portion of which reads: “WHEREFORE, judgment is rendered ordering defendants [petitioners], jointly and severally, to pay the plaintiff the amount of P179,638.74 as of October 10, 1997 representing the principal amount of the credit charges plus interest at the rate of 3% per month; penalties at the rate of 5% per month to be reckoned from the filing of the complaint until the amount is fully paid and 25% of the amount due, as and for attorney’s fees, and to pay the cost. SO ORDERED.”8 6

CA-G.R. SP No. 43687. Petitioners’ motion for reconsideration in CA-G.R. SP No. 43687 remained pending at the time the main case (CA-G.R. SP No. 67510) was decided by the CA. 8 Records, pp. 25-26. 7

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TORTS AND DAMAGES SIMPLIFIED

Petitioners’ motion for reconsideration was denied and they filed a petition for certiorari with the CA.9 On February 27, 2003, the CA10 rendered a decision, the pertinent portions of which read: “It is herein emphasized that petitioners were declared in default for non-filing of an answer; thus, the facts relied upon by the trial court, [upon] which its judgment was rooted, were established in an ex parte presentation of evidence of private respondents. Nevertheless, gathered from the pleadings, petitioners did not deny the existence of the principal obligation but merely contested the sky-high interest rate and penalty charges including the charge of attorney’s fees. In the instant case, the penalty of 5% per month on top of the monthly interest of 3% is considerably high, which if added, would result to almost 100% per annum. Moreover, the lowering of penalty is justified by the contributory negligence of private respondent since it did not observe diligence in monitoring petitioners’ use of the credit card which had accumulated to P179,638.74 or more than ten times his credit card limit of only P10,000.00 per month. Although well-settled is the rule that a contract has the force of law between the parties, and each is bound to fulfill what has been expressly stipulated therein, it is not always so, since any contract, which appears to be so heavily weighted in favor of one of the parties so as to lead to an unconscionable result, is void. There is no way a prospective credit card holder can object to any onerous provision in the contract containing standard stipulations imposed upon those who seek to avail of credit services as they are offered on a take-it-or-leave-it basis as the contract between them is one of adhesion (Polotan, Sr. v. Court of Appeals, 296 SCRA 247). Finally, the attorney’s fees of 25% of the amount due, with the interest and penalties as of May 16, 1995 of P221,560.14 which even exceed the principal debt of P179,638.74 are considered exorbitant. While the parties may have agreed to the payment of attorney’s fees, the court has jurisdiction to determine the reasonableness of the sum stipulated. For the court to ignore an express contract for attorney’s fees, it is sufficient that it is unreasonable or unconscionable (Civil Code, Volume 4, 1996, by Arturo M. Tolentino, p. 269).

9

CA-G.R. SP No. 67510. Id.

10

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101

WHEREFORE, premises considered and finding no grave abuse of discretion amounting to lack or excess of jurisdiction was committed by the respondent Presiding Judge of Branch 57 of the Regional Trial Court of Makati City in the issuance of the assailed Orders dated December 5, 2000, May 28, 2001, and August 10, 2001, the said Orders are AFFIRMED with MODIFICATION in that the penalties are reduced to 1% per month and attorney’s fees to 10%. SO ORDERED.”11

Petitioners’ motion for reconsideration was denied, hence, the petition herein raising the following arguments:12 First, the baseless and exorbitant interest of 3% per month which is shocking to the conscience of man and the court is contrary to the 12% interest per annum set by the Supreme Court in Medel v. Court of Appeals13 and Eastern Assurance and Surety, Corporation (EASCO) v. Court of Appeals;14 Second, the penalty of 5% per month violates Article 1226 of the Civil Code which states that in obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interest in case of noncompliance; and Lastly, the attorney’s fees should be fixed below 10%. The issue is whether the CA erred in failing to: 1) apply the interest rate of 12% to the principal amount owed; 2) disregard the penalty of 5%; and, 3) reduce the attorney’s fees to below 10%. The contract between the parties stipulated the following: “9. All charges made through the use of [the] card shall be paid by the UNICARD holder and/or co-obligor within twenty (20) days from the date of the said statement of account without the necessity of demand. These charges or balance thereof remaining unpaid after this 20-day period shall bear interest at the rate of 3% per month and a penalty equivalent to 5% of the amount due for every month or a fraction of a month’s delay… In case it is necessary to collect the account by or thru an attorney-at-law or collection agency, the UNICARD holder

11

Id., at pp. 20-21. Id., at pp. 7-10. 13 G.R. No. 131622, November 27, 1998, 299 SCRA 481. 14 G.R. No. 127135, January 18, 2000, 322 SCRA 73. 12

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and co-obligor shall pay 25% of the amount due which shall in no case be less than P1,000.00, as collection or attorney’s fees, in addition to costs and other litigation expenses.”15

The CA was correct in applying the 3% interest on the principal amount owed by petitioners to respondent Unicard, as well as the penalty due thereon, for the following reasons: One, Article 1226 of the Civil Code provides that in obligations with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interests in case of noncompliance, if there is no stipulation to the contrary. In other words, where the contract stipulates the rate of interest and the amount of penalty to be paid in case of failure to pay the obligation within a given period, both the penalty and the interest can be collected by the creditor. Two, petitioners’ reliance on this Court’s ruling in Medel v. Court of Appeals16 and Eastern Assurance and Surety, Corporation (EASCO) v. Court of Appeals17 is misplaced. Contrary to petitioners’ assertion, it is only when the parties to a contract have failed to fix the rate of interest or when such amount is unwarranted that the Court will apply the 12% interest per annum on a loan or forbearance of money. In Medel v. Court of Appeals,18 the 12% interest rate per annum was applied because this Court considered the stipulated rate of interest at 5.5% per month excessive and iniquitous. Moreover, the case of Eastern Assurance and Surety, Corporation (EASCO) v. Court of Appeals19 reiterated the rules in fixing the rate of interest, thus: “With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed as follows:

15

Records, p. 24. Supra note 10. 17 Supra note 11. 18 Supra note 10. 19 Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95. 16

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1. When an obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing.”

Hence, unless the stipulated amounts are exorbitant, the court will sustain the amounts agreed upon by the parties because, as stated in Pryce Corporation v. Philippine Amusement and Gaming Corporation,20 obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. If the terms of the contract clearly express the intention of the contracting parties, the literal meaning of the stipulations would be controlling. The court has to enforce the contractual stipulations in the manner that they have been agreed upon for as long as they are not unconscionable or contrary to morals and public policy. With regard to the award of attorney’s fees, the same is recoverable because petitioners signified their adherence to such an arrangement when they availed of the Unicard credit card. The 25% attorney’s fees was, however, excessive, thus, the reduction of the amount was appropriate. WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals on February 27, 2003 and September 2, 2003, respectively, are AFFIRMED. Costs against petitioners. SO ORDERED. Enumerated kinds of damages under the Civil Code The enumerated kinds of damages under the Civil Code are found in Article 2197 thereof. The subsequent provisions thereafter are actually explanations or amplifications of the statutorily damages. The principles of the general law on damages can be found in the specific provisions thereon of the Civil Code and both national and international applicable jurisprudence, in the Philippines and the United States.

20

G.R. No. 157480, May 6, 2005, 458 SCRA 164.

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CHAPTER 2. — ACTUAL OR COMPENSATORY DAMAGES “An amount awarded for a proven injury.” – Bryan Garmer Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Actual compensation is synonymous with adequate compensation explained Adequate means sufficient. Compensation is, therefore, sufficient if it is enough to restore a person before an injury inflicted upon him in good faith, malice being absent. Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain. (1106) Indemnification defined and explained Indemnification is the action of compensating for loss or damage. Because to indemnify means to reimburse or make good a duty to pay another for any loss, damage or liability.21 Actual damages must be proved with a reasonable degree of certainty explained It is a settled rule that actual damages, being a form of indemnification, must be proved within a reasonable degree of certainty. A party is entitled only to such compensation for pecuniary loss that he has duly proven. It cannot be presumed.22 There is indemnification when the compensation is made.

21 22

Black’s Law Dictionary, 7th Edition, p. 772. Macasaet v. R. Transport Corporation, 535 SCRA 503.

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The case Macasaet v. R. Transport Corporation In this case, the Supreme Court held inter alia that: Absent proof of actual damages sustained, the court cannot rely on speculations, conjectures or guesswork as to the fact and amount of damages, but must depend on the best obtainable evidence of the amount thereof. Moreover, “the parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law.” The case follows in toto. This petition seeks the reversal of the Decision23 of the Court of Appeals dated 5 October 2005 in CA-G.R. CV No. 70585, as well as its Resolution24 dated 28 March 2006 denying petitioner’s motion for reconsideration. First, the factual background. On 3 January 1996, a Complaint for Recovery of Possession and Damages25 was filed by herein respondent R. Transport Corporation against herein petitioner Alexander Macasaet before the Regional Trial Court (RTC) of Makati, Branch 147. The complaint alleged that R. Transport was a holder of Certificates of Public Convenience (CPC) to operate a public utility bus service within Metro Manila and the provinces whereas New Mindoro Transport Classic (NMTC), represented by petitioner, operates a transportation company in Oriental Mindoro. On 11 October 1995, R. Transport and Macasaet entered into a “Deed of Sale with Assumption of Mortgage” (deed of sale)26 over four (4) passenger buses27 whereby Macasaet undertook to pay the consideration of twelve million pesos (P12,000,000.00) and assume the existing mortgage obligation on the said buses in favor of Phil. Hino Sales Corporation. Accordingly, R. Transport delivered to Macasaet two (2) passenger buses. Despite repeated demands, however, Macasaet failed to pay the stipulated purchase price. This prompted R. Transport to file a complaint seeking the issuance of a writ of replevin, praying for judgment declaring R. Transport as the lawful owner and possessor 23 Rollo, pp. 26-35. Penned by Associate Justice Amelita G. Tolentino, and concurred in by Associate Justices Eliezer R. De los Santos and Vicente S. E. Veloso. 24 Id., at p. 6. 25 Id., at pp. 1-9. 26 Records, Vol. II, p. 334. 27 Records, Vol. 1, p. 2. Hino EK100-305604, Hino EK100-305607, Hino EK100305632, and Hino EK100-305903.

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of the passenger buses and ordering Macasaet to remit the amount of P660,000.00 representing the income generated by the two buses from 16 October 1995 to 2 January 1996.28 Prior to the execution of the contract, “Special Trip Contract” was entered into by the parties on 8 October 1995.29 This contract stipulated that R. Transport would lease the four buses subject of the deed of sale to Macasaet for the sum of P10,000.00 a day per bus or a total of P280,000.00 for the duration of one week, from 1522 October 1995.30 Respondent’s finance officer testified that the purpose of the contract was to support the delivery of the first two buses pending formal execution of the deed of sale.31 On 8 January 1996, on R. Transport’s motion, the trial court issued a writ of seizure32 ordering the sheriff to take possession of the two buses in NMTC subject to R. Transport’s filing of a bond in the amount of P12,000,000.00. The sheriff recovered the two buses and delivered them to R. Transport on 16 January 1996.33 For his defense, petitioner alleged that he had paid respondent the full consideration of P12,000,000.00 and had agreed to assume the mortgage obligation in favor of Phil. Hino Sales Corporation. He claimed ownership over the four passenger buses, including the two buses already delivered to him. He further contended that he had already remitted P120,000.00 to respondent as partial payment of the mortgage obligation. Petitioner admitted that he had been earning at least P7,000.00 per day on each of the buses.34 For his counterclaim, he prayed for the return of the bus units seized and the immediate delivery of the other two units, as well as for payment of damages.35 In its Decision36 dated 15 February 2001, the RTC upheld the right of respondent to possess the two buses but dismissed its claim for recovery of unpaid rentals for the use of the two buses. The dispositive portion of the decision reads as follows:

28

Id., at p. 9. TSN, 11 September 1996, p. 20. 30 Records, Vol. II, p. 359. 31 TSN, 11 September 1996, p. 21. 32 Records, Vol. I, p. 44. 33 Id., at p. 46. 34 Rollo, pp. 56-57. 35 Records, Vol. I, p. 61. 36 Records, Vol. II, p. 528. 29

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“WHEREFORE, in view of the foregoing, the Court hereby renders judgment in favor of the defendant and against plaintiff, dismissing the Complaint as regards the claim for recovery of the unpaid rentals of the two (2) passenger buses which were used by the defendant from October 16, 1995 until January 16, 1996 for lack of evidence. SO ORDERED.”37

The trial court observed that there was no basis for the payment of unpaid rentals because respondent failed to formally offer in evidence the records of operational expenses incurred by the buses delivered to petitioner and marked as Exhibits “W,” “W-1” to “W-3.”38 The trial court did not bother to give a definitive ruling on the issues related to the counterclaim for specific performance of the deed of sale on the ground that the issuance of a writ of replevin effectively disposed of the cause of action in the principal complaint, which is recovery of possession. The trial court was likewise silent with respect to the status of the deed of sale.39 Dissatisfied with the RTC’s refusal to award rentals, respondent filed a petition for review before the Court of Appeals asserting its right as an owner to the fruits of the two passenger buses, over the fruits thereof, i.e., the income derived from their use. The Court of Appeals, in its Decision dated 5 October 2005, sustained the trial court’s finding that ownership over the passenger buses remained with respondent. Unlike the RTC, the Court of Appeals ruled that the deed of sale was not perfected, thus, respondent retained ownership over the buses. It further ordered petitioner to remit the income from the passenger buses in the amount of P7,000.00 per day for the period between 16 October 1995 and 16 January 1996, deducting therefrom the amount of P120,000.00 which had already been remitted to respondent.40 Macasaet filed a motion for reconsideration which the appellate court denied.

37

Id., at p. 528. Id. 39 Id., at pp. 526-527. 40 Rollo, p. 35. 38

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Hence, the instant petition raising this sole issue: Is Section 34 of Rule 132 of the Rules of Court which states that “the court shall consider no evidence which has not been formally offered” applicable in the case at bar?41 However, other interrelated issues have to be looked into to resolve the controversy. Petitioner argues in the main that there was no legal and factual basis for the Court of Appeals to order the remittance of income. He harps on the fact that there was no lease agreement alleged in respondent’s complaint to support its claim for unpaid rentals. He reiterates the trial court’s finding that the exhibits tending to prove the rentals were not formally offered in evidence. Moreover, no other competent evidence was presented to substantiate its claim for unpaid rentals.42 Respondent, in its comment, merely parrots the ruling of the Court of Appeals, petitioner notes.43 Crucial to the resolution of the case is the continuing efficacy of the deed of sale, which in turn is the basis in determining the ownership of the buses. Respondent, on the other hand, claims that the contract was never consummated for lack of consideration and because of the subsequent disapproval of the security finance needed for petitioner to assume the mortgage obligation. On the other hand, petitioner asserts ownership over the subject buses by virtue of payment of the stipulated consideration for the sale. The appellate court declared that the non-perfection of the deed of sale precluded petitioner from possessing and enjoying the buses, including the income thereof. Explained the appellate court: “True, the plaintiff-appellant and the defendant-appellee have no agreement as to the payment of rentals for the subject passenger buses, since what was actually agreed upon by the parties herein, was not the lease, but the sale of the subject buses to the defendant-appellee in the amount of P12,000,000.00, with assumption of mortgage, as evidenced by the Deed of Sale with Assumption of Mortgage. It was pursuant to this Deed of Sale with Assumption of Mortgage that the subject two passenger buses were delivered by the plaintiff-appellant to the defendant-appellee in October, [sic] 1995. The said contract was the basis of the defendant-

41

Id., at p. 19. Id., at pp. 19-20. 43 Id., at pp. 47-54. 42

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appellee’s possession and enjoyment of the subject property, which includes entitlement to the income thereof. However, the aforementioned contract of sale has never been perfected. Firstly, the court a quo found that no payment has been made by the defendant-appellee, for otherwise, it could not have upheld the plaintiff-appellant’s possession over the subject buses.”44

The Court of Appeals erred in stating that the deed of sale was not perfected, for it was. There was no consummation, though. However, the rescission or resolution of the deed of sale is in order. The essential requisites of a contract under Article 1318 of the New Civil Code are: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. Thus, contracts, other than real contracts are perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Once perfected, they bind other contracting parties and the obligations arising therefrom have the force of law between the parties and should be complied with in good faith. The parties are bound not only to the fulfillment of what has been expressly stipulated but also to the consequences which, according to their nature, may be in keeping with good faith, usage and law.45 Being a consensual contract, sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.46 A perfected contract of sale imposes reciprocal obligations on the parties whereby the vendor obligates himself to transfer the ownership of and to deliver a determinate thing to the buyer who, in turn, is obligated to pay a price certain in money or its equivalent.47 Failure of either party 44

Id., at pp. 31-32. Manila Metal Container Corporation v. Philippine National Bank, G.R. No. 166862, December 20, 2006, 511 SCRA 444, 463-464, citing Gomez v. Court of Appeals, 395 Phil. 115, 125-126; 340 SCRA 720 (2000) and Article 1315 of the New Civil Code. 46 CIVIL CODE, Art. 1475. 47 CIVIL CODE, Art. 1458. 45

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to comply with his obligation entitles the other to rescission as the power to rescind is implied in reciprocal obligations.48 Applying these legal precepts to the case at bar, we hold that respondent has the right to rescind or cancel the deed of sale in view of petitioner’s failure to pay the stipulated consideration. Montecillo v. Reynes,49 cited by the appellate court, is particularly instructive in distinguishing the legal effects of “failure to pay consideration” and “lack of consideration:” “x x x Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing contract, while the latter prevents the existence of a valid contract. Where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void ab initio for lack of consideration. x x x”50

The Court of Appeals however failed to consider that in the instant case, there was failure on the part of petitioner to pay the purchase price and to complete the assumption of mortgage. The latter argued before the lower court that payment was in fact made and counterclaimed for the immediate delivery of the two other passenger buses and payment of damages.51 However, this claim remained a claim and was not substantiated. While the Court of Appeals relied on the text of the deed of sale which adverts to payment of the purchase price,52 the non-payment of the purchase price was no longer an issue at the appellate level. Respondent presented strong evidence that petitioner did not pay the purchase price, and that paved the way for the issuance of a writ of replevin. Petitioner did not challenge the finding of the trial court before the Court of Appeals and this Court. He did not also

48

CIVIL CODE, Art. 1191, as differentiated from rescission of rescissible contracts under Art. 1380. In rescission under Art. 1191, the only ground is failure of one of the parties with comply with what is incumbent upon him, while in rescission under Article 1380, there are several grounds such as lesion, fraud and others expressly specified by law. See JURADO, COMMENTS AND JURISPRUDENCE ON OBLIGATIONS AND CONTRACTS (1993), p. 498. 49 G.R. No. 138018, July 26, 2002, 385 SCRA 244. 50 Id., at p. 469. 51 Records, Vol. I, p. 65. 52 Records, Vol. II, p. 334.

