Sources of Obligations
Leung Ben v O'Brien
G.R. No. L-13602 April 6, 1918
LEUNG BEN, plaintiff,
vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First Instance of city of Manila, defendants.
vs.
P. J. O'BRIEN, JAMES A OSTRAND and GEO. R. HARVEY, judges of First Instance of city of Manila, defendants.
Thos. D. Aitken and W. A. Armstrong for plaintiff.
Kincaid & Perkins for defendants.
Kincaid & Perkins for defendants.
STREET, J.:
This is an application for a writ of certiorari, the purpose of which is to quash an attachment issued from the Court of First Instance of the City of Manila under circumstances hereinbelow stated.
Upon December 12, 1917, an action was instituted in the Court of First Instance of the city of Manila by P. J. O'Brien to recover of Leung Ben the sum of P15,000 alleged to have been lost by the plaintiff to the defendant in a series of gambling, banking and percentage games conducted ruing the two or three months prior to the institution of the suit. In his verified complaint the plaintiff asked for an attachment, under section 424, and 412 (1) of the Code of Civil Procedure, against the property of the defendant, on the ground that the latter was about to depart from the Philippine islands with intent to defraud his creditors. This attachment was issued; and acting under the authority thereof, the sheriff attached the sum of P15,000 which had been deposited by the defendant with the International Banking Corporation.
The defendant thereupon appeared by his attorney and moved the court to quash the attachment. Said motion having dismissed in the Court of First Instance, the petitioner, Leung Ben, the defendant in that action, presented to this court, upon January 8, 1918 his petition for the writ of certiorari directed against P. J. O'Brien and the judges of the Court of First Instance of the city of Manila whose names are mentioned in the caption hereof. The prayer is that the Honorable James A. Ostrand, as the judge having cognizance of the action in said court be required to certify the record to this court for review and that the order of attachment which had been issued should be revoked and discharged. with costs. Upon the filing of said petition in this court the usual order was entered requiring the defendants to show cause why the writ should not issue. The response of the defendants, in the nature of a demurrer, was filed upon January 21, 1918; and the matter is now heard upon the pleadings thus presented.
The provision of law under which this attachment was issued requires that there should be accuse of action arising upon contract, express or implied. The contention of the petitioner is that the statutory action to recover money lost at gaming is that the statutory action to recover money lost at gaming is no such an action as is contemplated in this provision, and he therefore insists that the original complaint shows on its face that the remedy of attachment is not available in aid thereof; that the Court of First Instance acted in excess of its jurisdiction in granting the writ of attachment; that the petitioner has no plain, speedy, and adequate remedy by appeal or otherwise; and that consequently the writ of certiorari supplies the appropriate remedy for his relief.
The case presents the two following questions of law, either of which, if decided unfavorably to the petitioner, will be fatal to his application:
(1) Supposing that the Court of First Instance has granted an attachment for which there is no statutory authority, can this court entertain the present petition and grant the desired relief?
(2) Is the statutory obligation to restore money won at gaming an obligation arising from "contract, express or implied?"
We are of the opinion that the answer to the first question should be in the affirmative. Under section 514 of the Code of Civil Procedure the Supreme Court has original jurisdiction by the writ of certiorari over the proceedings of Courts of First Instance, wherever said courts have exceeded their jurisdiction and there is no plaint, speedy, and adequate remedy. In the same section, it is further declared that the proceedings in the Supreme Court in such cases hall be as prescribed for Courts of First Instance in section 217-221, inclusive, of said Code. This Supreme Court, so far as applicable, the provisions contained in those section to the same extent as if they had been reproduced verbatim immediately after section 514. Turning to section 217, we find that, in defining the conditions under which certiorari can be maintained in a Court of First Instance substantially the same language is used as is the same remedy can be maintained in the Supreme Court of First Instance, substantially the same language is used as is found in section 514 relative to the conditions under which the same remedy can be maintained in the Supreme Court, namely, when the inferior tribunal has exceeded its jurisdiction and there is no appeal, nor any plain, speedy and adequate remedy. In using these expressions the author of the Code of Civil Procedure merely adopted the language which, in American jurisdictions at least, had long ago reached the stage of stereotyped formula.
In section 220 of the same Code, we have a provision relative to the final proceedings in certiorari, and herein it is stated that the court shall determine whether the inferior tribunal has regularly pursued its authority it shall give judgment either affirming annulling, or modifying the proceedings below, as the law requires. The expression, has not regularly pursued its authority as here used, is suggestive, and we think it should be construed in connection with the other expressions have exceeded their jurisdiction, as used in section 514, and has exceeded their jurisdiction as used in section 217. Taking the three together, it results in our opinion that any irregular exercise of juridical power by a Court of First Instance, in excess of its lawful jurisdiction, is remediable by the writ of certiorari, provided there is no other plain, speedy, and adequate remedy; and in order to make out a case for the granting of the writ it is not necessary that the court should have acted in the matter without any jurisdiction whatever. Indeed the repeated use of expression excess of jurisdiction shows that the lawmaker contemplated the situation where a court, having jurisdiction should irregularly transcend its authority as well as the situation where the court is totally devoid of lawful power.
It may be observed in this connection that the word jurisdiction as used in attachment cases, has reference not only to the authority of the court to entertain the principal action but also to its authority to issue the attachment, as dependent upon the existence of the statutory ground. (6 C. J., 89.) This distinction between jurisdiction to issue the attachment as an ancillary remedy incident to the principal litigation is of importance; as a court's jurisdiction over the main action may be complete, and yet it may lack authority to grant an attachment as ancillary to such action. This distinction between jurisdiction over the ancillary has been recognized by this court in connection with actions involving the appointment of a receiver. Thus in Rocha & Co. vs. Crossfield and Figueras (6 Phil. Rep., 355), a receiver had been appointed without legal justification. It was held that the order making the appointment was beyond the jurisdiction of the court; and though the court admittedly had jurisdiction of the main cause, the order was vacated by this court upon application a writ of certiorari. (See Blanco vs. Ambler, 3 Phil. Rep., 358, Blanco vs. Ambler and McMicking 3 Phil. Rep., 735, Yangco vs. Rohde, 1 Phil. Rep., 404.)
By parity of reasoning it must follow that when a court issues a writ of attachment for which there is no statutory authority, it is acting irregularly and in excess of its jurisdiction, in the sense necessary to justify the Supreme Court in granting relief by the writ of certiorari. In applying this proposition it is of course necessary to take account of the difference between a ground of attachment based on the nature of the action and a ground of attachment based on the acts or the conditions of the defendant. Every complaint must show a cause of action some sort; and when the statue declares that the attachment may issue in an action arising upon contract, the express or implied, it announces a criterion which may be determined from an inspection of the language of the complaint. The determination of this question is purely a matter of law. On the other hand, when the stature declares that an attachment may be issued when the defendant is about to depart from the Islands, a criterion is announced which is wholly foreign to the cause of action; and the determination of it may involve a disputed question of fact which must be decided by the court. In making this determination, the court obviously acts within its powers; and it would be idle to suppose that the writ of certiorari would be available to reverse the action of a Court of First Instance in determining the sufficiency of the proof on such a disputed point, and in granting or refusing the attachment accordingly.
We should not be understood, in anything that has been said, as intending to infringe the doctrine enunciated by this court in Herrera vs. Barretto and Joaquin (25 Phil. Rep., 245), when properly applied. It was there held that we would not, upon application for a writ of certiorari, dissolve an interlocutory mandatory injunction that had been issued in a Court of First Instance as an incident in an action of mandamus. The issuance of an interlocutory injunction depends upon conditions essentially different from those involved in the issuance of an attachment. The injunction is designed primarily for the prevention of irreparable injury and the use of the remedy is in a great measure dependent upon the exercise of discretion. Generally, it may be said that the exercise of the injunctive powers is inherent in judicial authority; and ordinarily it would be impossible to distinguish between the jurisdiction of the court in the main litigation and its jurisdiction to grant an interlocutory injunction, for the latter is involved in the former. That the writ of certiorari can not be used to reverse an order denying a motion for a preliminary injunction is of course not to cavil. (Somes vs. Crossfield and Molina, 8 Phil. Rep., 284.)
But it will be said that the writ of certiorari is not available in this cae, because the petitioner is protected by the attachment bond, and that he has a plain, speedy, and adequate remedy appeal. This suggestion seems to be sufficiently answered in the case of Rocha & Co vs. Crossfield and Figueras (6 Phil. Rep., 355), already referred to, and the earlier case there cited. The remedy by appeal is not sufficiently speedy to meet the exigencies of the case. An attachment is extremely violent, and its abuse may often result in infliction of damage which could never be repaired by any pecuniary award at the final hearing. To postpone the granting of the writ in such a case until the final hearing and to compel the petitioner to bring the case here upon appeal merely in order to correct the action of the trial court in the matter of allowing the attachment would seem both unjust and unnecessary.
Passing to the problem propounded in the second question it may be observed that, upon general principles,. recognize both the civil and common law, money lost in gaming and voluntarily paid by the loser to the winner can not in the absence of statue, be recovered in a civil action. But Act No. 1757 of the Philippine Commission, which defines and penalizes several forms of gambling, contains numerous provisions recognizing the right to recover money lost in gambling or in the playing of certain games (secs. 6, 7, 8, 9, 11). The original complaint in the action in the Court of First Instance is not clear as to the particular section of Act No. 1757 under which the action is brought, but it is alleged that the money was lost at gambling, banking, and percentage game in which the defendant was banker. It must therefore be assumed that the action is based upon the right of recovery given in Section 7 of said Act, which declares that an action may be brought against the banker by any person losing money at a banking or percentage game.
Is this a cause arising upon contract, express or implied, as this term is used in section 412 of the Code of Civil Procedure? To begin the discussion, the English version of the Code of Civil Procedure is controlling (sec. 15, Admin. Code, ed. of 1917). Furthermore it is universally admitted to be proper in the interpretation of any statute, to consider its historical antecedents and its juris prudential sources. The Code of Civil Procedure, as is well known, is an American contribution to Philippine legislation. It therefore speaks the language of the common-law and for the most part reflects its ideas. When the draftsman of this Code used the expression contract, express or implied, he used a phrase that has been long current among writers on American and English law; and it is therefore appropriate to resort to that system of law to discover the appropriate to resort to that system of law to discover the meaning which the legislator intended to convey by those meaning which the legislator intended to convey by those terms. We remark in passing that the expression contrato tracito, used in the official translation of the Code of Civil Procedure as the Spanish equivalent of implied contract, does not appear to render the full sense of the English expression.
The English contract law, so far as relates to simple contracts is planted upon two foundations, which are supplied by two very different conceptions of legal liability. These two conceptions are revealed in the ideas respectively underlying (1) the common- law debt and (2) the assumptual promise. In the early and formative stages of the common-law the only simple contract of which the courts took account was the real contract or contract re, in which the contractual duty imposed by law arises upon the delivery of a chattle, as in the mutuum, commodatum, depositum, and the like; and the purely consensual agreements of the Roman Law found no congenial place in the early common law system.
In course of time the idea underlying the contract re was extended so as to include from one person to another under such circumstances as to constitute a justa cuas debendi. The obligation thereby created was a debt. The constitutive element in this litigation is found in the fact that the debtor has received something from the creditor, which he is bound by the obligation of law to return or pay for. From an early day this element was denominated the quid pro quo, an ungainly phrase coined by Mediaeval Latinity. The quid pro quo was primarily a materials or physical object, and its constituted the recompense or equivalent acquired by the debtor. Upon the passage of the quid pro quo from one party to the other, the law imposed that real contractual duty peculiar to the debt. No one conversant with the early history of English law would ever conceive of the debt as an obligation created by promise. It is the legal duty to pay or deliver a sum certain of money or an ascertainable quantity of ponderable or measurable chattles.
The ordinary debt, as already stated, originates in a contract in which a quid pro quo passes to the debtor at the time of the creation of the debt, but the term is equally applicable to duties imposed by custom or statute, or by judgment of a court.
The existence of a debt supposes one person to have possession of thing (res) which he owes and hence ought to turn over the owner. This obligation is the oldest conception of contract with which the common law is familiar; and notwithstanding the centuries that have rolled over Westminster Hall that conception remains as one of the fundamental bases of the common-law contract.
Near the end of the fifteenth century there was evolved in England a new conception of contractual liability, which embodied the idea of obligation resulting from promise and which found expression in the common law assumpsit, or parol promise supported by a consideration. The application of this novel conception had the effect of greatly extending the filed of contractual liability and by this means rights of action came to be recognized which had been unknown before. The action of assumpsit which was the instrument for giving effect to this obligation was found to be a useful remedy; and presently this action came to be used for the enforcement of common-law debts. The result was to give to our contract law the superficial appearance of being based more or less exclusively upon the notion of the obligation of promise.
An idea is widely entertained to the effect that all simple contracts recognized in the common-law system are referable to a singly category. They all have their roots, so many of us imagine, in one general notion of obligation; and of course the obligation of promise is supposed to supply this general notion, being considered a sort of menstruum in which all other forms of contractual obligation have been dissolved. This a mistake. The idea of contractual duty embodied in the debt which was the first conception of contract liability revealed in the common law, has remained, although it was detained to be in a measure obscured by the more modern conception of obligation resulting from promise.
What has been said is intended to exhibit the fact that the duty to pay or deliver a sum certain of money or an ascertainable quantity of ponderable or measurable chattles — which is indicated by them debt — has ever been recognized, in the common-law system, as a true contract, regardless, of the source of the duty or the manner in which it is create — whether derived from custom, statue or some consensual transaction depending upon the voluntary acts of the parties. the form of contract known as the debt is of the most ancient lineage; and when reference is had to historical antecedents, the right of the debt to be classed as a contract cannot be questioned. Indeed when the new form of engagement consisting of the parol promise supported by a consideration first appeared, it was looked upon as an upstart and its right to be considered a true contract was questioned. It was long customary to refer to it exclusively as an assumpsit, agreement, undertaking, or parol promise, in fact anything but a contract. Only in time did the new form of engagement attain the dignity of being classed among true contract.
The term implied takers us into shadowy domain of those obligations the theoretical classification of which has engaged the attention of scholars from the time of Gaius until our own day and has been a source of as much difficulty to the civilian as to the common-law jurist. There we are concerned with those acts which make one person debtor to another without there having intervened between them any true agreement tending to produce a legal bond (vinculum juris). Of late years some American and English writers have adopted the term quasi-contract as descriptive of these obligations or some of them; but the expression more commonly used is implied contract.
Upon examination of these obligations, from the view point of the common-law jurisprudence, it will be found that they fall readily into two divisions according as they bear an analogy to the common-law debt or to the common law assumpsit. To exhibit the scope of these different classes of obligations is here impracticable. It is only necessary in this connection to observe that the most conspicuous division is that which comprises duties in the nature of debt. The characteristic feature of these obligations is that upon certain states of fact the law imposes an obligation to pay a sum certain of money; and it is characteristic of this obligation that the money in respect to which the duty is raised is conceived as being equivalent of something taken or detained under circumstances giving rise to the duty to return or compensate therefore. The proposition that no one shall be allowed to enrich himself unduly at the expense of another embodies the general principle here lying at the basis of obligation. The right to recover money improperly paid (repeticion de lo indebido) is also recognized as belong to this class of duties.
It will observed that according to the Civil Code obligations are supposed to be derived either from (1) the law, (2) contracts and quasi-contracts, (3) illicit acts and omission, or (4) acts in which some sort ob lame or negligence is present. This enumeration of sources of obligations and the obligation imposed by law are different types. The learned Italian jurist, Jorge Giorgi, criticises this assumption and says that the classification embodied in the code is theoretically erroneous. His conclusion is that one or the other of these categories should have been suppressed and merged in the other. (Giorgi, Teoria de las Obligaciones, Spanish ed., vol. 5 arts. 5, 7, 9.) The validity of this criticism is, we thin, self-evident; and it is of interest to note that the common law makes no distinction between the two sources of liability. The obligations which in the Code are indicated as quasi-contracts, as well as those arising ex lege, are in the common la system, merged into the category of obligations imposed by law, and all are denominated implied contracts.
Many refinements, more or less illusory, have been attempted by various writers in distinguishing different sorts of implied contracts, as for example, the contract implied as of fact and the contract implied as of law. No explanation of these distinctions will be here attempted. Suffice it to say that the term contract, express or implied, is used to by common-law jurists to include all purely personal obligations other than those which have their source in delict, or tort. As to these it may be said that, generally speaking, the law does not impose a contractual duty upon a wrongdoer to compensate for injury done. It is true that in certain situations where a wrongdoer unjustly acquired something at the expense of another, the law imposes on him a duty to surrender his unjust acquisitions, and the injured party may here elect to sue upon this contractual duty instead of suing upon the tort; but even here the distinction between the two liabilities, in contract and in tort, is never lost to sight; and it is always recognized that the liability arising out of the tort is delictual and not of a contractual or quasi-contractual nature.
In the case now under consideration the duty of the defendant to refund the money which he won from the plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege. Furthermore, it is a duty to return a certain sum which had passed from the plaintiff to the defendant. By all the criteria which the common law supplies, this a duty in the nature of debt and is properly classified as an implied contract. It is well- settled by the English authorities that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser in an action of indebitatus assumpsit for money had and received. (Clarke vs. Johnson. Lofft, 759; Mason vs. Waite, 17 Mass., 560; Burnham vs. Fisher, 25 Vt., 514.) This means that in the common law the duty to return money won in this way is an implied contract, or quasi-contract.
It is no argument to say in reply to this that the obligation here recognized is called an implied contract merely because the remedy commonly used in suing upon ordinary contract can be here used, or that the law adopted the fiction of promise in order to bring the obligation within the scope of the action of assumpsit. Such statements fail to express the true import of the phenomenon. Before the remedy was the idea; and the use of the remedy could not have been approved if it had not been for historical antecedents which made the recognition of this remedy at one logical and proper. Furthermore, it should not be forgotten that the question is not how this duty but what sort of obligation did the author of the Code of Civil Procedure intend to describe when he sued the term implied contract in section 412.
In what has been said we have assumed that the obligation which is at the foundation of the original action in the court below is not a quasi-contract, when judge by the principles of the civil law. A few observations will show that this assumption is not by any means free from doubt. The obligation in question certainly does not fall under the definition of either of the two-quasi- contracts which are made the subject of special treatment in the Civil Code, for its does not arise from a licit act as contemplated in article 1895. The obligation is clearly a creation of the positive law — a circumstance which brings it within the purview of article 1090, in relation with article, 1089; and it is also derived from an illicit act, namely, the playing of a prohibited game. It is thus seen that the provisions of the Civil Code which might be consulted with a view to the correct theoretical classification of this obligation are unsatisfactory and confusing.
The two obligations treated in the chapter devoted to quasi-contracts in the Civil Code are (1) the obligation incident to the officious management of the affairs of other person (gestion de negocios ajenos) and (2) the recovery of what has been improperly paid (cabro de lo indebido). That the authors of the Civil Code selected these two obligations for special treatment does not signify an intention to deny the possibility of the existence of other quasi-contractual obligations. As is well said by the commentator Manresa.
The number of the quasi-contracts may be indefinite as may be the number of lawful facts, the generations of the said obligations; but the Code, just as we shall see further on, in the impracticableness of enumerating or including them all in a methodical and orderly classification, has concerned itself with two only — namely, the management of the affairs of other person and the recovery of things improperly paid — without attempting by this to exclude the others. (Manresa, 2d ed., vol. 12, p. 549.)
It would indeed have been surprising if the authors of the Code, in the light of the jurisprudence of more than a thousand years, should have arbitrarily assumed to limit the quasi-contract to two obligations. The author from whom we have just quoted further observes that the two obligations in question were selected for special treatment in the Code not only because they were the most conspicuous of the quasi-contracts, but because they had not been the subject of consideration in other parts of the Code. (Opus citat., 550.)
It is well recognized among civilian jurists that the quasi- contractual obligations cover a wide range. The Italian jurist, Jorge Giorgi, to whom we have already referred, considers under this head, among other obligations, the following: payments made upon a future consideration which is not realized or upon an existing consideration which fails; payments wrongfully made upon a consideration which is contrary to law, or opposed to public policy; and payments made upon a vicious consideration or obtained by illicit means (Giorgi, Teoria de las Obligaciones, vol. 5, art. 130.)
Im permitting the recovery of money lost at play, Act No. 1757 has introduced modifications in the application of articles 1798, 180`, and 1305 of the Civil Code. The first two of these articles relate to gambling contracts, while article 1305 treats of the nullity of contracts proceeding from a vicious or illicit consideration. Taking all these provisions together, it must be apparent that the obligation to return money lost at play has a decided affinity to contractual obligations; and we believe that it could, without violence to the doctrines of the civil law, be held that such obligations is an innominate quasi-contract. It is, however, unnecessary to place the decision on this ground.
From what has been said it follows that in our opinion the cause of action stated in the complaints in the court below is based on a contract, express or implied and is therefore of such nature that the court had authority to issue writ of attachment. The application for the writ of certiorari must therefore be denied and the proceedings dismissed. So ordered.
Arellano, C.J., Torres, Johnson and Carson, JJ., concur.
Separate Opinions
MALCOLM, J., concurring:
As I finished reading the learned and interesting decision of the majority, the impression which remained was that the court was enticed by the nice and unusual points presented to make a hard case out of an easy one and unfortunately t do violence to the principles of certiorari. The simple questions are : Di the Court of First Instance of city of Manila exceed its jurisdiction in granting an attachments against the property of the defendant, now plaintiff? Has this defendant, now become the plaintiff, any other plain, speedy and adequate remedy? The answer are found in the decision of thinks court, in Herrera vs. Barretto and Joaquin ([1913], 25 Phil., 245), from which I quote the following:
It has been repeatedly held by this court that a writ of certiorari will not be issued unless it clearly appears that the court to which it is to be directed acted without or in excess of jurisdiction. It will not be issued to cure errors in the proceedings or to correct erroneous conclusions of law or of fact. If the court has jurisdiction. It will not be issued to cure errors in the proceedings to correct jurisdiction of the subject matter and f the person, decisions upon all question pertaining to the cause are decisions within its jurisdiction and, however irregular or erroneous they may be, cannot be corrected by certiorari. The Code of Civil Procedure giving Courts of First Instance general jurisdiction in actions for mandamus, it goes without saying that the Court of First Instance had jurisdiction in the present case to resolve every question arising in such an action and t decide every question presented to it which pertained to the cause. It has already been held by this court, that while it is a power to be exercised only in extreme case, a Court of First Instance has power to issue a mandatory injunction t stand until the final determination of the action in which it is issued. While the issuance of the mandatory injunction in this particular case may have been irregular and erroneous, a question concerning which we express no opinion, nevertheless its issuance was within the jurisdiction of the court and its action is not reveiwable on certiorari. It is not sufficient to say that it was issued wrongfully and without sufficient grounds and in the absence of the other party. The question is, Did the court act with jurisdiction?
It has been urged that the court exceeded its jurisdiction in requiring the municipal president t issue the license, for the reason that he was not the proper person to issue it and that, if he was the proper person, he had the right to exercise a discretion as to whom the license should be issued. We do not believe that either of these questions goes to the jurisdiction of the court to act. One of the fundamental question in a mandamus against a public officer is whether or not that officer has the right to exercise discretion in the performance of the act which the plaintiff asks him to perform. It is one of the essential determinations of the cause. To claim that the resolution of that question may deprive the court of jurisdiction is to assert a novel proposition. It is equivalent to the contention that a court has jurisdiction if he decides right but no jurisdiction if he decides wrong. It may be stated generally that it is never necessary to decide the fundamental questions of a cause to determine whether the court has jurisdiction. The question of jurisdiction is preliminary and never touches the merits of the case. The determination of the fundamental questions of a cause are merely the exercise of a jurisdiction already conceded. In the case at bar no one denies the power, authority or jurisdiction of the Court of First Instance to take cognizance of an action for mandamus and to decide very question which arises in that cause and pertains thereto. The contention that the decision of one of those question, if wrong, destroys jurisdiction involves an evident contradiction.
Jurisdiction is the authority to hear and determine a cause — the right to act in a case. Since it is the power to hear and determine, it does not depend either upon the regularity of the exercise of that power or upon the rightfulness of the decision made. Jurisdiction should therefore be distinguished from the exercise of jurisdiction. The authority to decide a case at all, and not the decision rendered therein, is what makes up jurisdiction. Where there is jurisdiction of the person and subject matter, as we have said before, the decision of all other questions arising in the case an exercise of that jurisdiction.
Then follows an elaborate citation and discussion of American authorities, including a decision of the United States Supreme Court and of the applicable Philippine cases. The decision continues"
The reasons givens in these cases last cited for the allowance of the writ of prohibition are applicable only to the class of cases with which the decision deal and do not in any way militate against the general proposition herein asserted. Those which relate to election contest are based upon the principle that those proceedings, are special in their nature and must be strictly followed, a material departure from the statute resulting a loss, or in an excess of jurisdiction. The cases relating to receivers are based, in a measure, upon the principle the appointment of a receiver being governed by the statute; and in part upon the theory that the appointment of a receiver in an improper case is in substance a bankruptcy proceeding, the taking of which is expressly prohibited by law. The case relative to the allowance of alimony pendente lite when the answer denies the marriage is more difficult to distinguish. The reasons in support of the doctrine laid down in that case are given the opinion in full and they seem to place the particular case to which they refer in a class by itself.
It is not alight things that the lawmakers have abolished writs of error and with them certiorari and prohibition, in so far as they were methods by which the mere errors of an inferior curt could be corrected. As instruments to that end they no longer exist. Their place is no taken by the appeal. So long as the inferior court retains jurisdiction its errors can be corrected only by that method. The office of the writ of certiorari has been reduced to the correction of defects of jurisdiction solely and cannot legally be used for any other purpose. It is truly an extra ordinary remedy and in this jurisdiction, its use is restricted to truly extraordinary cases — cases in which the action of the inferior court is wholly void, where any further steps in the case would result in a waste of time and money and would produce no result whatever; where the parties, or their privies, would be utterly deceived; where a final judgment or decree would be nought but a snare and a delusion, deciding nothing, protecting nobody, a juridical pretension, a recorded falsehood, a standing menace. It is only to avoid such result as these that a writ of certiorari is issuable; and even here an appeal will lie if the aggrieved party prefers to prosecute it.
A full and thorough examination of all the decided cases in this court touching the question of certiorari and prohibition fully supports the proposition already stated that, where a Court of First Instance has jurisdiction of the subject matter and of the person, its decision of any question pertaining to the cause, however, erroneous, cannot be reviewed by certiorari, but must be corrected by appeal.
I see no reason to override the decision in Herrera vs. Barretto and Joaquin (supra). Accordingly, I can do no better than to make the language of Justice Moreland my own. applying these principles, it is self-evident that this court should no entertain the present petition and should not grant the desired relief.
FISHER, J., dissenting:
I am in full accord with the view that the remedy of certiorari may be invoked in such cases as this, but I am constrained to dissent from the opinion of the majority as regards the meaning of the term implied contract.
Section 412 of the code of Civil Procedure in connection with section 424, authorizes the preliminary attachment of the property of the defendant: "(1) In an action for the recovery of money or damages on a cause of action arising upon contract, express or implied, when the defendant is about to depart from the Philippine Islands, with intent to defraud his creditors; (2) . . .; (3) . . .; (4) . . .; (5) When the defendant has removed or disposed of his property, or is about to do so, with intent to defraud his creditors."
It is evident that the terms of paragraph five of the article cited are much broader than those of the first paragraph. The fifth paragraph is not limited to action arising from contract, but is by its terms applicable to actions brought for the purpose of enforcing extra-contractual rights as well as contract rights. The limitation upon cases falling under paragraph five is to be found, not in the character of the obligation for the enforcement for which the action is brought, but in the terms of article 4265, which requires that the affidavit show that the amount due the plaintiff . . . is as much as the sum for which the order is granted.
That is to say, when application is made for a preliminary attachment upon the ground that the plaintiff is about to dispose of his property with intent to defraud his creditors — thus bringing the case within the terms of paragraph five of the section — it is not necessary to show that the obligation in suit is contractual in its origin, but is sufficient to show that the breach of the obligation, as shown by the facts stated in the complaint and affidavit, imposes upon the defendant the obligation to pay a specific and definite sum. For example, if it is alleged in the complaint that the defendant by negligence, has caused the destruction by fire of a building belonging to plaintiff, and that such building was worth a certain sum of money, these facts would show a definite basis upon which to authorize the granting of the writ. But if it were averred that the defendant has published a libel concerning the plaintiff, to the injury of his feeling and reputation, there is no definite basis upon which to grant an attachment, because the amount of the damage suffered, being necessarily uncertain and indeterminate, cannot be ascertained definitely until the trail has been completed.
But it appears that the legislature although it has seen fit to authorize a preliminary attachment in aid of action of all kinds when the defendant is concealing his property with intent to defraud his creditors, has provided is about to depart from the country with intent to defraud his creditos, the writ will issue only when the action in aid of which it is sought arises from a contract express or implied. If an attachment were permitted upon facts bringing the application with the first paragraph of the section in support of action of any kind, whether the obligation sued upon is contractual or not, then paragraph five would by construction be made absolutely identical with paragraph one, and this would be in effect equivalent to the complete eliminated of the last two lines of the first paragraph. It is a rule of statutory construction that effect should be given to all parts of the statue, if possible. I can see no reason why the legislature should have limited cases falling within the firs paragraph to action arising from contract and have refrained from imposing this limitation with respect to cases falling within the terms of the fifth paragraph, but this should have no effect upon us in applying the law. Whether there be a good reason for it or not the distinction exists.