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controvert the non-consummation of the assumption of mortgage at any level of the proceedings. Non-payment of the purchase price of property constitutes a very good reason to rescind a sale for it violates the very essence of the contract of sale.53 While it is preferable that respondent instead should have filed an action to resolve or cancel the deed as the right to do so must be invoked judicially,54 this shortcoming was cured when the complaint itself made out a case for rescission or resolution for failure of petitioner to comply with his obligation to pay the full purchase price. The complaint relevantly alleged: “x x x x 3. (a) That on October 11, 1995, the plaintiff and the defendant entered into and executed a Deed of Sale with Assumption of Mortgage with plaintiff as Vendor and the defendant as Vendee covering four (4) units of passenger airconditioned buses. x x x 3. (b) That the plaintiff and the defendant in said Deed of Sale with Assumption of Mortgage x x x hereof agreed that the price of the sale of the above-described motor vehicles is in the sum of PESOS TWELVE MILLION (P12,000,000.00), Philippine Currency, with the stipulation that the defendant as Vendee will assume the existing mortgage of the above-described motor vehicle with PHIL. HINO SALES CORPORATION and consequently, will assume the balance of the remaining obligation due to PHIL. HINO SALES CORPORATION as agreed upon in the said Deed of Sale with Assumption of Mortgage; 3. (c) That pursuant to said Deed of Sale with Assumption of Mortgage, the plaintiff delivered to the defendant at Calapan, Oriental Mindoro, the first two (2) motor vehicles x x x withholding the other two (2) passenger buses pending the payment by the defendant to the plaintiff of the purchase price of the sale of PESOS TWELVE MILLION (P12,000,000.00), Philippine currency and assumption of mortgage by said defendant obligating himself to pay the remaining balance of the obligation due to the PHIL. HINO SALES CORPORATION constituted over the above-described motor vehicles; 3. (d) That inspite of repeated demands made by the plaintiff to the defendant to pay the purchase price of the sale 53 54

Palma Gil v. Court of Appeals, 457 Phil. 804, 828; 411 SCRA 18, 36 (2003). CIVIL CODE, Art. 1191, par. 3.

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x x x the defendant, in evident bad faith, refused and failed and continue to refuse and fail to pay the plaintiff the purchase price of the said vehicles; xxxx 4. b.) That the plaintiff-applicant is the owner of the two (2) buses claimed as above-described and is entitled to the rightful possession thereof x x x 4. c.) That the above-described two (2) units of passenger buses are wrongfully detained by the defendant pretending that he is the owner under the Deed of Sale with Assumption of Mortgage which pretension is false because the defendant has not paid the plaintiff any single centavo out of the PESOS TWELVE MILLION (P12,000,000.00), Philippine currency, the purchase price of the sale of the four (4) passenger buses,55 x x x x”

As previously noted, petitioner did not pay the full purchase price as stipulated in the contract whereas respondent complied with its obligation when it delivered the two buses to petitioner. A necessary consequence of rescission is restitution with payment of damages. Article 1191 provides: “x x x x The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. x x x x”

Also, corollary to the rescission of the contract of sale is the recovery of possession of the object thereof. Thus, petitioner’s possession over the passenger buses became unlawful when upon demand for return, he wrongfully retained possession over the same. In ordering petitioner to remit to respondent the income derived from the passenger buses, the appellate court ratiocinated thus: “Although the parties herein did not agree on the rentals for the use of the property, the fact that the defendant-appellee

55

Records, Vol. I, pp. 2-6.

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was able to use the two passenger buses for the months of October, [sic] 1995 to January, [sic] 1996, and has derived income therefrom, was acknowledged by the court a quo and the defendant-appellee himself. Under such circumstances, it is but fair that the defendantappellee be made to pay reasonable rentals for the use of the two passenger buses from the time that they were delivered, until they were seized from him. It would be against the equitable proscription against unjust enrichment for the defendantappellee to keep the income from a property over which he has no legal right. It would be unfair to excuse the defendantappellee from the payment of reasonable rentals because he enjoyed and made use of the subject passenger buses. It is a basic rule in law that no one shall unjustly enrich himself at the expense of another. Niguno non deue enriquecerse tortizamente condaño de otro. Thus, a modification of the decision of the court a quo is in order. In view of the plaintiff-appellant’s failure to substantiate its claim for the unpaid rentals amounting to P660,000.00, we could not grant the same. However, we deem it just for the defendant-appellee to remit the plaintiff-appellant the income he derived from the subject passenger buses in the amount of P7,000.00 per day within the period that they were in the defendant-appellant’s possession, that is from October 16, 1997 to January 16, 1995, minus the amount of P120,000.00 which the defendant-appellee already remitted to the plaintiff-appellant.”56

It can be inferred from this decision that the appellate court did not consider petitioner liable for the unpaid rentals when it noted that respondent had failed to support its claim over it. Instead, it concluded that he was liable to respondent for damages, in the form of reasonable rentals for the use of the passenger buses. However, with respect to the amount of damages, we differ from the award of the appellate court. Settled is the rule that actual damages must be proved with reasonable degree of certainty. A party is entitled only up to such compensation for the pecuniary loss that he has duly proven. It cannot be presumed. Absent proof of the amount of actual damages sustained, the court cannot rely on

56

Rollo, pp. 33-34.

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speculations, conjectures, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have been suffered by the injured party and on the best obtainable evidence of the actual amount thereof.57 The appellate court arrived at the amount of P7,000.00 per day as income for the use of the two passenger buses due to respondent on the basis of the allegations in the answer of petitioner.58 The award cannot be sustained because no evidence was produced to support this averment made by petitioner. Petitioner did not present any record or journal that would have evidenced the earnings of the passenger buses for said period. Bare allegations would not suffice. Since the amount of damages awarded by the Court of Appeals was founded merely on speculations, we turn to the provisions of the Special Trip Contract. In said contract, the rental is fixed at P10,000.00 per day for each bus. This duly executed contract was presented, marked and formally offered in evidence. The fact that Macasaet voluntarily signed the contract evinced his acquiescence to its terms, particularly the amount of rentals. Therefore, the amount of P1,460,000.00 is deemed reasonable compensation for the use of the passenger buses, computed as follows: Amt. of rentals per bus: x No. of buses:

P10,000.00 2

Amt. of rentals per day: x No. of days (16 Oct-2 Jan)

P 20,000.00 79 P1,580,000.00

– Payment by Macasaet TOTAL

120,000.00 P1,460,000.00

Since the amount awarded as damages in the form of reasonable rentals is more than the amount of rentals specified in the complaint, additional filing fees corresponding to the difference between the amount prayed for in the complaint and the award based on the

57 Saguid v. Security Finance, Inc., G.R. No. 159467, December 9, 2005, 477 SCRA 256, 275 citing Sabio v. International Corporate Bank, Inc., G.R. No. 132709, September 4, 2001, 364 SCRA 385; Padillo v. Court of Appeals, G.R. No. 117907, November 29, 2001, 371 SCRA 27; and Manufacturers Building, Inc. v. Court of Appeals, G.R. No. 116847, March 16, 2001, 354 SCRA 521. 58 Records, Vol. I, p. 57.

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evidence should be assessed as a lien on the judgment, as mandated by Section 2, Rule 141 of the Rules of Court, to wit: “SEC. 2. Fees in lien. — Where the court in its final judgment awards a claim not alleged, or a relief different from, or more than that claimed in the pleading, the party concerned shall pay the additional fees which shall constitute a lien on the judgment in satisfaction of said lien. The clerk of court shall assess and collect the corresponding fees.”59

WHEREFORE, the petition is DENIED. However, the decision of the Court of Appeals is MODIFIED in that petitioner is ORDERED to pay respondent damages in the form of reasonable rentals in the amount of P1,460,000.00 with interest at 12% per annum from the finality of this decision, with a lien thereon corresponding to the additional filing fees adverted to above. The Clerk of Court of the Regional Trial Court of Makati is directed to assess and collect the additional filing fees. SO ORDERED. Proof required for lost income due to death explained Compensation for lost income is in the nature of damages and requires proof of the damages suffered. For lost income due to death, there must be unbiased proof of the deceased average income. The case People v. Bustamante (533 SCRA 170) This is a very peculiar case. In this case, the Supreme Court held inter alia that: Two years before the killing, the wife of the victim left their conjugal abode x x x. The wife and children refused to file charges against the killer. Thus, civil indemnity was awarded to his father, without objection from the wife and children. On August 19, 1999, Jonas Bustamante was charged with the crime of murder in an Information that reads: “That on or about the 17th day of October, 1998 in the municipality of Catigbi-an, province of Bohol, Philippines, and

59

Nestlé Phils. v. FY Sons, Incorporated, G.R. No. 150780, May 5, 2006, 489 SCRA 624, 634, citing Benguet Electric Cooperative, Inc. v. Court of Appeals, 378 Phil. 1137, 1150-1151; 321 SCRA 524 (1999), citing Ayala Corporation v. Madayag, G.R. No. 88421, January 30, 1990, 181 SCRA 687; Ng Soon v. Alday, G.R. No. 85879, September 29,1989, 178 SCRA 221.

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within the jurisdiction of this Honorable Court, the abovenamed accused, with intent to kill, without justifiable cause, with treachery and abuse of or taking advantage of superior strength, attacked from behind the victim Sergio Tandog y Lasaca who was unarmed and unaware of the attack, without affording the latter an opportunity to defend himself, and did then and there willfully, unlawfully and feloniously shoot the said victim with a short firearm, hitting him at the back portion of his head, and causing his instantaneous death, to the damage and prejudice of the heirs of the deceased in the amount to be proved during trial. Acts committed contrary to the provisions of Article 248 of the Revised Penal Code, as amended by R.A. No. 7659.”60

During arraignment, the accused entered a plea of not guilty.61 Trial on the merits thereafter ensued. The facts as found by the trial court are as follows: “The State’s contention as unfurled from the evidence on record and as argued in their memorandum, may be summed up as follows: In the evening of October 17, 1998, Sergio Tandog tendered a party in his house at Causwagan Norte, Catigbi-an, Bohol. After supper, Sergio, his brother Illuminado and a friend, Gumersindo “Jimmy” Ape, digressed to the yard of Sergio’s house to drink Tanduay rhum. Sergio’s yard was lighted with an extension light bulb at the eaves of the house. While seated partaking of their drinks, Illuminado and Gumersindo heard a gun burst and saw Sergio fell to the ground. Illuminado and Gumersindo saw accused Jonas Bustamante holding a gun two meters behind the place where Sergio was seated. Gumersindo shouted, “why did you shoot Mano Sering Bay?” Instead of answering, Jonas pointed his gun at Gumersindo, the latter rolled over to the cement floor, and heard the gun clicked three times, but did not explode. Accused then ran away. Illuminado tried to chase Jonas, but he was not able to catch up with him. On the road where the accused passed, Illuminado saw a brown right-foot sandal. They were told by a barangay councilman not to touch it. However, Charigen Tandog testified that her cousin Lolito Tandog picked up this sandal and threw it into the bushes by the road-side. In the search that ensued, it was policeman 60 61

Records, p. 16. Id., at p. 27.

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Florencio Ibarra who found the said sandal in the bushes five (5) meters from the spot where it was first discovered. Two days before the incident, Jonas Bustamante accompanied by Roselo Agon inquired from Jovencio Tandog the whereabouts of Sergio Tandog. Jovencio replied that Sergio was in Cebu. It was at this instance when Jovencio Tandog noticed that the accused was wearing a pair of sandals identical to the one found in the bushes by police officer Ibarra, in the early morning after Sergio Tandog was shot. Policeman Ibarra declared in Court that after arresting Jonas Bustamante, he asked the latter about the sandal and Jonas admitted that the same belongs to him. Investigating police officers, P/INSP Antonio Jongco and SPO1 Florencio Ibarra, declared that immediately after the incident they talked to Gumersindo Ape and Illuminado Tandog, who claimed that they were present when the shooting occurred, however, the policemen observed that said eyewitnesses were in the state of shock and apparently afraid to divulge the identity of the assailant. The police, noticing the witnesses’ condition, momentarily suspended their questioning to allow them to recover from their shock. It was only a month later, in November of 1998 when Gumersindo and Illuminado finally informed the police that it was Jonas Bustamante who shot Sergio Tandog. They told the Court that they were hesitant to immediately reveal the culprit’s identity because they were afraid of being harmed by the persons who were behind the killing of Sergio Tandog. They knew that Sergio Tandog and his wife Josefa Dinorog-Tandog had strained relations and have lived separately for more than two (2) years on account of frequent spats in the sharing of their common property and Sergio’s alleged womanizing. Their children who were not spared from the feud sided with their mother. After the filing of the instant case, there were sullied efforts to dissuade Gumersindo Ape and Illumnado Tandog from testifying as witnesses in this case. Gumersindo reported to the police that he was pressured not to testify as witness in the killing of Sergio Tandog by Teresita Tandog, and Jaime Dinorog. He was repeatedly asked to see Ex-Mayor Aurelio Dinorog otherwise a case will be filed against him. Upon his refusal, Illuminado Tandog was impleaded as respondent in a complaint, for Frustrated Murder initiated by Aurelio Dinorog, brother of Josefa Dinorog-Tandog, the victim’s wife. The instant case was initiated by Epifanio Tandog, the father of the victim because the latter’s wife and children refused

117

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to file a complaint against the herein accused. On the witness stand, Epifanio confirmed the strained relations between his son, Sergio on the one hand, and his wife and children on the other. Epifanio likewise declared that Dr. Inting was prevented from performing an autopsy on the victim’s body by Josefa, wife of the victim and brother of then Ex-Mayor Aurelio Dinorog. Accordingly, the deceased during his lifetime is even afraid of being injected. It is admitted however that the deceased’s body was embalmed. Epifanio cannot understand why in the trial for the killing of his son, his daughter-in-law Josefa and her brother chose to be on the side of the accused. Complainant Epifanio Tandog also told the Court that because of Sergio’s sudden death he suffered sleepless nights and worries that cannot be paid even by P500,000.00. He paid his lawyer P20,000.00 as acceptance fee, P1000.00 per appearance fees plus 25% of the damages that may be awarded. That his late son earned from his cattle trading business P10,000.00 per week, and 100 sacks of palay per harvest from his rice farm. Dr. Vito Inting, MHO of Catigbi-an, took the witnessstand to attest to his Postmortem findings, that the victim Sergio Tandog succumbed to irreversible shock, secondary to brain trauma and hemorrhage, due to a gunshot wound at the back portion of his head. He wanted to perform an autopsy of the victim’s body to recover the slug and determine the caliber of the firearm, but Josefa Tandog, the victim’s wife and then Catigbian Ex-Mayor Aurelio Dinorog, Josefa’s brother, and victim’s brother-in-law, prevented him from conducting the autopsy. Dr. Inting found it strange because this was the first time that he was prevented to perform an autopsy in a medicolegal case. Thus, the deceased was buried without any autopsy. The fact of death of the victim Sergio Tandog is further confirmed by his Certificate of Death on record. Immediately after the incident Jonas Bustamante left Bohol. It was only after (5) months that accused was arrested by elements of the Catigbian police on May 17, 1999 at Capalong, Davao del Norte. The prosecution also presented documents, showing that accused Jonas Bustamante has a criminal record of conviction for Direct Assault. xxxx Culled from the record, the defense’ contention may be capsulized as follows: Accused Jonas Bustamante denied the charge against him. He claims that he has no participation and has no motive

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to kill the deceased whom he doesn’t know. At the time Sergio was shot in the yard of his residence at Causwagan, Catigbi-an, Bohol, accused was at home with his family in Sitio Pandulian, Capalong, Davao del Norte. Although born in Causwagan, Catigbian, Bohol, accused and his parents migrated to Capalong, Davao del Norte in 1983 when the accused was 12 years old, and finished Fourth Grade at Causwagan Elem. School. Even before his marriage in 1992, accused was already working with Stanphilco the banana plantation of Dole Phil. Inc. His employment is recorded in the company’s pay Roll and was required to submit Daily Time Record (DTR). However, after giving his latest DTR to SPO1 Ibarra, the latter did not return it to him anymore. Since his migration to Davao del Norte, accused came back to Bohol only twice. First in 1989, to secure his Birth Certificate, and Second on October 4, 1998 when he came to Causwagan, Catigbi-an, Bohol to pay his respects to his dead grandmother, Maria Suaybaguio. He returned home to Capalong on October 9, 1998. Since then, he has not visited Bohol until his arrest on May 17, 1999. Accused denied being together with Roselo Agon near the deceased-victim’s residence at Causwagan, Catigbi-an, Bohol on October 14, 1998 to ask for the whereabouts of Sergio. That he is not the owner of the right-foot sandal that was found by Police Officer Ibarra. He does not know the deceased-victim and the prosecution’s eyewitnesses and therefore has no motive to kill the victim in this case. Accused further claims that witnesses Gumersindo “Jimmy” Ape and Illuminado Tandog failed to identify the assailant of Sergio Tandog when they were investigated by the police after the incident. It was only later, after 58 days when these witnesses named the accused to be Sergio Tandog’s assailang (sic).”62

The trial court found that prosecution witnesses Gumersindo Ape and Illuminado Tandog positively and clearly identified the accused as the victim’s assailant. The accused also tried to shoot Gumersindo but his firearm did not fire. After shooting the victim, Illuminado then chased the accused but was not able to catch up with the latter.

62

Id., at pp. 231-234.

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Both prosecution witnesses remained firm in their testimonies despite rigorous cross-examination by the defense counsel and the stern warning that they will be prosecuted for perjury if found to be lying. Moreover, the trial court noted that the narration of the prosecution witnesses jibed with the physical evidence of the case. Any seeming inconsistencies in their declarations referred only to minor and inconsequential matters. The delay in reporting the identity of the accused to the police officers was found reasonable and justified considering the threats of harm upon their persons and families. On the other hand, the trial court found the denial and alibi of the accused to be self-serving and unsubstantiated. Accused’s testimonies were fraught with inconsistencies that were rebutted by the prosecution. Thus, the prosecution successfully rebutted the claim of the accused that he left Bohol after finishing 4th grade by presenting a certification that accused was among the 6th grade students who graduated from Causwagan Elementary School in Catigbi-an, Bohol in 1984; that it is not true that he was employed by Stanphilco during the period 1990 to 2000; that he returned to Bohol after migrating to Davao del Norte not only in 1989 and 1998 but also in 1990 and was even arrested for Illegal Possession of Firearms and convicted of Direct Assault; and that he was in Causwagan, Catigbi-an, Bohol three days before the shooting incident asking for the whereabouts of the victim. On the basis of the foregoing factual findings, the Regional Trial Court of Tagbilaran City, Branch 2, rendered on August 29, 2001 a Decision63 finding the accused guilty as charged, the dispositive portion of which provides: “WHEREFORE, in the light of the foregoing, the Court finds accused Jonas Bustamante, guilty beyond reasonable doubt of the crime of Murder, defined and penalized under Article 248, Par. 1 of the Revised Penal Code, as amended by Republic Act No. 7659, and embraced in the aforequoted Information. There being no mitigating nor aggravating circumstance adduced and proven at the trial, the Court hereby sentences the accused to an indivisible penalty of Reclusion Perpetua, with the accessory penalties of the law, to indemnify Epifanio Tandog and his heirs,

63

Penned by Judge Baudilio K. Dosdos.

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death indemnity in the sum of P50,000.00, moral damages in the amount of P50,000.00; and attorney’s fees of P10,000.00. The accused who is a detention prisoner is credited in full of the period of his preventive imprisonment. SO ORDERED.”64

The trial court awarded the civil indemnities to Epifanio Tandog, the father of the deceased, and not to the latter’s wife and children, reasoning thus: “The wife and children of the victim in this case did not commence any action against the person responsible for the death of their slain relative. Instead, Josefa Tandog, and Lolito Tandog, victim’s wife and son respectively, testified in favor of the accused, worked for the latter’s acquittal without specifically claiming civil liability herein. They are therefore deemed to have waived and/or estopped, if not unworthy, to merit award of civil liability in this case. Epifanio Tandog, father of the deceased victim was the one who initiated the filing of the instant case and claimed civil liabilities for the death of his son. Based on the foregoing peculiar circumstances, the Court believes that the civil liability arising from the herein offense should be awarded to complainant Epifanio Tandog and his heirs.”65

Accused appealed to the Court of Appeals which rendered a Decision66 dated September 11, 2006 affirming in toto the decision of the trial court. The appellate court ruled that the positive identification of the accused as the perpetrator of the crime negated his denial and alibi; that the inconsistencies in the testimonies of the prosecution witnesses refer to minor and inconsequential details which did not diminish their credibility; and that the lapse of 58 days before the witnesses disclosed the identity of the accused to the authorities is reasonable. The Court of Appeals held that accused was correctly convicted of murder because the qualifying circumstance of treachery attended the commission of the crime. It noted that “the victim was having

64

Records, p. 240. Id. 66 CA Rollo, pp. 223-233. Penned by Associate Justice Isaias P. Dicdican and concurred in by Associate Justices Romeo F. Barza and Priscilla Baltazar-Padilla. 65

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after-dinner drinks in his house with his brother and a friend when, without warning, he was shot by the accused-appellant from behind, hitting him in the back of his head which ultimately caused his untimely death.”67 Hence, this appeal. There is no merit in the contention of the accused that he was not positively identified by the eyewitnesses because they failed to disclose his identity to the police authorities immediately after the shooting incident. As correctly found by the trial court and the Court of Appeals, there was justifiable reason for the witnesses’ delay in disclosing the identity of the assailant because of fear for their lives. They were also sternly warned not to testify for the prosecution or else they would also be prosecuted. Granting there were inconsistencies, they refer only to minor details, i.e., when and to whom was the identification reported. The fact remains that it was the accused whom the witnesses positively identified as the culprit. The accused assails the credibility of the prosecution witnesses. Suffice it to state that matters of credibility of witnesses are best addressed to the sound judgment of the trial court, and this Court generally defers to the trial court’s assessment because it has the singular opportunity to observe the demeanor of witnesses and their manner of testifying.68 In this regard, the trial court held that “the identification of the accused as the victim’s assailant by witnesses Gumersindo “Jimmy” Ape and Illuminado Tandog (was) clear, direct and positive compared to the defense’s negative, self-serving denial and alibi.”69 The case of People v. Flores70 cited by the accused is not in point. In that case, the Court acquitted the appellants because of serious and inexplicable discrepancies in the declarations of the prosecution’s principal witness.71 In her sworn statement, she claimed that she did not witness the killing of her husband but during her testimony in court, she pointed to and identified the appellants as her husband’s assailants. In the instant case, there is no serious and inexplicable discrepancy in the declarations of Gumersindo and Illuminado. The prosecution witnesses testified that they saw the actual killing but 67

Rollo, p. 12. Pang-oden v. Leonen, G.R. No. 138939, December 6, 2006, 510 SCRA 93, 100. 69 Records, p. 235. 70 377 Phil. 1009; 320 SCRA 178 (1999). 71 Id., at p. 1014; p. 187. 68

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did not immediately disclose the accused’s identity because they feared for their lives. If at all, the inconsistencies refer only to matters such as when and to whom did the witnesses reveal the identity of the accused. These inconsistencies were minor and immaterial and did not negate the fact that both eyewitnesses positively identified the accused as the culprit. Moreover, the failure of Gumersindo and Illuminado to immediately disclose the identity of the accused was justified. As correctly found by the Court of Appeals: “[T]he fears on the part of the eyewitnesses were not unfounded considering that they were threatened by persons whom they perceived to be behind the killing of the victim. In fact, Gumersindo Ape was summoned by Aurelio Dinorog, brother-in-law of the victim and ex-mayor of Catigbi-an. In his testimony, Gumersindo narrated that the purpose of the meeting was to prevent him from testifying in the case or else some harm will befall him. For his part, Illuminado was made one of the respondents in a criminal complaint for frustrated murder initiated by the said Aurelio Dinorog after the filing of the case for murder against accused-appellant.”72

We agree with the trial court and the Court of Appeals in awarding the civil indemnities in favor of Epifanio Tandog, the father of the victim, rather than to the latter’s wife and children, in view of the peculiarities of the instant case. Two years before the killing, the wife of the victim left their conjugal abode in Catigbi-an, Bohol and stayed in Tagbilaran City because of frequent altercations concerning their properties and the fact that the victim allegedly had a mistress. When the suspect for the killing was identified, the wife and children of the deceased refused to file charges against the accused. It was Epifanio who filed the suit and hired the services of a lawyer. The wife and the children of the deceased did not give any assistance in the prosecution of the case. In fact, during trial, they were even presented as witnesses for the defense. When asked why they testified for the accused, they claimed that they were seeking justice and truth. However, upon further interrogation, they admitted that they did not know whether or not the accused was the killer. We find this strange and contrary to human behavior. Since they did not know for sure whether the accused was the perpetrator of the crime or not, as in fact, they did not present any evidence to prove the accused’s innocence, 72

CA Rollo, pp. 228-229.

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then there is absolutely no reason for them to testify in his favor. Moreover, the defense failed to successfully rebut the testimonies of the prosecution witnesses that some relatives of the victim’s wife dissuaded them from testifying for the prosecution. We have also reviewed the records and found no instance where the wife and son of the deceased claim that they suffered wounded feelings or mental anguish for his death. Besides, the wife and son of the deceased did not raise as an issue the award of civil indemnities in favor of Epifanio Tandog. WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated September 11, 2006 affirming the Decision of the Regional Trial Court of Tagbilaran City, Branch 2, finding accused Jonas Bustamante guilty of murder and sentencing him to suffer the penalty of reclusion perpetua and to pay Epifanio Tandog and his heirs the amounts of P50,000.00 as civil indemnity, P50,000.00 as moral damages, and P10,000.00 as attorney’s fees, is AFFIRMED. SO ORDERED. Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a) Liability for damages in case of bad faith, malice or fraud explained As provided in Article 2201 of the Civil Code, both in contracts and quasi-contracts, while the damages for which the obligor who acted in good faith is limited “to those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have foreseen, at the time the obligation was constituted, it is different when the obligor is guilty of fraud, bad faith, malice or wanton attitude. In the latter case, the obligor shall be responsible for all damages which may be reasonable in the performance of the obligation.”

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Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant. Liability for damages of the defendant in crimes or quasi-delicts explained In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. Whether it has been or could have been foreseen by the defendant is immaterial. However, in crimes, the damages may be increased depending on the presence of aggravating or mitigating circumstances. Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances. Art. 2205. Damages may be recovered: (1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury; (2) For injury to the plaintiff’s business standing or commercial credit. Other instances when actual damages may be recovered under the Civil Code enumerated Actual damages may also recovered under Article 2205 of the Civil Code, namely: (1) For loss of earning capacity in cases of temporary or permanent injury; and (2) For injury to the plaintiff’s business standing or commercial credit. Earning capacity defined and explained Earning capacity refers to a person’s ability or power to earn money, given the person’s talent, skills, training and experience. It is the element considered when measuring damages under Article 2205(1), Civil Code.

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Reputation defined Reputation is the esteem which a person is held by others. If that person is engaged in business, the esteem which others have of him in his business activites is his business standing. Evidence of reputation may be introduced as proof of character whenever character is admissible. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of Article 291,73 the recipient who is not an heir called to the decedent’s inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

73

Now under Art. 195, EO No. 209, as amended.

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Subrogation defined and explained Subrogation is the substitution of one party for another whose debt party pays entitling the paying party to rights, remedies or securities that would otherwise belong to the debtor. For example, a surety who has paid a debt is, by subrogation, entitled to any security held by the creditor and the benefit of any judgment the creditor has against the debtor and may proceed against the debtor as the creditor would.74 “Subrogation simply means substitution of one person for another, that is, the person is allowed to stand in the shoes of another assert that person’s rights against the defendant.”

Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1)

When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; (6)

In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen’s compensation and employer’s liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; 74

See Black’s Law Dictionary, 7th Edition, p. 1110.

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(11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. In all cases, the attorney’s fees and expenses of litigation must be reasonable. Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. (1108) Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Rule in case of delay of money payment in subrogation explained Articles 2209 and 2010 are the rules to be followed in case of delay in payment of money and the debtor incurs in delay. If there is penalty stipulation, it shall be prevail. It there is no such stipulation, the court decision has to be followed for breach of contract. Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of the court. Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. (1109a) Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonably certainty. Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. Art. 2215. In contracts, quasi-contracts, and quasidelicts, the court may equitably mitigate the damages under circumstances other than the case referred to in the preceding article, as in the following instances: (1) That the plaintiff himself has contravened the terms of the contract;

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(2) That the plaintiff has derived some benefit as a result of the contract; (3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of counsel; (4)

That the loss would have resulted in any event;

(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff’s loss or injury. Instances when equitable mitigation of damages is allowed by the courts explained In contracts, quasi-contracts, and quasi-delicts, mitigation of damages is allowed by the courts in the instances enumerated in Article 2215 of the Civil Code. CHAPTER 3. — OTHER KINDS OF DAMAGES “The other kinds of damages referred to in Chapter 3, Title XVIII, of the Civil Code on Damages (Chapter V hereof) are damages other than actual damages.” — The author Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. Evidence of actual amount of loss required to justify award of actual damages explained It is fundamental that “to justify an award of actual damages, there must be competent proof of actual damages.75 Without such proof, actual damages cannot be granted because there is nothing to compensate for.’’ In Viron Transportation v. Delos Santos,76 the

75 76

B.F. Metal Corporation v. Lamotan, 551 SCRA 618. 316 SCRA 509.

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Supreme Court particularly disallowed the actual damages suffered by private respondents therein were based considering that the estimate and a photo showing the damage to the truck and no competent proof on the specific amounts of actual suffered was presented. It was also stressed that courts cannot simply rely on speculations, conjecture or guesswork in determining the award of damages.77 There would be no basis. Therefore, for an award of actual damages in that case. No proof of actual or specific amounts required in “other kinds of damages” need be proven to justify any award therein explained Insofar as “other kinds of damages” other than actual or compensatory damages as indemnification for pecuniary loss are concerned, Article 2216 expressly provides that: “No proof of loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages may be adjudicated.” The assessment of such damages except liquidated damages is left to the discretion of the court. Assessment of liquidated damages is excepted, the same being agreed upon by the parties to a contract, which has to be paid only in case of breach of the contract where the said liquidated damages has been agreed upon. Although no proof of loss is required in the case of “other kinds of damages,” the law itself provides for standards to serve as basis for the award of damages explained SECTION 1. — Moral Damages The standards for the award of moral damages are set forth in Articles 2217, Civil Code and therefore quoted hereunder, to wit: Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act for omission.

77

Ibid.

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Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered. Art. 2219. Moral damages may be recovered in the following and analogous cases: (1)

A criminal offense resulting in physical injuries;

(2)

Quasi-delicts causing physical injuries;

(3)

Seduction, abduction, rape, or other lascivious

(4)

Adultery or concubinage;

(5)

Illegal or arbitrary detention or arrest;

(6)

Illegal search;

(7)

Libel, slander or any other form of defamation;

(8)

Malicious prosecution;

(9)

Acts mentioned in Article 309;

acts;

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. When moral damages may be recovered explained Moral damages may be recovered if they are the proximate result of the defendant’s acts or omission. If no the proximate result of defendant’s act or omission, moral damages cannot be awarded. Article 2217, Civil Code enumerates the damages or injury to one’s

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person warranting the award of moral damages. Sentimental value of property damaged or injured are also included under Article 2218. Proximate cause defined and explained The proximate cause of damage or injury to person or property is a cause that legally results in liability. It is a cause that directly produces an event and without which the event would not have occured.78 SECTION 2. — Nominal Damages Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded. Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns. Nominal damages defined and explained Nominal damages is a trifling sum awarded when an injury is suffered but there is no substantial loss or injury. The purpose of nominal damages is to have a judicial declaration that plaintiff’s right has been violated. SECTION 3. — Temperate or Moderate Damages Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty.

78

Black’s Law Dictionary, 7th Edition, p. 213.

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Art. 2225. Temperate damages must be reasonable under the circumstances. Temperate or moderate damages defined and explained Temperate or moderate damages are those which are more than nominal but less than compensatory damages if the court finds same pecuniary loss. SECTION 4. — Liquidated Damages Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. Art. 2228. When the breach of the contract committed by the defendant is not the one contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages, and not the stipulation. Liquidated damages defined and explained Liquidated damages are those agreed upon by parties to a contract to be paid in case of breach thereof. Under Article 2227, liquidated damages whether intended as an indemnity or a penalty, may be reduced if they are: iniquitous or unconscionable. SECTION 5. — Exemplary or Corrective Damages Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines and shall be paid to the offended party. Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence.