Had the phrase express or implied not been used to qualify contract, there would be no doubt whatever with regard to the meaning of the word. In the Spanish Civil law contract are always consensual, and it would be impossible to define as a contract the judicial relation existing between a person who has lost money at gaming and the winner of such money, simple because the law imposes upon the winner the obligation of making restitution. An obligation of this kind, far from being consensual in its origin, arises against the will of the debtor. To call such a relation a contract is, from the standpoint of the civil law, a contradiction in terms.
But is said that as the phase express or implied has been used to qualify the word contract and these words are found in statue which speaks the language of the common law, this implies the introduction into our law of the concept of the implied contract of the English common-law, a concept which embraces a certain class of obligation originating ex lege, which have been arbitrarily classified as contracts, so that they might be enforced by one of the formal actions of the common law which legal tradition and practice has reserved for the enforcement of contract. I cannot concur in this reasoning. I believe that when a technical juridical term of substantive law is used in the adjective law of these islands, we should seek its meaning in our own substantive law rather than in the law of America or of England. The code of Civil Procedure was not enacted to establish rules of substantive law, but upon the assumption of the existence of these rules.
In the case of Cayce vs. Curtis (Dallam's Decisions Texas Reports, 403), it appears that the legislature, at a time when that State still retained to a large extent the Spanish substantive civil law, enacted a statue in which the word bonds is used. In litigation involving the construction of that statute, one of the parties contended that the work bond should be given the technical meaning which it had in the English Common Law. The court rejected this contention saying —
On the first point it is urged by counsel for the appellant that the word bond used in the statute being a common law term, we must refer to the common law for its legal signification; and that by that law no instrument is a bond which is not under seal. The truth of the proposition that sealing is an absolute requisite to the validity of a bond at common law is readily admitted; but the applicability of that rule of the case under consideration is not perceived. This bond was taken at a time when the common law afforded no rule of decision or practice in this country, and consequently that law cannot be legitimately resorted to, even for the purpose for which it is invoked by the counsel for the appellant, unless it be shown that the civil law had not term of similar import for we regard it as a correct rule of construction, that where technical terms are used in a statute they are to be referred for their signification to terms f similar import in the system of laws which prevails in the country where the statues is passed, and not to another system which is entirely foreign t the whole system of municipal regulations by which that country is governed. (Martin's Reports, vol. 3, 185; 7 Martin [N. S.], 162.)"
Consequently, I believe that in the interpretation of phase "contract, express or implied," we should apply the rules of our own substantive law. The phrase in itself offers no difficulty. The concept of the contract, under the Civil Code, as a legal relation of exclusively consensual origin, offers no difficulty. Nor is any difficulty encountered in the gramatical sense of the words express and "implied". Express according to the New International Dictionary is that which is directly and distinctly stated; expressed, not merely implied or left to interference. Therefore, a contract entered into by means of letters, in which the offer and the acceptance have been manifested by appropriate words, would be an "express contract." The word "imply" according to the same dictionary, is to involve in substance or essence, or by fair inference, or by construction of law, when not expressly stated in words or signs; to contain by implication to include virtually.
Therefore, if I enter a tailor shop and order a suit of clothes, although nothing is said regarding payment, it is an inference, both logical and legal, from my act that is my intention to pay the reasonable value of the garments. The contract is implied, therefore, is that in which the consent of the parties is implied.
Manresa, commenting upon article 1262 of the Civil Code, says:
The essence of consent is the agreement of the parties concerning that which is to constitute the contract . . . . The forms of this agreement may vary according to whether it is expressed verbally or in writing, by words or by acts. Leaving the other differences for consideration hereafter, we will only refer now to those which exist between express consent and implied consent . . . . It is unquestionable that implied consent manifested by act or conduct, produces a contract. . . .
If it were necessary to have recourse to the English common law for the purpose of ascertaining the meaning of the phrase under consideration, we could find many decisions which gave it the same meaning as that for which I contend.
An implied contract is where one party receives benefits from another party, under such circumstances that the law presume a promise on the part of the party benefited to pay a reasonable price for the same. (Jones vs. Tucker [Del.], 84 Atlantic, 1012.)
It is true that English courts have extended the concept of the term contract to include certain obligations arising ex lege without consent, express or implied. True contracts created by implied consent are designated in the English common law as contracts implied in the fact, while the so-called contracts in which the consent is a fiction of law are called contracts implied by law. But is evident that the latter are not real contracts. They have been called contract arbitrarily by the courts of England, and those of the Untied States in which the English common law is in force, in order that certain actions arising ex lege may be enforced by the action of assumpsit. In the rigid formulism of the English common law the substantive right had to be accommodated to the form of action. As is stated in the monograph on the action of assumpsit in Ruling Case Law. (volume 2, 743) —
In theory it wan action to recover for the nonperformance f simple contracts, and the formula and proceedings were constructed and carried on accordingly. . . . From the reign of Elizabeth this action has been extended to almost every case where an obligation arises from natural reason, . . . and it is now maintained in many cases which its principles do not comprehend and where fictions and intendments are resorted to, to fit the actual cause of action to the theory of the remedy. It is thus sanctioned where there has been no . . . real contract, but where some duty is deemed sufficient to justify the court in imputing the promise to perform its, and hence in bending the transaction to the form of action.
In the ancient English common law procedure the form of the action was regarded as being much more important than the substantive right to be enforced. If no form of action was found in which the facts would fit, so much the worse for the facts! to avoid the injustices to which this condition of affairs gave rise, the judges invented those fictions which permitted them to preserve the appearance of conservatism and change the law without expressly admitting that they were doing so. The indispensable averment, that they were doing so. The indispensable avernment without which the action of assumpsit would not lie, was that the defendant promised to pay plaintiff the amount demanded. (Sector vs. Holmes, 17 Vs., 566.) In true contracts, whether express or implied, this promise in fact exists. In obligations arising ex lege there is no such promise, and therefore the action of assumpsit could not be maintained, and therefore the action of assumpsit could not be maintained, although by reason of its relative simplicity it was one of the most favored forms of action. In order to permit the litigant to make use of this form of action for the enforcement of ascertain classes of obligations arising ex lege, the judges invented the fiction of the promise of the defendant to pay the amount of the obligation, and as this fictitious promise give the appearance of consensuality to the legal relations of the parties, the name of implied contract is given to that class of extra-contractual obligations enforcible by the action of assumpsit.
Now, it is not be supposed that it was the intention of the Legislature in making use in the first paragraph of article 412 of the phrase contract, express or implied to corrupt the logical simplicity of our concept of obligations by importing into our law the antiquated fictions of the mediaeval English common law. If one of the concepts of the term "implied contract" in the English common law, namely, that in which consent is presume from the conduct of the debtor, harmonizes with the concept of the contract in our law, why should we reject that meaning and hold that the Legislature intended to use this phrase in the foreign and illogical sense of a contract arising without consent? This is a civil law country. why should we be compelled to study the fictions of the ancient English common law, in order to be informed as to the meaning of the word contract in the law of the Philippine Islands? Much more reasonable to my mind was the conclusion of the Texas court, under similar circumstances, to the effect to be referred for their signification to terms of similar import in the system of laws which prevails in the country where the statue is passed." (Cayce vs. Curtis, supra.)
My conclusion is that the phase contract, express or implied should be interpreted in the grammatical sense of the words and limited to true contracts, consensual obligations arising from consent, whether expressed in words, writing or signs, or presumed from conduct. As it is evident that the defendant in the present case never promised, him in the gambling game in question, his obligation to restor the amounts won, imposed by the law, is no contractual, but purely extra-contractual and therefore the action brought not being one arising upon contract express or implied, the plaintiff is not entitled to a preliminary attachment upon the averment that the defendant is about to depart from the Philippine Islands with with intent t defraud his creditors, no averment being made in the compliant or in the affidavit that the defendant has removed or disposed of his property, or is about to depart with intent to defraud his creditors, so as to bring the case within the terms of the fifth paragraph of section 412.
I am unable to agree with the contention of the application (Brief, p. 39) here that the phase in question should be interpreted in such a way as to include all obligations, whether arising from consent or ex lege, because that is equivalent to eliminating all distinction between the first and the fifth paragraphs by practically striking out the first two lines of paragraph one. The Legislature has deliberately established this distinction, and while we may be unable to see any reason why it should have been made, it is our duty to apply and interpret the law, and we are not authorized under the guise of interpretation to virtually repeal part of the statute.
Nor can it be said that the relations between the parties litigant constitute a quasi-contract. In the first place, quasi- contracts are "lawful and purely voluntary acts by which the authors thereof become obligated in favor of a third person. . . ." The act which gave rise to the obligation ex lege relied upon by the plaintiff in the court below is illicit — an unlawful gambling game. In the second place, the first paragraph of section 412 of the Code of Civil Procedure does not authorize an attachment in actions arising out of quasi contracts, but only in actions arising out of contract, express or implied.
I am therefore of the opinion that the court below was without jurisdiction to issue that writ of attachment and that the writ should be declared null and void.
Avanceña, J., concurs.
Pelayo vs Lauron
G.R. No. L-4089 January 12, 1909
ARTURO PELAYO, plaintiff-appellant,
vs.
MARCELO LAURON, ET AL., defendants-appellees.
vs.
MARCELO LAURON, ET AL., defendants-appellees.
J.H. Junquera, for appellant.
Filemon Sotto, for appellee.
Filemon Sotto, for appellee.
TORRES, J.:
On the 23rd of November, 1906, Arturo Pelayo, a physician residing in Cebu, filed a complaint against Marcelo Lauron and Juana Abella setting forth that on or about the 13th of October of said year, at night, the plaintiff was called to the house of the defendants, situated in San Nicolas, and that upon arrival he was requested by them to render medical assistance to their daughter-in-law who was about to give birth to a child; that therefore, and after consultation with the attending physician, Dr. Escaño, it was found necessary, on account of the difficult birth, to remove the fetus by means of forceps which operation was performed by the plaintiff, who also had to remove the afterbirth, in which services he was occupied until the following morning, and that afterwards, on the same day, he visited the patient several times; that the just and equitable value of the services rendered by him was P500, which the defendants refuse to pay without alleging any good reason therefor; that for said reason he prayed that the judgment be entered in his favor as against the defendants, or any of them, for the sum of P500 and costs, together with any other relief that might be deemed proper.
In answer to the complaint counsel for the defendants denied all of the allegation therein contained and alleged as a special defense, that their daughter-in-law had died in consequence of the said childbirth, and that when she was alive she lived with her husband independently and in a separate house without any relation whatever with them, and that, if on the day when she gave birth she was in the house of the defendants, her stay their was accidental and due to fortuitous circumstances; therefore, he prayed that the defendants be absolved of the complaint with costs against the plaintiff.
The plaintiff demurred to the above answer, and the court below sustained the demurrer, directing the defendants, on the 23rd of January, 1907, to amend their answer. In compliance with this order the defendants presented, on the same date, their amended answer, denying each and every one of the allegations contained in the complaint, and requesting that the same be dismissed with costs.
As a result of the evidence adduced by both parties, judgment was entered by the court below on the 5th of April, 1907, whereby the defendants were absolved from the former complaint, on account of the lack of sufficient evidence to establish a right of action against the defendants, with costs against the plaintiff, who excepted to the said judgment and in addition moved for a new trial on the ground that the judgment was contrary to law; the motion was overruled and the plaintiff excepted and in due course presented the corresponding bill of exceptions. The motion of the defendants requesting that the declaration contained in the judgment that the defendants had demanded therefrom, for the reason that, according to the evidence, no such request had been made, was also denied, and to the decision the defendants excepted.
Assuming that it is a real fact of knowledge by the defendants that the plaintiff, by virtue of having been sent for by the former, attended a physician and rendered professional services to a daughter-in-law of the said defendants during a difficult and laborious childbirth, in order to decide the claim of the said physician regarding the recovery of his fees, it becomes necessary to decide who is bound to pay the bill, whether the father and mother-in-law of the patient, or the husband of the latter.
According to article 1089 of the Civil Code, obligations are created by law, by contracts, by quasi-contracts, and by illicit acts and omissions or by those in which any kind of fault or negligence occurs.
Obligations arising from law are not presumed. Those expressly determined in the code or in special laws, etc., are the only demandable ones. Obligations arising from contracts have legal force between the contracting parties and must be fulfilled in accordance with their stipulations. (Arts. 1090 and 1091.)
The rendering of medical assistance in case of illness is comprised among the mutual obligations to which the spouses are bound by way of mutual support. (Arts. 142 and 143.)
If every obligation consists in giving, doing or not doing something (art. 1088), and spouses are mutually bound to support each other, there can be no question but that, when either of them by reason of illness should be in need of medical assistance, the other is under the unavoidable obligation to furnish the necessary services of a physician in order that health may be restored, and he or she may be freed from the sickness by which life is jeopardized; the party bound to furnish such support is therefore liable for all expenses, including the fees of the medical expert for his professional services. This liability originates from the above-cited mutual obligation which the law has expressly established between the married couple.
In the face of the above legal precepts it is unquestionable that the person bound to pay the fees due to the plaintiff for the professional services that he rendered to the daughter-in-law of the defendants during her childbirth, is the husband of the patient and not her father and mother- in-law, the defendants herein. The fact that it was not the husband who called the plaintiff and requested his assistance for his wife is no bar to the fulfillment of the said obligation, as the defendants, in view of the imminent danger, to which the life of the patient was at that moment exposed, considered that medical assistance was urgently needed, and the obligation of the husband to furnish his wife in the indispensable services of a physician at such critical moments is specially established by the law, as has been seen, and compliance therewith is unavoidable; therefore, the plaintiff, who believes that he is entitled to recover his fees, must direct his action against the husband who is under obligation to furnish medical assistance to his lawful wife in such an emergency.
From the foregoing it may readily be understood that it was improper to have brought an action against the defendants simply because they were the parties who called the plaintiff and requested him to assist the patient during her difficult confinement, and also, possibly, because they were her father and mother-in-law and the sickness occurred in their house. The defendants were not, nor are they now, under any obligation by virtue of any legal provision, to pay the fees claimed, nor in consequence of any contract entered into between them and the plaintiff from which such obligation might have arisen.
In applying the provisions of the Civil Code in an action for support, the supreme court of Spain, while recognizing the validity and efficiency of a contract to furnish support wherein a person bound himself to support another who was not his relative, established the rule that the law does impose the obligation to pay for the support of a stranger, but as the liability arose out of a contract, the stipulations of the agreement must be held. (Decision of May 11, 1897.)
Within the meaning of the law, the father and mother-in-law are strangers with respect to the obligation that devolves upon the husband to provide support, among which is the furnishing of medical assistance to his wife at the time of her confinement; and, on the other hand, it does not appear that a contract existed between the defendants and the plaintiff physician, for which reason it is obvious that the former can not be compelled to pay fees which they are under no liability to pay because it does not appear that they consented to bind themselves.
The foregoing suffices to demonstrate that the first and second errors assigned to the judgment below are unfounded, because, if the plaintiff has no right of action against the defendants, it is needless to declare whether or not the use of forceps is a surgical operation.
Therefore, in view of the consideration hereinbefore set forth, it is our opinion that the judgment appealed from should be affirmed with the costs against the appellant. So ordered.
Mapa and Tracey, JJ., concur.
Arellano, C.J., and Carson, J., concurs in the result.
Willard, J., dissents.
Arellano, C.J., and Carson, J., concurs in the result.
Willard, J., dissents.
Ayala Corp vs Rosa Diana Realty
G.R. No. 134284, December 1, 2000.
AYALA CORPORATION, petitioner.
vs.
ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION, respondent.
vs.
ROSA-DIANA REALTY AND DEVELOPMENT CORPORATION, respondent.
DE LEON, J.:
Before us is a petition for review on certiorari seeking the reversal of a decision rendered by the Court of Appeals in C.A. G.R. C.V. No. 4598 entitled "Ayala Corporation vs. Rosa-Diana Realty and Development Corporation, ‘ dismissing Ayala Corporation’s petition for lack of merit.
The facts of the case are not in dispute:
Petitioner Ayala Corporation (herein-after referred to as Ayala) was the registration owner of a parcel of land located in Alfaro Street, Salcedo Village, Makati City with an area of 840 square meters, more or less and covered by Transfer Certificate of Title (TCT) No. 233435 of the Register of Deeds of Rizal.
On April 20, 1976, Ayala sold the lot to Manuel Sy married to Vilma Po and Sy Ka Kieng married to Rosa Chan. The Deed of Sale executed between Ayala and the buyers contained Special conditions of sale and Deed Restrictions. Among the Special Conditions of Sale were.
a. The vendee shall build on the lot and submit the building plans to the vendor before September 30, 1976 for the latter’s approval.
b. The construction of the building shall start on or before March 30, 1977 and completed before 1979. Before such completion, neither no the title released even if the purchase price shall have been fully paid.
c. There shall be no resale of the property.
The Deed Restrictions, on the other hand, contained the stipulation that the gross floor area of the building to be constructed shall not be more than five (5) times the lot area and the total height shall not exceed forty two (42) meters. The restrictions were to expire in the year 2025.
Manuel Sy and Sy Ka Kieng failed to construct the building in violation of the Special Conditions of Sale. Notwithstanding the violation, Manuel Sy anf Sy Ka Kieng, in April 1989, were able to sell the lot to respondent Rosa-Diana Realty and Development Corporation (hereinafter referred to as Rosa-Diana) with Ayala’s approval. As a consideration for Ayala to release the Certificate of title of the subject property, Rosa Diana, on July 27, 1989 executed an Undertaking, together with the buildings plans for a condominium project, known as "The Peak", Ayala released title to the lot, thereby enabling Rosa-Diana t register the deed of sale in its favor and obtain Certificate of Title No. 165720 in its name. The title carried as encumbrances the special conditions of sale and the deed restrictions. Rosa-Diana’s building plans as approved by Ayala were ‘subject to strict compliance of cautionary notices appearing on the building plans and to the restrictions encumbering the Lot regarding the use and occupancy of the same.’
Thereafter, Rosa-Diana submitted to the building official of Makati another set of building plans for "The Peak" which Rosa-Diana submitted to Ayala for approval envisioned a 24-meter high, seven (7) storey condominium project with a gross floor area of 3,968.56 square meters, the building plans which Rosa-Diana submitted to the building official of Makati, contemplated a 91.65 meter high, 38 storey condominium building with a gross floor area of 23,305.09 square meters.1 Needless to say, while the first set of building plans complied with the deed restrictions, the latter set seceded the same.
During the construction of Rosa-Diana’s condominium project, Ayala filed an action with the Regional Trial Court (RTC) of Makati, Branch 139 for specific performance, with application for a writ of preliminary injunction/temporary restraining order against Rosa-Diana Realty seeking to compel the latter to comply with the contractual obligations under the deed of restrictions annotated on its title as well as with the building plans it submitted to the latter. In the alternative, Ayala prayed for rescission of the sale of the subject lot to Rosa-Diana Realty.
The lower court denied Ayala’s prayer for injunctive relief, thus enabling Rosa-Diana to complete the construction of the building. Undeterred, Ayala tried to cause the annotation of a notice of lis pendens on Rosa-Diana’s title. The Register of Deeds of Makati, however, refused registration of the notice of lis pendens on the ground that the case pending before the trial court, being an action for specific performance and/or rescission, is an action in personal which does not involve the title, use or possession of the property.2 The Land Registration Authority (LRA) reversed the ruling of the Register of Deeds saying that an action for specific performance or recession may be classified as a proceeding of any kind in court directly affecting title to the land or the use or occupation thereof for which a notice of lis pendens may be held proper.3 The decision of the LRA, however, was overturned by the Court of Appeals in C.A. G.R. S.P. No. 29157. In G.R. No. 112774, We affirmed the ruling of the CA on February 16, 1994 saying.
We agree with respondent court that the notice of lis pendens is not proper in this instance. The case before the trial court is a personal action since the cause of action thereof arises primarily from the alleged violation of the Deed of Restriction.
In the meantime, Ayala completed its presentation of evidence before the trial court. Rosa-Diana filed a Demurrer to Evidence averring that Ayala failed to establish its right to the relief sought in-as much as (a) Ayala admittedly does not enforce the deed restrictions uniformly and strictly (b) Ayala has lost its right/power to enforce the restrictions due to its own acts and omissions; and (c) the deed restrictions are no longer valid and effective against lot buyers in Ayala’s controlled subdivision.
The trial court sustained Rosa-Diana’s Demurrer to Evidence saying that Ayala was guilty of abandonment and/or estoppel due to its failure to enforce the terms of deed of restrictions and special conditions of sale against Manuel Sy and Sy Ka Kieng. The trial court noted that notwithstanding the violation of the special conditions of sale, Manuel Sy and Sy Ka Kieng were able to transfer the title to Rosa-Diana with the approval of Ayala. The trial court added that Ayala’s failure to enforce the restrictions with respect to Trafalgar, Shellhouse, Eurovilla, LPL Plaza, Parc Regent, LPL Mansion and Leronville, which are located within Salcedo Village, shows that Ayala discriminated against those which it wants to have the obligation enforced. The trial court then concluded that for Ayala to discriminatory choose which obligor would be made to follow certain conditions and which should not, did not seem fair and legal.
The Court of Appeals affirmed the ruling of the trial court saying that the "appeal is seated by the doctrine of the law of the case in C.A. G.R. S.P. No. 29157" where it was stated that
xxx Ayala is bared from enforcing the Deed of Restriction in question pursuant to the doctrine of waiver and estoppel. Under the terms of the deed of sale, the vendee Sy Ka Kieng assumed faithful compliance with the special conditions of sale and with the Salcedo Village Deed of Restrictions. One of the conditions was that a building would be constructed within one year. However, Sy Ka Kieng failed to construct the building as required under the Deed Sale. Ayala did nothing to enforce the terms of the contract. In fact, it even agreed to the sale of the lot by Sy Ka Kieng in favor of petitioner Realty in 1989 or thirteen (13) years later. We, therefore, see no justifiable reason for Ayala to attempt to enforce the terms of the conditions of sale against the petitioner.
xxx
The Court of Appeals also cited C.A. G.R. C.V. No. 46488 entitled, "Ayala Corporation vs. Ray Burton Development Corporation’ which relied on C.A. G.R. S.P. No. 29157 in ruling that Ayala is barred from enforcing the deed restrictions in dispute. Upon a motion for reconsideration filed by herein petitioner, the Court of Appeals clarified that "the citation of the decision in Ayala Corporation vs. Ray Burton Development Corporation, Ca G.R. C.V. No. 46488, February 27, 1996, was made not because said decision is res judicata to the case at bar but rather because it is precedential under the doctrine of stare decisis."
Upon denial of said motion for reconsideration, Ayala filed the present appeal.
Ayala contends that the pronouncement of the Court of Appeals in C.A. G.R. S.P. No. 29157 that it is estopped from enforcing the deed restrictions is merely obiter dicta inasmuch as the only issue raised in the aforesaid case was the propriety of a lis pendens annotation on Rosa-Diana’s certificate of title.
Ayala avers that Rosa-Diana presented no evidence whatsoever on Ayala’s supposed waiver or estoppel in C.A. G.R. S.P. No. 29157. Ayala likewise pointed out that at the time C.A. G.R. S.P. No. 29157 was on appeal, the issues of the validity and continued viability of the deed of restrictions and their enforceability by Ayala were joined and then being tried before the trial court.
Petitioner’s assignment of errors in the present appeal may essentially be summarized as follows:
I. The Court of Appeals acted in manner not in accord with law and the applicable decisions of the Supreme Court in holding that the doctrine of the law of the case, or stare decisis, operated to dismiss Ayala’s appeal.
II. The Court of Appeals erred as a matter of law and departed from the accepted and usual course of judicial proceedings when it failed to expressly pass upon the specific errors assigned in Ayala’s appeal.
A discussion on the distinctions between law of the case, stare decisis and obiter dicta is in order.
The doctrine of the law of the case has certain affinities with, but is clearly distinguishable from, the doctrines of res judicata and stare decisis, principally on the ground that the rule of the law of the case operates only in the particular case and only as a rule of policy and not as one of law.4 At variance with the doctrine of stare decisis, the ruling adhered to in the particular case under the doctrine of the law of the case need not be followed as a precedent in subsequent litigation between other parties, neither by the appellate court which made the decision followed on a subsequent appeal in the same case, nor by any other court. The ruling covered by the doctrine of the law of the case is adhered to in the single case where it arises, but is not carried into other cases as a precedent.5 On the other hand, under the doctrine of stare decisis, once a point of law has been established by the court, that point of law will, generally, be followed by the same court and by all courts of lower rank in subsequent cases where the same legal issue is raised.6 Stare decisis proceeds from the first principle of justice that, absent powerful countervailing considerations, like cases ought to be decided alike.7
The Court of Appeals, in ruling against petitioner Ayala Corporation stated that the appeal is ‘sealed’ by the doctrine of the law of the case, referring to G.R. No. 112774 entitled "Ayala Corporation, petitioner vs. Courts of Appeals, et al., respondents". The Court of Appeals likewise made reference to C.A. G.R. C.V. No. 46488 entitled, "Ayala Corporation vs. Ray Burton Development Corporation, Inc." in ruling against petitioner saying that it is jurisprudentially under the doctrine of stare decisis.
It must be pointed out that the only issue that was raised before the Court of Appeals in C.A. G.R. S.P. No. 29157 was whether or not the annotation of lis pendens is proper. The Court of Appeals, in its decision, in fact stated "the principal issue to be resolved is: whether or not an action for specific performance, or in the alternative, rescission of deed of sale to enforce the deed of restrictions governing the use of property, is a real or personal action, or one that affects title thereto and its use or occupation thereof.8
In the aforesaid decision, the Court of Appeals even justified the cancellation of the notice of lis pendens on the ground that Ayala had ample protection should it succeed in proving its allegations regarding the violation of the deed of restrictions, without unduly curtailing the right of the petitioner to fully enjoy its property in the meantime that there is as yet no decision by the trial court.9
From the foregoing, it is clear that the Court of Appeals was aware that the issue as to whether petitioner is estopped from enforcing the deed of restrictions has yet to be resolved by the trial court. Though it did make a pronouncement that the petitioner is estopped from enforcing the deed of restrictions, it also mentioned at the same time that this particular issue has yet to be resolved by the trial court. Notably, upon appeal to this Court, We have affirmed the ruling of the Court of Appeals only as regards the particular issue of the propriety of the cancellation of the notice of lis pendens.
We see no reason then, how the law of the case or stare decisis can be held to be applicable in the case at bench. If at all, the pronouncement made by the Court of Appeals that petitioner Ayala is barred from enforcing the deed of restrictions can only be considered as obiter dicta. As earlier mentioned the only issue before the Court of Appeals at the time was the propriety of the annotation of the lis pendens. The additional pronouncement of the Court of Appeals that Ayala is estopped from enforcing the deed of restrictions even as it recognized that this said issue is being tried before the trial court was not necessary to dispose of the issue as to the propriety of the annotation of the lis pendens. A dictum is an opinion of a judge which does not embody the resolution or determination of the court, and made without argument, or full consideration of the point, not the proffered deliberate opinion of the judge himself.10 It is not necessarily limited to issues essential to the decision but may also include expressions of opinion which are not necessary to support the decision reached by the court. Mere dicta are not binding under the doctrine of stare decisis11.
While the Court of Appeals did not err in ruling that the present petition is not barred by C.A. G.R. C.V. No. 46488 entitled "Ayala Corporation vs. Ray Burton Development Inc." under the doctrine of res judicata, neither, however, can the latter case be cited as presidential under the doctrine of stare decisis. It must be pointed out that at the time the assailed decision was rendered, C.A. G.R. C.V. No. 46488 was on appeal with this Court. Significantly, in the decision. We have rendered in Ayala Corporation vs. Ray Burton Development Corporation12 which became final and executory on July 5, 1999 we have clearly stated that "An examination of the decision in the said Rosa-Diana case reveals that the sole issue raised before the appellate court was the propriety of the lis pendens annotation. However, the appellate court went beyond the sole issue and made factual findings bereft of any basis in the record to inappropriately rule that AYALA is in estoppel and has waived its right to enforce the subject restrictions. Such ruling was immaterial to the annotation of the lis pendens. The finding of estoppel was thus improper and made in excess of jurisdiction."
Coming now to the merits of the case, petitioner avers that the Court of Appeals departed from the usual course of judicial proceedings when it failed to expressly pass upon the specific errors assigned in its appeal. Petitioner reiterates its contention that law and evidence do not support the trial court’s findings that Ayala has waived its right to enforce the deed of restrictions.
We find merit in the petition.
It is basic that findings of fact of the trial court and the Court of Appeals are conclusive upon the Supreme Court when supported by substantial evidence.13 We are constrained, however, to review the trial court'’ findings of fact, which the Court of Appeals chose not to pass upon, in as much as there is ample evidence on record to show that certain facts were overlooked which would affect the disposition of the case.
In its assailed decision of February 4, 1994, the trial court, ruled in favor of respondent Rosa-Diana Realty on the ground that Ayala had not acted fairly when it did not institute an action against the original vendees despite the latter’s violation of the Special Conditions of Sale but chose instead to file an action against herein respondent Rosa-Diana. The trial court added that although the 38-storey building of Rosa-Diana is beyond the total height restriction, it was not violative of the National Building Code. According to the trial court the construction of the 38 storey building known as "The Peak" has not been shown to have been prohibited by law and neither is it against public policy.