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Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and void. Implications of malice explained Malice implies that the act complained of must be the result of an evil intent that excludes a mere voluntary act deliberated to inflict damage on either party to a case before him. It is the established rule that in the absence of malice, fraud, dishonesty or corruption, the acts of a judge in his official capacity are not subject to disciplinary action, even if such acts are erroneous. When an action for annulment of title or reconveyance based on fraud is imprescriptible explained An action for annulment of title or reconveyance based on fraud is imprescriptible where the plaintiff is in possession of the property subject of the acts. The case Antonio v. Santos, 538 SCRA 1, G.R. No. 149238, November 22, 2007 In this case, the Supreme Court held inter alia that: “we agree with the ruling of the Court of Appeals that here an award of moral

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damages is not warranted since the records bereft of any proof that Antonio acted maliciously or in bad faith in filing the action. Neither should attorney’s fees be awarded. The accepted rule is that the reason for the award of attorney’s fees must be stated in the text of the trial court’s decision; otherwise if it is stated only in the dispositive portion of the decision, the same must be disallowed.” Portions of the decision follow. The antecedent facts, culled from the records, are as follows: On September 19, 1988, petitioner Sixto Antonio filed before Branch 72, RTC, Antipolo, Rizal, a complaint for Reconveyance, Annulment of Title and Damages against respondents spouses Sofronio and Aurora Santos, Luis and Angelina Liberato, and Mario and Victoria Cruz. The complaint was docketed as Civil Case No. 1261-A. In his complaint,79 Antonio alleged that he is the absolute owner of a 13,159-square meter parcel of land denominated as Lot No. 11703, CAD 688-D, Cainta-Taytay Cadastre, situated in Barangay San Juan, Cainta, Rizal. He averred that, as evidenced by certificates of payment of realty taxes for the years 1918 and 1919, the property was previously owned by his father and that in 1984, he filed before Branch 71, RTC, Antipolo, Rizal, an application for the registration of two parcels of land, one of which was Lot No. 11703, CAD 688-D, situated in Barangay San Juan, Cainta, Rizal. His application was docketed as Land Registration Case No. 142-A (LRC No. 142-A). Although the RTC, Branch 71, declared him the true and absolute owner in fee simple of the two parcels of land he applied for, it set aside its decision with respect to Lot No. 11703, CAD 688-D in an Order dated August 21, 1986, to avoid duplication of issuance of titles. Antonio said that after investigation, he discovered that Lot No. 11703, CAD 688-D was already titled in the name of respondents. He then filed the complaint for Reconveyance, Annulment of Title and Damages against respondents, averring that respondents committed fraud in their application for titling because they made it appear in their application for registration that the subject property was located in Pinagbuhatan, Pasig, Rizal, when in fact, the property is located in Barangay San Juan, Cainta, Rizal. He added, 79

Id., at pp. 1-6.

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respondents also made it appear in their application for registration that the subject property is bound on the North East by the Pasig River when in fact it is bound on the North East by the Tapayan River. Furthermore, the Pasig River does not traverse any portion of the jurisdiction of Cainta, Rizal. He argued that Original Certificate of Title No. 108 (OCT No. 108) in respondents’ names, insofar as it included Lot No. 11703, CAD 688-D, is, therefore, null and void because it was obtained through fraudulent misrepresentations and machinations. In their Answer80 dated July 26, 1989, respondents averred that OCT No. 108 was duly issued to them by the Register of Deeds for Metro Manila, District II, on May 20, 1977. They alleged that prior to the issuance of OCT No. 108, they, as registered owners, had always been in peaceful possession of the property and at no time had Antonio possessed the property, nor did he ever make any claim against the said property. The RTC of Antipolo, Rizal, Branch 72, in a Decision dated October 7, 1997 dismissed the complaint and ordered Antonio to pay respondents moral damages and attorney’s fees. The dispositive portion of the decision reads: “WHEREFORE, premises considered, judgment is hereby rendered DISMISSING the instant complaint, and orders plaintiff as follows: 1. To pay defendants Sofronio Santos, Aurora Santos, Sps. Luis Liberato and Angelina Santos, the amount of P100,000.00 each, by way of moral damages; 2. To pay defendants the amount of P60,000.00, by way of attorney’s fees, and costs of suit. SO ORDERED.”81

The Court of Appeals in a Decision dated July 31, 2001 affirmed with modification the abovementioned decision by deleting the award of moral damages and attorney’s fees. The dispositive portion of the decision of the Court of Appeals states: “WHEREFORE, with modification deleting [or] setting aside the award for moral damages and attorney’s fees, the

80 81

Id., at pp. 66-71. Id., at p. 635.

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decision appealed from is AFFIRMED with costs against the plaintiff-appellant. SO ORDERED.”82

Hence, the instant petition, raising the following issues: I. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT THE DECISION IN LAND REGISTRATION CASE NO. 142-A, LRC RECORD NO. 58707, REGIONAL TRIAL COURT OF ANTIPOLO CITY, BRANCH 71, IS SUFFICIENT BASIS OF PETITIONER’S CLAIM OF RIGHT OF OWNERSHIP OVER THE PROPERTY SUBJECT OF ACTION FOR RECONVEYANCE. II. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN TREATING PETITIONER’S ACTION FOR RECONVEYANCE AS ONE FOR TITLING OF A PARCEL OF LAND. III. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN NOT HOLDING THAT RESPONDENTS HAVE FRAUDULENTLY REGISTERED AND TITLED SUBJECT PROPERTY IN THEIR NAMES. IV. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN HOLDING THAT RESPONDENTS’ MOTHER ACQUIRED SUBJECT PROPERTY FROM HER FATHER, GAVINO SANTOS, WHICH THE LATTER ALLEGEDLY PURCHASED FROM LADISLAO RIVERA. V. THE HONORABLE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE DECISION OF THE COURT A QUO DISMISSING PETITIONER’S ACTION FOR RECONVEYANCE.83

82 83

Rollo, p. 45. Id., at pp. 15-16.

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Simply put, the issues raised are: (1) Did the Court of Appeals err in not holding that the decision in LRC No. 142-A was sufficient basis of petitioner’s claim of ownership over the subject property? (2) Did the Court of Appeals and RTC erroneously treat petitioner’s action for reconveyance as one for titling of a parcel of land? (3) Did respondents fraudulently title the subject property in their names? (4) Did the Court of Appeals err in finding that respondents’ mother acquired the subject property from her father, Gavino Santos, who purchased it from Ladislao Rivera? and (5) Did the Court of Appeals err in affirming the decision of the RTC dismissing petitioner’s action for reconveyance? Petitioner argues that the Court of Appeals erred in not holding that the decision in LRC No. 142-A is sufficient basis for his claim of ownership over the property; in treating his action for reconveyance as one for titling; in not holding that respondents had fraudulently registered the property in their names; and in holding that respondents’ mother had acquired the subject property from her father, Gavino Santos, who allegedly bought the property from Ladislao Rivera. Respondents, on the other hand, in their Comments,84 contend that they have proved they have a better title to the property. They argue that petitioner’s attempt to register Lot No. 11703, CAD 688D in his name is tainted with fraud, and that petitioner had failed to adduce any evidence of fraud on their part. They assert that their documentary and testimonial evidence which were unrebutted by petitioner show original ownership of the land by Ladislao Rivera from whom their grandfather bought the property. After serious consideration, we find that petitioner’s arguments lack merit. On the first issue, petitioner argues that in LRC No. 142-A, the RTC of Antipolo, Branch 71, rendered a Decision on January 7, 1986 adjudicating ownership of two lots, including Lot No. 11703, CAD 688-D, in his favor. He adds that on February 19, 1986, after said decision has become final and executory, the said RTC issued a certification for issuance of decree, directing the Land Registration Commission to issue the corresponding decree of registration. Hence, he argues, his right of ownership over the land has already been fully established, but no certificate of title was issued to him

84

Id., at pp. 124-148.

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only because the property was already registered in the name of respondents. But we agree with respondents that petitioner cannot rely on the decision in LRC No. 142-A. As pointed out by the Court of Appeals, even if a title had been issued to petitioner based on said decision, his title would be of a later date than the title of respondents, hence inefficacious and ineffective. This Court has ruled that, when two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail; and in case of successive registrations where more than one certificate is issued over the same land, the person holding a prior certificate is entitled to the land as against a person who relies on a subsequent certificate.85 On the second issue, petitioner contends that it is very apparent that the RTC and Court of Appeals had the notion that his case a quo was not an action for reconveyance, but rather an application for registration of land where the applicant and oppositor had to prove their respective registrable titles. This, he adds, could be gleaned from the RTC’s findings that “the claim of plaintiff on the basis of said documents cannot prevail over the adverse, public, open, peaceful and continuous possession by the defendants over the subject property,” and that “it was indubitably shown that the defendants have occupied said property since time immemorial while plaintiff has never at anytime taken possession of said property.” We find petitioner’s contentions unconvincing. For an action for reconveyance based on fraud to prosper, this Court has held that the party seeking reconveyance must prove by clear and convincing evidence his title to the property and the fact of fraud.86 The RTC, in making the abovementioned findings, was not treating petitioner’s action for reconveyance as one for titling of property. But it was weighing whether petitioner has, by clear and convincing evidence, proven his title to the property. Moreover, the RTC, in its decision, discussed the merits of petitioner’s ground for his action for reconveyance, i.e. whether or not respondents committed fraud in titling the subject property in their names. The RTC held that as shown by public records in the custody of the RTC, Pasig City

85 Chan v. Court of Appeals (Special Seventh Division), G.R. No. 118516, November 18, 1998, 298 SCRA 713, 725. 86 Barrera v. Court of Appeals, G.R. No. 123935, December 14, 2001, 372 SCRA 312, 316.

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and the Land Registration Authority, petitioner’s claim that the property was fraudulently titled in the names of respondents is baseless. Thus, petitioner’s contention that the RTC and the Court of Appeals treated his action for reconveyance as one for titling of property lacks any persuasive basis. On the third and fourth issues, we find them to be factual issues, hence beyond our jurisdiction to resolve. In a petition for review under Rule 45 of the 1997 Rules of Civil Procedure, this Court’s power of review is limited to questions of law only.87 Note, however, should be taken of the established doctrine that an action for reconveyance resulting from fraud prescribes four years from the discovery of the fraud. Such discovery is deemed to have taken place upon the issuance of the certificate of title over the property. Registration of real property is considered a constructive notice to all persons, thus, the four-year period shall be counted therefrom.88 It appears that OCT No. 108 was issued to respondents by the Register of Deeds for Metro Manila on May 20, 1977. From the time of registration of the land in the name of respondents on May 20, 1977 to the filing of the complaint on September 19, 1988, more than four years had already elapsed. Hence, it cannot be denied that petitioner’s action had already prescribed. Based on the foregoing considerations, we find that the Court of Appeals did not err in affirming the decision of the RTC dismissing petitioner’s action for reconveyance. Finally, concerning the deletion of moral damages and attorney’s fees, we agree with the ruling of the Court of Appeals that here an award of moral damages is not warranted since the record is bereft of any proof that Antonio acted maliciously or in bad faith in filing the action.89 Neither should attorney’s fees be awarded. The accepted rule is that the reason for the award of attorney’s fees must be stated in the text of the trial court’s decision; otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed.90 In this case, we find that the trial court’s decision

87

Guanga v. Dela Cruz, G.R. No. 150187, March 17, 2006, 485 SCRA 80, 88-89. Philippine Economic Zone Authority v. Fernandez, G.R. No. 138971, June 6, 2001, 358 SCRA 489, 498. 89 Francel Realty Corporation v. Court of Appeals, G.R. No. 117051, January 22, 1996, 252 SCRA 127, 134. 90 Agustin v. Court of Appeals, G.R. No. 84751, June 6, 1990, 186 SCRA 375, 384. 88

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failed to show the reason for the award of attorney’s fees, hence it was properly deleted by the appellate court. WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated July 31, 2001 of the Court of Appeals in CAG.R. CV No. 58246 is AFFIRMED. No pronouncement as to costs. SO ORDERED. Hults v. PR Builders, Inc. (532 SCRA 74) In this case, the Supreme Court held inter alia that: “Petitioner received what he is entitled to receive under the circumstances. Article 22 of the Civil Code embodies the maxim x x x no man ought to be made rich out of another’s injury. x x x Every person who, through an act or performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The above quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which are formulated as basic principles to be observed for the rightful relationship between human beings, and for stability of the social order designed to indicate certain social norms that spring from the fountain of good conscience, guides human conduct that should run as golden threads through society to the end that the law may approach its supreme ideal which is the way and dominance of justice.” Moreover, “There is unjust enrichment when a person retains a benefit at the less of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.” Portions of the decision follow. The facts: Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida), Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. (respondent), for the purchase of a 210-sq. m residential unit in respondent’s townhouse project in Barangay Niyugan, Laurel, Batangas. When respondent failed to comply with its verbal promise to complete the project by June 1995, the spouses Hulst filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with interest, damages and attorney’s fees, docketed as HLRB Case No. IV6-071196-0618.

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On April 22, 1997, HLURB Arbiter Ma. Perpetua Y. Aquino (HLURB Arbiter) rendered a Decision91 in favor of spouses Hulst, the dispositive portion of which reads: “WHEREFORE, premises considered, judgment is hereby rendered in favor of the complainant, rescinding the Contract to Sell and ordering respondent to: 1) Reimburse complainant the sum of P3,187,500.00, representing the purchase price paid by the complainants to P.R. Builders, plus interest thereon at the rate of twelve percent (12%) per annum from the time complaint was filed; 2) Pay complainant the sum of P297,000.00 as actual damages; 3) Pay complainant the sum of P100,000.00 by way of moral damages; 4) Pay complainant the sum of P150,000.00 as exemplary damages; 5) P50,000.00 as attorney’s fees and for other litigation expenses; and 6)

Cost of suit.

SO ORDERED.”92

Meanwhile, spouses Hulst divorced. Ida assigned her rights over the purchased property to petitioner.93 From then on, petitioner alone pursued the case. On August 21, 1997, the HLURB Arbiter issued a Writ of Execution addressed to the Ex Officio Sheriff of the Regional Trial Court of Tanauan, Batangas directing the latter to execute its judgment.94 On April 13, 1998, the Ex Officio Sheriff proceeded to implement the Writ of Execution. However, upon complaint of respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the Sheriff was set aside, requiring the Sheriff to levy first on respondent’s personal properties.95 Sheriff Jaime B. Ozaeta (Sheriff)

91

Id., at p. 48. Id., at p. 50. 93 Id., at p. 46. 94 Id., at p. 51. 95 Id., at p. 66. 92

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tried to implement the writ as directed but the writ was returned unsatisfied.96 On January 26, 1999, upon petitioner’s motion, the HLURB Arbiter issued an Alias Writ of Execution.97 On March 23, 1999, the Sheriff levied on respondent’s 15 parcels of land covered by 13 Transfer Certificates of Title (TCT)98 in Barangay Niyugan, Laurel, Batangas.99 In a Notice of Sale dated March 27, 2000, the Sheriff set the public auction of the levied properties on April 28, 2000 at 10:00 a.m.100 Two days before the scheduled public auction or on April 26, 2000, respondent filed an Urgent Motion to Quash Writ of Levy with the HLURB on the ground that the Sheriff made an overlevy since the aggregate appraised value of the levied properties at P6,500.00 per sq. m is P83,616,000.00, based on the Appraisal Report101 of Henry Hunter Bayne Co., Inc. dated December 11, 1996, which is over and above the judgment award.102 At 10:15 a.m. of the scheduled auction date of April 28, 2000, respondent’s counsel objected to the conduct of the public auction on the ground that respondent’s Urgent Motion to Quash Writ of Levy was pending resolution. Absent any restraining order from the HLURB, the Sheriff proceeded to sell the 15 parcels of land. Holly Properties Realty Corporation was the winning bidder for all 15 parcels of land for the total amount of P5,450,653.33. The sum of P5,313,040.00 was turned over to the petitioner in satisfaction of the judgment award after deducting the legal fees.103 At 4:15 p.m. of the same day, while the Sheriff was at the HLURB office to remit the legal fees relative to the auction sale and to submit the Certificates of Sale104 for the signature of HLURB Director Belen G. Ceniza (HLURB Director), he received the Order

96

Id., at p. 75. Id., at p. 76. 98 Id., at pp. 78-129. 99 Id., at pp. 81, 85, 89, 93, 97, 101, 105, 109, 113, 117, 121, 125 and 129. 100 Id., at p. 130. 101 Id., at pp. 140 and 151. 102 Id., at p. 136. 103 Id., at p. 210. 104 Id., at pp. 191-207. 97

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dated April 28, 2000 issued by the HLURB Arbiter to suspend the proceedings on the matter.105 Four months later, or on August 28, 2000, the HLURB Arbiter and HLURB Director issued an Order setting aside the sheriff’s levy on respondent’s real properties,106 reasoning as follows: “While we are not making a ruling that the fair market value of the levied properties is PhP6,500.00 per square meter (or an aggregate value of PhP83,616,000.00) as indicated in the Hunter Baynes Appraisal Report, we definitely cannot agree with the position of the Complainants and the Sheriff that the aggregate value of the 12,864.00-square meter levied properties is only around PhP6,000,000.00. The disparity between the two valuations are [sic] so egregious that the Sheriff should have looked into the matter first before proceeding with the execution sale of the said properties, especially when the auction sale proceedings was seasonably objected by Respondent’s counsel, Atty. Noel Mingoa. However, instead of resolving first the objection timely posed by Atty. Mingoa, Sheriff Ozaete totally disregarded the objection raised and, posthaste, issued the corresponding Certificate of Sale even prior to the payment of the legal fees (pars. 7 & 8, Sheriff’s Return). While we agree with the Complainants that what is material in an execution sale proceeding is the amount for which the properties were bidded and sold during the public auction and that, mere inadequacy of the price is not a sufficient ground to annul the sale, the court is justified to intervene where the inadequacy of the price shocks the conscience (Barrozo vs. Macaraeg, 83 Phil. 378). The difference between PhP83,616,000.00 and Php6,000,000.00 is PhP77,616,000.00 and it definitely invites our attention to look into the proceedings had especially so when there was only one bidder, the HOLLY PROPERTIES REALTY CORPORATION represented by Ma, Chandra Cacho (par. 7, Sheriff’s Return) and the auction sale proceedings was timely objected by Respondent’s counsel (par. 6, Sheriff’s Return) due to the pendency of the Urgent Motion to Quash the Writ of Levy which was filed prior to the execution sale. Besides, what is at issue is not the value of the subject properties as determined during the auction sale, but the determination of the value of the properties

105 106

Supra note 14. Id., at p. 38.