It bears emphasis that as complainant, Ayala had the prerogative to initiate an action against violators of the deed restrictions. That Rosa-Diana had acted in bad faith is manifested by the fact that it submitted two sets of building plans, one which was in conformity with the deed restrictions submitted to Ayala and MACEA, and the other, which exceeded the height requirement in the deed restrictions to the Makati building official for the purpose of procuring a building permit from the latter. Moreover, the violation of the deed restrictions committed by respondent can hardly be denominated as a minor violation. It should be pointed out that the original building plan which was submitted to and approved by petitioner Ayala Corporation, envisioned a twenty four (24) meter high, seven (7) storey condominium whereas the respondent’s building plan which was submitted to and approved by the building official of Makati is that of a thirty eight (38) storey, 91.65 meters high, building. At present, the Peak building of respondent which actually stands at 133.65 meters with a total gross floor area of 23,305.09 square meters, seriously violates the dimensions indicated in the building plans submitted by Rosa-Diana to petitioner Ayala for approval in as much as the Peak building exceeds the approved height limit by about 109 meters and the allowable gross floor area under the applicable deed restrictions by about 19,105 square meters. Clearly, there was a gross violation of the deed restrictions and evident bad faith by the respondent.
It may not be amiss to mention that the deed restrictions were revised in a general membership meeting of the association of lot owners in Makati Central Business District the Makati Commercial Estate Association, Inc. (MACEA).
Whereby direct height restrictions were abolished in lieu of floor area limits. Respondent, however, did not vote for the approval of this revision during the General Membership meeting, which was held on July 11, 1990 at the Manila Polo Clud Pavilion, Makati, and Metro Manila. Hence, respondent continues to be bound by the original deed restrictions applicable to Lot 7, Block 1 and annotated on its title to said lot. In any event, assuming arguendo that respondent voted for the approval of direct height restrictions in lieu of floor area limits, the total floor area of its Peak building would still be violative of the floor area limits to the extent of about 9,865 square meters of allowable floor area under the MACEA revised restrictions.
Respondent Rosa-Diana avers that there is nothing illegal or unlawful in the building plans which it used in the construction of the Peak condominium ‘inasmuch as it bears the imprimatur of the building official of Makati, who is tasked to determine whether building and construction plans are in accordance with the law, notably, the National Building Code."
Respondent Rosa-Diana, however, misses the point inasmuch as it has freely consented to be bound by the deed restrictions when it entered into a contract of sale with spouses Manuel Sy and Sy Ka Kieng. While respondent claims that it was under the impression that Ayala was no longer enforcing the deed restrictions, the Undertaking14 it executed belies this same claim. In said Undertaking, respondent agreed to ‘construct and complete the construction of the house on said lot as required under the special condition of sale." Respondent likewise bound itself to abide and comply with x x x the condition of the rescission of the scale by Ayala Land, Inc. on the grounds therein stated x x x.
Contractual obligations between parties have the force of law between them and absent any allegation that the same are contrary to law, morals, good custom, public order or public policy, they must be complied with in good faith. Hence, Article 1159 of the New Civil Code provides.
"Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith."
Respondent Rosa-Diana insists that the trial court had already ruled that the undertaking executed by its Chairman and President cannot validly bind Rosa-Diana and hence, it should not be held bound by the deed restrictions.
We agree with petitioner Ayala’s observation that respondent Rosa-Diana’s special and affirmative defenses before the trial court never mentioned any allegation that its president and chairman were not authorized to execute the Undertaking. It was inappropriate therefore for the trial court to rule that in the absence of any authority or confirmation from the Board of Directors of respondent Rosa-Diana, its Chairman and the President cannot validly enter into an undertaking relative to the construction of the building on the lot within one year from July 27, 1989 and in accordance with the deed restrictions, Curiously, while the trial court stated that it cannot be presumed that the Chairman and the President can validly bind respondent Rosa-Diana to enter into the aforesaid Undertaking in the absence of any authority or confirmation from the Board of Directors, the trial court held that the ordinary presumption of regularity of business transactions is applicable as regards the Deed of Sale which was executed by Manuel Sy and Sy Ka Kieng and respondent Rosa-Diana. In the light of the fact that respondent Rosa-Diana never alleged in its Answer that its president and chairman were not authorized to execute the Undertaking, the aforesaid ruling of the trial court is without factual and legal basis and suppressing to say the least.
The fact alone that respondent Rosa-Diana conveniently prepared two sets of building plans –with one set which fully conformed to the Deed Restrictions and another in gross violation of the same – should have cautioned the trial court to conclude that respondent Rose-Diana was under the erroneous impression that the Deed Restrictions were no longer enforceable and that it never intended to be bound by the Undertaking signed by its President and Chairman. We reiterate that contractual obligations have the force of law between parties and unless the same is contrary to public policy morals and good customs, they must be complied by the parties in good faith.
Petitioners, in its Petition, prays that judgement be rendered:
a. ordering Rosa-Diana Realty and Development Corporation to comply with its contractual obligations in the construction of the Peak by removing, or closing down and prohibiting Rosa-Diana from using, selling, leasing or otherwise disposing, of the portions of areas thereof constructed beyond or in excess of the approved height, as shown by the building plans submitted to, and approved by, Ayala, including any other portion of the building constructed not in accordance with the said building plans, during the effectivity of the Deed Restrictions;
b. Alternatively, in the event specific performance has become impossible;
1. ordering the cancellation and recession of the April 20, 1976 Deed of Sale by Ayala in favor of the original vendees thereof as well as the subsequent Deed of Sale executed by such original vendees in favor of Rosa-Diana, and ordering Rosa-Diana to return Ayala Lot 7, Block 1 of Salcedo Village;
2. ordering the cancellation of Transfer Certificate of Title No. 165720 (in the name of Rosa-Diana) and directing the office of the Register of Deeds of Makati to issue a new title over the lot in the name of Ayala; and
3. Ordering Rosa-Diana to pay Ayala attorney’s fees in the amount of P500, 000.00, exemplary damages in the amount of P5, 000,000.00 and the costs of suit.
It must be noted that during the trial respondent Rosa-Diana was able to complete the construction of The Peak as a building with a height of thirty-eight (38) floors or 133.65 meters. Having been completed for a number of years already, it would be reasonable to assume that it is now fully tenanted. Consequently, the remedy of specific performance by respondent is no longer feasible. However, neither can we grant petitioner’s prayer for the cancellation and rescission of the April 20, 1976 Deed of Sale by petitioner Ayala in favor of respondent Rosa-Diana inasmuch as the resale of the property by the original vendees, spouses Manuel Sy and Ka Kieng to comply with their obligation to construct a building within one year from April 20, 1976, has effectively waived its right to rescind the sale of the subject lot to the original vendees.
Faced with the same question as to the proper remedy available to petitioner in the case of "Ayala Corporation vs. Ray Burton Development Inc., ‘ a case which is on all fours with the case at bench, we ruled therein that the party guilty of violating the deed restrictions may only be held alternatively liable for substitute performance of its obligation, that is, for the payment of damages. In the aforesaid case it was observed that the Consolidated and Revised Deed Restrictions (CRDR) imposed development charges on constructions which exceed the estimated Gross Limits permitted under the original Deed Restrictions but which are within the limits of the CRDR’s.1âwphi1.nêt
The pertinent portion of the Deed of Restrictions reads:
3. DEVELOPMENT CAHRGE For building construction within the Gross Floor Area limits defined under Paragraphs C-2.1 to C-2.4 above, but which will result in a Gross Floor Area exceeding certain standards defined in Paragraphs C-3.1-C below, the OWNER shall pay MACEA, prior to the construction of any new building a DEVELOPMENT CHARGE as a contribution to a trust fund to be administered by MACEA. This trust fund shall be used to improve facilities and utilities in Makati Central District.
3.1 The amount of the development charge that shall be due from the OWNER shall be computed as follows:
DEVELOPMENT
CAHRGE = A x (B-C-D)
Where:
A – is equal to the a Area Assessment which shall be set at Five Hundred Pesos (P500.00) until December 31, 1990. Each January 1st thereafter, such amount shall increase by ten percent (10%) over the immediately preceding year; provided that beginning 1995 and at the end of every successive five-year period thereafter, the increase in the Area Assessment shall be reviewed and adjusted by the VENDOR to correspond to the accumulated increase in the construction cost index during the immediately preceding five years as based on the weighted average of wholesale price and wage indices of the National Census and Statistics Office and the Bureau of Labor Statistics.
B – Is equal to the Gross Floor Area of the completed or expanded building in square meters.
C – is equal to the estimated Gross Floor Area permitted under the original deed restrictions, derived by multiplying the lot area by the effective original FAR shown below for each location.
We then ruled in the aforesaid case that the development; charges are a fair measure of compensatory damages which therein respondent Ray Burton Development Inc. is liable to Ayala Corporation. The dispositive portion of the decision in the said case, which is squarely applicable to the case at bar, reads as, follows:
WHEREFORE, premises considered, the assailed Decision of the Court of Appeals dated February 27, 1996, in CA G.R. C.V. No. 46488, and its Resolution dated October 7, 1996 are hereby REVERSED and SET ASIDE, and in lieu thereof judgement is hereby rendered finding that:
1. The Deed Restrictions are valid and petitioner AYALA is not estopped from enforcing them against lot owners who have not yet adopted the Consolidated and Revised Deed Restrictions.
2. Having admitted that the Consolidated and Revised Deed Restrictions are the applicable Deed Restrictions to Ray Burton Development Corporation, RBDC should be, and is bound by the same.
3. Considering that Ray Burton Development Corporation’s Trafalgar plaza exceeds the floor area limits of the Deed Restrictions, RBDC is hereby ordered to pay development charges as computed under the provisions of the consolidated and Revised Deed Restrictions currently in force.
4. Ray Burton Development corporation is further ordered to pay AYALA exemplary damages in the amount of P2, 500,000.00 attorney’s fees in the amount of P250,000.00
SO ORDERED:
There is no reason why the same rule should not be followed in the case at bar, the remedies of specific performance and/or rescission prayed for by petitioner no longer being feasible. In accordance with the peculiar circumstances of the case at bar, the development charges would certainly be a fair measure of compensatory damages to petitioner Ayala.
Exemplary damages in the sum of P2, 500,000.00 as prayed for by petitioner are also in order inasmuch as respondent Rosa-Diana was in evident bad faith when it submitted a set of building plans in conformity with the deed restrictions to petitioner Ayala for the sole purpose of obtaining title to the property, but only to prepare and later on submit another set of buildings plans which are in gross violation of the Deed Restrictions. Petitioner Ayala is likewise entitled to an award of attorney’s fees in the sum of P250, 000.00.
WHEREFORE, the assailed Decision of the Court of Appeals dated December 4, 1997 and its Resolution dated June 19, 1998, C.A. G.R. C.V. No. 4598, are REVERSED and SET ASIDE. In lieu thereof, judgement is rendered.
a. orderings respondent Rosa-Diana Realty and Development Corporation to pay development charges as computed under the provisions of the consolidated and Revised Deed Restrictions currently in force; and
b. ordering respondent Rosa-Diana Realty and Development Corporation to pay petitioner Ayala Corporation exemplary damages in the sum of P2,500,00.00, attorney’s fees in the sum of P250,000.00 and the costs of the suit.
SO ORDERED.
Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.
Bricktown Development vs Amor Tierra Development
| G.R. No. 112182 December 12, 1994 BRICKTOWN DEVELOPMENT CORP. (its new corporate name MULTINATIONAL REALTY DEVELOPMENT CORPORATION) and MARIANO Z. VERALDE, petitioners, vs. AMOR TIERRA DEVELOPMENT CORPORATION and the HON. COURT OF APPEALS, respondents. Tabaquero, Dela Torre, Simando & Associates for petitioners. Robles, Ricafrente & Aguirre Law Firm for private respondent. VITUG, J.: A contract, once perfected, has the force of law between the parties with which they are bound to comply in good faith and from which neither one may renege without the consent of the other. The autonomy of contracts allows the parties to establish such stipulations, clauses, terms and conditions as they may deem appropriate provided only that they are not contrary to law, morals, good customs, public order or public policy. The standard norm in the performance of their respective covenants in the contract, as well as in the exercise of their rights thereunder, is expressed in the cardinal principle that the parties in that juridical relation must act with justice, honesty and good faith. These basic tenets, once again, take the lead in the instant controversy. Private respondent reminds us that the factual findings of the trial court, sustained by the Court of Appeals, should be considered binding on this Court in this petition. We concede to this reminder since, indeed, there appears to be no valid justification in the case at bench for us to take an exception from the rule. We shall, therefore, momentarily paraphrase these findings. On 31 March 1981, Bricktown Development Corporation (herein petitioner corporation), represented by its President and co-petitioner Mariano Z. Velarde, executed two Contracts to Sell (Exhs. "A" and "B") in favor of Amor Tierra Development Corporation (herein private respondent), represented in these acts by its Vice-President, Moises G. Petilla, covering a total of 96 residential lots, situated at the Multinational Village Subdivision, La Huerta, Parañaque, Metro Manila, with an aggregate area of 82,888 square meters. The total price of P21,639,875.00 was stipulated to be paid by private respondent in such amounts and maturity dates, as follows: P2,200,000.00 on 31 March 1981; P3,209,968.75 on 30 June 1981; P4,729,906.25 on 31 December 1981; and the balance of P11,500,000.00 to be paid by means of an assumption by private respondent of petitioner corporation's mortgage liability to the Philippine Savings Bank or, alternatively, to be made payable in cash. On even date, 31 March 1981, the parties executed a Supplemental Agreement (Exh. "C"), providing that private respondent would additionally pay to petitioner corporation the amounts of P55,364.68, or 21% interest on the balance of downpayment for the period from 31 March to 30 June 1981, and of P390,369.37 representing interest paid by petitioner corporation to the Philippine Savings Bank in updating the bank loan for the period from 01 February to 31 March 1981. Private respondent was only able to pay petitioner corporation the sum of P1,334,443.21 (Exhs. "A" to "K"). In the meanwhile, however, the parties continued to negotiate for a possible modification of their agreement, although nothing conclusive would appear to have ultimately been arrived at. Finally, on 12 October 1981, petitioner corporation, through its legal counsel, sent private respondent a "Notice of Cancellation of Contract" (Exh. "D") on account of the latter's continued failure to pay the installment due 30 June 1981 and the interest on the unpaid balance of the stipulated initial payment. Petitioner corporation advised private respondent, however, that it (private respondent) still had the right to pay its arrearages within 30 days from receipt of the notice "otherwise the actual cancellation of the contract (would) take place." Several months later, or on 26 September 1983, private respondent, through counsel, demanded (Exh. "E") the refund of private respondent's various payments to petitioner corporation, allegedly "amounting to P2,455,497.71," with interest within fifteen days from receipt of said letter, or, in lieu of a cash payment, to assign to private respondent an equivalent number of unencumbered lots at the same price fixed in the contracts. The demand, not having been heeded, private respondent commenced, on 18 November 1983, its action with the court a quo. 1 Following the reception of evidence, the trial court rendered its decision, the dispositive portion of which read: In view of all the foregoing, judgment is hereby rendered as follows: 1. Declaring the Contracts to Sell and the Supplemental Agreement (Exhibits "A", "B" and "C") rescinded; 2. Ordering the [petitioner] corporation, Bricktown Development Corporation, also known as Multinational Realty Development Corporation, to return to the [private respondent] the amount of One Million Three Hundred Thirty Four Thousand Four Hundred Forty-Three Pesos and Twenty-One Centavos (P1,334,443.21) with interest at the rate of Twelve (12%) percent per annum, starting November 18, 1983, the date when the complaint was filed, until the amount is fully paid; 3. Ordering the [petitioner] corporation to pay the [private respondent] the amount of Twenty-five Thousand (P25,000.00) Pesos, representing attorney's fees; 4. Dismissing [petitioner's] counterclaim for lack of merit; and 5. With costs against the [petitioner] corporation. SO ORDERED. 2 On appeal, the appellate court affirmed in toto the trial court's findings and judgment. In their instant petition, petitioners contend that the Court of Appeals has erred in ruling that — (1) By petitioners' acts, conduct and representation, they themselves delayed or prevented the performance of the contracts to sell and the supplemental agreement and were thus estopped from cancelling the same. (2) Petitioners were no justified in resolving the contracts to sell and the supplemental agreement. (3) The cancellation of the contract required a positive act on the part of petitioners giving private respondent the sixty (60) day grace period provided in the contracts to sell; and (4) In not holding that the forfeiture of the P1,378,197.48 was warranted under the liquidated damages provisions of the contracts to sell and the supplemental agreement and was not iniquitous nor unconscionable. The core issues would really come down to (a) whether or not the contracts to sell were validly rescinded or cancelled by petitioner corporation and, in the affirmative, (b) whether or not the amounts already remitted by private respondent under said contracts were rightly forfeited by petitioner corporation. Admittedly, the terms of payment agreed upon by the parties were not met by private respondent. Of a total selling price of P21,639,875.00, private respondent was only able to remit the sum of P1,334,443.21 which was even short of the stipulated initial payment of P2,200,000.00. No additional payments, it would seem, were made. A notice of cancellation was ultimately made months after the lapse of the contracted grace period. Paragraph 15 of the Contracts to Sell provided thusly: 15. Should the PURCHASER fail to pay when due any of the installments mentioned in stipulation No. 1 above, the OWNER shall grant the purchaser a sixty (60)-day grace period within which to pay the amount/s due, and should the PURCHASER still fail to pay the due amount/s within the 60-day grace period, the PURCHASER shall have the right to ex-parte cancel or rescind this contract, provided, however, that the actual cancellation or rescission shall take effect only after the lapse of thirty (30) days from the date of receipt by the PURCHASER of the notice of cancellation of this contract or the demand for its rescission by a notarial act, and thereafter, the OWNER shall have the right to resell the lot/s subject hereof to another buyer and all payments made, together with all improvements introduced on the aforementioned lot/s shall be forfeited in favor of the OWNER as liquidated damages, and in this connection, the PURCHASER obligates itself to peacefully vacate the aforesaid lot/s without necessity of notice or demand by the OWNER. 3 A grace period is a right, not an obligation, of the debtor. When unconditionally conferred, such as in this case, the grace period is effective without further need of demand either calling for the payment of the obligation or for honoring the right. The grace period must not be likened to an obligation, the non-payment of which, under Article 1169 of the Civil Code, would generally still require judicial or extrajudicial demand before "default" can be said to arise. 4 Verily, in the case at bench, the sixty-day grace period under the terms of the contracts to sell became ipso facto operative from the moment the due payments were not met at their stated maturities. On this score, the provisions of Article 1169 of the Civil Code would find no relevance whatsoever. The cancellation of the contracts to sell by petitioner corporation accords with the contractual covenants of the parties, and such cancellation must be respected. It may be noteworthy to add that in a contract to sell, the non-payment of the purchase price (which is normally the condition for the final sale) can prevent the obligation to convey title from acquiring any obligatory force (Roque vs. Lapuz, 96 SCRA 741; Agustin vs. Court of Appeals, 186 SCRA 375). The forfeiture of the payments thus far remitted under the cancelled contracts in question, given the factual findings of both the trial court and the appellate court, must be viewed differently. While clearly insufficient to justify a foreclosure of the right of petitioner corporation to rescind or cancel its contracts with private respondent, the series of events and circumstances described by said courts to have prevailed in the interim between the parties, however, warrant some favorable consideration by this Court. Petitioners do not deny the fact that there has indeed been a constant dialogue between the parties during the period of their juridical relation. Concededly, the negotiations that they have pursued strictly did not result in the novation, either extinctive or modificatory, of the contracts to sell; nevertheless, this Court is unable to completely disregard the following findings of both the trial court and the appellate court. Said the trial court: It has been duly established through the testimony of plaintiff's witnesses Marcosa Sanchez and Vicente Casas that there were negotiations to enter into another agreement between the parties, after March 31, 1981. The first negotiation took place before June 30, 1981, when Moises Petilla and Renato Dragon, Vice-President and president, respectively, of the plaintiff corporation, together with Marcosa Sanchez, went to the office of the defendant corporation and made some proposals to the latter, thru its president, the defendant Mariano Velarde. They told the defendant Velarde of the plaintiff's request for the division of the lots to be purchased into smaller lots and the building of town houses or smaller houses therein as these kinds of houses can be sold easily than big ones. Velarde replied that subdivision owners would not consent to the building of small houses. He, however, made two counter-proposals, to wit: that the defendant corporation would assign to the plaintiff a number of lots corresponding to the amounts the latter had already paid, or that the defendant corporation may sell the corporation itself, together with the Multinational Village Subdivision, and its other properties, to the plaintiff and the latter's sister companies engaged in the real estate business. The negotiations between the parties went on for sometime but nothing definite was accomplished. 5 For its part, the Court of Appeals observed: We agree with the court a quo that there is, therefore, reasonable ground to believe that because of the negotiations between the parties, coupled with the fact that the plaintiff never took actual possession of the properties and the defendants did not also dispose of the same during the pendency of said negotiations, the plaintiff was led to believe that the parties may ultimately enter into another agreement in place of the "contracts to sell." There was, evidently, no malice or bad faith on the part of the plaintiff in suspending payments. On the contrary, the defendants not only contributed, but had consented to the delay or suspension of payments. They did not give the plaintiff a categorical answer that their counter-proposals will not materialize. 6 In fine, while we must conclude that petitioner corporation still acted within its legal right to declare the contracts to sell rescinded or cancelled, considering, nevertheless, the peculiar circumstances found to be extant by the trial court, confirmed by the Court of Appeals, it would be unconscionable, in our view, to likewise sanction the forfeiture by petitioner corporation of payments made to it by private respondent. Indeed, in the opening statement of this ponencia, we have intimated that the relationship between parties in any contract must always be characterized and punctuated by good faith and fair dealing. Judging from what the courts below have said, petitioners did fall well behind that standard. We do not find it equitable, however, to adjudge any interest payment by petitioners on the amount to be thus refunded, computed from judicial demand, for, indeed, private respondent should not be allowed to totally free itself from its own breach. WHEREFORE, the appealed decision is AFFIRMED insofar as it declares valid the cancellation of the contracts in question but MODIFIED by ordering the refund by petitioner corporation of P1,334,443.21 with 12% interest per annum to commence only, however, from the date of finality of this decision until such refund is effected. No costs. SO ORDERED. Bidin, Romero and Melo, JJ., concur. Feliciano, J., is on leave. |
Pilipinas Hino Vs CA
PILIPINAS HINO, INC., petitioner, vs. COURT OF APPEALS, FERNANDO V. REYES, PONCIANO REYES, and TERESITA R. TAN, respondents.
D E C I S I O N
KAPUNAN, J.:
This petition for review on certiorari seeks to reverse and set aside the decision, dated September 26, 1996, of the Court of Appeals in CA-G.R. CV NO. 48612 which affirmed in toto the decision of the Regional Trial Court of Pasig, Branch 152 in Civil Case No. 61266.
The antecedents of the case as found by the trial court and adopted by the appellate court in its decision, are as follows:
This is an action for Sum of Money and Damages filed by Pilipinas Hino, Inc., thereinafter referred to as the plaintiff against Fernando V. Reyes, Ponciano V. Reyes, and Teresita R. Tan, hereinafter referred to as the defendants.
The plaintiff is a corporation duly organized and existing under the laws of the Philippines, with office address at PMI Building, EDSA, Mandaluyong, Metro Manila: whereas, the defendants Fernando V. D. Reyes and Ponciano V. D. Reyes are both of legal age, with residential or business address at 57 Xavierville Avenue, Loyola Heights, Quezon City, Metro Manila, while defendant Teresita R. Tan is likewise of legal age, with postal address at 39 Zalameda St., Corinthian Garden, Quezon City.
The material allegations in plaintiff's Complaint are as follows:
ON THE FIRST CAUSE OF ACTION
That on or about 15 August 1989, a contract of lease was entered into between herein parties, under which the defendants, as lessors, leased real property located at Bigaa, Balagtas, Bulacan, to herein plaintiff for a term of two (2) years, from 16 August 1989 to 15 August 1991.
Pursuant to the contract of lease, plaintiff-lessee deposited with the defendants-lessors the amount of Four Hundred Thousand (P400,000.00) Pesos to answer for repairs and damages that may be caused by the lessee on the leased premises during the period of the lease.
After the expiration of the lease contract, the plaintiff and defendants made a joint inspection of the premises to determine the extent of the damages thereon, both agreed that the cost of repairs would amount to P60,000.00 and that the amount of P340,000.00 shall then be returned by the defendants to plaintiff. However, defendants returned to plaintiff only the amount of P200,000.00, still having a balance of P140,000.00.
Notwithstanding repeated demands, defendants unjustifiably refused to return the balance of P140,000.00 holding that the true and actual damage on the lease premises amounted to P298,738.90.
ON THE SECOND CAUSE OF ACTION
On August 10, 1990, plaintiff and defendants entered into a contract to sell denominated as a Memorandum of Agreement to sell whereby the latter agreed to sell to the former the leased property subject of this suit in the amount of P45,611,000.00.
The aforesaid Memorandum of Agreement to sell granted the owner (defendants) the option to rescind the same upon failure of the buyer (plaintiff) to pay any of the first six (6) installments with the corresponding obligation to return to the buyer any amount paid by the buyer in excess of the downpayment as stated in paragraphs 7 and 9 of the Memorandum of Agreement.
Pursuant to said Memorandum of Agreement, plaintiff remitted on August 10, 1990 to the defendants the amount of P1,811,000.00 as downpayment. Subsequently, plaintiff paid the first and second installments in the amount of P1,800,000.00 and P5,250,000.00, respectively, thereby making the total amount paid by the plaintiff to the defendants, on top of the downpayment, P7,050,000.00.
Unfortunately, plaintiff failed to pay the 3rd installment and subsequent installments: and thereupon, defendants decided to, and in fact did, in a letter dated 20 November 1990, rescinded and terminated the contract and promised to return to the plaintiff all the amounts paid in excess of the downpayment after deducting the interest due from 3rd to 6th installments, inclusive.
Thus, from the amount of P7,050,000.00 due to be returned to the plaintiff, defendants deducted P924,000.00 as interest and P220,000.00 as rent for the period from 15 February to 15 March 1991, thereby returning to the plaintiff the amount of P5,906,000.00 only, as acknowledged by plaintiff in the letter dated 4 April 1991.
x x x
In their Answer, defendants interposed the following defenses, to wit:
ON THE FIRST CAUSE OF ACTION
There is absolutely no evidence of any agreement allegedly arrived at between plaintiff and defendants upon which plaintiff can anchor its first cause of action.
Plaintiff avers that an estimate of P60,000.00 cost of repairs was agreed upon by the parties after a joint inspection of the premises, to which defendant categorically asserted that there was no such agreement arrived at, nor even an estimated amount was agreed upon by the parties. No less than plaintiff's witness Atty. Yumang testified that there was no such agreement.
It was Atty. Yumang who, by himself and without the approval of the Board came up with an amount of P60,000.00, which was turned down by the defendants as they were incompetent to determine the actual cost of the repairs.
Granting that there was an agreement entered into by Atty. Yumang with the defendants during the first inspection and thereafter as to the amount of damages, this agreement, at that time, would not have been binding on the plaintiff-corporation as Atty. Yumang was never authorized by the plaintiff-corporation at that time to enter into any settlement with the defendants.
Aside from Atty. Yumang, Mr. Rene C. Sangalang was also presented by the plaintiff. He testified that sometime in March 1991, Plaintiff (Pilhino) was moving out and he was requested to inspect the premises. In the same vein, there is nothing in the testimony to show that, at the time of the inspection or anytime thereafter, he was empowered or authorized by the plaintiff-corporation to settle any transaction with defendants. He merely prepared the cost of estimate on the repairs to be done and he forwarded it to Mr. Arsenio Paez, the General Manager of the plaintiff, who in turn allegedly sent it to the defendants. Unfortunately, however, said estimate never reached the hands of the defendants.
Plaintiff's other witness, Mr. Arsenio Paez, testified that there were two (2) inspections made on the premises and he categorically testified that he was present only in the second inspection. He also affirmed that the 'estimated' amount of P60,000.00 was allegedly arrived at by the parties and that plaintiff agreed that such amount should be allegedly retained by the defendants. However, nobody among the defendants agreed to the amount of P60,000.00. Indeed, this non-acceptance was corroborated by Mrs. Teresita Tan when she testified that she rejected the offer because it was not enough. Thus, there was no such agreement to speak of.
x x x
ON THE SECOND CAUSE OF ACTION
The defendants are entitled to the retention of the amount of P924,000.00 as payment of interest stipulated in the contract.
The second cause of action pertains to the Memorandum of Agreement to sell entered into by the parties. It is stated in paragraph 6 that an interest equivalent to three (3%) percent per thirty days period shall be imposed on any installment due but not paid for the duration of the delay. Paragraph 7 of the same documents also deserves a second look.
Since plaintiff failed to pay the third and subsequent installments, defendants' right to the 3% interest, therefore, readily accrued and became demandable at the time of the non-payment. The grace period granted to the plaintiff likewise lapsed. Consequently, the defendants decided to, and in fact did in a letter dated 20 November 1990, terminate the contract to sell. The defendants as agreed upon returned to the plaintiff the amount of P5,906,000.00 representing the amount due to the plaintiff as reimbursement of the installments for the 1st and 2nd installments. Considering that the plaintiff has failed to pay the installments due on time, the interest in the amount of P924,000.00 was charged against the plaintiff (which interest, in turn, represents the unproductive use of the money which should have been made by the defendants had the payment been made on time). The amount of P220,000.00 was likewise deducted by the defendants representing rentals for the period. Thus, only the amount of P5,906,000.00 was rightfully returned by the defendants.