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levied upon by the Sheriff taking into consideration Section 9(b) of the 1997 Rules of Civil Procedure x x x. xxxx It is very clear from the foregoing that, even during levy, the Sheriff has to consider the fair market value of the properties levied upon to determine whether they are sufficient to satisfy the judgment, and any levy in excess of the judgment award is void (Buan v. Court of Appeals, 235 SCRA 424). x x x x”107 (Emphasis supplied).

The dispositive portion of the Order reads: “WHEREFORE, the levy on the subject properties made by the Ex Officio Sheriff of the RTC of Tanauan, Batangas, is hereby SET ASIDE and the said Sheriff is hereby directed to levy instead Respondent’s real properties that are reasonably sufficient to enforce its final and executory judgment, this time, taking into consideration not only the value of the properties as indicated in their respective tax declarations, but also all the other determinants at arriving at a fair market value, namely: the cost of acquisition, the current value of like properties, its actual or potential uses, and in the particular case of lands, their size, shape or location, and the tax declarations thereon. SO ORDERED.”108

A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the 1996 HLURB Rules and Procedure, petitioner filed a Petition for Certiorari and Prohibition with the CA on September 27, 2000. On October 30, 2002, the CA rendered herein assailed Decision109 dismissing the petition. The CA held that petitioner’s insistence that Barrozo v. Macaraeg110 does not apply since said case stated that “when there is a right to redeem inadequacy of price should not be material” holds no water as what is obtaining in this case is not “mere inadequacy,” but an inadequacy that shocks the senses; that Buan v. Court of Appeals111 properly applies since the questioned

107

Id., at pp. 42-43. Id., at p. 44. 109 Supra note 1. 110 83 Phil. 378 (1949). 111 G.R. No. 101614, August 17, 1994, 235 SCRA 424. 108

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levy covered 15 parcels of land posited to have an aggregate value of P83,616,000.00 which shockingly exceeded the judgment debt of only around P6,000,000.00. Without filing a motion for reconsideration,112 petitioner took the present recourse on the sole ground that: THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ARBITER’S ORDER SETTING ASIDE THE LEVY MADE BY THE SHERIFF ON THE SUBJECT PROPERTIES.113

Before resolving the question whether the CA erred in affirming the Order of the HLURB setting aside the levy made by the sheriff, it behooves this Court to address a matter of public and national importance which completely escaped the attention of the HLURB Arbiter and the CA: petitioner and his wife are foreign nationals who are disqualified under the Constitution from owning real property in their names. Section 7 of Article XII of the 1987 Constitution provides: “Sec. 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.” (Emphasis supplied).

The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities “qualified to acquire lands of the public domain.” The 1987 Constitution reserved the right to participate in the disposition, exploitation, development and utilization of lands of the public domain for Filipino citizens114 or corporations at least 60 percent 112

Applying by analogy the ruling in Commissioner on Higher Education v. Mercado, G.R. No. 157877, March 10, 2006, 484 SCRA 424, 432, a party may elevate a decision of the Court of Appeals before the Supreme Court by way of a petition for review under Rule 45 of the Rules of Court, without the benefit of a prior motion for reconsideration. 113 Rollo, p. 19. 114 CONSTITUTION, (1987), Article XII, Section 3. Sec. 3. Lands of the public domain are classified into agricultural, forest or timber, mineral lands, and national parks. Agricultural lands of the public domain may be classified by law according to the uses to which they may be

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of the capital of which is owned by Filipinos.115 Aliens, whether individuals or corporations, have been disqualified from acquiring public lands; hence, they have also been disqualified from acquiring private lands.116 Since petitioner and his wife, being Dutch nationals, are proscribed under the Constitution from acquiring and owning real property, it is unequivocal that the Contract to Sell entered into by petitioner together with his wife and respondent is void. Under Article 1409(1) and (7) of the Civil Code, all contracts whose cause, object or purpose is contrary to law or public policy and those expressly prohibited or declared void by law are inexistent and void from the beginning. Article 1410 of the same Code provides that the action or defense for the declaration of the inexistence of a contract does not prescribe. A void contract is equivalent to nothing; it produces no civil effect.117 It does not create, modify or extinguish a juridical relation.118 Generally, parties to a void agreement cannot expect the aid of the law; the courts leave them as they are, because they are deemed in pari delicto or “in equal fault.”119 In pari delicto is “a

devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof by purchase, homestead, or grant. x x x x (Emphasis supplied). 115 Id., at Section 2. Sec. 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixty per centum of whose capital is owned by such citizens. x x x (Emphasis supplied). 116 Muller v. Muller, G.R. No. 149615, August 29, 2006, 500 SCRA 65, 71; Frenzel v. Catito, G.R. No. 143958, July 11, 2003, 406 SCRA 55, 69; Ong Ching Po v. Court of Appeals, G.R. No. 113472-73, December 20, 1994, 239 SCRA 341, 346. 117 Tolentino, Civil Code of the Philippines (1991), Vol. IV, p. 629; Tongoy v. Court of Appeals, 208 Phil. 95, 113; 123 SCRA 99, 119 (1983). 118 Id., at p. 632; Tongoy v. Court of Appeals, Id. 119 Sodhi, Latin Words and Phrases for Lawyers (1980), p. 115.

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universal doctrine which holds that no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its specific performance, or to recover the property agreed to be sold or delivered, or the money agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given to one against the other.”120 This rule, however, is subject to exceptions121 that permit the return of that which may have been given under a void contract to: (a) the innocent party (Arts. 1411-1412, Civil Code);122 (b) the debtor who pays usurious interest (Art. 1413, Civil Code);123 (c) the party repudiating the void contract before the illegal purpose is accomplished or before damage is caused to a third person and if public interest is subserved by allowing recovery (Art. 1414, Civil Code);124 (d) the incapacitated party if the interest of justice so demands (Art. 1415, Civil Code);125 (e) the party for whose protection the prohibition by law is intended if the agreement is 120

Moreno, Philippine Law Dictionary (1988), p. 451, citing Rellosa v. Gaw Chee Hun, 93 Phil. 827, 831, (1953). 121 Vitug, Civil Law Annotated, Vol. III (2003), pp. 159-160. 122 Art. 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal Code relative to the disposal of effects or instruments of a crime shall be applicable to the things or the price of the contract. This rule shall be applicable when only one of the parties is guilty; but the innocent one may claim what he has given, and shall not be bound to comply with his promise. Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal offense, the following rule shall be observed: (1) When the fault is on the part of both contracting parties, neither may recover what he has given by virtue of the contract, or demand the performance of the other’s undertaking; (2) When only one of the contracting parties is at fault, he cannot recover what he has given by reason of the contract, or ask for the fulfillment of what has been promised him. The other who is not at fault, may demand the return of what he has given without any obligation to comply with his promise. 123 Art. 1413. Interest paid in excess of the interest allowed by the usury laws may be recovered by the debtor, with interest thereon from the date of the payment. 124 Art. 1414. When money is paid or property delivered for an illegal purpose, the contract may be repudiated by one of the parties before the purpose has been accomplished, or before any damage has been caused to a third person. In such case, the courts may, if the public interest will thus be subserved, allow the party repudiating the contract to recover the money or property. 125 Art. 1415. Where one of the parties to an illegal contract is incapable of giving consent, the courts may, if the interest of justice so demands, allow recovery of money or property delivered by the incapacitated person.

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not illegal per se but merely prohibited and if public policy would be enhanced by permitting recovery (Art. 1416, Civil Code);126 and (f) the party for whose benefit the law has been intended such as in price ceiling laws (Art. 1417, Civil Code)127 and labor laws (Arts. 1418-1419, Civil Code).128 It is significant to note that the agreement executed by the parties in this case is a Contract to Sell and not a contract of sale. A distinction between the two is material in the determination of when ownership is deemed to have been transferred to the buyer or vendee and, ultimately, the resolution of the question on whether the constitutional proscription has been breached. In a contract of sale, the title passes to the buyer upon the delivery of the thing sold. The vendor has lost and cannot recover the ownership of the property until and unless the contract of sale is itself resolved and set aside.129 On the other hand, a contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed.130 In other words, in a contract to sell, the prospective seller agrees to transfer ownership of the property to the buyer upon the happening of an event, which normally is the full payment of the purchase price. But even upon the fulfillment of 126 Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the prohibition by the law is designed for the protection of the plaintiff, he may, if public policy is thereby enhanced, recover what he has paid or delivered. 127 Art. 1417. When the price of any article or commodity is determined by statute, or by authority of law, any person paying any amount in excess of the maximum price allowed may recover such excess. 128 Art. 1418. When the law fixes, or authorizes the fixing of the maximum number of hours of labor, and a contract is entered into whereby a laborer undertakes to work longer than the maximum thus fixed, he may demand additional compensation for service rendered beyond the time limit. Art. 1419. When the law sets, or authorizes the setting of a minimum wage for laborers, and a contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to recover the deficiency. 129 Ayala Life Assurance, Inc. v. Ray Burton Development Corporation, G.R. No. 163075, January 23, 2006, 479 SCRA 462, 468-469; Dijamco v. Court of Appeals, G.R. No. 113665, October 7, 2004, 440 SCRA 190, 197. 130 Philippine National Bank v. Court of Appeals, 330 Phil. 1048, 1067; 262 SCRA 464, 477-478 (1996); Rose Packing Co., Inc. v. Court of Appeals, G.R. No. L-33084, November 14, 1988, 167 SCRA 309, 318; Lim v. Court of Appeals, G.R. No. 85733, February 23, 1990, 182 SCRA 564, 570.

150

TORTS AND DAMAGES SIMPLIFIED

the suspensive condition, ownership does not automatically transfer to the buyer. The prospective seller still has to convey title to the prospective buyer by executing a contract of absolute sale.131 Since the contract involved here is a Contract to Sell, ownership has not yet transferred to the petitioner when he filed the suit for rescission. While the intent to circumvent the constitutional proscription on aliens owning real property was evident by virtue of the execution of the Contract to Sell, such violation of the law did not materialize because petitioner caused the rescission of the contract before the execution of the final deed transferring ownership. Thus, exception (c) finds application in this case. Under Article 1414, one who repudiates the agreement and demands his money before the illegal act has taken place is entitled to recover. Petitioner is therefore entitled to recover what he has paid, although the basis of his claim for rescission, which was granted by the HLURB, was not the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing the purchase price paid to respondent. No damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces no juridical tie between the parties involved.132 Further, petitioner is not entitled to actual as well as interests thereon,133 moral and exemplary damages and attorney’s fees. The Court takes into consideration the fact that the HLURB Decision dated April 22, 1997 has long been final and executory. Nothing is more settled in the law than that a decision that has acquired finality becomes immutable and unalterable and may no longer be modified in any respect even if the modification is meant to correct erroneous conclusions of fact or law and whether it was made by the court that rendered it or by the highest court of the land.134 131 Sacobia Hills Development Corporation v. Ty, G.R. No. 165889, September 20, 2005, 470 SCRA 395, 404; Coronel v. Court of Appeals, 331 Phil. 294, 309; 263 SCRA 15, 28 (1996). 132 Menchavez v. Teves, Jr., G.R. No. 153201, January 26, 2005, 449 SCRA 380, 393. 133 Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95. 134 Peña v. Government Service Insurance System (GSIS), G.R No. 159520, September 19, 2006, 502 SCRA 383, 404; Siy v. National Labor Relations Commission, G.R. No. 158971, August 25, 2005, 468 SCRA 154, 161-162; Sacdalan v. Court of Appeals, G.R. No. 128967, May 20, 2004, 428 SCRA 586, 599.

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The only recognized exceptions to the general rule are the correction of clerical errors, the so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and whenever circumstances transpire after the finality of the decision rendering its execution unjust and inequitable.135 None of the exceptions is present in this case. The HLURB decision cannot be considered a void judgment, as it was rendered by a tribunal with jurisdiction over the subject matter of the complaint.136 Ineluctably, the HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent. Petitioner received more than what he is entitled to recover under the circumstances. Article 22 of the Civil Code which embodies the maxim, nemo ex alterius incommode debet lecupletari (no man ought to be made rich out of another’s injury), states: “Art. 22. Every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him.”

The above-quoted article is part of the chapter of the Civil Code on Human Relations, the provisions of which were formulated as basic principles to be observed for the rightful relationship between human beings and for the stability of the social order; designed to indicate certain norms that spring from the fountain of good conscience; guides for human conduct that should run as golden threads through society to the end that law may approach its supreme ideal which is the sway and dominance of justice.137 There is unjust enrichment when a person unjustly retains a benefit at the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience.138

135 Peña v. Government Service Insurance System (GSIS), supra note 45; Siy v. National Labor Relations Commission, supra note 45, at p. 162; Sacdalan v. Court of Appeals, supra note 45. 136 Pilapil v. Heirs of Maximino R. Briones, G.R. No. 150175, February 5, 2007, 514 SCRA 197, citing Gomez v. Concepcion, 47 Phil. 717, 722-723 (1925). 137 Security Bank & Trust Company v. Court of Appeals, 319 Phil. 312, 317; 249 SCRA 206, 209-210 (1995). 138 66 Am Jur 2d Restitution and Implied Contracts § 3.

152

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A sense of justice and fairness demands that petitioner should not be allowed to benefit from his act of entering into a contract to sell that violates the constitutional proscription. This is not a case of equity overruling or supplanting a positive provision of law or judicial rule. Rather, equity is exercised in this case “as the complement of legal jurisdiction [that] seeks to reach and to complete justice where courts of law, through the inflexibility of their rules and want of power to adapt their judgments to the special circumstances of cases, are incompetent to do so.”139 The purpose of the exercise of equity jurisdiction in this case is to prevent unjust enrichment and to ensure restitution. Equity jurisdiction aims to do complete justice in cases where a court of law is unable to adapt its judgments to the special circumstances of a case because of the inflexibility of its statutory or legal jurisdiction.140 The sheriff delivered to petitioner the amount of P5,313,040.00 representing the net proceeds (bidded amount is P5,450,653.33) of the auction sale after deducting the legal fees in the amount of P137,613.33.141 Petitioner is only entitled to P3,187,500.00, the amount of the purchase price of the real property paid by petitioner to respondent under the Contract to Sell. Thus, the Court in the exercise of its equity jurisdiction may validly order petitioner to return the excess amount of P2,125,540.00. The Court shall now proceed to resolve the single issue raised in the present petition: whether the CA seriously erred in affirming the HLURB Order setting aside the levy made by the Sheriff on the subject properties. Petitioner avers that the HLURB Arbiter and Director had no factual basis for pegging the fair market value of the levied properties at P6,500.00 per sq. m or P83,616,000.00; that reliance on the appraisal report was misplaced since the appraisal was based on the value of land in neighboring developed subdivisions and on the assumption that the residential unit appraised had already been built; that the Sheriff need not determine the fair market value of the

139

Tamio v. Ticson, G.R. No. 154895, November 18, 2004, 443 SCRA 44, 55. Agcaoili v. Government Service Insurance System, G.R. No. L-30056, August 30, 1988, 165 SCRA 1, 9; Air Manila, Inc. v. Court of Industrial Relations, G.R. No. L-39742, June 9, 1978, 83 SCRA 579, 589. 141 Sheriff’s Return dated May 3, 2000, CA Rollo, pp. 208-210. 140

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subject properties before levying on the same since what is material is the amount for which the properties were bidded and sold during the public auction; that the pendency of any motion is not a valid ground for the Sheriff to suspend the execution proceedings and, by itself, does not have the effect of restraining the Sheriff from proceeding with the execution. Respondent, on the other hand, contends that while it is true that the HLURB Arbiter and Director did not categorically state the exact value of the levied properties, said properties cannot just amount to P6,000,000.00; that the HLURB Arbiter and Director correctly held that the value indicated in the tax declaration is not the sole determinant of the value of the property. The petition is impressed with merit. If the judgment is for money, the sheriff or other authorized officer must execute the same pursuant to the provisions of Section 9, Rule 39 of the Revised Rules of Court, viz.: “Sec. 9. Execution of judgments for money, how enforced. — (a) Immediate payment on demand. — The officer shall enforce an execution of a judgment for money by demanding from the judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. x x x (b) Satisfaction by levy. — If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution, giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if the personal properties are insufficient to answer for the judgment. The sheriff shall sell only a sufficient portion of the personal or real property of the judgment obligor which has been levied upon. When there is more property of the judgment obligor than is sufficient to satisfy the judgment and lawful fees, he must sell only so much of the personal or real property as is sufficient to satisfy the judgment and lawful fees.