Plaintiff's request to return the amount of P924,000.00 to which defendants however refused for reasons that the said amount represents interest due and demandable from the plaintiff when it incurred the delay which by virtue of legal compensation, was set-off by operation of law and the said amount was rightfully deducted from the amount of P7,050,000.00.
On 24 August 1994, the trial court rendered a decision ruling in favor of respondents Reyes, et al. As to the first cause of action, the trial court found that petitioner was unable to prove its claim that based on the joint ocular inspection of the leased premises, the parties jointly agreed that petitioner would only be held liable in the amount of P60,000.00 representing damages to the leased property. As to the second cause of action, the trial court ruled that based on the contract to sell, petitioner is liable for interest arising from its failure to pay the third and subsequent installments, hence respondents were correct in withholding the amount representing these interest. The dispositive portion of the trial court’s decision reads:
WHEREFORE, judgment is hereby rendered:
1. Under the first cause of action, the plaintiff has no cause of action to demand the return of the balance of the deposits in the amount of P140,000.00 pesos:
2. Under the second cause of action, the defendants have the legal right to demand accrued interest on the unpaid installments in the amount of P924,000.00 pesos.
Defendants counterclaim has not been substantiated.
SO ORDERED.
Not satisfied with the trial court’s decision, petitioner Pilipinas Hino elevated the case to the Court of Appeals. The appellate court, however, sustained the findings of the trial court:
WHEREFORE, the appealed decision of the lower court in Civil Case No. 61266 is hereby AFFIRMED by this Court, with costs against plaintiff-appellant.[1][4]
Petitioner thus seeks recourse to this Court and raises the following assignment of errors:
I
THE LOWER COURT ERRED IN NO[T] FINDING THAT THERE IS NO EVIDENCE ON RECORD SUFFICIENT TO SHOW ANY RIGHT FROM DEFENDANT-APPELLANT TO REFUSE THE RETURN OF THE BALANCE OF THE DEPOSITS AMOUNTING TO P140,000.00.
II
THE LOWER COURT ERRED IN NOT FINDING THAT THE ALLEGED DAMAGES ON THE PREMISES WERE CAUSED BY WEAR AND TEAR AND NOT DUE TO THE FAULT OF THE PLAINTIFF-APPELLANT.
III
THE LOWER COURT IN NOT FINDING THAT THE ESTIMATE OF REPAIRS MADE ON THE PREMISES WERE SPECULATIVE.
IV
THE LOWER COURT ERRED IN NOT FINDING THAT THE MEMORANDUM OF AGREEMENT (EXH. “C”) CLEARLY [U]NEQUIVOCABLY PROVIDES THAT PLAINTIFF-APPELLANT IS ENTITLED TO THE RETURN OF THE AMOUNT PAID IN EXCESS OF THE DOWNPAYMENT AFTER THE DEFENDANT-APPELLEE EXERCISE[D] THE RIGHT TO FORFEIT THE SAID DOWNPAYMENT.
V
THE LOWER COURT ERRED IN NOT FINDING THAT THE PROVISION FOUND IN PARAGRAPH 6 OF THE MEMORANDUM OF AGREEMENT GRANTING THE DEFENDANT-APPELLEE THE RIGHT TO IMPOSE INTEREST IN CASE OF DELAY APPLIES ONLY IN CASE PAYMENTS AS STIPULATED IN THE AGREEMENT ARE CONTINUED BUT NOT WHEN THE AGREEMENT ITSELF IS RESCINDED.
VI
THE LOWER COURT ERRED IN NOT FINDING THAT INTEREST CANNOT BE RECOVERABLE WHEN THE PRINCIPAL AMOUNT IS IN ITSELF NOT RECOVERABLE.
VII
THE LOWER COURT ERRED IN NOT AWARDING THE SUM CLAIMED UNDER THE COMPLAINT INCLUDING EXEMPLARY DAMAGES AND ATTORNEY’S FEES.
The petition is partly meritorious.
The issues raised in this petition may be summed as follows:
(1) Should the petitioner be held liable for alleged damages to the leased property in an amount of more than P60,000.00?
(2) Does private respondent have the right to retain the P924,000.00 representing the interest due for the unpaid installments, despite the fact that the respondent has exercised his option to rescind the memorandum of agreement?
The first issue is undoubtedly a question of fact. Time and again, this Court has pronounced that we do not review findings of fact by the Court of Appeals unless findings of the appellate court are mistaken, absurd, speculative, conjectural, conflicting, tainted with grave abuse of discretion, or contrary to the findings culled by the trial court of origin. In the case bar, no such reason exist to warrant a review of the appellate court’s factual findings.
In support of his allegation, petitioner quotes the following portion of the decision of the trial court:
A cursory perusal of the expediente as well as the documentary evidence presented by the parties, it appears therefrom that there was no exact figures agreed upon by the parties. Plaintiffs claimed that the amount of P60,000.00 was agreed by them which defendants vehemently denied as there was no such agreement.
The estimate and appraisals made by the contractors hired by the defendants entailed major repairs and renovation which was not fair, just and equitable on the part of the plaintiff. Some of the damages pointed to by the defendants were caused by wear and tear and thus not chargeable against the plaintiff (par. 7 of the lease contract).
Defendants should have secured first the consent/approval of the plaintiff whether they are amenable or not to the amount charged, before engaging the services of Eduardo Pascual (contractor). Otherwise, such actuations will cast doubt on the part of the payor.
The reception of defendants evidence together with the testimonies of their witnesses has indubitably proved that the amounts offered by the plaintiff was not enough to cover the expenses of the repairs. In fact, after deducting the amount claimed by the plaintiff from the total expenses incurred, the plaintiff is still obliged to pay the defendants the amount of P184,732.50. However, since the defendants were also in bad faith in dealing with the plaintiff, the difference of P184,732.50 may be dispensed with, and considering the short span of the leased period, it is impossible that all the damages found on the premises are attributable solely on the part of the plaintiff.”
Based on the underlined portions above quoted, petitioner asserts that the trial court found the following facts: (1) that the appraisals made entailed major repairs and renovations which are not fair to be charged to petitioner; (2) there was bad faith on the part of private respondents in presenting appraisal for repairs; and (3) the alleged damage to the premises are not attributable to the petitioner.
Petitioner merely highlights certain portions of the trial court’s decision, which should not however be read in isolation with the rest of the decision. As mentioned earlier, the crux of petitioner’s first cause of action is whether or not the damage to the leased property amounted to more than P60,000.00. We find that the trial court correctly ruled that petitioner failed to prove his first cause of action:
Upon consideration of all the allegations, issues and documentary [evidence] adduced by the parties, the court, finds and so holds, that plaintiff has failed to establish by preponderance of evidence that there is an agreement reached between the parties as to the exact amount of the repairs to be done, so that it is barred to demand the return of the balance of the deposits.
We agree with the findings of the appellate court that such matter is factual in nature, and that the findings of the trial court as to petitioner’s first cause of action are ably supported by the records on hand:
The issue on plaintiff-appellant’s first cause of action is evidentiary as to whether or not defendants-appellees’ refusal to return the amount of P140,000.00 is valid and in accordance with the lease agreement. It is the contention of the plaintiff-appellant that after the joint inspection was conducted on the subject premises it had been agreed upon by the parties that the amount of damages for the repairs of the premises shall be P60,000.00. Thus, plaintiff-appellant claims that the amount of P340,000.00 in excess of the cost of the repairs should have been returned by the defendants-appellees to plaintiff-appellant. Upon the other hand, defendants-appellees vehemently denied that there was such an agreement of P60,000.00 as having been agreed upon by them.
We find defendants-appellees’ contention to be in accordance with the evidence in this case. Plaintiff-appellant’s witness, Atty. Mauro Yumang when asked by the lower court on the matter, testified that plaintiff and defendants did not come to an agreement as to the exact cost of the repairs of the subject premises (pp. 8-9 tsn, April 22, 1993). Neither was it shown in the testimony of plaintiff-appellant’s other witness, Arsenio Paez that there was an agreement between the parties on the said P60,000.00. Thus, plaintiff-appellant, failed to prove its claim of P60,000.00 as costs of repair with solid and convincing proof. It is, of course, a basic rule in evidence that a party must prove his own affirmative allegations. In civil cases, the burden of proof is on the plaintiff to establish his case by a preponderance of evidence. In affirmative averment the onus probandi falls on pleader’s shoulder.
In contrast, respondents were able to prove by clear and convincing evidence their counterclaim that the damage to the leased property amounted to P384,732.50. This petitioner failed to dispute:
Upon the other hand, defendants-appellees were able to prove that the amount of P60,000.00 offered by the plaintiff-appellant was not sufficient to answer the damages of the subject premises. It is highly improbable to believe that the alleged amount of P60,000.00 can cover the entire expenses of the repairs considering the actual area of the premises to be repaired was quite big with the building having broken door knobs, windows, jalousies, toilet bowls, walls, flooring, among the other things, not to mention the labor. As matter of fact, defendants-appellees’ witness Mr. Eduardo Pascual, an experienced contractor, categorically testified that defendants-appellees’ expenses for the repairs of the subject premises amounted to not only in P60,000.00 bit P384,732.50. Thus, plaintiff-appellees even owed defendants-appellees the amount of P184,732.50.
We take note of petitioner’s assertion that the trial court found the respondent to be in bad faith in having the damage estimated without securing the consent of the petitioner and that not all the damages are attributable to the petitioner. However, these findings do not negate the correctness of the award by the trial court. Recognizing these facts, the trial court did not hold the petitioner liable for the whole amount of P384,732.50, but only for the amount of P200,000.00:
The defendants are likewise barred from demanding for the excess of the repairs as it was due (sic) without the knowledge of the plaintiff.
Anent the petitioner’s second cause of action, we find the same to be meritorious. In order to verify the soundness of petitioner’s claim, an examination of the pertinent paragraphs of the memorandum of agreement between the parties is in order:
6. Where the buyer fails to deliver the check(s) due under paragraph 2 thereof, an interest equivalent to three percent (3%) per thirty (30) days period shall be imposed on the amount due for the duration of the delay.
7. The owners shall have the right to terminate or rescind this agreement, and to forfeit the downpayment where the buyer fails to pay any of the first six (6) installments. The buyer shall have a grace period of sixty (60) days within which to pay the installments and the interest due for the reason of the delay.
The owners may thereafter forfeit the downpayment and sell the property to other parties without need of notice to the buyer, the owner shall not have other obligations to the buyer relating to the property subject of the right of first refusal by the buyer, as contained in the lease contract between the owner and the buyers.
x x x
9. When the owners exercise their option to forfeit the downpayment, they shall return to the buyer any amount paid by the buyer in excess of the downpayment with no obligation to pay interest thereon. This shall be done within a period not later than one hundred twenty days (120) days from notice by the owner to the buyer of the forfeiture of the downpayment.
In holding the petitioner liable for the amount of P924,000.00 representing interest earned for the unpaid installments, the trial court rationalized:
For failure of the plaintiff to pay the installments on September 14, 1990, September 28, 1990, October 15, 1990 and October 30, 1990, the defendants were consequently deprived of the productive use of the supposed money they should have received as per contract. The ‘Agreement’ of both parties leaves no room for further explanation. It categorically states that in case of default, the defendant will charge interest for the delay.
It is worthy of note to believe that when the defendants terminated their contract to sell on November 20, 1990, the plaintiff was already in default from the September 14, 1990 to October 30, 1990. Thus, defendants have a valid reason to retain the amount of P924,000.00 representing interest due of the unpaid installments.
As expressly provided for in Article 1159 of the Civil Code:
Obligation arising from contracts have the force of law between the contracting parties and should be complied with in good faith.
The appellate court in upholding the above findings of the trial court pronounced, thus:
Clearly plaintiff-appellant should be held liable to pay for the corresponding three (3%) percent interest on the unpaid installments in accordance with the above provisions of paragraph 6 of the Memorandum of Agreement. Noteworthy to stress in this case that plaintiff-appellant admits its failure to pay the installments. x x x.
We disagree.
In justifying the withholding of the amount of P924,000.00 representing interest due of the unpaid installments, both the trial and the appellate court relied on paragraph 6 of the memorandum of agreement entered into by the parties. Surprisingly, both courts failed to consider paragraph 9 contained in the same memorandum of agreement. Said paragraph provides in very clear terms that “when the owners exercise their option to forfeit the downpayment, they shall return to the buyer any amount paid by the buyer in excess of the downpayment with no obligation to pay interest thereon.” This should include all amounts paid, including interest. Had it been the intention of the parties to exclude interest from the amount to be returned to the buyer in the event that the owner exercises its option to terminate or rescind the agreement, then such should have been stated in categorical terms. We find no basis in the conclusion reached by the lower courts that “interest paid” should not be returned to the buyer. It may be conceded, as the trial court endeavored to rationalize, that for failure of the buyer to pay the installments, private respondents “were consequently deprived of the productive use of the supposed money they should have received as per contract.” However, the private respondents’ withholding of the amount corresponding to the interest violated the specific and clear stipulation in paragraph 9 of the memorandum of agreement that except for the downpayment, all amounts paid shall be returned to the buyer “with no obligation to pay interest thereon.” The parties are bound by their agreement. Thus, Article 1159 of the Civil Code expressly provides:
Obligation arising from contracts have the force of law between the contracting parties and should be complied with in good faith.
Paragraph 9 of the memorandum of agreement between the parties, not being contrary to law, morals, good customs, public policy, or public order has therefore the force of law between the parties. Aside from equity considerations, the lower courts failed to provide a basis for the retention by the respondent of the interest. Equity is applied only in the absence of, and never against, statutory law or judicial rules of procedure.The memorandum of agreement, being the law between the parties, must therefore, govern.
Both the private respondents and trial court quote our ruling in Luzon Brokerage Company v. Maritime Building Inc.in order to justify retention of said interest:
The distinction between contracts of sale and contracts to sell with reserved title has been recognized by this Court in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already received, where such rights are expressly provided for, as in the case at bar.
Sadly for private respondents, our ruling in the above case defeats rather than sustains their claim. While this Court recognizes that in contracts to sell even if the contract is terminated the seller can retain the sums already received or paid, such can be done only if it is expressly provided for in the contract. Such proviso is not contained in the memorandum of agreement, as what is merely provided for in paragraphs 7 and 9 is the retention of the downpayment.
As regards the claim of exemplary damages and attorney’s fees, petitioner fails to present an iota of evidence why they are entitled to these awards. The petition before this Court merely raises such assignment of error but does not even discuss the basis of such claim.
WHEREFORE, the petition is hereby GIVEN DUE COURSE and the decision of the Court of Appeals is MODIFIED in that private respondent is ordered to return to petitioner the amount of P924,000.00 representing the accrued interest for the unpaid installments. The decision appealed from is AFFIRMED in all other respects. However, the pronouncement as to cost is hereby deleted.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.
BPI vs Pineda
G.R. No. L-62441 December 14, 1987
BANK OF THE PHILIPPINE ISLANDS, as Successor to Peoples Bank and Trust Company, petitioner,
vs.
BENJAMIN PINEDA, doing business under the name and style of PIONEER IRON WORKS, respondent.
vs.
BENJAMIN PINEDA, doing business under the name and style of PIONEER IRON WORKS, respondent.
BIDIN, J.:
This is a Petition for Review on certiorari, seeking the reversal of the Decision of the First Division 1 of the Court of Appeals in CA- G.R. No. 66365-R entitled "Benjamin Pineda, etc., plaintiff-appellee vs. Southern Industrial Projects Inc., Bacong Shipping Company, S.A. Gacet Inc., Interocean Shipping Corporation and Peoples Bank and Trust Co., defendant-appellant, " affirming the decision of the trial court, the dispositive portion of which reads:
Wherefore, the appealed decision being in accordance with the law and the evidence, the same is hereby affirmed, with proportionate cost against appellant.
The facts of this case as found by the Court of Appeals are as follows:
Southern Industrial Project, Inc. (SIP for short) is a corporation the majority stockholder of which is the Concon Family. Bacong Shipping Company, S.A. (Bacong, for short) is a Panamanian corporation organized to operate vessels purchased by SIP under Panamanian Flag and its president is Gregorio A. Concon.
SIP and/or Bacong purchased the vessels SS "Southern Comet," SS "Southern Express" and SS "Southern Hope," thru financing furnished by defendant Peoples Bank and Trust Company, now the Bank of the Philippine Islands. To secure the payment of whatever amounts maybe disbursed for the aforesaid purpose, the said vessels were mortgaged to Peoples Bank and Trust Company. For the operation of the said vessels, these were placed under the booking agency of defendant Interocean Shipping Corporation, with the undertaking that the freight revenues from their charter and operation shall be deposited with the Trust Department of Peoples Bank and Trust Company and that disbursements made therefrom shall be covered by vouchers bearing the approval of SIP.
As Peoples Bank and Trust Company and SIP were not satisfied with the amount of revenues being deposited with the said Bank, it being suggested that diversions thereof were being made, Gregorio A. Concon of SIP and/or Bacong and Roman Azanza of Peoples Bank and Trust Company, organized S.A. Gacet, Inc. to manage and supervise the operation of the vessels with Ezekiel P. Toeg as the manager thereof. Accordingly, on August 15, 1966, a Management Contract (Exh. A., Exh. 1-SIP and Exh. 3-Peoples Bank) was entered into between SIP and GACET, Inc., placing the supervision and management of the aforementioned vessels in the hands of GACET, Inc., which was to run for a period of six (6) months, renewable at the will of the parties, without however, terminating the booking agency of interocean Shipping Corporation.
The said Management Contract stipulates, among others, that —
The agent GACET may not borrow money for the husbanding of vessels "without special authority" from the appellant bank (5 [f])
All office records required as well as books of accounts" shall "be available for inspection" by the appellant bank and "may at any time temporarily take possession of such records and books to make a complete audit" (5 [h])
The appellant bank may-obtain copies of documents from any or all of GACET's booking agents pertaining to transactions entered into by said booking agents" (5 (h)) [1]);
The appellant bank has the right "(t)o inquire and obtain information, by telephone, or otherwise such data as the name of the shippers, nature of cargo, destination of cargo, freight rates, etc. " (5 (h)) [2]); and,
The appellant bank has the right "(t)o check on remittances made by shipper to the booking agent" etc. (5)[3]).
Likewise, under the terms of said Management Contract, the Peoples Bank and Trust Company was designated as depository of all revenues coming from the operation of the subject vessels thereby enabling it to control all expenses of GACET, Inc., since they win all be drawn against said deposit.
During the period comprising March 16, 1967 and August 25, 1967, GACET and Interocean in performing their obligations under said Management Contract, contracted the services of herein plaintiff-appellee, Benjamin Pineda doing business under the name and style "Pioneer Iron Works," to carry out repairs, fabrication and installation of necessary parts in said vessels in order to make them seaworthy and in good working operation. Accordingly, repairs on the vessels were made. Labor and materials supplied in connection therewith, amounted to P 84,522.70, P 18,141.75 of which was advanced by Interocean, thereby leaving a balance of P 62,095.95. For this balance, Interocean issued three checks (Exhibit I) and the third one for P 17,377.57 (Exh. J). When these checks were however presented to the drawee, Peoples Bank and Trust Company, they were dishonored as defendant Interocean stopped payment thereon (Exhs. H-2,I-2 & J-2).
Meanwhile and by reason of the inability of SIP and/or Bacong to pay their mortgage indebtedness which was past due since 1964, the mortgagee Peoples Bank and Trust Company threatened to foreclose the mortgage on said vessels. In order to avoid the inconvenience and expense of imminent foreclosure proceedings, SIP and/or Bacong sold said vessels to Peoples Bank by way of dacion en pago. The sale is evidenced by three (3) deeds of sale all dated January 19, 1968 (Exhs. C, D, & E). Immediately preceding the execution of said deeds of sale, SIP, Bacong and Peoples Bank executed a "Confirmation of Obligation" (Exh. "B") whereby SIP and Bacong (1) acknowledged being indebted to defendant bank, the payment of which indebtedness was secured by chattel mortgages on said vessels, (2) agreed to sell and convey to defendant bank the aforementioned vessels by separate deed of sale for the total purchase price of P 3,038,000.00 to be applied as partial payment on account of their mortgage indebtedness; and (3) expressly recognized that after such application, a substantial balance will still remain unpaid and owing by SIP and Bacong which remaining balance they have agreed to confirm and pay to the bank on demand with 12% interest per annum. Likewise, listed in the "Confirmation of Obligation" were some of the accounts acknowledged and confirmed by the parties to be outstanding at the time, in connection with the subject vessels as follows-
a) Accrued Salaries and allotments........................ P180,687.04
b) National Shipyard ......................................................31,068.57
c) Pioneer Iron Works : ..................................................82,877.57
d) Pacific Engineering Corporation .............................152,094.85
e) Esso Standard Eastern Account ..........................1,693,913.25
f) Cost of bailing out of the vessels
in Japan crews, salaries, etc.................................... 328,692.50
TOTAL.................................................................. P 2,954 833,34
The Deed of "Confirmation of Obligation" also provides
That Southern and/or Bacong acknowledge that the total purchase price of "TSS Southern Comet,
That Southern Hope" and "SS Southern Express" in the sum of THREE MILLION THIRTY EIGHT THOUSAND PESOS (P 3,038,000.00), Philippine currency shall be applied on account of their mortgage obligations, as they appear on the books of the BANK, and whatever amount remains outstanding after application (or set off) is hereby acknowledged to be owed to the BANK and shall be payable with interest at the rate of 12170 per annum." That part (sic) from the foregoing SOUTHERN and/or BACONG have authorized the BANK to pay certain expenses, accounts of charges in connection with the sold vessels, the principal items being those listed below." (These are the accounts listed above). "It is agreed that this is not a final or complete listing and the above expenses shall be subject to final adjustment after verification of the amounts actually paid or advanced by the BANK under the said authority from SOUTHERN and/or BACONG. It is further agreed that these expenses shall also be subject to the terms of condition No. 1 above." (Those enclosed in parenthesis are supplied).
On October 1, 1968, plaintiff instituted the present action (Civil Case No. 74379) before the Court of First Instance of Manila, seeking to recover from SIP, GACET, Interocean and the Peoples Bank and 'Trust Company the principal sum of P62,095.92 with interests thereon from the respective dates of each repair order until the same is fully paid, which amount was allegedly the total unpaid balance of the cost of repairs, fabrication and installation of necessary parts carried out by the said plaintiff on the aforenamed vessels.
Answering the complaint, defendants Peoples Bank and Trust Co., now Bank of P.I. and Southern Industrial Projects, Inc. (SIP) alleged that the abovementioned claim is the personal responsibility of Interocean Shipping Corporation and/or Gacet, Inc. and deny liability thereof Defendant Bacong Shipping Company, S.A. (Bacong on its part denies knowledge of the obligation claiming it did not have any transaction whatsoever with the plaintiff while defendant Interocean Shipping Corporation and GACET, Inc. also deny liability contending that the obligation being lien on the vessels upon which services and repairs were made by the plaintiff, defendant Peoples Bank & Trust Co., now Bank of P.I., being the ultimate owners thereof should be the one liable therefor.
After trial, the court a quo rendered judgment the dispositive portion of which reads as follows —
WHEREFORE, in view of the foregoing, judgment is hereby rendered ordering defendants Southern Industrial Projects, Inc. and Peoples Bank and Trust Company, now Bank of P.I., to pay plaintiff Benjamin Pineda doing business under the name and style of Pioneer Iron Works, jointly and severally, the amount of P62,095.92, with legal rate of interest thereon from the date of the filing of the complaint, attorney's fees in the amount of P10,000.00, and the costs of the suit. The complaint is dismissed against defendants Interocean Shipping Corporation and Gacet, Inc.
SO ORDERED.
From the foregoing decision, defendants Bank of P.I. and Southern Industrial Projects, Inc. appealed to the Court of Appeals but the latter, finding the aforequoted decision to be in accordance with law and the evidence, affirmed the same, Hence, this petition.
Petitioner raised the following assignment of errors:
I. The Intermediate Appellate Court erred in affirming the findings of the lower court that petitioner, in purchasing the vessels, assumed the obligations of Southern Industrial Projects, Inc. and/or Bacong Shipping Company.
II. The Intermediate Appellate Court erred in affirming the ruling of the lower court that petitioner is liable to private respondent when the same was based on an erroneous interpretation of the "confirmation of obligation" in relation to the deeds of sale of the vessels.
III. The findings of the lower court as affirmed by the Intermediate Appellate Court that private respondent had a valid and subsisting repairer's lien is contrary to law as well as the rulings set forth by this Honorable Court.
IV. The Intermediate Appellate Court erred in not holding that the lower court has no jurisdiction over the subject matter of the action or suit which seeks to enforce a statutory lien under paragraph 5 of Article 2241 of the Civil Code of the Philippines.
As correctly pointed out by the Court of Appeals in its decision, the various assigned errors boil down to the issue of who should be liable for the cost of repairs undertaken on the subject vessels.
Petitioner raised the following questions: (1) whether the findings of the lower court are supported by facts and evidence; and (2) whether or not petitioner is liable to respondent on the basis of the "Confirmation of Obligation. "
The general rule is that findings of facts of the Court of Appeals are not subject to review by the Supreme Court. (Alaras vs. Court of Appeals, 64 SCRA 671; Perido vs. Perido, 13 SCRA 97: Mendoza vs. Court of Appeals, 84 SCRA 67; Manlapaz vs. Court of Appeals, 147 SCRA 236 [1987]; Baniqued vs. Court of Appeals, 127 SCRA 50 [1984]; Moran vs. Court of Appeals, 133 SCRA 88 [1984]; Collector of Customs vs. Court of Appeals, 137 SCRA 3 [1985]; Espiritu vs. Court of Appeals, 137 SCRA 50 [1985]; Premier Insurance & Surety Corp. vs. Intermediate Appellate Court, et al., 141 SCRA 423 [1986]: Director of Lands vs. Funtillar, 142 SCRA 57 [1986]; Republic vs. Intermediate Appellate Court, 144 SCRA 705 [1986]: subject to the following exceptions; (1) when the conclusion is a finding grounded entirely on speculation, surmises or conjectures (Joaquin vs. Navarro, 93 Phil. 257); (2) when the inference made is manifestly mistaken, absurd or impossible (Luna vs. Linatok 74 Phil. 15); (3) where there is a grave abuse of discretion (Buyco vs. People, 51 O.G. 2927); (4) when the judgment is based on a misapprehension of facts (Cruz vs. Sosing, L-4875, November 27, 1953; (5) when the findings of fact are conflicting (Casica vs. Villaseca, L-9590, April 30, 1957); and (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and the same is contrary to the admissions of both appellant and appellee (Evangelista vs. Alto Surety & Ins. Co., L-11139, April 23, 1958; Ramos vs. Pepsi Cola, L-22533, February 9, 1967, 19 SCRA 289)." (cited in Manlapaz vs. Court of Appeals, 147 SCRA 236 [1987]; Tolentino vs. de Jesus, 56 SCRA 167 [1974]; Carolina Industries, Inc. vs. CMS Stock Brokerage, Inc., et al., 97 SCRA 734 [1980]; Manero vs. Court of Appeals, 102 SCRA 317 [1981]; Moran, Jr. vs. Court of Appeals, supra Sacay vs. Sandiganbayan, 142 SCRA 593 [1983]; Director of Lands vs. Funtillar, et al., supra)
The petitioner argued that the findings of the lower court are contrary to, and are not supported by the evidence.
There is no question that at the time subject obligation was incurred, the vessels were owned by defendant Southern industrial Projects, Inc. although mortgaged to People's Bank and Trust Company. Hence, the former as owner is liable for the costs of repairs made on the vessels. On the other hand, Interocean Shipping Corporation and S.A. Gacet undeniably mere agents of the owner, a disclosed principal, cannot be held liable for repairs made on the vessels to keep them in good running condition in order to earn revenue, there being no showing that said agents exceeded their authority.
Ultimately therefore, the issue which remains is, whether or not People's Bank, now Bank of P.I. being the purchaser of said vessels, is jointly and severally liable for the outstanding balance of said repairs, admittedly a lien on the properties in question.
It appears that Bank of P.I. seeks shelter in a deed of "Confirmation of Obligation" entered into between buyer and seller before the execution of a deed of sale between them. Buyer, Bank of P.I., maintains that it has the option of whether or not to pay the obligations listed thereunder, one of which is the repairs undertaken by private respondent, as inferred from the phrase that the owner of the vessels merely authorized petitioner bank to pay certain expenses and charges in connection with said vessels. The latter stressed the fact that nowhere in said deed was the bank placed under obligation to pay any of the listed indebtedness of the owner.
The cardinal rule in the interpretation of contracts is to the effect that the intention of the contracting parties should always prevail because their will has the force of law between them (Kasilag vs. Rodriguez, et al., 69 Phil. 217 [1939]; Sec. 10, Rule 130 of the New Rules of Court). Thus, in order to judge the intention of the contracting parties, regard must be had principally to their acts both contemporaneous and subsequent to the contract (Atlantic Gulf Co. vs. Insular Government, 10 Phil. 166 [1908]), "the circumstances under which it was made, including the situation of the subject thereof and of the parties to it, may be shown, so that the judge may be placed in the position of those whose language he is to interpret." (Sec. 11, Rule 130 of the New Rules of Court). It has been held that once this intention of the parties has been ascertained, it becomes an integral part of the contract as though it has been originally expressed therein in unequivocal terms (Nielson & Co., Inc. vs. Lepanto Consolidated Mining Co., 18 SCRA 1040 [19661). Likewise, well settled is the fact that in construing a writing particularly a written agreement, the reason behind the circumstances surrounding its execution are of paramount importance to place the interpreter in the situation of the parties concerned at the time the writing was executed (Vicente Gotamco Hermanos vs. Shotwell 38 SCRA 107 [1971]),
It is undisputed that S.A. Gacet, Inc., the managing corporation, is only a creation of Gregorio A. Concon of Southern Industrial Projects, Inc. and of Roman Azanza of People's Bank and Trust Company obviously for the protection of their respective interests on the properties in question, after both expressed dissatisfaction with the amount of revenue being deposited with the said bank which suggests that diversions thereof were being made. Thus, although it was SIP and GACET which entered into the Management Contract, it was expressly stipulated thereunder, among others, that GACET may not borrow money for the husbanding of vessels without special authority from the petitioner bank. In addition, all office records were required to be subject to inspection and complete audit by the latter, including all remittances made by the Shipper to the booking agent. Otherwise stated, petitioner was already in control of the vessels as early as August 15, 1966, the date the Management Contract was signed (Decision, CA G.R No. 66365-R), (Rollo, p. 28). In fact, the contract itself for the repairs of the vessels which is now the bone of contention, was entered into by GACET and INTEROCEAN with private respondent Benjamin Pineda with the approval of petitioner Bank. This lends credence to the claim of Pineda that he was led to believe that he will be paid the corresponding amount for the repairs, as in fact he was paid with checks which were later dishonored.
The records show that SIP incurred debts by reason of these vessels not only here in the Philippines but also in Japan, notably ESSO Standard Eastern which attached said vessels in Japan. As admitted by Gregorio A. Concon, fourteen banks were after the assets of the corporation. Under this distressed financial condition and with People's Bank also threatening to foreclose the mortgages on these vessels, SIP decided to sell the vessels to People's Bank (Record on Appeal, pp. 55-56). But a deed of "Confirmation of Obligation" was first entered into between SIP and/or Bacong Shipping and People's Bank, confirming and acknowledging the obligations outstanding at the time, among which is the obligation to private respondent in the amount corresponding to the repairs in question.
Petitioner however insists on its theory based on a separate interpretation of the deed of "Confirmation of Obligation" that on the authority granted thereunder by the seller (the previous owner), responsibility to pay the listed obligation was not compulsory or mandatory (Record on Appeal, pp. 59- 60).
Other fundamental rules in the interpretation of contracts no less important than those already indicated are to the effect that where the terms are doubtful, the various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly (Art. 1374, Civil Code), and if some stipulation of any contract should admit of several meanings, it shall be understood as having that import which is most adequate to render it effectual (Art. 1373, Civil Code) and the words which may have different significations shall be understood in that which is most in keeping with the nature and object of the contract (Art. 1375, Civil Code). The reason for these rules is that it must be presumed that the parties had intended an effective act and not one that is impracticable or illusory (Caguioa Comments and Cases on Civil Law, p. 592,1983 Ed.).
It will be observed that the deed of "Confirmation of Obligation" is but a part or a corollary to the deeds of sale of the three vessels. In fact, specific reference thereto was made by said deeds of sale as to the settlement of obligations, among which are the repairs in question. Said provision in the deeds of sale reads:
Any amount or amounts that the Bank has voluntarily paid and/or has been compelled to pay, or hereafter will voluntarily and/or will be compelled to pay for any encumbrance, claim, lien or particular average in order to save the vessel from any legal seizure or suits by third parties, and for any repair, supplies, provisions, accrued salaries and allotment of crew, cost of bailing out of the vessel, and any other expenses or accounts of the said vessel, shall be for the account of Southern and/or Bacong in accordance with their agreement preceding this conveyance executed on January 19, 1968 ...
It will be observed that the above stipulation interpreted together with the deed of "Confirmation of Obligation" leaves no room for doubt that while the bank may indeed pay certain obligations voluntarily or by choice, there are those that the Bank will be compelled to pay to save the vessel from any legal seizure or suits by third parties. In other words, the primary purpose of the contracts is the protection of the vessels. Among them are liens on the same under which the obligation to private respondent properly belongs.
However, petitioner contends that assuming that such obligations are liens on said vessels, they are deemed to have been waived and discharged when respondent released and delivered said vessels to GACET and/or Interocean which ordered said repairs prior to their sale and conveyance to petitioner (Rollo, p. 117).
Such contention is untenable.
It will be recalled that private respondent was paid the sum of P18,141.75 and for the balance of P62,095.95 Interocean issued three checks. Under the circumstances, private respondent has no basis or necessity at that time to exercise his right of retention under Art. 1731 of the Civil Code. The fact that later said checks were dishonored, as correctly argued by private respondent, cannot give validity to petitioner's argument that the former has waived or abandoned his liens on the vessels. To pursue such view would put a premium on an act of deception which led private respondent to believe that he will be fully paid. Furthermore, when the checks were dishonored, it was impossible for private respondent to enforce his lien because the vessels were already in Japan, outside the territorial jurisdiction of the Philippine courts (Brief for Plaintiff-Appellee, p. 19, Rollo, p. 128).
In view of the foregoing facts, it was aptly stated by the trial court and affirmed by the Court of Appeals that when the parties executed the deed of "Confirmation of Obligation" they really intended to confirm and acknowledge the existing obligations for the purpose of the buyer assuming liability therefor and charging them to the seller after proper accounting, verification and set offs have been made. Indeed, there is merit in the trial court's view that if there was no intention on the part of People's Bank (now Bank of P.I., to assume responsibility y for these obligations at the time of the sale of the si it vessels, there is no sense in executing said Deed of Confirmation together with the deeds of sale and the stipulations thereunder would be pointless (Record on Appeal, pp. 61-62, Annex "C", Rollo, P. 33).
Finally, it is indisputable that the repairs made on the vessels ultimately redounded to the benefit of the new owner for without said repairs, those vessels would not be seaworthy. Under Art. 2142 of the Civil Code, such 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."
WHEREFORE, the petition is Denied and the decision appealed from is hereby AFFIRMED.
SO ORDERED.
Gutierrez, Jr., Feliciano and Cortes, JJ., concur.
Fernan, J., took no part.
State Investment vs CA
G.R. No. 89767 February 19, 1992
STATE INVESTMENT HOUSE, INC., petitioner,
vs.
COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, EDGAR OBLIMAR, ABE ESTRADA and the 2,081 complainants-laborers in NLRC Case No. 9-3296-84 represented by FLORANTE M. YAMBOT, respondents.
vs.
COURT OF APPEALS, SECURITIES AND EXCHANGE COMMISSION, EDGAR OBLIMAR, ABE ESTRADA and the 2,081 complainants-laborers in NLRC Case No. 9-3296-84 represented by FLORANTE M. YAMBOT, respondents.
G. R. No. 96056 February 19, 1992
THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, represented by the ASSET PRIVATIZATION TRUST, petitioner,
vs.
HONORABLE COURT OF APPEALS, HON. PEDRO N. LAGGUI, in his capacity as Presiding Judge of the Regional Trial Court, Branch 60, Makati, Metro Manila, BIENVENIDO HERMOGENES and SILVINO SANTOS, in their respective capacities as Labor Arbiter and Sheriff of the National Labor Relations Commission, ALFREDO ASIBAR, RICARDO ZURITA, FELIXBERTO ABARQUEZ, RODRIGO CELSO, and the other 31 complainants in NLRC Case No. NCR-9-3296-84, respondents.
vs.
HONORABLE COURT OF APPEALS, HON. PEDRO N. LAGGUI, in his capacity as Presiding Judge of the Regional Trial Court, Branch 60, Makati, Metro Manila, BIENVENIDO HERMOGENES and SILVINO SANTOS, in their respective capacities as Labor Arbiter and Sheriff of the National Labor Relations Commission, ALFREDO ASIBAR, RICARDO ZURITA, FELIXBERTO ABARQUEZ, RODRIGO CELSO, and the other 31 complainants in NLRC Case No. NCR-9-3296-84, respondents.
G.R. No. 96437 February 19, 1992
PHOENIX IRON AND STEEL CORPORATION and WILFREDO LABAYEN, petitioners,
vs.
HON. COURT OF APPEALS, HON. EUTROPIO MIGRINO, in his capacity as the Presiding Judge of the Regional Trial Court of Pasig, Branch 151, and ALFREDO ASIBAR, respondents.
vs.
HON. COURT OF APPEALS, HON. EUTROPIO MIGRINO, in his capacity as the Presiding Judge of the Regional Trial Court of Pasig, Branch 151, and ALFREDO ASIBAR, respondents.
Jardeleza, Sobrevinas, Diaz, Hayudini & Bodegon for petitioner SIHI.
Florante M. Yambot for private respondents Laborers of Phil. Blooming Mills, Inc. and Zurita, et al.
Jose C. Sison, Florello E. Azura and Jose M. Suratos, Jr. for petitioner in G.R. No. 96056.
Jaime T. Capoquian for private respondent Alfredo Asibar.
Balgos and Perez for petitioning intervenors in G.R. 96056.
Feria, Feria, Lugtu and La'O for petitioners-movants in G.R. 96437
GUTIERREZ, JR., J.:
These consolidated petitions involve properties formerly owned by the Philippine Blooming Mills, Inc. (PBM) which is now under the rehabilitation and receivership of the Securities and Exchange Commission (SEC. Case No. 2250, "In the matter of the Petitioner for Suspension of Payments").
In G.R. No. 89767, the petitioner questions the decision of the Court of Appeals which affirmed the validity of the Order dated May 26, 1989 issued by the Securities and Exchange Commission (SEC) in SEC Case No. 2250 granting the respondents' motion for the issuance of a break-open Order for the purpose of implementing the Certificate of Sale of November 23, 1987 in NLRC Case No. 9-3296-84 covering certain PBM properties, located at the PBM Compound in Balintawak, Quezon City which were earlier sold at a public auction sale on the ground that the same properties already belonged to the petitioner before the auction sale.
In G.R. No. 96056, the petitioner questions the decision of the Court of Appeals which affirmed the earlier decision of the Regional Trial Court (RTC) of Makati, Branch 60 validating the auction sale of some PBM properties by respondent deputy sheriff Silvino Santos of the Department of Labor and Employment (DOLE) on the ground that the same properties already belonged to the government before the auction sale.
In G.R. No. 96437, the petitioner questions the decision and resolution of the Court of Appeals which also affirmed an earlier order of the Regional Trial Court of Pasig, Metro Manila, Branch 151. The Pasig RTC denied the petitioner's motion to dismiss a complaint (with application for a writ of preliminary attachment) seeking compliance with the provision of a deed of sale, the subject matter of which are some properties of the PBM bought by respondent Alfredo E. Asibar (also a respondent in G.R. No. 96056) as highest bidder in an auction sale executed between Asibar as vendor and petitioner Phoenix Iron and Steel Corporation (Piscor) as vendee on the ground that the complaint states no cause of action.
In 1981, the PBM stopped operations due to business losses and financial reverses. On April 1, 1982, the PBM filed with the SEC a petition seeking for a declaration of a state of suspension of payments. On April 6, 1982, the SEC assumed jurisdiction over the petition. On July 9, 1982, the SEC placed the PBM under rehabilitation receivership and appointed rehabilitation receivers. The employees of PBM then filed a complaint for illegal dismissal with money claims against PBM with the National Labor Relations Commission (NLRC). Those who filed belonged to the rank-and-file and managerial/technical employees identified and categorized by groups. Common claims of the employees were unpaid benefits under Wage Order No. 1, 15th month-pay, money value of unearned vacation and sick leaves and holiday pay. The case was docketed as NCR Case No. 3-1250-83.
On December 28, 1983, Labor Arbiter Bienvenido Hermogenes rendered a decision in favor of the employees. The employees were granted monetary benefits including separation pay.
On appeal, the Labor Arbiter's decision was modified by the NLRC, to wit:
WHEREFORE, except for the modification dismissing the claim for separation pay for lack of merit, the Decision appealed from is hereby AFFIRMED in all other respects. The injunction issued on 15 November 1984 is lifted. (Rollo — G.R. No. 79202, p. 18)
In G.R. No. 79202, we affirmed the NLRC decision in a resolution dated November 18, 1987. Thus, we dismissed the petition for certiorari filed by the employees questioning the deletion of the award of separation pay resulting from serious losses by PBM.
In the meantime, the employees of PBM numbering 2,081 filed another complaint for illegal dismissal and money claims with the NLRC. The case was docketed as NCR Case No. 9-3296-84.
On May 28, 1987, Labor Arbiter Bienvenido V. Hermogenes rendered a decision in favor of the employees including separation pay.
On appeal, the Labor Arbiter's decision was affirmed by the NLRC in a decision dated November 9, 1987. The NLRC ordered the remand of the records to the Labor Arbiter for the issuance of a writ of execution.
On November 13, 1987, the Labor Arbiter issued a writ of execution.
On November 17, 1987, Deputy Sheriff Silvino Santos of the NLRC issued a "Notice of Levy and Sale of Personal Properties On Execution" and scheduled a public auction of PBM properties to the highest bidder for cash on November 23, 1987.
On November 19, 1987, PBM filed with us a petition to review the decision of the NLRC on the ground that the November 9, 1987 decision did not take into account the fact that as found by this Court in G.R. No. 71318 the NLRC had already denied claims for separation pay of the employees. In addition, the petitioner prayed for the issuance of a temporary restraining order enjoining the scheduled sale of the properties. The petition was docketed as G.R. No. 80580.
In a resolution dated December 1, 1987, G.R. Nos. 79202 and 80580 were consolidated.
On May 2, 1988, we issued a resolution in the consolidated petitions, to wit:
On November 18, 1987, the Court issued a resolution dismissing the petition in G.R. No. 79202 for lack of merit. A motion for reconsideration was denied with finality on January 27, 1988. This Court has stated that in various and more appropriate cases involving consortiums of banks trying to recover even only a percentage of the loans extended to Philippine Blooming Mills (PBM), it was determined that PBM not only incurred serious losses but was in desperate straits leading to its collapse. This is a finding which remains beyond serious dispute and it is pointless for the petitioners to keep on reiterating the same arguments on this issue in any motion for reconsideration in this or other petitions.
Any claims of laborers, including those enjoying preference over other credits, will have to be submitted in the course of the bankruptcy, liquidation or rehabilitation proceedings.
xxx xxx xxx
In G.R. No. 80580, the Solicitor General has taken sides with the petitioner and adopted the petitioner's reply to the private respondents' comment. No explanation is given and no substantial distinctions are cited to explain why the National Labor Relations Commission should take an action in G.R. No. 80580 which is different from and conflicts with its stand in G.R. No. 79202. This being the case, the Court reiterates its ruling in G.R. No. 79202.
xxx xxx xxx
Considering the foregoing, the COURT RESOLVED to SET ASIDE the decision of the National Labor Relations Commission dated November 9, 1987 in G.R. No. 80580 and to permanently enjoin the sale of properties in NLRC Case No. NCR-9-3296-84 until after the Securities and Exchange Commission in SEC Case No. 2250 has determined the procedures for settling the many claims, including the money claims for workers and employees, against the Philippine Blooming Mills Co. Inc. (Rollo — G.R. No. 80580, pp. 309-310).
The petitioners filed separate motions for clarification of the resolution as regards the portion that permanently enjoins the sale of properties of PBM until after the SEC has determined the procedures for settling the various money claims against PBM.
It turned out that during the pendency of G.R. No. 80580, deputy sheriff Silvino Santos pushed through with the scheduled auction sale of PBM properties on November 23, 1987 in NCR Case No. 9-3296-84 as a result of which a certificate of sale dated November 23, 1987 was issued in favor of the highest bidder, Alfredo Asibar, the respondent in G.R. Nos. 96056 and 96437. We did not issue the prayed for temporary restraining order to enjoin the scheduled auction sale on November 23, 1987.
On November 21, 1988, we issued a resolution, the pertinent portion of which reads:
xxx xxx xxx
The respondents claim that the injunction should not cover properties already sold before May 2, 1988 or more particularly the certificate of sale of November 23, 1987. On the other hand, the petitioner states that the sale of properties in G.R. No. 71318 is not the same as the sale of properties in the instant case.
The issues raised by the respondents call for ascertainment of facts. This Court is not a trier of facts. The question of exactly what properties may no longer be included in the liquidation proceedings but should be given to the workers pursuant to the decision of the National Labor Relations Commission is, therefore, referred to the Securities and Exchange Commission which is directed to hold hearings on the matter. This petition has been decided. A motion for reconsideration has been denied with finality. Entry of judgment has been effected. No further motions of the same nature as the one before the Court will be entertained.
CONSIDERING THE FOREGOING, THE COURT RESOLVED to REFER the respondents' motion for clarification to the Securities and Exchange Commission for resolution. Counsel of the parties are warned to follow regular procedures regarding their respective claims and not indiscriminately pass on to this Court questions which call for determination or action by other agencies or Tribunals. (Rollo — G.R. No. 96056, pp. 345-346, Emphasis supplied)
II
G.R. NO. 89767
On July 20, 1983, the petitioner filed with the Regional Trial Court of Pasig a complaint for foreclosure of mortgage with receivership against PBM, Four Seas Trading Corporation (Four Seas) and Alfredo Ching. The case was docketed as C.C. No. 49997.
On August 29, 1986, the court rendered a partial summary judgment, the dispositive portion of which read:
WHEREFORE, premises considered, this Court hereby resolves to GRANT plaintiff SIHI's motion for Partial Summary Judgment dated January 15, 1986 and hereby orders defendants Philippine Blooming Mills Co., Inc. and Alfredo Ching to pay plaintiff State Investment House, Inc. jointly and severally their unpaid obligations in the undisputed amount of P53,000,000.00 plus the stipulated attorney's fees in the amount equivalent to 25% thereof, as well as the costs of suit; and in the event the said defendants are unable to satisfy said judgment within the period prescribed by law, this Court hereby orders plaintiff State Investment House, Inc., as the court-appointed receiver, to apply the proceeds of the Receiver's sale of the mortgaged steel inventories, including any earnings thereon, if any, in partial satisfaction of said judgment and the Branch Sheriff of this Court is likewise ordered to sell at public auction the real properties mortgages (Annexes "E", "E-1" to "E-9" and "F" and "F-1", Complaint) and that the proceeds thereof be applied in satisfaction of said judgment and costs of suit, accordingly. (Rollo, p. 5)
On October 5, 1987, the court issued an Order granting the petitioner's Motion to Order Sale of Mortgaged Real Properties. Accordingly, Deputy Sheriff Mario J. Tamang sold at public auction said mortgaged properties belonging to PBM and Four Seas. The highest bidder was the petitioner as evidence by two (2) separate certificates of sale executed by the sheriff in its favor on November 9, and 10, 1987, respectively.
In response to the notice of levy and sale of personal properties on execution issued by Deputy Sheriff Silvino Santos in connection with the writ of execution in NCR Case No. 9-3296-84, setting for sale at public auction, among others, some properties of PBM located at PBM Compound Balintawak, Quezon City, the petitioner filed in Civil Case No. 49997 a motion for issuance of a writ of preliminary injunction to restrain Silvino Santos from selling at public auction the said properties. The petitioner contended that the said properties are among the mortgaged properties of Four Seas which were sold to the petitioner on November 9 and 10, 1987.
On November 20, 1987, the court issued an Order temporarily enjoining Silvino Santos from selling at public auction the questioned properties. Despite this temporary restraining order, Silvino Santos proceeded with the auction sale prompting the petitioner to file a motion to cite the sheriff guilty of contempt of court and declaring null and void the certificate of sale executed by him covering the properties located at PBM compound in Balintawak, Quezon City. The lower court granted the motion.
Silvino Santos tried unsuccessfully to have the contempt order set aside in both the Court of Appeals and this Court. The case docketed as G.R. No. 85242 will be discussed later. Suffice it to say at this point that the Court dismissed the petition for certiorari questioning the affirmance by the Court of Appeals of the contempt Order issued by the Regional Trial Court of Pasig.
As a result of our Resolution dated November 21, 1988 issued in G.R. Nos. 79202 and 80580 the private respondents filed an urgent motion with the SEC in SEC Case No. 2250 seeking clarification on the question of the scope of injunction referred to said agency by the Court.
On February 9, 1989, the SEC issued an Order ruling that the said injunction "does not cover properties already sold before May 2, 1988 or more particularly, the certificate of sale on November 23, 1987 in NLRC Case No. NCR-9-3296-84" (p. 100, Rollo, G.R. No. 89767)
On May 26, 1989, the SEC issued another Order granting the private respondent's motion for the issuance of a break-open Order, the dispositive portion of which reads:
WHEREFORE, the Urgent Motion For The Issuance of a Break-Open Order dated April 12, 1989 should be, as it is hereby GRANTED, for the purpose of implementing and carrying into effect the Certificate of Sale of November 23, 1987 in NLRC Case No. 9-3296-84 involving the properties subject-matter of such sale located at the PBM Compound in Balintawak, Quezon City, and Manggahan, Pasig, Metro Manila (Rollo, p. 11)
The petitioner questioned the SEC Order by filing a petition for certiorari with the Court of Appeals.
In a decision dated June 29, 1989, the appellate court denied due course and dismissed the petition. A motion for reconsideration was denied.
Hence, this petition.
G.R. NO. 96056
One of the creditors of PBM was the Philippine National Bank (PNB). When PBM failed to pay its obligations secured by mortgages, PNB extrajudicially foreclosed the real estate mortgages executed in its favor. Thus, on November 2, 1983, the mortgaged properties — a) seven [7] registered lots in Rosario, Pasig, Metro Manila, and b) seven [7] buildings and machineries and equipment, were publicly auctioned by the Sheriff and sold to PNB. The lots were sold for P21,930,000.00 (Exhibits B, B-1, and B-2), the buildings for P4,192,250.00 (Exhibits C and C-1), and the machineries and equipment (Exhibits A to A-17), inclusive — for P76,720,800.00 (Exhibit A).
In accordance with Administrative Order No. 14 implementing Proclamation No. 50 of the President dated December 8, 1986 (Exhibit F-1-B), PNB transferred to the national government through the Asset Privatization Trust (APT) the assets acquired from PBM as evidenced by the deed of transfer dated June 5, 1987.
The APT in turn sold machineries and equipment for P45,000,000.00 to Phoenix Iron and Steel Corporation and the others for P65 million to Killer Realty.
When respondent sheriff Silvino Santos issued the notice of levy and sale of the personal properties of PBM, and scheduled the public auction sale on November 23, 1987 in NCR Case No. 9-3296-84, the PNB filed with the NLRC a "NOTICE OF THIRD PARTY CLAIM" on November 20, 1987 (Exhibit F-3).
As stated earlier, deputy sheriff Santos proceeded with the scheduled auction sale on November 23, 1987. The highest bidder was respondent Asibar. His bid was P5,950,000.00. On the same day, Santos issued the corresponding Certificate of Sale in favor of Asibar.
On November 24, 1987, Labor Arbiter Hermogenes issued a "break open" order, ordering the "Sheriff assigned in the case and his assistance (sic)" to gain access to the place (PBM Compound). Between November 24 and November 28, 1987, some persons hauled and carried away personal properties from the compound. The guards listed the properties and the lists were given to the guards' supervisor. (Rollo — G.R. No. 96056, p. 31)
On November 27, 1987, the national government through APT filed an action for damages with preliminary injunction and/or temporary restraining order against Labor Arbiter Hermogenes, Deputy Sheriff Silvino Santos, Asibar and all the complainants in NCR Case No. 9-3296-84 with the Regional Trial Court of Makati, Metro Manila. The case was raffled to Branch 60 and was docketed as Civil Case No. 18426.
After due trial, the trial court on December 29, 1989 rendered a decision dismissing the complaint, to wit:
xxx xxx xxx
WHEREFORE, the Court hereby renders judgment as follows:
The complaint dated November 25, 1987 is DISMISSED;
The Order dated December 16, 1987 (pp. 87-90, Records) as clarified in the Order dated July 19, 1988 granting the plaintiffs' application for a writ of preliminary injunction (pp. 286-289, Id.) is LIFTED and SET ASIDE; and
The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and BIENVENIDO HERMOGENES) are DISMISSED. (Rollo, P. 42)
A motion for reconsideration filed by the petitioner APT was denied.
Petitioner APT then filed a petition for certiorari and prohibition with the Court of Appeals. The appellate court, however, dismissed the petition.
Hence, the instant petition.
On November 29, 1990, we issued a temporary restraining order enjoining respondent Asibar from taking the machineries, engines, and equipment (foreclosed chattels of the Philippine Blooming Mills, Co., Inc.) which were transferred and assigned by the Philippine National Bank in favor of the National Government as well as those already sold by the National Government to Phoenix Iron and Steel Corporation.
On January 10, 1991 Phoenix Iron and Steel Corporation and the Rehabilitation Receivers of PBM filed a motion for intervention alleging that its intervention is imperative because its possession of the chattels sold to it by the National Government and which are being used in the rehabilitation of PBM are being threatened to be taken by the private respondent. We granted the motion in a Resolution dated January 24, 1991.
The petition was given due course in the Resolution dated April 16, 1991.
In another Resolution dated November 26, 1991, we granted the intervenors' motion for leave to submit Additional Comment And/Or Argument.
G.R. NO. 96437
On February 10, 1988, a Deed of Sale was executed between respondent Alfredo Asibar as vendor and petitioner Phoenix Iron and Steel Corporation (co- petitioner Wilfredo Labayen is the vice-president of the corporation) as vendee involving machineries and equipment inside all the buildings at PBM compound in Manggahan, Pasig, Metro Manila. These properties were among the properties bought by Alfredo Asibar in the auction sale conducted by Deputy Sheriff Silvino Santos on November 23, 1987.
On December 26, 1988, respondent Asibar filed with the Regional Trial Court of Pasig, Metro Manila, Branch 151, a complaint with application for a writ of preliminary attachment, seeking the payment by the petitioners, jointly and severally of the amount of P8.5 million which he alleged was the balance already due at the time based on the terms of the contract, including penalty for late payment, moral, exemplary damages, litigation expenses, attorney's fees and costs of suit. The case was docketed as Civil Case No. 56806. On February 10, 1989, the petitioner filed a motion to dismiss on the ground that the complaint fails to state a cause of action.
On May 10, 1989, the trial court issued an order denying the motion. The petitioners were given ten (10) days from receipt within which to file their answers to the complaint.
The petitioners then filed with the Court of Appeals a petition for certiorari with prayer for the issuance of a writ of preliminary injunction questioning the May 10, 1989 order.
The Court of Appeals, however, dismissed the petition and ordered the return or remand of the records to the trial court for trial of the case on the merits.
A motion for reconsideration filed by the petitioners was denied. Hence, the instant petition.
On January 28, 1991, we issued a temporary restraining order enjoining the Regional Trial Court of Pasig, Metro Manila, Branch 151, from further proceeding with Civil Case No. 56806.
III
In G.R. No. 89767, the petitioner contends that:
a) By upholding the questioned Order of respondent SEC of 26 May 1989, the respondent Court of Appeals has in effect reversed the ruling of this Honorable Court in G.R. No. 85242.
b) By allowing respondent SEC to seize from petitioner SIHI the properties in dispute for the purpose of satisfying the money judgment obtained by the laborers of PBM despite the adverse claim of petitioner SIHI over the said properties, the respondent Court of Appeals has completely disregarded the right of petitioner SIHI to due process of law.
c) By permitting respondent SEC to execute the money judgment obtained against PBM by its laborers pending liquidation of PBM, the respondent Court of Appeals has in effect granted the PBM-Laborers undue preference contrary to the ruling of this Honorable Court. (Rollo, p. 16)
In G.R. NO. 96056, the petitioner raises the following issues:
I. WHETHER OR NOT THE CA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE AUCTION SALE CONDUCTED BY SANTOS IS VOID.
II. WHETHER OR NOT THE CA ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF JURISDICTION IN NOT FINDING THAT THE PROPERTIES SOLD TO ASIBAR ARE THE SAME AS THOSE FORECLOSED BY PNB AND NOW BELONGING TO THE NATIONAL GOVERNMENT. (Rollo — G.R. No. 96056, p.9)
These petitions are discussed jointly as the issues raised are interrelated.
In response to our directive in the November 21, 1988 resolution in G.R. No. 80580 which referred the respondents' motion for clarification as to whether or not the certificate of sale of November 23, 1987 is included in the order of permanent injunction to sell PBM properties in NLRC Case No. NCR-9-3296-84 until after the SEC in SEC Case No. 2250 (PBM liquidation proceedings) has determined the procedures for settling all the money claims against PBM ordered in the resolution dated December 2, 1987 in G.R. Nos. 79202 and 80580, the SEC issued an order dated February 9, 1989 in SEC Case No. 2250, to wit:
Acting upon the Urgent Motion To Resolve Clarification dated August 22, 1988 in G.R. No. 80580 which the Supreme Court referred to this Honorable Commission For Resolution, as per Order of the Supreme Court in its Resolution in G.R. No. 80580 dated November 21, 1988, filed by the counsel for the 2,081 laborers of PBM in NLRC Case No. NCR 9-3296-84, and considering the Manifestation dated February 2, 1989, filed by the petitioner and the rehabilitation receiver in the above-entitled case, the Hearing Panel hereby rules that the injunction issued therein, does not cover properties already sold before May 2, 1988 or more particularly the certificate of sale on November 23, 1987 in NLRC Case No. NCR-9-3296-84. (Rollo — G.R. No. 85242, p. 330; Emphasis Supplied)
Another order dated May 26, 1989, was issued in SEC Case No. 2250 involving PBM properties claimed by the State Investment House, Inc. wherein the SEC reiterated its February 9, 1989 clarificatory order regarding the certificate of sale dated November 23, 1987. This order was the subject matter in CA-G.R. SP No. 17698. The Court of Appeals affirmed the order prompting SIHI to challenge the appellate court's decision by filing a petition for certiorari with this Court. The case is docketed as G.R. No. 89767.