154

TORTS AND DAMAGES SIMPLIFIED

Real property, stocks, shares, debts, credits, and other personal property, or any interest in either real or personal property, may be levied upon in like manner and with like effect as under a writ of attachment (Emphasis supplied).”142

Thus, under Rule 39, in executing a money judgment against the property of the judgment debtor, the sheriff shall levy on all property belonging to the judgment debtor as is amply sufficient to satisfy the judgment and costs, and sell the same paying to the judgment creditor so much of the proceeds as will satisfy the amount of the judgment debt and costs. Any excess in the proceeds shall be delivered to the judgment debtor unless otherwise directed by the judgment or order of the court.143 Clearly, there are two stages in the execution of money judgments. First, the levy and then the execution sale. Levy has been defined as the act or acts by which an officer sets apart or appropriates a part or the whole of a judgment debtor’s property for the purpose of satisfying the command of the writ of execution.144 The object of a levy is to take property into the custody 142

RULES OF COURT, Rule 57, Section 7: Sec. 7. Attachment of real and personal property; recording thereof. — Real and personal property shall be attached by the sheriff executing the writ in the following manner: (a) Real property, or growing crops thereon, standing upon the record of the registry of deeds of the province in the name of the party against whom attachment is issued, or not appearing at all upon such records, or belonging to the party against whom attachment is issued and held by any other person, or standing on the records of the registry of deeds in the name of any other person, by filing with the registry of deeds a copy of the order, together with a description of the property attached, and a notice that it is attached, or that such real property and any interest therein held by or standing in the name of such other person are attached, and by leaving a copy of such order, description, and notice with the occupant of the property, if any, or with such other person or his agent if found within the province. Where the property has been brought under the operation of either the Land Registration Act or the Property Registration Decree, the notice shall contain a reference to the number of the certificate of title, the volume and page in the registration book where the certificate is registered, and the registered owner or owners thereof. The registrar must index attachments filed under this paragraph in the names both of the applicant, the adverse party, or the person by whom the property is held or in whose name it stands in the records. x x x. xxxx 143 Moran, Comments on the Rules of Court, Vol. II, p. 297 (1980). 144 Caja v. Nanquil, A.M. No. P-04-1885, September 13, 2004, 438 SCRA 174, 191; Cagayan de Oro Coliseum, Inc. v. Court of Appeals, 378 Phil. 498, 523; 320 SCRA 731, 755 (1999); Fiestan v. Court of Appeals, G.R. No. 81552, May 28, 1990, 185 SCRA

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of the law, and thereby render it liable to the lien of the execution, and put it out of the power of the judgment debtor to divert it to any other use or purpose.145 On the other hand, an execution sale is a sale by a sheriff or other ministerial officer under the authority of a writ of execution of the levied property of the debtor.146 In the present case, the HLURB Arbiter and Director gravely abused their discretion in setting aside the levy conducted by the Sheriff for the reason that the auction sale conducted by the sheriff rendered moot and academic the motion to quash the levy. The HLURB Arbiter lost jurisdiction to act on the motion to quash the levy by virtue of the consummation of the auction sale. Absent any order from the HLURB suspending the auction sale, the sheriff rightfully proceeded with the auction sale. The winning bidder had already paid the winning bid. The legal fees had already been remitted to the HLURB. The judgment award had already been turned over to the judgment creditor. What was left to be done was only the issuance of the corresponding certificates of sale to the winning bidder. In fact, only the signature of the HLURB Director for that purpose was needed147 — a purely ministerial act. A purely ministerial act or duty is one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of a legal authority, without regard for or the exercise of his own judgment upon the propriety or impropriety of the act done. If the law imposes a duty upon a public officer and gives him the right to decide how or when the duty shall be performed, such duty is discretionary and not ministerial. The duty is ministerial only when the discharge of the same requires neither the exercise of official discretion nor judgment.148 In the present case, all the requirements of auction sale under the Rules have been fully complied with to warrant the issuance of the corresponding certificates of sale.

751, 757; Del Rosario v. Hon. Yatco, 125 Phil. 396, 399; 18 SCRA 1263, 1266 (1966); Llenares v. Valdeavella, 46 Phil. 358, 360 (1924). 145 Cagayan de Oro Coliseum, Inc. v. Court of Appeals, supra note 55, at pp. 523524; Francisco, The Revised Rules of Court in the Philippines, Vol. II, p. 700 (1968), citing 33 C.J.S. 234; Del Rosario v. Yatco, supra note 55. 146 Caja v. Nanquil, supra note 55. 147 CA Rollo, pp. 191-207. 148 Espiridion v. Court of Appeals, G.R. No. 146933, June 8, 2006, 490 SCRA 273, 277; Codilla, Sr. v. de Venecia, 442 Phil. 139, 189; 393 SCRA 639, 681 (2002).

156

TORTS AND DAMAGES SIMPLIFIED

And even if the Court should go into the merits of the assailed Order, the petition is meritorious on the following grounds: Firstly, the reliance of the HLURB Arbiter and Director, as well as the CA, on Barrozo v. Macaraeg149 and Buan v. Court of Appeals150 is misplaced. The HLURB and the CA misconstrued the Court’s pronouncements in Barrozo. Barrozo involved a judgment debtor who wanted to repurchase properties sold at execution beyond the one-year redemption period. The statement of the Court in Barrozo, that “only where such inadequacy shocks the conscience the courts will intervene,” is at best a mere obiter dictum. This declaration should be taken in the context of the other declarations of the Court in Barrozo, to wit: “Another point raised by appellant is that the price paid at the auction sale was so inadequate as to shock the conscience of the court. Supposing that this issue is open even after the oneyear period has expired and after the properties have passed into the hands of third persons who may have paid a price higher than the auction sale money, the first thing to consider is that the stipulation contains no statement of the reasonable value of the properties; and although defendant’ answer avers that the assessed value was P3,960 it also avers that their real market value was P2,000 only. Anyway, mere inadequacy of price — which was the complaint’ allegation — is not sufficient ground to annul the sale. It is only where such inadequacy shocks the conscience that the courts will intervene. x x x Another consideration is that the assessed value being P3,960 and the purchase price being in effect P1,864 (P464 sale price plus P1,400 mortgage lien which had to be discharged) the conscience is not shocked upon examining the prices paid in the sales in National Bank v. Gonzales, 45 Phil. 693 and Guerrero v. Guerrero, 57 Phil. 445, sales which were left undisturbed by this Court. Furthermore, where there is the right to redeem — as in this case — inadequacy of price should not be material because the judgment debtor may re-acquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale. x x x x (Emphasis supplied).”151 149

Supra note 21. Supra note 22. 151 Supra note 21, at pp. 380-381. 150

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In other words, gross inadequacy of price does not nullify an execution sale. In an ordinary sale, for reason of equity, a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one’s conscience as to justify the courts to interfere; such does not follow when the law gives the owner the right to redeem as when a sale is made at public auction,152 upon the theory that the lesser the price, the easier it is for the owner to effect redemption.153 When there is a right to redeem, inadequacy of price should not be material because the judgment debtor may reacquire the property or else sell his right to redeem and thus recover any loss he claims to have suffered by reason of the price obtained at the execution sale.154 Thus, respondent stood to gain rather than be harmed by the low sale value of the auctioned properties because it possesses the right of redemption. More importantly, the subject matter in Barrozo is the auction sale, not the levy made by the Sheriff. The Court does not sanction the piecemeal interpretation of a decision. To get the true intent and meaning of a decision, no specific portion thereof should be isolated and resorted to, but the decision must be considered in its entirety.155 152

REVISED RULES OF COURT, Rule 39, Section 28, provides: SEC. 28. Time and manner of, and amounts payable on, successive redemptions; notice to be given and filed. — The judgment obligor, or redemptioner, may redeem the property from the purchaser, at any time within one (1) year from the date of the registration of the certificate of sale, by paying the purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after purchase, and interest on such last named amount of the same rate; and if the purchaser be also a creditor having a prior lien to that of the redemptioner, other than the judgment under which such purchase was made, the amount of such other lien, with interest. x x x x (Emphasis supplied). 153 Philippine National Bank v. Court of Appeals, 367 Phil. 508, 522; 308 SCRA 229, 242 (1999); Sulit v. Court of Appeals, 335 Phil. 914, 927; 268 SCRA 441, 453 (1997); The Abaca Corporation of the Philippines v. Garcia, 338 Phil. 988, 993; 272 SCRA 475, 480 (1997); Tiongco v. Philippine Veterans Bank, G.R. No. 82782, August 5, 1992, 212 SCRA 176, 189-190. 154 Suico Rattan & Buri Interiors, Inc. v. Court of Appeals, G.R. No. 138145, June 15, 2006, 490 SCRA 560, 579, citing Prudential Bank v. Martinez, G.R. No. 51768, September 14, 1990, 189 SCRA 612, 617; Development Bank of the Philippines v. Moll, 150 Phil. 101, 107; 43 SCRA 82, 87-88 (1972). 155 Telefunken Semiconductors Employees Union v. Court of Appeals, 401 Phil. 776, 800; 348 SCRA 565, 587 (2000); Valderrama v. National Labor Relations Commission, 326 Phil. 477, 484; 256 SCRA 466, 472 (1996); Policarpio v. Philippine Veterans Board and Associated Insurance & Surety Co., Inc., 106 Phil. 125, 131 (1959).

158

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As regards Buan, it is cast under an entirely different factual milieu. It involved the levy on two parcels of land owned by the judgment debtor; and the sale at public auction of one was sufficient to fully satisfy the judgment, such that the levy and attempted execution of the second parcel of land was declared void for being in excess of and beyond the original judgment award granted in favor of the judgment creditor. In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the Revised Rules of Court, to “sell only a sufficient portion” of the levied properties “as is sufficient to satisfy the judgment and the lawful fees.” Each of the 15 levied properties was successively bidded upon and sold, one after the other until the judgment debt and the lawful fees were fully satisfied. Holly Properties Realty Corporation successively bidded upon and bought each of the levied properties for the total amount of P5,450,653.33 in full satisfaction of the judgment award and legal fees.156 Secondly, the Rules of Court do not require that the value of the property levied be exactly the same as the judgment debt; it can be less or more than the amount of debt. This is the contingency addressed by Section 9, Rule 39 of the Rules of Court. In the levy of property, the Sheriff does not determine the exact valuation of the levied property. Under Section 9, Rule 39, in conjunction with Section 7, Rule 57 of the Rules of Court, the sheriff is required to do only two specific things to effect a levy upon a realty: (a) file with the register of deeds a copy of the order of execution, together with the description of the levied property and notice of execution; and (b) leave with the occupant of the property copy of the same order, description and notice.157 Records do not show that respondent alleged non-compliance by the Sheriff of said requisites. Thirdly, in determining what amount of property is sufficient out of which to secure satisfaction of the execution, the Sheriff is left to his own judgment. He may exercise a reasonable discretion, and must exercise the care which a reasonably prudent person would exercise under like conditions and circumstances, endeavoring on the one hand to obtain sufficient property to satisfy the purposes of the writ, and on the other hand not to make an unreasonable

156

CA Rollo, p. 210. Cagayan de Oro Coliseum, Inc. v. Court of Appeals, supra note 55, at p. 524; p. 756; Philippine Surety & Insurance Company, Inc. v. Zabal, 128 Phil. 714, 718; 21 SCRA 682, 685 (1967). See also Martin, Civil Procedure, Vol. I, p. 806 (1989). 157

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and unnecessary levy.158 Because it is impossible to know the precise quantity of land or other property necessary to satisfy an execution, the Sheriff should be allowed a reasonable margin between the value of the property levied upon and the amount of the execution; the fact that the Sheriff levies upon a little more than is necessary to satisfy the execution does not render his actions improper.159 Section 9, Rule 39, provides adequate safeguards against excessive levying. The Sheriff is mandated to sell so much only of such real property as is sufficient to satisfy the judgment and lawful fees. In the absence of a restraining order, no error, much less abuse of discretion, can be imputed to the Sheriff in proceeding with the auction sale despite the pending motion to quash the levy filed by the respondents with the HLURB. It is elementary that sheriffs, as officers charged with the delicate task of the enforcement and/or implementation of judgments, must, in the absence of a restraining order, act with considerable dispatch so as not to unduly delay the administration of justice; otherwise, the decisions, orders, or other processes of the courts of justice and the like would be futile.160 It is not within the jurisdiction of the Sheriff to consider, much less resolve, respondent’s objection to the continuation of the conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the auction sale. His duty being ministerial, he has no discretion to postpone the conduct of the auction sale. Finally, one who attacks a levy on the ground of excessiveness carries the burden of sustaining that contention.161 In the determination of whether a levy of execution is excessive, it is proper to take into consideration encumbrances upon the property, as well as the fact that a forced sale usually results in a sacrifice; that is, the price demanded for the property upon a private sale is not the standard for determining the excessiveness of the levy.162 Here, the HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. Respondent only submitted an Appraisal Report, based merely on surmises. The Report was based on the projected value of the townhouse project 158

30 Am Jur 2d Executions and Enforcement of Judgments § 122. Id. 160 Security Bank Corporation v. Gonzalbo, A.M. No. P-06-2139, March 23, 2006, 485 SCRA 136, 145-146; Zarate v. Untalan, A.M. No. MTJ-05-1584, March 31, 2005, 454 SCRA 206, 216; Mendoza v. Tuquero, 412 Phil. 435, 442; 360 SCRA 21, 27 (2001). 161 30 Am Jur 2d Executions and Enforcement of Judgments § 122. 162 Id., at § 123, citing French v. Snyder, 30 Ill 339. 159

160

TORTS AND DAMAGES SIMPLIFIED

after it shall have been fully developed, that is, on the assumption that the residential units appraised had already been built. The Appraiser in fact made this qualification in its Appraisal Report: “[t]he property subject of this appraisal has not been constructed. The basis of the appraiser is on the existing model units.”163 Since it is undisputed that the townhouse project did not push through, the projected value did not become a reality. Thus, the appraisal value cannot be equated with the fair market value. The Appraisal Report is not the best proof to accurately show the value of the levied properties as it is clearly self-serving. Therefore, the Order dated August 28, 2000 of HLURB Arbiter Aquino and Director Ceniza in HLRB Case No. IV6-071196-0618 which set aside the sheriff’s levy on respondent’s real properties, was clearly issued with grave abuse of discretion. The CA erred in affirming said Order. WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of the Court of Appeals in CA-G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order dated August 28, 2000 of HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen G. Ceniza in HLRB Case No. IV6-071196-0618 is declared NULL and VOID. HLURB Arbiter Aquino and Director Ceniza are directed to issue the corresponding certificates of sale in favor of the winning bidder, Holly Properties Realty Corporation. Petitioner is ordered to return to respondent the amount of P2,125,540.00, without interest, in excess of the proceeds of the auction sale delivered to petitioner. After the finality of herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid. SO ORDERED. — oOo —

163

CA Rollo, p. 152.

161

APPENDIX “A” Title XVII. — EXTRA-CONTRACTUAL OBLIGATIONS CHAPTER 1 QUASI-CONTRACTS Art. 2142. Certain lawful, voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the expense of another. (n) Art. 2143. The provisions for quasi-contracts in this Chapter do not exclude other quasi-contracts which may come within the purview of the preceding article. (n) SECTION 1. — Negotiorum Gestio Art. 2144. Whoever voluntarily takes charge of the agency or management of the business or property of another, without any power from the latter, is obliged to continue the same until the termination of the affair and its incidents, or to require the person concerned to substitute him, if the owner is in a position to do so. This juridical relation does not arise in either of these instances: (1) When the property or business is not neglected or abandoned; (2) If in fact the manager has been tacitly authorized by the owner. In the first case, the provisions of Articles 1317, 1403, No. 1, and 1404 regarding unauthorized contracts shall govern. In the second case, the rules on agency in Title X of this Book shall be applicable. (1888a) 161

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Art. 2145. The officious manager shall perform his duties with all the diligence of a good father of a family, and pay the damages which through his fault or negligence may be suffered by the owner of the property or business under management. The courts may, however, increase or moderate the indemnity according to the circumstances of each case. (1889a) Art. 2146. If the officious manager delegates to another person all or some of his duties, he shall be liable for the acts of the delegate, without prejudice to the direct obligation of the latter toward the owner of the business. The responsibility of two or more officious managers shall be solidary, unless the management was assumed to save the thing or business from imminent danger. (1890a) Art. 2147. The officious manager shall be liable for any fortuitous event: (1) If he undertakes risky operations which the owner was not accustomed to embark upon; (2) owner;

If he has preferred his own interest to that of the

(3) If he fails to return the property or business after demand by the owner; (4)

If he assumed the management in bad faith. (1891a)

Art. 2148. Except when the management was assumed to save property or business from imminent danger, the officious manager shall be liable for fortuitous events: (1)

If he is manifestly unfit to carry on the management;

(2) If by his intervention he prevented a more competent person from taking up the management. (n) Art. 2149. The ratification of the management by the owner of the business produces the effects of an express agency, even if the business may not have been successful. (1892a) Art. 2150. Although the officious management may not have been expressly ratified, the owner of the property or

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business who enjoys the advantages of the same shall be liable for obligations incurred in his interest, and shall reimburse the officious manager for the necessary and useful expenses and for the damages which the latter may have suffered in the performance of his duties. The same obligation shall be incumbent upon him when the management had for its purpose the prevention of an imminent and manifest loss, although no benefit may have been derived. (1893) Art. 2151. Even though the owner did not derive any benefit and there has been no imminent and manifest danger to the property or business, the owner is liable as under the first paragraph of the preceding article, provided: (1)

The officious manager has acted in good faith, and

(2) The property or business is intact, ready to be returned to the owner. (n) Art. 2152. The officious manager is personally liable for contracts which he has entered into with third persons, even though he acted in the name of the owner, and there shall be no right of action between the owner and third persons. These provisions shall not apply: (1) If the owner has expressly or tacitly ratified the management, or (2) When the contract refers to things pertaining to the owner of the business. (n) Art. 2153. The management is extinguished: (1) When the owner repudiates it or puts an end thereto; (2) When the officious manager withdraws from the management, subject to the provisions of Article 2144; (3) By the death, civil interdiction, insanity or insolvency of the owner or the officious manager. (n) SECTION 2. — Solutio Indebiti Art. 2154. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. (1895)