In G.R. No. 96056, the appellate court is of the view that the February 9, 1989 order of the SEC clarified the issue as to what properties are excluded from the liquidation proceedings but which should be given to the workers pursuant to the decision of the NLRC in Case No. NCR 9-3296-84 by ruling that "the hearing Panel hereby rules that the injunction issued therein does not cover properties already sold before May 2, 1988 more particularly the certificate of sale in November 23, 1987 in NLRC Case No. NCR 9-3296-84" (Rollo — G.R. No. 96056, p.25). With this finding, the appellate court, among others, dismissed the petition.
In this regard, we take note of another case (G.R. No. 85242 entitled "Sheriff Silvino Santos, et al. v. Court of Appeals, et al."). In this petition, SIHI filed an action before the Regional Trial Court of Pasig, Metro Manila, Branch 168 presided by Judge Benjamin Pelayo, to enjoin the implementation of a writ of execution issued in NLRC Case NCR No. 9-3296-84. Specifically, SIHI asked the court to enjoin Deputy Sheriff Silvino Santos from selling at the public auction sale on November 23, 1987 PBM properties which were allegedly owned by SIHI.
On November 20, 1987, Judge Pelayo issued an order, enjoining Sheriff Santos to desist from selling the properties being claimed by SIHI.
Sheriff Santos, however, ignored the order and went ahead with the November 23, 1987 auction sale. Judge Pelayo, then issued another order dated February 22, 1988 nullifying the sale and finding Sheriff Santos guilty of contempt.
Sheriff Santos then filed a petition for certiorari and prohibition with preliminary injunction with the Court of Appeals alleging that Judge Pelayo committed grave abuse of discretion and lack of jurisdiction in blocking the NLRC's writ of execution. The petition was dismissed.
Ricardo Zurita and 2,080 other laborers (complainants in NLRC Case No. 9-3296-84) in whose favor the writ of execution was issued by the NLRC filed with the Court a motion for leave to intervene as co-petitioners.
In a resolution dated March 15, 1989, we denied the petition for lack of merit. We stated:
xxx xxx xxx
Insofar as the money claims of the co-petitioners-intervenors are concerned., the law on the case is that announced in G.R. No. 71318, Philippine Blooming Mills, Co., Inc. v. National Labor Relations Commission, et al., January 20, 1986, where this Court ruled:
Considering all the foregoing, the Court Resolved to DISMISS the petition insofar as it seeks to nullify the decision of the National Labor Relations Commission on benefits due the respondent laborers and to restrain the disposition of properties in the satisfaction of the various obligations of the petitioner. However, the awards made by the Commission shall be referred to the Securities and Exchange Commission to determine the preference or priority under the law in the settlement of all claims. The restraining order dated July 22, 1985 which reads in part:
xxx xxx xxx
ENJOINING the respondents from enforcing the alias writ of execution and the sale of the properties of petitioner, and if already enforced, from turning over to the private respondents the proceeds of the auction sale in NLRC Case No. 3-1250-83, entitled "Pedro Ablaza, et al., Complainants, v. Philippine Blooming Mills Company, Inc., Respondent" of the National Labor Relations Commission, Ministry of Labor and Employment.'
is clarified as not covering the certificate of sale issued on July 19, 1985. However, all proceeds of that sale and earlier sales must be turned over to the Securities and Exchange Commission to be distributed according to law. This Court's temporary restraining order shall be lifted and set aside once the Securities and Exchange Commission has taken over the control of funds and assets as above indicated."
Any execution of the NLRC decision awarding benefits to the PBM workers and any disposition of PBM properties arising from the NLRC awards must be referred to the Securities and Exchange Commission pursuant to the above resolution.
Any attempt to execute on properties not belonging to PBM is properly a concern of civil courts and not of the NLRC. Either way, the action of the petitioner sheriff is premature or improper. (Rollo — G.R. No. 85242, pp. 271-272; Emphasis supplied)
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The petitioner sheriff filed a motion for reconsideration. The movant-intervenors also filed a separate motion for reconsideration with clarification. The movant-intervenors specifically mentioned the February 9, 1989 order of the SEC in SEC Case No. 2250 clarifying the issue as to whether or not the certificate of sale dated November 23, 1987 in NLRC Case NCR No. 9-3296-84 is included in the permanent injunction of the sale of PBM properties under the resolution dated November 21, 1988 in G.R. No. 80580. The movant-intervenors contended:
It is an admitted fact that the properties subject of this controversy are included in the certificate of sale of November 23, 1987 and not by another execution which, this Honorable Court might misunderstand, and which the same was already clarified by this Honorable Court through its delegated authority, the Honorable Securities and Exchange Commission. It is very apparent and very important then, that in so far as the certificate of sale of November 23, 1987 is concerned, (which includes subject properties in controversy) be finally laid to rest as this Honorable Court said in that particular resolution . . . (Rollo — G.R. No. 85242, p. 306)
We denied the motions. We said in our resolution dated April 5, 1989:
The motion for reconsideration cites the Court's resolution dated March 15, 1989 out of context. The movant-intervenors play up paragraph 2, page 3 of the resolution but ignore the first paragraph on the same page which is more important.
The resolution of this Court rules that if, as the petitioners and the movant-intervenors insist, the disputed properties really belong to the Philippine Blooming Mills, then the execution must be referred to the Securities and Exchange Commission pursuant to the earlier resolution of this Court. On the other hand, if the properties belong to persons other than the Philippine Blooming Mills, the National Labor Relations Commission has no jurisdiction because the matters falls within the jurisdiction of the civil courts.
Therefore, if the movant-intervenors are correct and the disputed properties belong to the Philippine Blooming Mills, their action is premature and must await a determination by the Securities and Exchange Commission pursuant to the earlier resolutions in the Philippine Blooming Mills cases. Once the SEC has decided the cases, the execution shall issue from it and not from the NLRC.
The Court further reiterates its resolution in G.R. No. 80580 and G.R. No. 79202 that the claims of the Philippine Blooming Mills laborers are not denied. The Court simply rules that all valid claims including those of the laborers must be submitted in the course of bankruptcy, liquidation and rehabilitation proceedings. This is a function of the Securities and Exchange Commission for appropriate action. (Rollo — G.R. No. 85242, p. 335; Emphasis supplied).
xxx xxx xxx
From the different resolutions in all the cases involving PBM properties in relation to SEC Case No. 2250 (liquidation proceedings of PBM) we reiterate the following: 1) all PBM properties including the proceeds of the various sales undertaken by the NLRC to implement its final decision in NCR 9-3296-84 should be turned over to the SEC for disposition according to law, and 2) for purposes of executing the NLRC final decision awarding monetary benefits to the former workers of PBM, the NLRC has no jurisdiction over properties belonging to persons other than PBM.
As far as the Sheriff's sale dated November 23, 1987 is concerned, the SEC issued the Order dated February 9, 1989, pursuant to our directive in our resolution of November 21, 1988 clarifying that the injunction against the sale of PBM properties does not include the November 23, 1987 certificate of sale. However, it does not necessarily follow from the auction sale of PBM properties conducted by Sheriff Santos resulting in the issuance of the certificate of sale dated November 23, 1987 in favor of the highest bidder, respondent Asibar, that all properties sold therein fall within the clarificatory order of the Securities and Exchange Commission (SEC). A distinction as to the ownership of these properties must be made. Thus, if some properties were sold which belonged to other persons over whom the NLRC does not have jurisdiction, necessarily, such properties must be considered not to fall within the February 9, 1989 order of the SEC. These should be returned to their rightful owners.
Under these circumstances, the pivotal issue to be resolved hinges on whether or not the disputed properties sold by Sheriff Santos belong to petitioner SIHI in G.R. No. 89767 and APT in G.R. No. 96056.
In G.R. No. 89767, the questioned Order dated May 26, 1989 of the SEC which was affirmed by the Court of Appeals states:
We found the grounds invoked by SIHI in its comment untenable and without merit. Firstly, the urgent motion for a break-open order is but an implementation of our final order of February 9, 1989 wherein it clearly states that "the injunction issued therein, does not cover properties already sold before May 2, 1988 or more particularly the certificate of sale on November 23, 1987 in NLRC Case No. NCR-9-3296-84;" secondly, this Commission is legally authorized and duly empowered by the Supreme Court pursuant to its Resolutions dated November 21, 1988 (G.R. No. 80580 and 79202) and April 5, 1989 (G.R. No. 86242) to determine the valid claims of subject laborers in all these cases; and thirdly, it is the function of this Commission to implement the Certificate of Sale on November 23, 1987 in NLRC Case No. NCR.-9-3296-84 for the reason above-stated and to issue forthwith any writ of execution, if necessary, to fully satisfy the valid claims of these complainants-laborers, as clearly mandated in the aforestated Resolution of the Supreme Court. (Emphasis supplied, Rollo, p. 32)
In affirming the Order, the appellate court said:
The SEC issued the "Break-Open Order" contained in the Order now being assailed for the purpose of implementing and carrying into effect the certificate of sale of properties involved in NLRC Case No. 9-3296-84 wherein the claims against PBM of private respondents — The 2,081 complainants former PBM laborers — were resolved. The authority of the SEC to act on this particular matter emanates from the Supreme Court Resolutions of November 21, 1988, March 15, 1989 and April 5, 1989. The first above-named Resolution was issued by the Supreme Court upon private respondents' motion for clarification of the scope of the injunction which the Court issued to stop the enforcement of the writ of execution already mentioned, which had been issued by the NLRC, against properties foreclosed by PBM creditors. In very certain terms, the Supreme Court in said Order states that it "cannot supervise the liquidation of PBM assets and declare what portion goes to laborers, what portion to creditor banks, etc." and that this is a function of the SEC; referred to the SEC the question of exactly what properties should be given to the workers pursuant to the decision of the NLRC; and directed the SEC "to hold hearings on the matter." The other two Resolutions (of March 15, 1989 and April 5, 1989) were issued by the Supreme Court precisely on the petition for review of the order of the RTC of Pasig in C.C. No. 49997, inter alia declaring null and void the certificate of sale executed by the NLRC Deputy sheriff covering the properties located at the PBM compound in Balintawak, Quezon City. In the March 15, 1989 order, the Supreme Court categorically stated that "any execution of the NLRC decision awarding benefits to the PBM workers and any disposition of PBM properties arising from the NLRC awards must be referred to the Securities and Exchange Commission." And in reiteration of said pronouncement, the Supreme Court in the April 5, 1989 Order, explicitly "REFERRED" the matter to the SEC "for appropriate action" after stating that all valid claims against PBM including those of the laborers "must be submitted" in the course of the bankruptcy, liquidation and rehabilitation proceedings" which is a function of the Securities and Exchange Commission. (Rollo, pp. 33-34)
Obviously, the SEC's May 26, 1989 Order has for its basis, the certificate of sale covering the Balintawak properties of PBM issued by Sheriff Silvino Santos as a result of the auction sale Santos held on November 23, 1989 pursuant to the writ of execution issued by the NLRC in NCR Case No. 9-3296-84. It is to be noted, however, that the certificate of sale issued to the highest bidder on the Balintawak properties of PBM was declared null and void in Civil Case No. 49997 and such declaration was affirmed by us in G.R. No. 85242.
Under these circumstances, the SEC had no authority to order the implementation of a certificate of sale which was earlier declared null and void. True, the SEC pursuant to our Resolution in the other related PBM cases has jurisdiction over all properties of the PBM which should be distributed among valid claimants including the private respondents in the liquidation proceedings. Such jurisdiction, however, does not include the power to reverse and set aside our own resolutions. It cannot issue a "break-open order" arbitrarily and to the prejudice of third persons seize PBM properties which were earlier in the lawful possession of third persons.
In the instant case, the Balintawak properties of PBM covered by the certificate of sale were earlier sold to the petitioner in an auction sale involving the said properties. Thus, in Civil Case No. 49997, the trial court issued an Order dated May 3, 1988, the pertinent portion of which reads:
In the light of the foregoing facts, the pertinent question is whether plaintiff, as purchaser at the auction sale of the aforementioned mortgaged properties, acquired valid titles not only to the land, subject of the mortgage of defendant Four Seas Trading Corporation, but also to all the buildings, improvements and machineries existing thereon. The answer to this question is determinative of the question of whether this court had the jurisdiction to issue the restraining order, and subsequently the writ of preliminary injunction, under consideration whereby this court enjoined Sheriff Santos from proceeding with the execution sale of the buildings, machineries and equipment located on the land of defendant Four Seas Trading Corporation in satisfaction of the judgment rendered against defendant Philippine Blooming Mills Co., Inc. in NLRC Case no. NCR-9-3296-84.
It is an admitted fact that the land, on which the buildings, machineries and equipment in question are located, are registered land in the name of defendant Four Seas Trading Corporation. It is also an admitted fact that no reservation of title in the name of defendant Philippine Blooming Mills Co., Inc. is noted in the certificates of title of defendant Four Seas Trading Corporation with respect to the buildings, machineries and equipment existing on the land covered by the said titles.
Such being the case, this court finds no cogent reason to disturb its findings contained in its Order, dated December 10, 1987, ordering the issuance of a writ of preliminary injunction against Sheriff Santos. For under the law and existing jurisprudence, plaintiff, as an innocent mortgagee and purchaser for value, acquires good and valid titles to the properties in question.
As long as this decision is not set aside or modified in proper legal proceedings, the SEC has no jurisdiction over the Balintawak properties, much less, to issue a break-open Order to implement a voided certificate of sale covering the said properties.
The trial court has the competence to identify and to secure properties and interests therein held by the judgment debtor for the satisfaction of a money judgment rendered against him. (Section 15, Rule 39, Revised Rules of Court). The exercise of its authority is premised on one important factor: that the properties levied upon, or sought to be levied upon, are properties unquestionably owned by the judgment debtor and are not exempt by law from execution, For the power of the Court in the execution of its judgment extends only over properties belonging to the judgment debtor. (See Reyes v. Grey, 21 Phil. 73 [1911], Misut v. West Coast San Francisco Life Insurance Co., 41 Phil. 258. [1920], Herald Publishing Co. v. Ramos, 88 Phil. 94 [1951]; and Bayer Philippines, Inc. v. Agana, 63 SCRA 355 [1975]; Consolidated Bank and Trust Corp. v. Court of Appeals, 193 SCRA 158 [1991])
In G.R. No. 96056 the petitioner contends that the appellate court committed grave abuse of discretion amounting to lack of jurisdiction in dismissing its petition for certiorari accusing the trial court of grave abuse of discretion in ruling that there is no identity between the PBM properties sold to the petitioner's predecessor PNB in 1983 and the PBM properties sold to respondent Asibar in the auction sale of November 23, 1987 on the ground that the appellate court did not consider the petitioner's allegations and evidence.
Petitioner APT contends that what took place was a simulated auction sale of properties already owned by PNB and transferred to the APT and that the Sheriff sold for P5,950,000.00 properties for which PNB had bid P76,720,800.00.
The petitioner claims that the Certificate of Sale (Exhibit "A", Annex "C", Petition) issued in favor of PNB shows that the chattels which were sold later by Sheriff Santos to Asibar in the questioned auction sale are housed at the following: (1) Oxygen Plant No. 2; (2) Carpentry Shop; (3) Electrical Shop and Instrumentation Building; (4) Machine Shop; (5) Scale house; (6) Wire Drawing Plant; (7) Nail Plant; (8) Bolt and Nut Making Plant; (9) Motorpool and Rebuilding Section; (10) Repair and Shifting Maintenance Section; (11) General Utility and Fire Section; (12) Oxygen Plant No. 1; (13) Topy Mill (Rolling Mill # 1); (14) Rolling Mill # 2; (15) Rolling Mill No. 3; (16) Wire Rod Mill; (17) Open Hearth Furnace; (18) and those at Building Nos. 24, 25, 26, 28 , 31, and 33 (Electric Arc Furnace), 34, 35, and 37 (Bailing Press Machine Building, Press Machine Building, Scale House No. 2 and Pump House No. 2). According to the petitioner, all the buildings, plants, shops, sections, and mills acquired in 1983 are located at the PBM Compound, Pasig, Metro Manila. All these chattels were transferred, assigned and conveyed by PNB in favor of the national government thru the Deed of Transfer dated February 27, 1987.
The petitioner claims that the Certificate of Sale issued to Asibar by Sheriff Santos conclusively shows that chattels inside nine (9) buildings which PNB bought, namely: Oxygen Plant No. 2, Carpentry Shop, Electrical Shop and Instrumentation Building, Machine Shop, Scale House, Wire Drawing Plant, Nail Plant, Bolt and Nut Making Plant, Motorpool and Rebuilding Section, Repair and Shifting Maintenance Section, General Utility and Fire Section, Oxygen Plant No. 1, Topy Mill (Rolling Mill No. 1), Rolling Mill No. 2, Rolling Mill No. 3, Wire Rod Mill, Open Hearth Furnace, and Bailing Press Machine Building all located at PBM compound, Manggahan, Pasig, Metro Manila were also sold to Asibar by Sheriff Santos.
It is to be noted that the appellate court's decision has no specific findings of facts regarding the issue as to whether or not the properties sold to Asibar are different from the properties previously sold to the PNB. Instead, the decision in a sweeping statement stated that the lower court did not commit grave abuse of discretion as the trial court's findings are duly supported by substantial evidence.
The lower court said:
PROPERTIES
SOLD TO PNB
SOLD TO PNB
13. The plaintiff does not question in this case the auction sale of PBM's properties in Balintawak, Quezon City to ASIBAR. What it questions only is the auction sale of PBM's properties located in its Compound in Manggahan, Pasig. It is therefore necessary to determine what are the properties sold to PNB per the certificates of sales (Exhs. A to A-147 inclusive; and Exhs. C and CO1) and the properties of PBM at its Manggahan, Pasig, Compound sold to Asibar per the certificate of sale (Exhs. H, G-1 to H-4 or Exhs. 1, 1-A to 1-E- Asibar)
14. The properties which PNB bought are:
14.1. The machineries and equipments in sixteen (16) Buildings — Building Nos. 6 (Exhs. A-20 to A-32); 10 (Exh. A-32), 12 (Exhs. A-33 to A-43), 13 (Exhs. A-6; Exhs. A-43 to A-59), 16 (A-43 to A-59), 21 (Exhs. A-59 to A-85), 22 (Exhs. A-86 to A-108), 24 (Exhs. A-108 to A-112), 25 (Exhs. A-109 to A-112), 26 (Exhs. A-112-A to A-114), 28 (Exh. A-114) 13 (Exhs. A-114 and A-115), 33 (Exhs. A-125 to A-133); A-138 to A-140), 34 (Exhs. A-132 and A-133), 35 (Exhs. A-140 to A-147) and 37 (Exhs. A-134 to A-138) per Exhs. A, A-1 to A-147.
14.2. Four (4) buildings (sic) erected on the lots covered by TCT Nos. 43445, 853, 30196 and 32897, Registry of Deeds of Rizal; namely: (a) a CANTEEN 2-storey semi-concrete; (b) one-storey electrical shop; (c) OPEN WAREHOUSE and carpentry shop; and (d) scale house (wood and masonry) per Exhs. C and C-1.
PROPERTIES SOLD
TO ASIBAR
TO ASIBAR
15. On the other hand, Asibar bought the following properties per Exhs. 1 to 1-E-Asibar or Exhs. H to H-4;
15.1. Thirty four (34) buildings and fixtures, embedded pipes and metals obtained from the total demolition thereof;
15.2. The mill plant machineries, equipment, materials supplies, and all movable properties found in each of the thirty-four (34) buildings; and
15.3. Scrap iron and other metals, discarded or detached machine or equipment parts found in open areas and diggings.
NO IDENTITY
OF PROPERTIES SOLD TO
PNB AND TO ASIBAR
OF PROPERTIES SOLD TO
PNB AND TO ASIBAR
16. The question then is: were the properties sold to PNB as described in paragraph 14, the same properties sold to Asibar as described in paragraph 15 hereof? The evidence does not show that the properties sold to PNB are the same properties sold to Asibar. This is clear from the following considerations.
16.1. Exhs. A and A-1 to A-177 do not show that the material and equipments found in the sixteen (16) buildings are located at the PBM Compound in Manggahan, Pasig. They do not state where these buildings are located. Exh. A simply states that the auction sale of the properties listed in the "attached Annexes" took place on November 23, 1983 at 10:00 o' clock in the morning "at the compound of the mortgagors, located at Barrio Rosario, PBM Compound, Pasig, Metro Manila." Exh. T however shows that PBM has machineries and equipments in 12 buildings, namely Building Nos. 6, 12, 14 , 16, 18, 20, 21, 22, 23, 25, 26 and 31, at the PBM Compound in Manggahan, Pasig. Even if it were assumed that the twelve (12) buildings are the same buildings bearing the same number referred to in Exhs. A to A-147 the fact remains that the machineries and the equipments found in these twelve (12) buildings have not been shown to be the same machineries and equipments that may be found in the thirty four (34) buildings described in Exhs. 1-C and 1-D-Asibar. For there is even no proof that the twelve (12) buildings are among the thirty-four (34) buildings listed in Exhibits 1-C and 1-D-Asibar.
16.2. The four (4) buildings sold to PNB under Exhibits C and C-1 have not been shown to be among the same thirty-four (34) buildings. These four (4) buildings are (note: not legible) lots covered by TCT Nos. 43445, 853, 30196 and of Deeds of Rizal. This then suggests that the (not legible) the Province of Rizal. However, their . . . (not legible) Rizal has not been established much less does the evidence show that they are within the PBM Compound in Manggahan, Pasig, or that they are among the said thirty-four (34) buildings.
16.2.1. True it is that among the thirty-four (34) are: (a) scale house (No. 5, Exh. 1-C-Asibar); (b) a canteen (No. 27, Exh. 1-D-Asibar); (c) a carpentry/electrical shop (No. 30, Exh. 1-D-Asibar). However there is absolutely no proof that they are the same four (4) buildings described in Exhs. C and C-1.
16.3. PNB did not acquire any "scrap iron and other metals, discarded or detached machine parts found in open areas and diggings" from PBM. They are not among the properties which PNB acquired under the certificates of sale (Exhs. A, A-1 to A-147), B and B-1, C and C-1). PNB did not transfer any such property to the RP under the deed of transfer (Exhs. D to D-3). Obviously, these properties belonged to PBM when they were sold to Asibar.
17. In brief, RP failed to prove by any competent and satisfactory evidence that the properties which it acquired from PNB are the same properties levied upon and sold at public auction to ASIBAR. (Rollo — G.R. No. 96056, pp. 31-33; Decision-Civil Case No. 18426, pp. 5-7)
In an order dated June 6, 1990, the trial court amended "14.2" and "16.2" of the decision to read as follows:
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14.2. Seven (7) buildings erected on the lots covered by TCT Nos. 43445, 853, 30196 and 32897, Registry of Deed of Rizal, namely: (a) a CANTEEN 2-storey semi-concrete; (b) one-storey electrical shop; (c) OPEN WAREHOUSE and carpentry shop; (d) scale house (wood and masonry); (e) Wire and Nail Plant (industrial) one-storey steel frame with an area of 6,489 erected on the lots covered by TCT Nos. 43445, 43338, 853 and 30196, land records of Rizal; (f) office building (commercial two-storey, wood and masonry, with an area of 240 square meters, first floor erected a lot covered by TCT No. 32343, Land records of Rizal; and (g) Mess Hall and dormitory, with a total area of 250 square meters, erected on the same above-mentioned lot (TCT No. 322843-Rizal) per Exhs. C and C-1.
19.3 The first sentence of paragraph 16.2 of the DECISION is AMENDED to read as follows:
16.2. The seven (7) buildings sold to PNB under Exhs. C and C-1 have not been shown to be among the said thirty-four (34) buildings.
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(Rollo — G.R. No. 96056, p. 237)
Obviously, the trial court assumed that there are two (2) PBM compounds in Pasig, Metro Manila, one at Manggahan and one at Rosario. Under this premise, the trial court ruled that since the petitioner did not adduce evidence to prove that the buildings housing the chattels sold to PNB are located at the PBM Compound in Manggahan where the building machinery and equipment sold to Asibar were located, then there is no identity of properties between those sold earlier to PNB and later to Asibar. Such conclusion has no factual basis.
Asibar, himself, in his "Answer with Counterclaim" never raised the issue as regards the location of the buildings, machinery and equipment sold to him. Under his Answer with Counterclaim, captioned as "SPECIAL AND AFFIRMATIVE DEFENSES" Asibar alleged:
Assuming without admitting that the plaintiff's acquisition of the properties of the PBM in the alleged auction sale on November 23, 1983 by virtue of a foreclosure proceedings under a mortgage contract is true, its ownership is only limited to its rights as mortgagee and subject to other superior liens. It cannot affect the lien of the defendants Ricardo Zurita, et al. (complainants in NLRC Case No. 9-3296-84) over the properties of PBM already attached and existing to it at the time of the foreclosure and/or the plaintiff's acquisition of the PBM properties being said lien is a laborer's lien;
10. The lien of the defendants Ricardo Zurita, et al. and other laborers numbering 2,081 in all, complainants in the NLRC Case No. 9-3296-84 was already attached and existing over the PBM properties since 1981 the time when the said laborers were illegally dismissed or when PBM ceased its operations allegedly due to bankruptcy, and at the time when the PNB or the plaintiff allegedly acquired the PBM properties;
11. Said lien of the defendants Ricardo Zurita, et al. (complainants in NLRC Case No. NCR-9-3296-84) is superior and enjoys preference over the lien of the plaintiff as mortgagee and constitute an automatic first lien above all other earlier encumbrances on the PBM properties pursuant to the doctrine laid down by the Supreme Court in G.R. No. 68819-20, Ferrer, et al, v. Romillo, Jr., et al. promulgated on February 7, 1985; PCIB v. NAMAWU, 115 SCRA 873 and G.R. No. L-39742, Air Manila, Inc., et al. v. CIR;
12. The judgment award to the defendants Ricardo Zurita, et al. in NLRC Case No. NCR. 9-3296-84 which is in the nature of separation pay from PBM a corporation that had ceased operation due to bankruptcy, is superior to the rights of PNB as mortgagee and that of the plaintiff who just step into the shoes of the former over the properties of PBM pursuant to the doctrine laid down by the Supreme Court in G.R. No. 75161-62, PNB v. Delta Workers Union, et al., promulgated on April 1, 1987, that the rights of workers to separation pay from a bankrupt corporation is superior to a mortgagee's credit in the foreclosed property and considering further that Art. 110 of the Labor Code is constitutional because Police Power prevails over non-impairment of the obligation and contract clause in the Constitution;
13. So that what the PNB can rightfully claim on the PBM properties is only the residue after the lien of the laborers of PBM (defendants Ricardo Zurita, et al., complainants against the PBM in NLRC Case No. NCR 9-3296-84) has been fully satisfied. Thus, this residue, if there is any, is the only thing that the plaintiff can rightfully claim, and it cannot further claim that the properties are already exempt from execution the fact that the plaintiff is the government as it merely steps into the shoes of the PNB. It is elementary that water cannot rise higher than its source;
14. Herein defendant being the purchaser of the properties of PBM transferred on account of the exercise of a superior and automatic first lien above all earlier encumbrances attached to the properties, evidenced by a certificate of sale, is therefore the rightful and legal owner of the properties subject hereof over and above and superior and paramount from the claim of ownership of the plaintiff; (Rollo, p. 215-217)
In fine, Asibar's defense to the complaint of the petitioner centered on his allegation that his right to the properties is superior to the right of the petitioner. The issue as to the proper disposition of the PBM properties has already been decided earlier by this court in the other PBM cases. The jurisprudence on the matter is now final and Asibar cannot resurrect the issue as to which is superior, the PNB foreclosure and purchase of the properties in 1983 or the claims of various creditors, including the workers, which we decided in 1985.
Moreover, it is worthy to note that respondent Sheriff Santos in itemizing the properties which he sold during the auction sale identified them as "Properties Located at PBM Compound, Pasig Metro Manila" (p. 194, Rollo, G.R. No. 96056) which signifies that there is only one PBM compound in Pasig, Metro Manila.
That there is only one PBM compound in Pasig is confirmed by the certification of Mayor Mario S. Raymundo of Pasig (Annex "B", Additional Argument filed by intervenor Phoenix Inc. and Steel Corporation [PISCOR]), to wit:
C E R T I F I C A T I O N
TO WHOM IT MAY CONCERN:
THIS IS TO CERTIFY that since 1981 up to the present time there is only one facility referred to as the Philippine Blooming Mills (P.B.M.) Compound in the Municipality of Pasig, Metro Manila.
The above-mentioned facility is located at the boundary of Barangay Rosario and Manggahan. And, therefore, the P.B.M. Compound is sometimes part of the Barangay Manggahan. In any case, there is only one facility known as the P.B.M. Compound in the Municipality of Pasig.
This certification is issued at the request of the Phoenix Iron and Steel Corporation (PISCOR) for location reference purposes.
Given this 5th day of March 1991 at Pasig, Metro Manila.
(Sgd.) MARIO S. RAYMUNDO
Municipal Mayor
Municipal Mayor
(Rollo — G.R. No. 96056, p. 797)
Another certification issued by the Assessor's Office through Senior Taxmapper Bonifacio C. Maceda, Jr. clears the confusion as regards the address of the PBM Compound in Pasig which is referred to as Manggahan by some and Rosario by others, to wit:
October 30, 1991
TO WHOM IT MAY CONCERN:
This is to certify that as per Real Property Tax Records of this office, the properties of the former facility known as the Philippine Blooming Mills Co., Inc., located in the Municipality of Pasig, are officially part of Manggahan and not part of Rosario based on the Tax Declaration of the said property.