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Art. 2155. Payment by reason of a mistake in the construction or application of a doubtful or difficult question of law may come within the scope of the preceding article. (n) Art. 2156. If the payer was in doubt whether the debt was due, he may recover if he proves that it was not due. (n) Art. 2157. The responsibility of two or more payees, when there has been payment of what is not due, is solidary. (n) Art. 2158. When the property delivered or money paid belongs to a third person, the payee shall comply with the provisions of Article 1984. (n) Art. 2159. Whoever in bad faith accepts an undue payment, shall pay legal interest if a sum of money is involved, or shall be liable for fruits received or which should have been received if the thing produces fruits. He shall furthermore be answerable for any loss or impairment of the thing from any cause, and for damages to the person who delivered the thing, until it is recovered. (1896a) Art. 2160. He who in good faith accepts an undue payment of a thing certain and determinate shall only be responsible for the impairment or loss of the same or its accessories and accessions insofar as he has thereby been benefited. If he has alienated it, he shall return the price or assign the action to collect the sum. (1897) Art. 2161. As regards the reimbursement for improvements and expenses incurred by him who unduly received the thing, the provisions of Title V of Book II shall govern. (1898) Art. 2162. He shall be exempt from the obligation to restore who, believing in good faith that the payment was being made of a legitimate and subsisting claim, destroyed the document, or allowed the action to prescribe, or gave up the pledges, or cancelled the guaranties for his right. He who paid unduly may proceed only against the true debtor or the guarantors with regard to whom the action is still effective. (1899)

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Art. 2163. It is presumed that there was a mistake in the payment if something which had never been due or had already been paid was delivered; but he from whom the return is claimed may prove that the delivery was made out of liberality or for any other just cause. (1901) SECTION 3. — Other Quasi-Contracts Art. 2164. When, without the knowledge of the person obliged to give support, it is given by a stranger, the latter shall have a right to claim the same from the former, unless it appears that he gave it out of piety and without intention of being repaid. (1894a) Art. 2165. When funeral expenses are borne by a third person, without the knowledge of those relatives who were obliged to give support to the deceased, said relatives shall reimburse the third person, should the latter claim reimbursement. (1894a) Art. 2166. When the person obliged to support an orphan, or an insane or other indigent person unjustly refuses to give support to the latter, any third person may furnish support to the needy individual, with right of reimbursement from the person obliged to give support. The provisions of this article apply when the father or mother of a child under eighteen years of age unjustly refuses to support him. Art. 2167. When through an accident or other cause a person is injured or becomes seriously ill, and he is treated or helped while he is not in a condition to give consent to a contract, he shall be liable to pay for the services of the physician or other person aiding him, unless the service has been rendered out of pure generosity. Art. 2168. When during a fire, flood, storm, or other calamity, property is saved from destruction by another person without the knowledge of the owner, the latter is bound to pay the former just compensation. Art. 2169. When the government, upon the failure of any person to comply with health or safety regulations concerning property, undertakes to do the necessary work, even over his objection, he shall be liable to pay the expenses.

166

TORTS AND DAMAGES SIMPLIFIED

Art. 2170. When by accident or other fortuitous event, movables separately pertaining to two or more persons are commingled or confused, the rules on co-ownership shall be applicable. Art. 2171. The rights and obligations of the finder of lost personal property shall be governed by Articles 719 and 720. Art. 2172. The right of every possessor in good faith to reimbursement for necessary and useful expenses is governed by Article 546. Art. 2173. When a third person, without the knowledge of the debtor, pays the debt, the rights of the former are governed by Articles 1236 and 1237. Art. 2174. When in a small community a nationality of the inhabitants of age decide upon a measure for protection against lawlessness, fire, flood, storm or other calamity, any one who objects to the plan and refuses to contribute to the expenses but is benefited by the project as executed shall be liable to pay his share of said expenses. Art. 2175. Any person who is constrained to pay the taxes of another shall be entitled to reimbursement from the latter. CHAPTER 2 QUASI-DELICTS Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. (1902a) Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. (n) Art. 2178. The provisions of Articles 1172 to 1174 are also applicable to a quasi-delict. (n)

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Art. 2179. When the plaintiff’s own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant’s lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. (n) Art. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company. The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. The State is responsible in like manner when it acts through a special agent; but not when the damage has been caused by the official to whom the task done properly pertains, in which case what is provided in Article 2176 shall be applicable. Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. (1903a)

168

TORTS AND DAMAGES SIMPLIFIED

Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. (1904) Art. 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. (n) Art. 2183. The possessor of an animal or whoever may make use of the same is responsible for the damage which it may cause, although it may escape or be lost. This responsibility shall cease only in case the damage should come from force majeure or from the fault of the person who has suffered damage. (1905) Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. (n) Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. (n) Art. 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and other terms shall be fixed by the competent public official. (n) Art. 2187. Manufacturers and processors of foodstuffs, drinks, toilet articles and similar goods shall be liable for death or injuries caused by any noxious or harmful substances used, although no contractual relation exists between them and the consumers. (n) Art. 2188. There is prima facie presumption of negligence on the part of the defendant if the death or injury results

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169

from his possession of dangerous weapons or substances, such as firearms and poison, except when the possession or use thereof is indispensable in his occupation or business. (n) Art. 2189. Provinces, cities and municipalities shall be liable for damages for the death of, or injuries suffered by, any person by reason of the defective condition of roads, streets, bridges, public buildings, and other public works under their control or supervision. (n) Art. 2190. The proprietor of a building or structure is responsible for the damages resulting from its total or partial collapse, if it should be due to the lack of necessary repairs. (1907) Art. 2191. Proprietors shall also be responsible for damages caused: (1) By the explosion of machinery which has not been taken care of with due diligence, and the inflammation of explosive substances which have not been kept in a safe and adequate place; (2) By excessive smoke, which may be harmful to persons or property; (3) By the falling of trees situated at or near highways or lanes, if not caused by force majeure; (4) By emanations from tubes, canals, sewers or deposits of infectious matter, constructed without precautions suitable to the place. (1908) Art. 2192. If damage referred to in the two preceding articles should be the result of any defect in the construction mentioned in Article 1723, the third person suffering damages may proceed only against the engineer or architect or contractor in accordance with said article, within the period therein fixed. (1909) Art. 2193. The head of a family that lives in a building or a part thereof, is responsible for damages caused by things thrown or falling from the same. (1910) Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary. (n)

170

TORTS AND DAMAGES SIMPLIFIED

Title XVIII. — DAMAGES CHAPTER 1 GENERAL PROVISIONS Art. 2195. The provisions of this Title shall be respectively applicable to all obligations mentioned in Article 1157. Art. 2196. The rules under this Title are without prejudice to special provisions on damages formulated elsewhere in this Code. Compensation for workmen and other employees in case of death, injury or illness is regulated by special laws. Rules governing damages laid down in other laws shall be observed insofar as they are not in conflict with this Code. Art. 2197. Damages may be: (1)

Actual or compensatory;

(2)

Moral;

(3)

Nominal;

(4)

Temperate or moderate;

(5)

Liquidated; or

(6)

Exemplary or corrective.

Art. 2198. The principles of the general law on damages are hereby adopted insofar as they are not inconsistent with this Code. CHAPTER 2 ACTUAL OR COMPENSATORY DAMAGES Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Art. 2200. Indemnification for damages shall comprehend not only the value of the loss suffered, but also that of the profits which the obligee failed to obtain. (1106) Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall

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171

be those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen or could have reasonably foreseen at the time the obligation was constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be reasonably attributed to the non-performance of the obligation. (1107a) Art. 2202. In crimes and quasi-delicts, the defendant shall be liable for all damages which are the natural and probable consequences of the act or omission complained of. It is not necessary that such damages have been foreseen or could have reasonably been foreseen by the defendant. Art. 2203. The party suffering loss or injury must exercise the diligence of a good father of a family to minimize the damages resulting from the act or omission in question. Art. 2204. In crimes, the damages to be adjudicated may be respectively increased or lessened according to the aggravating or mitigating circumstances. Art. 2205. Damages may be recovered: (1) For loss or impairment of earning capacity in cases of temporary or permanent personal injury; (2) For injury to the plaintiff’s business standing or commercial credit. Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of Article 291, the recipient who is not

172

TORTS AND DAMAGES SIMPLIFIED

an heir called to the decedent’s inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Art. 2207. If the plaintiff’s property has been insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Art. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1)

When exemplary damages are awarded;

(2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; (4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; (6)

In actions for legal support;

(7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen’s compensation and employer’s liability laws;

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173

(9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered. In all cases, the attorney’s fees and expenses of litigation must be reasonable. Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest, which is six per cent per annum. (1108) Art. 2210. Interest may, in the discretion of the court, be allowed upon damages awarded for breach of contract. Art. 2211. In crimes and quasi-delicts, interest as a part of the damages may, in a proper case, be adjudicated in the discretion of the court. Art. 2212. Interest due shall earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. (1109a) Art. 2213. Interest cannot be recovered upon unliquidated claims or damages, except when the demand can be established with reasonably certainty. Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the damages that he may recover. Art. 2215. In contracts, quasi-contracts, and quasidelicts, the court may equitably mitigate the damages under circumstances other than the case referred to in the preceding article, as in the following instances: (1) That the plaintiff himself has contravened the terms of the contract; (2) That the plaintiff has derived some benefit as a result of the contract;

174

TORTS AND DAMAGES SIMPLIFIED

(3) In cases where exemplary damages are to be awarded, that the defendant acted upon the advice of counsel; (4)

That the loss would have resulted in any event;

(5) That since the filing of the action, the defendant has done his best to lessen the plaintiff’s loss or injury. CHAPTER 3 OTHER KINDS OF DAMAGES Art. 2216. No proof of pecuniary loss is necessary in order that moral, nominal, temperate, liquidated or exemplary damages, may be adjudicated. The assessment of such damages, except liquidated ones, is left to the discretion of the court, according to the circumstances of each case. SECTION 1. — Moral Damages Art. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act for omission. Art. 2218. In the adjudication of moral damages, the sentimental value of property, real or personal, may be considered. Art. 2219. Moral damages may be recovered in the following and analogous cases: (1)

A criminal offense resulting in physical injuries;

(2)

Quasi-delicts causing physical injuries;

(3)

Seduction, abduction, rape, or other lascivious

(4)

Adultery or concubinage;

(5)

Illegal or arbitrary detention or arrest;

(6)

Illegal search;

(7)

Libel, slander or any other form of defamation;

acts;

APPENDIX “A’’

(8)

Malicious prosecution;

(9)

Acts mentioned in Article 309;

175

(10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The parents of the female seduced, abducted, raped, or abused, referred to in No. 3 of this article, may also recover moral damages. The spouse, descendants, ascendants, and brothers and sisters may bring the action mentioned in No. 9 of this article, in the order named. Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith. SECTION 2. — Nominal Damages Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered by him. Art. 2222. The court may award nominal damages in every obligation arising from any source enumerated in Article 1157, or in every case where any property right has been invaded. Art. 2223. The adjudication of nominal damages shall preclude further contest upon the right involved and all accessory questions, as between the parties to the suit, or their respective heirs and assigns. SECTION 3. — Temperate or Moderate Damages Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be provided with certainty.

176

TORTS AND DAMAGES SIMPLIFIED

Art. 2225. Temperate damages must be reasonable under the circumstances. SECTION 4. — Liquidated Damages Art. 2226. Liquidated damages are those agreed upon by the parties to a contract, to be paid in case of breach thereof. Art. 2227. Liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. Art. 2228. When the breach of the contract committed by the defendant is not the one contemplated by the parties in agreeing upon the liquidated damages, the law shall determine the measure of damages, and not the stipulation. SECTION 5. — Exemplary or Corrective Damages Art. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. Art. 2230. In criminal offenses, exemplary damages as a part of the civil liability may be imposed when the crime was committed with one or more aggravating circumstances. Such damages are separate and distinct from fines and shall be paid to the offended party. Art. 2231. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. Art. 2232. In contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated. Art. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before

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177

the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary in addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages. Art. 2235. A stipulation whereby exemplary damages are renounced in advance shall be null and void.

— oOo —

178

TORTS AND DAMAGES SIMPLIFIED

179

GENERAL INDEX —A— Adequate, 104 Award of Damages in Contracts general rule on the, 59 —B— Bond, 80 —C— Civil liabilities to an act or omission causing damage to another, 72 Consequences of unjust refusal to support a minor or an orphan to the person obliged to support them, 45 Constitutional Tort, 31 —D— Damage, 96 kinds of, 97 kinds of damages under the civil code, 103 Doctrine of Res Ipsa Loquitur, 14 Doctrine of Respondeat Superior, 78 —E— Earning Capacity, 125 Effect of a community measure for protection against lawlessness, flood, storm or other calamity, 49 Effect of aiding an accidentally injured or seriously ill person unable to contract, 45 Effect of bearing funeral expenses by a third person, on relatives obliged to give support to the deceased, 40 Effect of payment of taxes for another, 49 Effect of saving property from destruction without the knowledge of the property owner, 46 179

180

TORTS AND DAMAGES SIMPLIFIED

Effect of support given by a stranger upon the person obliged to give support, 40 Extinguishment, 35 Extra-contractual obligations, 29 Extraordinary Diligence, 73 —F— Fault, 73 —G— Good Faith, 37-38 accepter responsibilities of an, 38 possessor, 47-48 rights to reimbursement for necessary and useful expenses governed by Article 546, Civil Code of every, 48 —I— Imminent Danger, 33 Indemnification, 104 —J— Joint Owner, 82 —L— Liability for damages in case of bad faith, malice or fraud, 124 Liability for damages of local government, 81 Liability for damages of the defendant in crimes or quasi-delicts, 125 Liability of motor vehicle owner in case of accidents, 79 Liquidated Damages, 133 —M— Malice implications of, 134 Malicious Prosecution, 49 Moderate Damages (see: Temperate) Negligence, 74

GENERAL INDEX

181

—N— Negotiorum gestio, 3 Negotiorum gestion, 3 Negotiorum gestor, 3 duties of the, 4 responsibility for delegation of functions to another person by the, 32 liability for fortuitous events of, 33 personal liability of, 35 Nominal Damages, 132 —O— Obligation of person obliged to give support to the one who gives it without the former’s knowledge, 44 Owner who has enjoyed the advantages of the management obligation of the, 34 —P— Personal Acts or Omission responsibility for, 73 Personal Acts or Omission and Respondeat Superior responsibility for, 77-78 Personal Property classifications, 47 Proximate Cause, 132 —Q— Quasi, 29 Quasi-contract, 29 Quasi-delict, 71 elements under Articles 2176-2194, Civil Code of, 71 requisites of, 71 —R— Ratification, 33-34 effect by the owner of, Reputation, 126 Responsibilities of a building owner or proprietor, 81 Rules on penalty on unpaid interest on actual damages, 98

182

TORTS AND DAMAGES SIMPLIFIED

—S— Solidarity, 82 Solutio Indebiti, 36 Subrogation, 127 —T— Temperate, 133 Things that may be proven by the person from whom the return is claimed, 39 Tort, 1 kinds of, 2 essential elements of, 31 nature of obligations arising from, 31 Tortfeasor, 2 Tortious, 2 —U— Unjust enrichment, 30

183

CASE INDEX —A— Abalos v. Philex Mining Corporation, 441 Phil. 386; 393 SCRA 134 (2002), 9 Acebedo Optical Company, Inc. v. Court of Appeals, 385 Phil. 956, 976; 329 SCRA 314, 334 (2000), 89 Agcaoili v. Government Service Insurance System, G.R. No. L-30056, August 30, 1988, 165 SCRA 1, 9, 152 Agustin v. Court of Appeals, G.R. No. 84751, June 6, 1990, 186 SCRA 375, 384, 140 Air Manila, Inc. v. Court of Industrial Relations, G.R. No. L-39742, June 9, 1978, 83 SCRA 579, 589, 152 Alauya, Jr. v. Commission on Elections, 443 Phil. 893, 907; 395 SCRA 742, 752-753 (2003), 88 Almeida v. Court of Appeals, G.R. No. 159124, January 17, 2005, 448 SCRA 681, 694, 87 Anselmo v. Hernandez, 533 SCRA 122, 60 Antonio v. Santos, 538 SCRA 1, G.R. No. 149238, November 22, 2007, 134-135 Ayala Corporation v. Madayag, G.R. No. 88421, January 30, 1990, 181 SCRA 687, 115 Ayala Life Assurance, Inc. v. Ray Burton Development Corporation, G.R. No. 163075, January 23, 2006, 479 SCRA 462, 468-469, 149 —B— Balanoba v. Madriaga, G.R. No. 160109, November 22, 2005, 475 SCRA 688, 9 Barrera v. Court of Appeals, G.R. No. 123935, December 14, 2001, 372 SCRA 312, 316, 139 Bayani v. Panay Electric Co., Inc., 386 Phil. 980, 986; 330 SCRA 759, 764-765 (2000), 54 Benguet Electric Cooperative, Inc. v. Court of Appeals, 378 Phil. 1137, 1150-1151; 321 SCRA 524 (1999), 115 183

184

TORTS AND DAMAGES SIMPLIFIED

Bogo-Medellin Milling Co., Inc. v. Court of Appeals, 455 Phil. 285; 407 SCRA 518 (2003), 10 Bulay-og, et al. v. Bacalso, G.R. No. 148795, July 17, 2006, 495 SCRA 308, 10 —C— Cagayan de Oro Coliseum, Inc. v. Court of Appeals, 378 Phil. 498, 523; 320 SCRA 731, 755 (1999), 154 Caja v. Nanquil, A.M. No. P-04-1885, September 13, 2004, 438 SCRA 174, 191, 154 Capili v. Cardaña, G.R. No. 157906, November 2, 2006, 506 SCRA 569, 575, 91 Catalina v. Espitero, 61 O.G. 90, 35 Chan v. Court of Appeals (Special Seventh Division), G.R. No. 118516, November 18, 1998, 298 SCRA 713, 725, 139 Child Learning Center, Inc. v. Tagorio, G.R. No. 150920, November 25, 2005, 476 SCRA 236, 242, 90 Codilla, Sr. v. de Venecia, 442 Phil. 139, 189; 393 SCRA 639, 681 (2002), 155 College Assurance Plan v. Belfranlt Development, Inc. (538 SCRA 41), 15 Cometa v. Court of Appeals, 378 Phil. 1187; 301 SCRA 459 (1999), 56 Corinthian Gardens Association, Inc. v. Tanjunco, 558 SCRA 154, 83 Coronel v. Court of Appeals, 331 Phil. 294, 309; 263 SCRA 15, 28 (1996), 150 Country Bankers Insurance Corporation v. Lianga Bay and Community Multi-Purpose Cooperative, Inc., 425 Phil. 511, 521; 374 SCRA 653 (2002), 22 Cruz v. Cristobal, G.R. No. 140422, August 7, 2006, 498 SCRA 37, 10 —D— DBP Pool of Accredited Insurance Companies v. Radio Mindanao Network, Inc., G.R. No. 147039, January 27, 2006, 480 SCRA 314, 326, 22 Del Rosario v. Hon. Yatco, 125 Phil. 396, 399; 18 SCRA 1263, 1266 (1966), 155 Department of Health v. C.V. Canchela & Associates, G.R. Nos. 151373-74, November 16, 2005, 475 SCRA 218, 14 Development Bank of the Philippines v. Moll, 150 Phil. 101, 107; 43 SCRA 82, 87-88 (1972), 157

CASE INDEX

185

Dijamco v. Court of Appeals, G.R. No. 113665, October 7, 2004, 440 SCRA 190, 197, 149 DM Consunji v. Court of Appeals, G.R. No. 137873, April 20, 2001, 357 SCRA 249, 259, 23 Domingo v. Roces, 449 Phil. 189; 401 SCRA 197 (2003), 10 —E— Eastern Shipping Lines, Inc. v. Court of Appeals, G.R. No. 97412, July 12, 1994, 234 SCRA 78, 95, 102, 150 Escano v. Ortigas, Jr., 536 SCRA 36, 83 Espiridion v. Court of Appeals, G.R. No. 146933, June 8, 2006, 490 SCRA 273, 277, 155 Estacion v. Bernardo, G.R. No. 144724, February 27, 2006, 483 SCRA 222, 231-232, 22 —F— Fabia v. Court of Appeals, 437 Phil. 389, 399; 388 SCRA 574, 581 (2002), 56 Fernando v. Court of Appeals, G.R. No. 92087, May 8, 1992, 208 SCRA 714, 718, 91 Fiestan v. Court of Appeals, G.R. No. 81552, May 28, 1990, 185 SCRA 751, 757, 154 Firestone Tire and Rubber Company of the Philippines v. Tempongko, 27 SCRA 418, 424 (1969), 88 First Women’s Credit Corporation v. Perez, G.R. No. 169026, June 15, 2006, 490 SCRA 774, 56 Francel Realty Corporation v. Court of Appeals, G.R. No. 117051, January 22, 1996, 252 SCRA 127, 134, 140 Frenzel v. Catito, G.R. No. 143958, July 11, 2003, 406 SCRA 55, 69, 147 Fule v. Legaro, 117 Phil. 374, 38 —G— Garcia v. Florido, 52 SCRA 421, 71 Gobonseng v. Unibancard Corporation, 539 SCRA 561, 98 Gomez v. Concepcion, 47 Phil. 717, 722-723 (1925), 151 Gomez v. Court of Appeals, 395 Phil. 115, 125-126; 340 SCRA 720 (2000), 109 Government Service Insurance System v. Court of Appeals, 368 Phil. 36, 50; 308 SCRA 559, 573 (1999), 88

186

TORTS AND DAMAGES SIMPLIFIED

Guanga v. Dela Cruz, G.R. No. 150187, March 17, 2006, 485 SCRA 80, 88-89, 140 —H— Hernandez v. Dolor, G.R. No. 160286, July 30, 2004, 435 SCRA 668, 677-678, 24 Herrera v. Bollos, G.R. No. 138258, January 18, 2002, 374 SCRA 107, 94 Hongkong & Shanghai Banking Corporation v. Aldecoa & Co., 30 Phil. 283, 34 Hults v. PR Builders, Inc., 532 SCRA 74, 141 —I— Imperial Victor Shipping Agency v. National Labor Relations Commission, G.R. No. 84672, August 5, 1991, 200 SCRA 178, 11 —L— Lafarge Cement Philippines, Inc. v. Continental Cement Corporation, 443 SCRA 532, 31 Lagman v. Intermediate Appellate Court, No. L-72281, October 28, 1988, 166 SCRA 734, 739, 54 Lao v. Court of Appeals, 382 Phil. 583, 608; 325 SCRA 694, 715 (2000), 54 Lim v. Court of Appeals, G.R. No. 85733, February 23, 1990, 182 SCRA 564, 570, 149 Llenares v. Valdeavella, 46 Phil. 358, 360 (1924), 155 Lopez v. Court of Appeals, 446 Phil. 722; 398 SCRA 550 (2003), 10 Lucas v. Royo, 398 Phil. 400, 409; 344 SCRA 481, 488 (2000), 53 —M— Macasaet v. R. Transport Corporation, 105 Manila Electric Company v. Court of Appeals, 413 Phil. 338, 354; 361 SCRA 35, 49-50 (2001), 91 Manila Metal Container Corporation v. Philippine National Bank, G.R. No. 166862, December 20, 2006, 511 SCRA 444, 463-464, 109 Manufacturers Building, Inc. v. Court of Appeals, G.R. No. 116847, March 16, 2001, 354 SCRA 521, 114 Martires v. Cokieng, G.R. No. 150192, February 17, 2005, 451 SCRA 696, 705, 54

CASE INDEX

187

Menchavez v. Teves, Jr., G.R. No. 153201, January 26, 2005, 449 SCRA 380, 393, 150 Mendoza v. Tuquero, 412 Phil. 435, 442; 360 SCRA 21, 27 (2001), 159 Metropolitan Bank and Trust Company v. Court of Appeals (508 SCRA 215), 49 Milwaukee Industries Corporation v. Pampanga III Electric Cooperative, Inc., 430 SCRA 380, 59 Mindex v. Morillo, 428 Phil. 934, 943; 379 SCRA 144, 153 (2002), 19 Montecillo v. Reynes, G.R. No. 138018, July 26, 2002, 385 SCRA 244, 110 Muller v. Muller, G.R. No. 149615, August 29, 2006, 500 SCRA 65, 71, 147 —N— Natalia Realty, Inc. v. Court of Appeals, 440 Phil. 1; 391 SCRA 370 (2002), 9 Nestlé Phils. v. FY Sons, Incorporated, G.R. No. 150780, May 5, 2006, 489 SCRA 624, 634, 115 Ng Soon v. Alday, G.R. No. 85879, September 29,1989, 178 SCRA 221, 115 —O— Ong Ching Po v. Court of Appeals, G.R. No. 113472-73, December 20, 1994, 239 SCRA 341, 346, 147 —P— Padillo v. Court of Appeals, G.R. No. 117907, November 29, 2001, 371 SCRA 27, 114 Palma Gil v. Court of Appeals, 457 Phil. 804, 828; 411 SCRA 18, 36 (2003), 111 Pang-oden v. Leonen, G.R. No. 138939, December 6, 2006, 510 SCRA 93, 100, 122 Peña v. Government Service Insurance System (GSIS), G.R No. 159520, September 19, 2006, 502 SCRA 383, 404, 150 People v. Bustamante, 533 SCRA 170, 115 People v. Domingo, 538 SCRA 733, 24 People v. Espejon, 427 Phil. 672, 680; 377 SCRA 412, 420 (2002), 27 People v. Latag, 463 Phil. 492, 502; 418 SCRA 122, 130 (2003), 27 People v. Malones, 425 SCRA 315 (2005), 24

188

TORTS AND DAMAGES SIMPLIFIED

People v. Mangubat, G.R. No. 172068, August 7, 2007, 529 SCRA 377, 27 Perla Compania de Seguros v. Sarangaya III, G.R. No. 147746, October 25, 2005, 474 SCRA 191, 199, 24 Pestaño v. Sumayang, 400 Phil. 740, 749; 346 SCRA 870, 878 (2000), 91 Philippine Economic Zone Authority v. Fernandez, G.R. No. 138971, June 6, 2001, 358 SCRA 489, 498, 140 Philippine National Bank v. Court of Appeals, 330 Phil. 1048, 1067; 262 SCRA 464, 477-478 (1996), 149 Philippine National Bank v. Court of Appeals, 367 Phil. 508, 522; 308 SCRA 229, 242 (1999), 157 Philippine National Railways v. Brunty, G.R. No. 169891, November 2, 2006, 506 SCRA 685, 697, 21, 75 Philippine School of Business Administration-Quezon City v. Tolentino-Genilo, G.R. No. 159277, December 21, 2004, 447 SCRA 442, 448, 88 Philippine Sinter Corporation v. Cagayan Electric Power and Light Co., Inc., 431 Phil. 324, 333; 381 SCRA 582, 590 (2002), 88 Philippine Surety & Insurance Company, Inc. v. Zabal, 128 Phil. 714, 718; 21 SCRA 682, 685 (1967), 158 Pilapil v. Heirs of Maximino R. Briones, G.R. No. 150175, February 5, 2007, 514 SCRA 197, 151 Pilipinas Shell Petroleum Corporation v. John Bordman Ltd. of Iloilo, Inc., G.R. No. 159831, October 14, 2005, 473 SCRA 151, 161, 21 Policarpio v. Philippine Veterans Board and Associated Insurance & Surety Co., Inc., 106 Phil. 125, 131 (1959), 157 Preferred Homes Specialties, Inc. v. Court of Appeals, G.R. No. 163593, December 16, 2005, 478 SCRA 387, 410, 55 Prudential Bank v. Martinez, G.R. No. 51768, September 14, 1990, 189 SCRA 612, 617, 157 —Q— Quezon City Government v. Dacara, G.R. No. 150304, June 15, 2005, 460 SCRA 243, 253, 21 —R— Republic v. Court of Appeals, G.R. No. 108926, July 12, 1996, 258 SCRA 712, 14 Republic v. Sandiganbayan, 453 Phil. 1059; 406 SCRA 190 (2003), 10

CASE INDEX

189

Republic v. Tuvera, G.R. No. 148246, February 16, 2007, 516 SCRA 113, 152, 23 Reyes v. Sisters of Mercy Hospital, 396 Phil. 87, 96; 341 SCRA 760, 771 (2000), 23 Rose Packing Co., Inc. v. Court of Appeals, G.R. No. L-33084, November 14, 1988, 167 SCRA 309, 318, 149 —S— Saber v. Court of Appeals, G.R. No. 132981, August 31, 2004, 437 SCRA 259, 56 Sabio v. International Corporate Bank, Inc., G.R. No. 132709, September 4, 2001, 364 SCRA 385, 114 Sacdalan v. Court of Appeals, G.R. No. 128967, May 20, 2004, 428 SCRA 586, 599, 150 Sacobia Hills Development Corporation v. Ty, G.R. No. 165889, September 20, 2005, 470 SCRA 395, 404, 150 Safeguard Security Agency, Inc. v. Tangco, 511 SCRA 57, 73 Saguid v. Security Finance, Inc., G.R. No. 159467, December 9, 2005, 477 SCRA 256, 275, 114 Security Bank & Trust Company v. Court of Appeals, 319 Phil. 312, 317; 249 SCRA 206, 209-210 (1995), 151 Security Bank Corporation v. Gonzalbo, A.M. No. P-06-2139, March 23, 2006, 485 SCRA 136, 145-146, 159 Sia v. Court of Appeals, 272 SCRA 141, May 5, 1997, 94 Singapore Airlines Limited v. Court of Appeals, 243 SCRA 143, 148 (1995), 88 Siy v. National Labor Relations Commission, G.R. No. 158971, August 25, 2005, 468 SCRA 154, 161-162, 150 Solidbank Corporation v. Mindanao Ferroalloy Corporation, G.R. No. 153535, July 28, 2005, 464 SCRA 409, 429, 56 Suico Rattan & Buri Interiors, Inc. v. Court of Appeals, G.R. No. 138145, June 15, 2006, 490 SCRA 560, 579, 157 Sulit v. Court of Appeals, 335 Phil. 914, 927; 268 SCRA 441, 453 (1997), 157 —T— Tamio v. Ticson, G.R. No. 154895, November 18, 2004, 443 SCRA 44, 55, 152 Tawag v. Alcantara, 98 SCRA 728, 71 Telefunken Semiconductors Employees Union v. Court of Appeals, 401 Phil. 776, 800; 348 SCRA 565, 587 (2000), 157

190

TORTS AND DAMAGES SIMPLIFIED

The Abaca Corporation of the Philippines v. Garcia, 338 Phil. 988, 993; 272 SCRA 475, 480 (1997), 157 Tiongco v. Philippine Veterans Bank, G.R. No. 82782, August 5, 1992, 212 SCRA 176, 189-190, 157 Tongoy v. Court of Appeals, 208 Phil. 95, 113; 123 SCRA 99, 119 (1983), 147 —U— Unimex Micro-Electronics GmBH v. Commissioner of Customs, 4 United States of America v. Ruiz, 136 SCRA 487, 13 —V— Valderrama v. National Labor Relations Commission, 326 Phil. 477, 484; 256 SCRA 466, 472 (1996), 157 Ventura v. Bernabe, G.R. No. L-26760, April 30, 1971, 38 SCRA 587, 56 Victory Liner v. Gammad, G.R. No. 159636, November 25, 2004, 444 SCRA 355, 370, 23 Villanueva v. Secretary of Justice, G.R. No. 162187, November 18, 2005, 475 SCRA 495, 511, 55 Villanueva v. United Coconut Planters Bank, 384 Phil. 130, 140; 327 SCRA 391, 400 (2000), 53 —X— Xentrex Automobile, Inc. v. Court of Appeals, G.R. No. 121559, June 18, 1998, 291 SCRA 66, 69 —Y— Yasoña, v. De Ramos, G.R. No. 156339, October 6, 2004, 440 SCRA 154, 157-158, 53 —Z— Zarate v. Untalan, A.M. No. MTJ-05-1584, March 31, 2005, 454 SCRA 206, 216, 159

TORTS AND DAMAGES SIMPLIFIED

By

REYNALDO B. ARALAR

2010 EDITION

Published & Distributed by

856 Nicanor Reyes, Sr. St. Tel. Nos. 736-05-67 • 735-13-64 1977 C.M. Recto Avenue Tel. Nos. 735-55-27 • 735-55-34 Manila, Philippines www.rexpublishing.com.ph i

Philippine Copyright 2010 by

REYNALDO B. ARALAR ISBN 978-971-23-5770-1 No portion of this book may be copied or reproduced in books, pamphlets, outlines or notes, whether printed, mimeographed, typewritten, copied in different electronic devices or in any other form, for distribution or sale, without the written permission of the author except brief passages in books, articles, reviews, legal papers, and judicial or other official proceedings with proper citation. Any copy of this book without the corresponding number and the signature of the author on this page either proceeds from an illegitimate source or is in possession of one who has no authority to dispose of the same. ALL RIGHTS RESERVED BY THE AUTHOR

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Printed by

84 P. Florentino St., Quezon City Tel. Nos. 712-41-08 • 712-41-01 ii

PREFACE A tort is not a criminal but a civil wrong. Being a wrong, it has to be righted just the same. This book, therefore, is basically about righting a civil wrong. As far as fairness under the rule of law can go. The essence of fairness in every situation is the purpose for which every law was made anyway. A tort presupposes a legal duty, which has to be performed in every civilized society. Whenever there is non-performance of a legal duty, altough there is no contractual relations between the parties, or any other act punishable by law, at least a tort is committed. A realization of this fact brings us to the importance of torts as a subject. The natural and logical consequence of a breach of legal duty is damages. From there, the damages sustained as a consequence of that breach can be quantified in terms of money. Thus, the subject matter of this volume. As any law subject, the subject torts and damages has complications. Hence, the need to simplify the presentation. In the preparation hereof, cooperation of the UP Law library, particularly, Mr. Siegfredo Porticacion and the assistance of Atty. Jimmy Buhain and Mr. Aurelio Sec Go is hereby acknowledged. Quezon City, February 11, 2010

REYNALDO B. ARALAR

iii

iv

CONTENTS

Pages Preface ........................................................................................

iii

Chapter One

– TORT .........................................................

1

Chapter Two

– EXTRA-CONTRACTUAL OBLIGATIONS ........................................

29

Chapter Three

– OTHER QUASI-CONTRACTS .................

44

Chapter Four

– QUASI-DELICTS .....................................

71

Chapter Five

– DAMAGES .................................................

96

TITLE XVII. EXTRA-CONTRACTUAL OBLIGATIONS .............................................................

161

TITLE XVIII. DAMAGES ..................................................

170

GENERAL INDEX ...................................................................

179

CASE INDEX ............................................................................

183

APPENDIX A

— oOo —

v