Furthermore, although the Pasig facility of the Philippine Blooming Mills Co., Inc. since existence carried the address of Rosario; the tax mapping of the Municipality of Pasig initiated by this office in the period between 1987-1988 officially pegged the boundary of Rosario and Manggahan to be the point where the Litton Mills property end and where the former Philippine Blooming Mills Co., Inc. begins.
This certification is issued for whatever purpose it may serve.
(Sgd.) BONIFACIO C. MACEDA, JR.
Sr. Taxmapper
Sr. Taxmapper
(Rollo — G.R. No. 96056, p. 798)
Any doubts regarding the existence of only one PBM Compound located at Pasig instead of two (2) as implied by the trial court is dispelled by Volume 2 of the 1989-1990 Metro Manila Citiguide (The Encyclopedic Map of Metro Manila) where Map 130 shows the PBM Compound, and Map 131 a portion thereof which indicates that the PBM compound in Pasig is only one and not made of two (2) parts, one in Rosario and another in Manggahan. (Annex "D", Additional Argument filed by PISCOR).
The location of the PBM Compound was never in issue before the trial court. It appears from the records that it was assumed to be a matter known to all the parties, that the parties were aware of the exact whereabouts of the compound in Pasig.
From the sole fact that some documents bore the address PBM, Rosario, Pasig, while other documents carried the address PBM, Manggahan, Pasig, the trial court jumped to the conclusion that there are two (2) PBM compounds in the same town, in two barangays adjacent to each other, with each compound containing identical sets of buildings and the buildings containing identical but separate sets of extremely expensive machineries and equipment.
It was relatively easy for the trial court, if it wanted to decide the case on matter not fully litigated by the parties, to ascertain the correct factual bases for its conclusion.
The PBM compound is at the boundary of the two barangays. This explains why in some documents, it used Rosario as an address while in others it used Manggahan. It is not logical for a steel company to establish two huge industrial complexes in two adjacent barangays of the same town and to treat them, as the trial court did, as two separate and distinct industrial complexes. The court should have received evidence to clearly establish what now appears from the records of these and earlier cases to be a wrong conclusion.
The chattels are clearly identified and numbered in the PNB and APT records of ownership. Conveniently for the private respondent, properties acquired by PNB for P76,720,800.00 in the 1983 were sold to Asibar for only P5,950,000.00 as scrap and machineries in lots, each lot being the contents of one entire building, with no specifying details and no identification as to what types of machineries, serial numbers, etc. were sold for a nominal sum.
The well-entrenched principle that findings of facts of the Court of Appeals are conclusive and binding upon this Court is not without exceptions. Such exceptions include the following: when the findings are not supported by the record, glaringly erroneous as to constitute grave abuse of discretion or when the findings are grounded entirely on speculation, surmise or conjecture. (See Chan v. Court of Appeals, 33 SCRA 737 [1970]; Baniqued v. Court of Appeals, 127 SCRA 596 [1984]; Moran, Jr. v. Court of Appeals, 133 SCRA 88 [1984]; Collector of Customs of Manila v. Intermediate Appellate Court, 137 SCRA 3 [1985]; Premier Insurance and Surety Corporation v. Intermediate Appellate Court, 141 SCRA 423 [1986]; Director of Lands, et al. v. Funtilar, et al., 142 SCRA 57 [1986]; Manlapaz v. Court of Appeals, 147 SCRA 236 [1987]; Chua Giok Ong v. Court of Appeals, 149 SCRA 115 [1987] Francisco v. Mandi, 152 SCRA 711 [1987]; Knecht v. Court of Appeals, 158 SCRA 80 [1988]; Garcia v. Court of Appeals, 33 SCRA 623 [1970]; Tolentino v. De Jesus, 56 SCRA 167 [1974]; Ramos v. Court of Appeals, 63 SCRA 331 [1975]; Rizal Cement Co., Inc. v. Villareal, 135 SCRA 15 [1985]; Municipality of Meycauayan v. Intermediate Appellate Court, 157 SCRA 640 [1988]; Remalante v. Tibe, et al., 158 SCRA 138 [1988]; Bunag v. Court of Appeals, 158 SCRA 306 [1988]; Santa Ana, Jr. v. Hernandez, 18 SCRA 973 [1986]; Joaquin v. Navarro, 93 Phil. 257 [1953]; Cruz v. Court of Appeals, G.R. No. 85685, September 11, 1991)
Certainly, the trial court's ruling that there is no identity as between the PBM properties sold to PNB and those sold to Asibar because the petitioners did not prove the location of the same, whether they are at the PBM compound located at Manggahan or at the PBM Compound located at Rosario on the premise that there are two (2) PBM Compounds in Pasig is patently and glaringly erroneous amounting to a grave abuse of discretion.
Moreover, the trial court's finding that the petitioner failed to show that the machineries and equipment sold to PNB found inside twelve (12) buildings inside the PBM compound are the same as those sold to Asibar found in the thirty four (34) buildings and that the twelve (12) buildings are the same twelve buildings forming part of thirty four (34 buildings) in which machineries and equipment were sold to Asibar is patently erroneous and not supported by the record.
The record shows that the petitioner mentions at least nine (9) buildings which are among the thirty four (34) buildings and that the machineries and equipment inside the said nine buildings were also sold to Asibar as indicated by Exhibits 1 to 1-"D", Annex "D" Petition). These are: (1) Scale House which is Bid Item No. 5; (2) Machine Shop which is Bid Item No. 8; (3) Open Hearth Furnace which is Bid Item No. 12; (4) Oxygen Plant which is Bid Item No. 14; (5) Rolling Mills which is Bid Item No. 19; (6) Boiling Press Machine Building which is Bid Item No. 24; (7) Carpentry and Electrical Shop which is Bid Item No. 30; (8) Nail Plant which is Bid Item No. 30; and (9) Motor Pool which is Bid Item No. 33. The certificate of sale (Annex "C" Petition) issued to PNB indicates that the chattels inside these buildings found at PBM Compound, Barrio Rosario, Pasig Metro Manila were sold to PNB. The certificate of sale describes with particularity the chattels found in these buildings. For example, citing only one building:
Nail Plant
Nail Making Machine "Yamamura" built 1950, weight 420, type YA, 500 rpm, Serial No. 244.
9 Nail Making Machine "Yamamura" built 1950, weight 550, type YB, 400 rpm, Serial Nos. 252, 246, 245, 217, 218, 251, 250, and 249. (Rollo — G.R. No. 96056, p.80)
xxx xxx xxx
On the other hand, the certificate of sale issued to Asibar by Sheriff Santos referred to the chattels found in the thirty four (34) buildings which include the aforesaid nine (9) buildings sold to Asibar as follows:
. . . building materials and fixtures including imbedded pipes and metals and all kinds of materials obtained from the total demolition of each buildings, structure, or bid item described below; and all MILL/PLANT MACHINERY, EQUIPMENT, MATERIALS AND SUPPLIES and all movable properties found inside each building/structure described below.
Undoubtedly, the foregoing description of properties includes all chattels found inside the thirty four (34) buildings including those already sold to PNB in the nine (9) buildings.
Under these circumstances, the appellate court committed a reversible error in ruling that the lower court did not commit a grave abuse of discretion in its finding that there is no identity of PBM properties sold to PNB and Asibar.
With these findings, the inevitable conclusion is that the auction sale conducted by Sheriff Santos is null and void. As discussed earlier the NLRC has no jurisdiction over PBM properties which are already owned by third persons. As revealed by the records, the questioned PBM properties which were levied under a writ of execution dated November 13, 1987 issued in NLRC Case NO. 9-3296-84 and subsequently sold in a public auction sale were already owned by PNB as evidenced by a certificate of sale dated November 23, 1983. The validity of the sale was not challenged by the respondents at the time of the said properties' levy. We ruled in a long line of cases that the power of the court to execute its judgment extends only to properties unquestionably owned by the judgment debtor. (See Consolidated Bank and Trust Corporation(solid Bank) supra.
IV
The main issue in G.R. No. 96437 centers on whether or not the complaint filed by respondent Asibar against the petitioner states a cause of action.
In the lower court, the petitioner contended that the complaint is premature since paragraph 2 of the Deed of Sale states that the balance shall be payable only upon the dismissal of Civil Case No. 18426 (subject of the petition in G.R. No. 96056) and the same shall be secured within two (2) weeks from the signing of the Deed of Sale on February 10, 1988. In other words, the balance would be paid only when it is finally ascertained as to who between the APT and Asibar owns the properties sold by the latter. According to the petitioner, the private respondent still has to present proof of the dismissal of Civil Case No. 18426. Hence, the petitioner argues that based on the Deed of Sale, the contract between the two (2) parties, the private respondent possessed no demandable right arising from the Deed of Sale.
The appellate court dismissed the petition on the ground that it has become moot and academic in view of the December 29, 1989 decision of the Regional Trial Court of Makati, Branch 60 in Civil Case No. 18426. The dispositive portion of the decision reads:
WHEREFORE, the Court hereby renders judgment as follows:
The COMPLAINT dated November 25, 1987 is DISMISSED;
The Order dated December 16, 1987 (pp. 87-90, Records) as clarified in the Order dated July 19, 1988 granting the plaintiffs application for a writ of preliminary injunction (pp. 288-289, Id.) is LIFTED and SET ASIDE; and
The COUNTERCLAIMS of the defendants (other than SILVINO SANTOS and BIENVENIDO HERMOGENES) are DISMISSED. (Rollo — G.R. No. 96056, p. 42)
The appellate court ruled that the decision dismissing Civil Case No. 18426 and lifting the injunction rendered the petition moot and academic.
The petitioner now contends that the appellate court committed grave abuse of discretion in dismissing its petition for certiorari for being moot and academic. It argues that the dismissal of Civil Case No. 18426 provided in the Deed of Sale refers to a decision which is final and executory considering that Civil Case No. 18426 is for the annulment of the auction sale and certificate of sale from which respondent Asibar derived the properties which he sold to the petitioner. Until, therefore, the sale of these properties are declared valid by a final and executory decision, the respondent has no right and interest in the same properties which he could transfer and sell to the petitioner.
The well-settled rule is that when a party files a motion to dismiss the complaint for lack of cause of action he is deemed to hypothetically admit the allegations thereof. (Nicanor G. De Guzman, Jr. v. Court of Appeals, G.R. Nos. 92029-30, December 20, 1990)
It is clear from the Deed of Sale which was attached to the complaint and in fact the basis for the complaint, that the vendee, the petitioner herein, is obligated under that contract to pay the amount of P9,500,000.00 as follows:
xxx xxx xxx
b. Fourteen (14) days from the date Civil Case No. 18426 pending in Branch 60, is dismissed, the VENDEE shall pay the amount of Four Million Pesos (P4,000,000.00) to the VENDOR;
xxx xxx xxx
. . . In the event the restraining order is lifted, the payments under the above-schedule shall be resumed; (pp. 1-4, Deed of Sale, Annex "B", Petition)
When, therefore, the trial court rendered its decision and dismissed Civil Case No. 18426 and at the same time lifted the injunction issued therein, the vendor, respondent Asibar, acquired a demandable right against the petitioners in relation to their contract, the Deed of Sale.
The cause of action must always consist of two elements: (1) the plaintiff's primary right and the defendant's corresponding primary duty, whatever may be the subject to which they relate — person, character, property or contract; and (2) the delict or wrongful act or omission of the defendant, by which the primary right and duty have been violated. The cause of action is determined not by the prayer of the complaint but by the facts alleged. (R.C.L. 489 21; Section 126, C.C.P.I.; Cagibao v. Lim, 50 Phil. 844 [1924]; See Martin, supra) (De Guzman, Jr. v. Hon. Court of Appeals, et al. supra)
Under the facts as they then stood, the Court of Appeals did not commit grave abuse of discretion in dismissing the petition for being moot and academic.
Whether or not the Regional Trial Court's dismissal of Civil Case No. 18426 refers to a dismissal that is final and executory was a defense which should be raised in the answer and determined in the course of the proceedings of the case.
However, the issue in G.R. No. 96437 are inextricably intertwined with the issues in G.R. No. 96056. Since we have found that the Sheriff's sale to Asibar was null and void, it follows that Asibar could not have sold to Phoenix Iron and Steel Corporation the properties which did not lawfully belong to him.
This case started as a complaint seeking the payment to Asibar by petitioner Phoenix Iron and Steel Corporation (PISCOR) and Wilfredo Labayen, vice-president of PISCOR of the alleged balance based on the deed of sale executed by respondent Asibar in favor of PISCOR. The deed of sale covers PBM properties which Asibar acquired in the auction sale which is the subject matter in G.R. No. 96056 to wit:
WHEREAS, the VENDOR is the purchaser at an auction sale conducted in NLRC Case No. 9-3296-84 of machineries and equipment located inside all the buildings in the realty covered by TCT No. (11486) 41183, per certificate of sale dated November 23, 1987, executed and issued by Silvino S. Santos, as an incident in the execution of the decision in the aforementioned case entitled Ricardo Zurita, et al. v. Philippine Blooming Mills, Co., Inc., (PBM) and BPI Investment Corporation, . . . (Rollo — G.R. No. 96437, p. 38)
Considering our ruling in G.R. No. 96056 where we annulled that auction sale of February 23, 1987 conducted by Sheriff Silvino Santos, respondent Asibar has no rights and/or interest over the PBM properties, the same properties of which are concededly subject of the deed of sale between Asibar as vendor and petitioner PISCOR as vendee. In view of this development Asibar's complaint against the petitioner to recover the payment of the balance of the consideration agreed upon by the parties in the deed of sale has no more legal basis and should now be dismissed.
WHEREFORE, the Court renders judgment as follows:
1. In G.R. No. 89767, the petition is GRANTED. The questioned decision and resolution of the Court of Appeals are hereby reversed and set aside. The May 26, 1989 Order of the Securities and Exchange Commission is declared null and void;
2. In G.R. No. 96056, the petition is GRANTED. The questioned decision of the Court of Appeals is hereby SET ASIDE. The questioned auction sale conducted by Sheriff Silvino Santos is declared null and void and the certificate of sale issued to respondent Alfredo Asibar is cancelled. The Temporary Restraining Order issued on November 29, 1990 is made PERMANENT; and
3. In G.R. No. 96437, the petition is declared MOOT and ACADEMIC. The Regional Trial Court of Pasig Branch 151 is ordered to DISMISS Civil Case No. 56806.
SO ORDERED.
Narvasa, C.J., Melencio-Herrera, Cruz, Paras, Feliciano, Bidin, Griño-Aquino, Medialdea, Regalado, Davide, Jr., Romero and Nocon, JJ., concur.
Padilla, J., took no part.
People vs Sia
G.R. No. 137457 November 21, 2001
PEOPLE OF THE PHILIPPINES, plaintiff-appellee,
vs.
ROSAURO SIA y DICHOSO, JOHNNY BALALIO y DEZA, JIMMY PONCE y TOL and JOHN DOE @ PEDRO MUÑOZ (at large), accused-appellants.
vs.
ROSAURO SIA y DICHOSO, JOHNNY BALALIO y DEZA, JIMMY PONCE y TOL and JOHN DOE @ PEDRO MUÑOZ (at large), accused-appellants.
YNARES-SANTIAGO, J.:
Christian Bermudez was beaten to death and the taxicab he was driving was taken by the assailants. His lifeless body, wrapped in a carton box, was recovered several days later in a fishpond in Meycauayan, Bulacan. For the felonies, the above-named accused were indicted for violation of R.A. 6539, otherwise known as the Anti-Carnapping Law, and Murder in two (2) separate Informations, to wit:
Criminal Case No. Q-95-63962 for Violation of the Anti-Carnapping Law:
That on or about August 23, 1995, in the City of Quezon, Metro Manila, Philippines and within the jurisdiction of this Honorable Court, herein accused, conspiring, confederating and mutually helping one another did then and there willfully, unlawfully and feloniously take, steal, and carry away one (1) motor vehicle described as Toyota Tamaraw FX; Motor No. 2C-2983302; Chassis No. CF50-0014375; Plate No. NYT-243, owned by BIENVENIDO CRUZ, killing the driver Christian Bermudez in the process, to the damage and prejudice of the registered owner thereof and the heirs of Christian Bermudez.
CONTRARY TO LAW.1
Criminal Case No. Q-95-63963 for Murder:
That on or about 23 August 1995, in the City of Quezon, Metro Manila, Philippines, and within the jurisdiction of this Honorable Court, the above-named accused with intent to kill qualified by treachery, evident premeditation, taking advantage of superior strength, employing means to weaken the defense or of means of persons to insure or afford impunity, conspiring, confederating and mutually helping one another, did then and there willfully, unlawfully and feloniously attack, assault and use violence upon the person of CHRISTIAN BERMUDEZ by beating him on the head and other parts of the body, thereby causing his death.
CONTRARY TO LAW.2
At the arraignment, only Johnny Balalio y Deza and Jimmy Ponce y Tol appeared and pleaded "Not Guilty."3 The third accused, Rosauro Sia y Dichoso, escaped from police custody while on the way to the hospital for treatment.4 As a consequence, the two (2) cases were subsequently consolidated and jointly tried against accused Johnny Balalio and Jimmy Ponce only.
After trial, the court a quo rendered judgment against both accused imposing upon them the supreme penalty of Death, thus:
WHEREFORE, premises considered, judgment is hereby rendered finding the accused Johnny Balalio and Jimmy Ponce GUILTY beyond reasonable doubt as principals by conspiracy of violation of R.A. No. 6539, as amended and hereby sentences them to suffer the penalty of DEATH.
Accused are likewise adjudged jointly and severally [liable] to pay to Agripina Bermudez, the mother of the deceased Christian Bermudez the sums of:
a. P50,000.00 as compensatory damages for the death of Christian Bermudez;
b. P200,000.00 as burial and other expenses incurred in connection with the death of Christian; and
c. P3,307,199.60 (2/3 x [80-27] x 300 per day x 26 days (excluding Sundays) x 12 months) representing the loss of earning capacity of Christian Bermudez as taxi driver.
Costs against accused.
The cases of accused Rosauro Sia who escaped from custody before he was arraigned and as against Peter Doe who was never apprehended and whose identity has never been known are hereby ordered ARCHIVED, subject to activation when they are arrested and brought before the bar of justice.
SO ORDERED.5itc-alf
On automatic review before this Court, accused-appellants raised the lone assigned error that:
THE COURT A QUO ERRED IN CONVICTING THE ACCUSED-APPELLANTS FOR VIOLATION OF RA 6539 (ANTI-CARNAPPING LAW) SOLELY ON THE BASIS OF THE EXTRA-JUDICIAL CONFESSIONS OF ACCUSED ROSAURO SIA AND JIMMY PONCE (EXHIBITS C AND D, RESPECTIVELY) WHICH ARE INADMISSIBLE IN EVIDENCE.6
The facts as summed up by the trial court are as follows:itc-alf
The vehicle claimed as carnapped is registered in the name of complainant Bienvenido C. Cruz of No. 1125 Primero de Mayo Street, Tondo, Manila7 and operated as a taxi being Unit 2 of KIRBEE TAXI and bearing the following description:
| Make/Type | : | Toyota Tamaraw FX Wagon |
| Motor Number | : | 2-C 2983302 |
| Chassis No. | : | CF 50-0014375 |
| Plate No. | : | NYT-243 |
| Color | : | Maroon |
The said taxi was taken from the garage and driven by its regular driver, Christian Bermudez, the alleged murder victim at about 6:00 a.m. on August 23, 1995. The taxi was last seen at the vicinity of the Pegasus Night Club in Quezon City at about 10:30 p.m. on the said date with an unidentified passenger who surfaced later as the accused Rosauro Sia, whose true name is allegedly Antonio Labrador (Mang Tony) and who resides at San Francisco Del Monte. Accused Rosauro Sia appears to have gypped driver Christian Bermudez to service him the following day (August 24, 1995) in the morning and to be paid P150.00 per hour which was apparently accepted because Rosauro gave instructions to accused Johnny Balalio and Jimmy Ponce to wait for him (Christian) that following morning. When Christian returned to Sia's residence in San Francisco Del Monte that morning, he was told to come back in the afternoon because that was the instruction given him by accused Rosauro Sia. When Christian returned in the afternoon in the Sia residence, he was asked to get inside. As soon as he alighted from the Tamaraw FX taxi he was driving, his hands were tied by Johnny Balalio and was handed to a certain "Pedro", the accused Peter Doe who has not been arrested and who told Johnny Balalio and Johnny (sic) Ponce "Ako na'ng bahala dito". Christian was taken to accused Rosauro and shortly afterwards, the latter was seen lugging with him a big carton box from which blood was dripping. Accused Jimmy Ponce saw Rosauro hand the carton-wrapped lifeless body of Christian inside the carnapped FX taxi. Before leaving with the lifeless body of Christian loaded in the taxi, accused Sia gave P3,000.00 each to Jimmy Ponce, Johnny Balalio and "Pedro" and admonished them not to say anything about what happened. The ring taken from Christians8 was given to accused Jimmy Ponce by Rosauro Sia.
On August 26, 1995, the lifeless body of Christian Bermudez was found and retrieved from a fishpond in Meycauayan, Bulacan. This fact was broadcast over the radio and, after hearing the same, Agripina Bermudez went to see the lifeless body retrieved from the fishpond and confirmed it to be that of Christian, whom she claims is her eldest son who was earning about P650.00 a day as a taxi driver.
Photographs were taken on the carton-wrapped body of Christian including one position which shows the latter's body.9
Dr. Benito Caballero, Medico Legal Officer of Bulacan, conducted a postmortem examination of the deceased body of Christian and found that the latter's death was due to shock caused by massive external and intracranial hemorrhage on account of multiple lacerations on the head and fracture of the skull due to use of hard object, possibly iron, for which he issued certificates of death and postmortem death certificate.10
In the meantime, Bienvenido Cruz, the owner of the carnapped vehicle, reported to the police authorities in Camp Crame the loss of his taxi.11 On September 21, 1995, at about 10:30 p.m., the carnapped taxi was intercepted being driven by accused Rosauro Sia, who was immediately placed in custody of the anti-carnapping authorities. While in custody, Rosauro Sia managed to escape but he was recaptured on November 15, 1995 by the manhunt team created for that purpose. As accused Rosauro Sia claimed that he bought the hot car from his co-accused Johnny Balalio and Jimmy Ponce, the latter were picked up from their residence in Baseco, Isla Tawid, Port Area, Tondo, Manila and investigated. Sworn Statement of the accused Rosauro Sia and Jimmy Ponce were taken12 narrating their respective participations such as Sia's instruction to Jimmy to guard his (Sia's) gate to deter passersby from snooping around and describing what transpired inside Sia's residence at San Francisco Del Monte when Christian was tied and killed. The Sworn Statement of Bienvenido Cruz, owner of the missing vehicle, was likewise taken. On the basis of the sworn statements of accused Rosauro Sia and Jimmy Ponce, Dr. Benito Caballero, Provincial Health Officer of Bulacan, together with the Certificate of Registration of the FX Taxi and the Death and Postmortem Certificates mentioned heretofore, the Special Operations Unit, Traffic Management Command, PNP, Camp Crame, referred the matter to the authorities of the Department of Justice who, after finding probable cause in the preliminary investigation, filed these cases of Violation of R.A. 6539, as amended, and of Murder against the above-named accused which were consolidated together in this Branch for joint trial.13
In their lone assigned error, accused-appellants contend in sum that the extra-judicial confessions of accused Rosauro Sia and Johnny Balalio, which the trial court heavily relied upon, are inadmissible in evidence since they were executed in violation of their right to counsel. Specifically, accused-appellants argue that the said extra-judicial statements are inadmissible because they were obtained without compliance with the requirements of the law for their admissibility.14
The Solicitor General agrees, stating that during the custodial investigation, Ponce and Sia were not assisted by counsel as required by the Constitution. The trial court's finding that Sia and Ponce were assisted by Prosecutor Pormento when they executed their extra-judicial confessions did not meet the requirement of the law. The Solicitor General further contends that, during his testimony, Ponce vehemently denied having voluntarily executed his alleged statement; rather, he maintained that he was coerced to sign the same and that he did not even know its contents.
Extra-judicial confessions must conform to the requirements of the Constitution.15 Indeed, a suspect's confession, whether verbal or non-verbal when taken without the assistance of counsel without a valid waiver of such assistance regardless of the absence of such coercion or the fact that it had been voluntarily given,16 is inadmissible in evidence,17 even if appellant's confession were gospel truth.18
Be that as it may, the inadmissibility of the extra-judicial statements of Sia and Ponce will not absolve accused-appellants from criminal liability because, as pointed out by the Solicitor General, there still is independent evidence to establish their authorship of the victim's killing on the occasion of the carnapping. The Solicitor General asserts that while there was no prosecution witness who positively identified accused-appellants as particeps criminis, their culpability was nonetheless proven through circumstantial evidence.
We agree.
Direct evidence of the commission of the crime is not the only matrix wherefrom a court may draw its conclusions and findings of guilt.19 The rules on evidence20 and case law sustain the conviction of the accused through circumstantial evidence when the following requisites concur: (1) there must be more than one circumstance; (2) the facts from which the inferences are derived are proven; and (3) the combination of all circumstances is such as to produce a conviction beyond reasonable doubt of the guilt of the accused.21
A circumspect scrutiny of the testimonies of the witnesses of both prosecution and defense shows adequate evidentiary bases to establish the aforementioned circumstances.@lawphil.net
First, when the police apprehended accused Rosauro Sia while he was in possession of the carnapped vehicle, he immediately pointed to accused-appellants as his accomplices in taking away the victim's vehicle.22 Notably, accused-appellants claimed to have met Sia for the first time on August 24, 1995, when Sia supposedly passed by them looking for a certain person. They saw Sia for the second time on November 15, 1995, when Sia and some policemen came to their place to arrest them. If accused-appellants did not actually participate in the perpetration of the crime, it certainly defies reason why Sia would implicate them in so serious an offense when they were practically strangers to him. In this regard, it must be borne in mind that the fact that a witness may have been a co-conspirator in the commission of the offense is not in itself sufficient to dilute the credibility of or, much less, be a ground to disregard altogether his testimony.23 Indeed:
By way of exception, the testimony of a co-conspirator may, even if uncorroborated, be sufficient as when it is shown to be sincere in itself, because given unhesitatingly and in a straightforward manner, and is full of details which by their nature could not have been the result of deliberate afterthought.24
Second, defense witness Porferio Fernando testified that accused-appellants were with Rosauro Sia from August 25-28, 1995.25 When accused-appellants came back on August 28, 1995; they informed him that they were to guard a bodega owned by Sia, which contained a carnapped vehicle.26 This testimony of Fernando confirms the fact that accused-appellants were in the company of Rosauro Sia during that critical period when the crime was perpetrated.
Third, upon his arrest, accused-appellant Jimmy Ponce voluntarily surrendered to the police authorities a ring,27 admittedly belonging to the victim.28 It is a well-settled rule that when a person is found in possession of a thing taken in the doing of a recent wrongful act, he is presumed to be the taker and doer of the whole act.29 Thus, when property stolen is found in the possession of a person who is unable to give a satisfactory explanation of his possession thereof, he may be deemed to have committed the crime of theft of said property.30 More apropos to the peculiar facts prevailing herein is the case of People v. Prado,31 where we stated:
In the absence of an explanation of how one has come into the possession of stolen effects belonging to a person wounded and treacherously killed, he must necessarily be considered the author of the aggression and death of the said person and of the robbery committed on him.
The application of this presumption validly applies to a case of carnapping for, indeed, the concept of unlawful taking in theft, robbery and carnapping is the same and, had it not been for the enactment of the Anti-Carnapping Act, the unlawful taking of the motor vehicle would certainly fall within the purview of either theft or robbery.32
All told, the Court finds no reason to reverse the ruling of the court a quo insofar as the crimes were committed. What remains to be determined is the propriety of the penalty imposed on accused-appellants.@lawphil.net
In connection with the penalty imposed, the Solicitor General invites the Court's attention to the erroneous imposition by the trial court of death on the accused-appellants. He points out that while the sentence was meted upon a finding that the aggravating circumstances of treachery, abuse of superior strength and evident premeditation attended the commission of the crime, these were not duly established in the case at bar.
The observation is well-taken. Qualifying and aggravating circumstances which are taken into consideration for the purpose of increasing the degree of the penalty imposed must be proven with equal certainty as the commission of the act charged as criminal offense.33
With regard to alevosia, there is treachery when the offender commits any of the crimes against persons, employing means, methods or forms in the execution thereof which tend directly and specially to insure its execution, without risk to himself arising from the defense which the offended party might make.34 Treachery is considered present when: (1) there is employment of means of execution that gives the person attacked no opportunity to defend himself or to retaliate; and (2) the means or method of execution was deliberately or consciously adopted by the culprit.35 For treachery to be appreciated, it must be present and seen by the witness right at the inception of the attack.36 Where no particulars are known as to how the killing began, its perpetration with treachery cannot merely be supposed.37
In this case, there was neither a description of how the attack was commenced — whether it was sudden, unexpected and whether the victim was caught totally unaware — nor has there been a showing that the method of execution in the commission of the crime was consciously or deliberately adopted by the malefactors. To reiterate, alevosia cannot be established where no particulars are known regarding the manner in which the aggression was carried out or how it developed.38 It must be based on positive or conclusive proof, not mere suppositions or speculations,39 and must be proved as clearly and as convincingly as the killing itself.40
Similarly, the elements of evident premeditation must be established with equal certainty as the criminal act itself before it can be appreciated as a qualifying circumstance.41 These elements are: (1) the time when the accused determined to commit the crime; (2) an overt act manifestly indicating that they clung to their determination to commit the crime; and (3) a sufficient lapse of time between the decision to commit the crime and the execution thereof to allow the accused to reflect upon the consequences of their act.42 The essence of evident premeditation is that the execution of the criminal act is preceded by cool thought and reflection upon the resolution to carry out the criminal intent within a space of time sufficient to arrive at a calm judgment.43
In this case, there is no showing that the killing of Christian Bermudez was the product of cool thought and reflection. There is absolutely no showing how and when the plan was hatched or how long a time had elapsed before the crime was carried out. On the contrary, what appears very much evident is that he was killed on the occasion of the carnapping itself. Without such evidence, mere presumptions and inferences, no matter how logical and probable, will not suffice to warrant the appreciation of this qualifying circumstance of evident premeditation.44
Abuse of superior strength cannot likewise be appreciated. In People v. Flores,45 this Court pointed out that this aggravating circumstance necessitates the showing of the relative disparity in physical characteristics, usually translating into the age, gender, the physical size and the strength of the aggressor and the victim. There is no proof that accused-appellant utilized any notorious inequality to his advantage. In other words, mere superiority in number is not enough to constitute superior strength.46
To be appreciated as a qualifying circumstance, what should be considered is not that there were three or more assailants of one victim, but whether the aggressors purposely took advantage of their combined strength in order to consummate the offense.47 In this case, the prosecution did not present any direct proof that there was a deliberate intent on the part of accused-appellants to take advantage of the obvious inequality of force between them and the victim.
In the absence of any qualifying or aggravating circumstances which would merit the imposition of death, the proper imposable penalty should be reclusion perpetua, pursuant to Section 14 of R.A. No. 6539, viz:
Penalty for Carnapping — Any person who is found guilty of carnapping, as the term is defined in Section Two of this Act, shall, irrespective of the value of the motor vehicle taken, be punished by imprisonment of not less than fourteen years and eight months and not more than seventeen years and four months, when the carnapping is committed without violence or intimidation of persons, or force upon things; and by imprisonment for not less than seventeen years and four months and not more than thirty years, when the carnapping is committed by means of violence against or intimidation of any person, or force upon things; and the penalty of reclusion perpetua to death shall be imposed when the owner, driver or occupant of the carnapped motor vehicle is killed or raped in the course of the commission of the carnapping or on the occasion thereof. (Italics ours)
On the other hand, Article 63 (2) of the Revised Penal Code states:itc-alf
Rules for the application of indivisible penalties. — In all cases in which the law prescribes a single indivisible penalty, it shall be applied by the courts regardless of any mitigating or aggravating circumstances that may have attended the commission of the deed.@lawphil.net
In all cases in which the law prescribes a penalty composed of two indivisible penalties, the following rules shall be observed in the application thereof:
xxx xxx xxx
2. When there are neither mitigating nor aggravating circumstances in the commission of the deed, the lesser penalty shall be applied.itc-alf
Anent the civil indemnity award, this Court finds the amount of P50,000.00 as death indemnity proper, following prevailing jurisprudence,48 and in line with controlling policy.49 The award of civil indemnity may be granted without any need of proof other than the death of the victim.50 Though not awarded by the trial court, the victim's heirs are likewise entitled to moral damages, pegged at P50,000.00 by controlling case law,51 taking into consideration the pain and anguish of the victim's family52 brought about by his death.53
However, the award of P200,000.00 as burial and other expenses incurred in connection with the death of the victim must be deleted. The records are bereft of any receipt or voucher to justify the trial court's award of burial and other expenses incurred in connection with the victim's death. The rule is that every pecuniary loss must be established by credible evidence before it may be awarded.54 Credence can be given only to claims which are duly supported by receipts or other credible evidence.55
The trial court was correct in awarding damages for loss of earning capacity despite the non-availability of documentary evidence.56 Damages representing net earning capacity have been awarded by the Court based on testimony in several cases.57 However, the amount of the trial court's award needs to be recomputed and modified accordingly.
In determining the amount of lost income, the following must be taken into account: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of the loss sustained by the heirs of the deceased. The second variable is computed by multiplying the life expectancy by the net earnings of the deceased, meaning total earnings less expenses necessary in the creation of such earnings or income less living and other incidental expenses. Considering that there is no proof of living expenses of the deceased, net earnings are computed at fifty percent (50%) of the gross earnings.58 The formula used by this Court in computing loss of earning capacity is:
| Net Earning Capacity | = | [2/3 x (80 - age at time of death) x (gross annual income - reasonable and necessary living expenses)]59 |
In this case, the Court notes that the victim was 27 years old at the time of his death and his mother testified that as a driver of the Tamaraw FX taxi, he was earning P650.00 a day.60 Hence, the damages payable for the loss of the victim's earning capacity is computed thus:
| Gross Annual Earnings | = = | P650 x 261 working days in a year P169,650.00 |
| Net Earning Capacity | = = = | 2/3 x (80-27) x [P169,650.00 - P84,825.00] 35.33 x 84,825.00 P2,996,867.20 |
Based on the foregoing computation, the award of the trial court with regard to lost income is thus modified accordingly.
WHEREFORE, the decision of the Regional Trial Court of Quezon City, Branch 85, in Criminal Cases No. Q-95-63963, finding accused-appellant guilty beyond reasonable doubt of violation of Republic Act No. 6539 (The Anti-Carnapping Law) is AFFIRMED with MODIFICATIONS. Accused-appellants are SENTENCED to suffer the penalty of reclusion perpetua; and are ORDERED, jointly and severally, to pay the heirs of the victim Christian Bermudez the sum of P50,000.00 as civil indemnity, the sum of P50,000.00 as moral damages, and the sum of P2,996,867.20 representing lost earnings. The award of P200,000.00 as burial and other expenses is DELETED for lack of substantial proof.
SO ORDERED.itc-alf
Davide, Jr., C.J., Bellosillo, Melo, Puno, Vitug, Kapunan, Mendoza, Panganiban, Quisumbing, Pardo, Buena, De Leon, Jr., Sandoval-Gutierrez, and Carpio, JJ., concur.
People vs Doctolero
G.R. No. 131866, August 20, 2001
EOPLE OF THE PHILIPPINES, PLAINTIFF-APPELLEE, VS. CARLOS DOCTOLERO, SR., ACCUSED-APPELLANT.
DECISION
BUENA, J.:
Carlos Doctolero Sr. appeals from the decision dated 10 September 1997 in Criminal Case No. 14735-R of the Regional Trial Court of Baguio City, Branch VI, finding him guilty beyond reasonable doubt of the crime of murder.
The information against Doctolero states-
“That on or about the 20th day of November, 1996, in the City of Baguio, Philippines, and within the jurisdiction of the Honorable Court, the above-named accused, with intent to kill and with treachery, did then and there willfully, unlawfully and feloniously shoot one VICENTE GANONGAN JR. with a gun, thereby inflicting upon the latter gunshot wounds of the trunk which caused hemorrhage, and as a result thereof, the said Vicente Ganongan, Jr. died.
“That in the commission of the offense the qualifying aggravating circumstance of treachery attended the same considering that the accused suddenly attacked the victim who did not have any means to defend himself because of the suddenness of the attack.
“CONTRARY TO LAW.”[1]
Upon arraignment, Doctolero entered a plea of not guilty. Thereafter, trial ensued.
Prosecution evidence showed that on November 20, 1996 at around 7:00 in the evening, Vicente Ganongan Jr. and Roderick Litorco went to their friends’ boarding house on Honeymoon Road, Baguio City. Thereat, Vicente Ganongan, Roderick Litorco, Regie Daodaoan, Rex Tabanganay, Jeffrey Alimani and Florencio Dagson agreed to drink gin in Sangatan Store, which is about 20 meters from the boarding house. After two (2) hours, the group decided to go home. They went down Honeymoon road towards Rimando road to get a taxi for Litorco. Upon noticing that Litorco could not carry himself, they decided to bring him to their boarding house. Dagson assisted Litorco and walked ahead of Ganongan, Daodaoan, Tabanganay and Alimani. As the latter four neared the Garcia store along Honeymoon road, Carlos Garcia, with three companions, told them to stop, pointing a gun at them. Hearing the commotion, Dagson who was walking about 5 to 7 meters ahead with Litorco rushed to the boarding house and sought help. When Dagson came back, he was with Oliver Alimani, Arman Alimani and Dexter Daggay. When they arrived, they saw Garcia pointing a gun at the group of Ganongan, Daodaoan, Tabanganay and Jeffrey Alimani. Oliver Alimani approached Garcia who in turn pointed his gun at Oliver and identified himself as barangay kagawad. At this time, Carlos Doctolero Sr. was standing at the edge of Honeymoon road. He then put his arm over Daodaoan’s shoulder. Daoadaoan shoved Doctolero’s hand and retreated. Doctolero stepped back and fired twice at Daodaoan but missed. Tabanganay asked Daodaoan if he was hit and upon answering that he was not, Tabanganay shouted at his friends to run. When Ganongan turned around to run, Doctolero fired at him, hitting him twice. Oliver Alimani came to Ganongan’s aid when the latter yelled that he was hit. Thereafter, they hailed a taxi and rushed Ganongan to Saint Louis University Hospital where he expired.
In his defense, accused-appellant denied the accusation against him. He testified that while he was in his house watching a television program, the telephone rang. His wife answered the phone and it turned out that it was Carlos Garcia’s wife asking for help. When he opened his window and looked outside, he saw several men running and shouting. Sensing trouble, he went out, took his licensed handgun and tucked it in his waist. His wife followed. Arriving at the scene of the incident, he saw the group of young men, drunk, shouting and holding stones poised to strike at the group of Carlos Garcia. He tried to pacify the contending parties but the group of young men did not heed his plea to stop the trouble and instead advanced towards him with stones held in their hands. He then pulled his gun and fired a warning shot directed upwards. The group of men continued to approach him. Thus, he was forced to fire another warning shot directed towards the ground. As the group of young men approached him, he retreated and his right foot slipped into the canal at the edge of the road where he fell. The handgun that he was holding fell to the ditch. At this juncture, he heard two (2) more shots coming from the direction of Carlos Garcia. Thereafter, he declared that a taxi coming from upper Honeymoon road passed by. Upon reaching the Garcia store, one of the passengers shouted and blamed Garcia in shooting one of their companions. He claimed that he confronted Garcia about what he heard from the passengers of the taxi but Garcia told him just to ignore what he heard. After the incident, he proceeded to Garcia’s house. After a while, he went home and entered through the back door of his house. He cleaned his gun, threw the spent shells, changed his soiled clothes and narrated to his wife what happened. After some time, both he and his wife fell asleep.
As aforestated, accused-appellant was convicted of murder after appreciating the aggravating circumstance of treachery. He was sentenced to suffer the penalty of reclusion perpetua and was ordered to indemnify the heirs of Ganongan the amounts of P50,000.00 as civil indemnity, P227,808.80 as actual damages, and P300,000.00 as moral damages plus costs, to wit-
“WHEREFORE, the Court finds the accused Carlos Doctolero, Sr. guilty beyond reasonable doubt of the offense of Murder, qualified by treachery defined and penalized under Article 248 of the Revised Penal Code as charged in the Information, and hereby sentences him to Reclusion Perpetua; to indemnify the heirs of deceased Vicente Ganongan, Jr. the sum of P50,000.00 as indemnity for his death; the sum of P227,808.80 as actual damages for expenses incurred for hospitalization, doctor’s fees, funeral expenses, vigil and burial as a result of his death, and P300,000.00 as Moral damages for the pain and mental anguish suffered by the heirs by reason of his death, all indemnifications being without subsidiary imprisonment in case of insolvency, and to pay the costs.
“The accused being a detention prisoner is entitled to be credited 4/5 of his preventive imprisonment in the service of his sentence in accordance with Article 29 of the Revised Penal Code.
“The Court directs that the Prosecutor’s Office of Baguio conduct a preliminary investigation on the participation of Carlos Garcia in the shooting incident resulting in the death of Vicente Ganongan, Jr. on November 20, 1996, informing the latter accordingly of the same and if warranted by the evidence, to file the appropriate Information.
“SO ORDERED.”[2]
In his appeal, accused-appellant contends that the trial court erred – [3]
“I. in disregarding the physical, testimonial and documentary evidence which, if appreciated, would have exonerated the accused.
“II. in anchoring its decision entirely on and giving full credence to the testimony of the prosecution’s purported eyewitness.
“III. in giving primacy to, and basing its decision, on supposed weakness of the defense.
“IV. in disregarding the unrebutted evidence of part of res gestae.
“V. in completely disregarding the testimony of defense witness Zoilo Estolas.
“VI. in disregarding the unrebutted evidence on the character and reputation of the accused.
“VII. in finding the existence of the aggravating circumstance of treachery.
“VIII. in convicting the accused and disregarding the principle of proof beyond reasonable doubt.
Accused-appellant professes his innocence and seeks an acquittal on the ground that the prosecution failed to prove his guilt beyond reasonable doubt. He maintains that it was Carlos Garcia who fired the fatal shots.[4]
Records reveal that Oliver Alimani[5] and Jeffrey Alimani[6] positively identified accused-appellant as the one who shot Ganongan when the latter was about to run. They were present at the incident and saw at close range when accused-appellant fired his gun. Their testimonies are consistent with the findings of the medico-legal officer who conducted the autopsy on the cadaver that Ganongan sustained four (4) gunshot wounds, consisting of two (2) points of entry and two (2) points of exit[7] such that the first gunshot wound was the one located at the back.[8] Notably, a witness’ testimony which is corroborated by the autopsy report is credible.[9] Accused-appellant insists that the trial court erred in disregarding the testimonies of disinterested witnesses who corroborated his defense. He stakes his appeal on the assertion that the testimonies of prosecution witnesses were biased and inconsistent which should not be relied upon. These allegations of inconsistent testimonies – that it was impossible for Litorco, being so drunk to be carried by just one man; that Litorco and Dagson, being so drunk, could not walk faster than the rest of his friends who were following, about 5 to 7 meters, behind;[10] that Dagson was inconsistent on the place where he left Litorco, whether in Sangatan store or in the boarding house;[11] or the incompatible testimony that the boarding house was lighted or not when Dagson arrived and woke up his friends[12] – merely refer to minor details which do not negate the fact that the prosecution witnesses saw the fatal shooting. Although there may be inconsistencies on minor details, the same do not impair the credibility of the witness where there is consistency in relating the principal occurrence and positive identification of the assailant.[13] As a whole, prosecution witnesses were unanimous in identifying accused-appellant as the person who killed Ganongan.
Accused-appellant avers that the trial court erred in not giving probative weight to the testimony of defense witness Zoilo Estolas who testified that -
“xxx he was in front of his store smoking cigarette at about 9:00 in the evening of November 20, 1996. His store is between Garcia’s Store and Annabel’s Store. While smoking, he heard chasing, shouting and stoning about 15 meters away from him. They were familiar to him as the group of Kalinga students and they were chasing two male persons who went down to the house of Engr. Genove. He did not recognize the two male persons being chased. The group of Kalinga students were stopped by Garcia, a barangay kagawad, and his three companions. Garcia shouted, ‘You stop and raise your hands,’ while pointing a gun at them. And the group of young men answered back., ‘Why? What is our fault? Why do you point your gun at us?’ And Garcia insisted saying he is a barangay official. At that time the young men were noisy and in a drunken state. Suddenly, the 3 companions of Garcia engaged the young men in a street fight using fists and feet. The rumble lasted about two minutes when one of the group of Kalinga students ran away shouting, ‘I will call the police!’ That was when the group of Garcia and the group of Kalinga students parted ways. He saw again chasing and running. He ran back to his store and it was then that he heard two successive gunshots. He did not see who fired the successive gunshots. But he looked towards the source of the gunshots and saw Doctolero and Garcia each holding a gun. And it was then that the group of young men advanced towards Doctolero. The young men advanced towards Doctolero with their hands poised to throw stones they were holding. Doctolero retreated and fell to the canal. It was then that Garcia fired his gun. Apprehensive, Estolas returned to his house. But while going towards his yard, he heard another burst of gunfire. He did not see anymore who fired the last shot. He saw Garcia and Doctolero going near the store of Garcia after which a taxicab came and one of the passengers shouted, ‘Vulva of your mother, Garcia. Why did you shoot one of our companions? We will be back.’”[14]
Proceeding from Estolas’ testimony, even if admitted, will not reinforce the defense of denial advanced by accused-appellant considering that he admitted that he did not see who actually killed Ganongan. Moreover, his testimony that he heard the passenger of the taxi shouting at Garcia and blaming him for shooting Ganongan suffers a fatal defect. It has been established that prosecution witnesses do not know Garcia and accused-appellant by name but merely refer to them as barangay kagawad. This, nonetheless, does not affect the admissibility of the identification because one need not identify the assailant by name. What is important is that he is positive as to the physical identification of the accused.[15] Prosecution witnesses declared that they could identify the person responsible in the shooting incident if ever they would see them again.[16] They were able to immediately identify accused-appellant on the basis of the photographs shown to them at the Barangay Affairs Office on November 21, 1996.
In sum, accused-appellant’s appeal hinges on the credibility of the prosecution witnesses. The trial court found the eyewitness account to be spontaneous, consistent and credible.[17] Time and again, we have ruled that appellate courts will generally not disturb the assessment of the trial court on matters of credibility, considering that the latter was in a better position to appreciate the same, having heard and observed the witnesses themselves and observed their deportment, as well as their manner of testifying, during the trial.[18] We see no reason to depart from the well-entrenched doctrine that findings of facts of the lower court are accorded due respect and weight unless it has overlooked material and relevant points that would have led it to rule otherwise.[19] Accused-appellant’s conviction was grounded on the strength of the evidence of the prosecution positively establishing his presence at the scene of the crime and identifying him as the one who fired the fatal shots. It is true that the prosecution witnesses are friends of the deceased. Even so, other witnesses, who are relatives and friends of the deceased, would not just indiscriminately impute the crime to anybody but would necessarily identify and seek the conviction of the real culprit to attain justice.[20] Relationship by itself does not give rise to the presumption of bias or ulterior motive, nor does it ipso facto impair the credibility or tarnish the testimony of the witness.[21] No ill motive was attributed to these witnesses that could make them falsely testify against accused-appellant.
The trial court concluded that treachery attended the commission of the crime and rationalizes in this wise -
“xxx, given the circumstances above discussed that at the time Ganongan was shot he was already on the run with his back turned towards Doctolero, there was no danger or risk to the latter when he fired at Ganongan. Nor was there any necessity for it for Ganongan was drunk, unarmed and on the run and could not possibly harm Doctolero. In that situation there was no way Ganongan could defend himself. He was not armed. He was drunk. He was running away. He could not see who was going to fire from behind him. He would not know to whom and what direction the shots will be fired. He cannot dodge or avoid the shots which he cannot see nor know when fired.
“And since Honeymoon Road is an ascending road, literally Doctolero and Garcia had a turkey shot. Doctolero was like shooting turkey. Ganongan was a sitting duck. Firing once at Ganongan and the Kalinga students may be considered accidental even casual impelled by the moment’s necessity. But firing at Ganongan once, twice, thrice, four times and even five times would indicate already a method deliberately adopted to pick anyone from the group to shoot at like in target practice. And if you consider that Doctolero and Garcia both fired their guns simultaneously if not in rapid succession as shown by the evidence, the treacherous manner in which Ganongan was shot can readily be appreciated in that the Kalinga students running away were being shot at like animals with the blazing guns of Doctolero and Garcia. There was completely no reason to shoot them as they were simply drunk, noisy and unruly but unarmed.”[22]
After a close scrutiny of the records, we are not fully persuaded that treachery qualified the crime. Circumstances qualifying a killing to murder such as treachery must be proven as indubitably as the crime itself.[23] For treachery to be appreciated, two conditions must concur: (1) the employment of means of execution that gives the person attacked no opportunity to defend himself or to retaliate; and (2) the said means of execution be deliberately or consciously adopted.[24] In the instant case, the victim was shot at his back while attempting to run. While the initial shooting that hit Ganongan at his back appears to have been sudden and unexpected, suddenness of attack does not, of itself, suffice to support a finding of treachery, so long as the decision to kill was made at that instant and the victim’s helpless position was accidental.[25] In the instant case, prosecution witness Florencio Dagson testified that he was walking ahead of his friends and he was not able to witness how the altercation started. The failure of the prosecution to present evidence as to the manner in which the altercation started precludes a finding that the killing was qualified by treachery.[26] Here, Dagson’s attention was caught by the loud voices coming from behind and seeing his friends being stopped by a group of men, he hurriedly sought the help of his friends in the boarding house. Arriving at the scene, Jeffrey Alimani, Oliver Alimani and Florencio Dagson saw that both Carlos Garcia and accused-appellant were holding their respective guns. Significantly, they testified that accused-appellant fired at Ganongan. To establish treachery, the evidence must show that the accused has made some preparations to kill the victim in such a manner as to ensure the execution of the crime or to make it impossible or hard for the person attacked to defend himself. A killing done at the spur of the moment is not treacherous.[27] What was clear was the fact that prosecution witnesses saw accused-appellant shot Ganongan. No more, no less. The prosecution failed to show by clear and convincing evidence that accused-appellant deliberately adopted such means of execution to ensure the killing of Ganongan. Any doubt as to the existence of treachery must be resolved in favor of the accused.[28] Hence, absent clear and convincing proof of treachery, accused-appellant can only be convicted of homicide.
Under Article 249 of the Revised Penal Code, homicide is punishable by reclusion temporal. When there are neither aggravating nor mitigating circumstances, the penalty shall be imposed in its medium period.[29] Applying the Indeterminate Sentence Law and there being no modifying circumstance, the minimum of the imposable penalty shall be taken from the penalty next lower in degree, or more specifically prision mayor. Accordingly, appellant shall suffer the indeterminate penalty of eight (8) years and one (1) day of prision mayor, as minimum, to fourteen years (14) years, 8 months and one (1) day of reclusion temporal, as maximum.
With respect to the damages awarded by the trial court, we deem it proper to reduce the award to P112,413.40 representing funeral expenses, which were duly proven and covered by receipts. Expenses relating to the 9th day, 40th day and 1st year anniversaries cannot be considered in the award of actual damages as these were incurred after a considerable lapse of time from the burial of the victim.[30] With respect to the award of moral damages,[31] the same is reduced to P50,000.00 in accordance with existing jurisprudence.
WHEREFORE, the decision appealed from is AFFIRMED with the MODIFICATION that, instead of murder the Court finds accused-appellant, Carlos Doctorlero, Sr., guilty beyond reasonable doubt of HOMICIDE and imposes upon him an indeterminate prison term of eight (8) years and one (1) day of prision mayor, as minimum, to fourteen years (14) years, 8 months and one (1) day of reclusion temporal, as maximum, and orders him to pay the heirs of Vicente Ganongan Jr., P112,413.40 as actual damages, P50,000.00 as civil indemnity, and P50,000.00 as moral damages plus costs.
SO ORDERED.
Bellosillo, (Chairman), Mendoza, Quisumbing, and De Leon, Jr., JJ., concur.
Calalas vs CA
SECOND DIVISION
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE SUNGA and FRANCISCO SALVA, respondents.
D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals, dated March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36, Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action for breach of contract of carriage.
The facts, as found by the Court of Appeals, are as follows:
At 10 o’clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G. Sunga, then a college freshman majoring in Physical Education at the Siliman University, took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg circular casting, and case wedging were done under sedation. Her confinement in the hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr. Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a period of three months and would have to ambulate in crutches during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation of the contract of carriage by the former in failing to exercise the diligence required of him as a common carrier. Calalas, on the other hand, filed a third-party complaint against Francisco Salva, the owner of the Isuzu truck. Korte
The lower court rendered judgment against Salva as third-party defendant and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney. Rtcspped
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground that Sunga’s cause of action was based on a contract of carriage, not quasi-delict, and that the common carrier failed to exercise the diligence required under the Civil Code. The appellate court dismissed the third-party complaint against Salva and adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-appellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorney’s fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena was the proximate cause of the accident negates his liability and that to rule otherwise would be to make the common carrier an insurer of the safety of its passengers. He contends that the bumping of the jeepney by the truck owned by Salva was a caso fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that it is not supported by evidence. Sdaadsc
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores the fact that she was never a party to that case and, therefore, the principle of res judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict for the damage caused to petitioner’s jeepney. On the other hand, the issue in this case is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its source the negligence of the tortfeasor. The second, breach of contract or culpa contractual, is premised upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because it is the basis of the action, whereas in breach of contract, the action can be prosecuted merely by proving the existence of the contract and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination. In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common carriers are presumed to have been at fault or to have acted negligently unless they prove that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier the burden of proof. Slxmis
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding Salva and his driver Verena liable for the damage to petitioner’s jeepney, should be binding on Sunga. It is immaterial that the proximate cause of the collision between the jeepney and the truck was the negligence of the truck driver. The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions involving breach of contract. The doctrine is a device for imputing liability to a person where there is no relation between him and another party. In such a case, the obligation is created by law itself. But, where there is a pre-existing contractual relation between the parties, it is the parties themselves who create the obligation, and the function of the law is merely to regulate the relation thus created. Insofar as contracts of carriage are concerned, some aspects regulated by the Civil Code are those respecting the diligence required of common carriers with regard to the safety of passengers as well as the presumption of negligence in cases of death or injury to passengers. It provides: Slxsc
Art. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.
Art. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of negligence at once arose, and it became the duty of petitioner to prove that he had to observe extraordinary diligence in the care of his passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances" as required by Art. 1755? We do not think so. Several factors militate against petitioner’s contention. Slx
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion being exposed about two meters from the broad shoulders of the highway, and facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No. 4136, as amended, or the Land Transportation and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a manner as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on passengers or loading or unloading freight, obstruct the free passage of other vehicles on the highway.
Second, it is undisputed that petitioner’s driver took in more passengers than the allowed seating capacity of the jeepney, a violation of §32(a) of the same law. It provides: Mesm
Exceeding registered capacity. - No person operating any motor vehicle shall allow more passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that to which the other passengers were exposed. Therefore, not only was petitioner unable to overcome the presumption of negligence imposed on him for the injury sustained by Sunga, but also, the evidence shows he was actually negligent in transporting passengers. Calrky
We find it hard to give serious thought to petitioner’s contention that Sunga’s taking an "extension seat" amounted to an implied assumption of risk. It is akin to arguing that the injuries to the many victims of the tragedies in our seas should not be compensated merely because those passengers assumed a greater risk of drowning by boarding an overloaded ferry. This is also true of petitioner’s contention that the jeepney being bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an event which could not be foreseen, or which, though foreseen, was inevitable. This requires that the following requirements be present: (a) the cause of the breach is independent of the debtor’s will; (b) the event is unforeseeable or unavoidable; (c) the event is such as to render it impossible for the debtor to fulfill his obligation in a normal manner, and (d) the debtor did not take part in causing the injury to the creditor. Petitioner should have foreseen the danger of parking his jeepney with its body protruding two meters into the highway. Kycalr
Finally, petitioner challenges the award of moral damages alleging that it is excessive and without basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated: Kyle
Plaintiff-appellant at the time of the accident was a first-year college student in that school year 1989-1990 at the Silliman University, majoring in Physical Education. Because of the injury, she was not able to enroll in the second semester of that school year. She testified that she had no more intention of continuing with her schooling, because she could not walk and decided not to pursue her degree, major in Physical Education "because of my leg which has a defect already."
Plaintiff-appellant likewise testified that even while she was under confinement, she cried in pain because of her injured left foot. As a result of her injury, the Orthopedic Surgeon also certified that she has "residual bowing of the fracture side." She likewise decided not to further pursue Physical Education as her major subject, because "my left leg x x x has a defect already."
Those are her physical pains and moral sufferings, the inevitable bedfellows of the injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover moral damages in the sum of P50,000.00, which is fair, just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages predicated on a breach of contract for it is not one of the items enumerated under Art. 2219 of the Civil Code. As an exception, such damages are recoverable: (1) in cases in which the mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith, as provided in Art. 2220.
In this case, there is no legal basis for awarding moral damages since there was no factual finding by the appellate court that petitioner acted in bad faith in the performance of the contract of carriage. Sunga’s contention that petitioner’s admission in open court that the driver of the jeepney failed to assist her in going to a nearby hospital cannot be construed as an admission of bad faith. The fact that it was the driver of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly indifferent to the plight of his injured passenger. If at all, it is merely implied recognition by Verena that he was the one at fault for the accident. Exsm
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the award of moral damages is DELETED.
SO ORDERED.
Bellosillo, (Chairman), and Buena, JJ., concur.
Quisumbing, and De Leon, Jr., JJ., on leave.
Ludo and Luym Corp vs CA
G.R. No. 125483 February 1, 2001
LUDO AND LUYM CORPORATION, petitioner,
vs.
COURT OF APPEALS, GABISAN SHIPPING LINES, INC. and/or ANSELMO OLASIMAN, respondents.
vs.
COURT OF APPEALS, GABISAN SHIPPING LINES, INC. and/or ANSELMO OLASIMAN, respondents.
QUISUMBING, J.:
This petition for review1 under Rule 45 of the Revised Rules of Court seeks to annul and set aside the decision2 dated January 10, 1996 of the Court of Appeals which reversed and set aside the decision of the Regional Trial Court of Cebu City, Branch IX, and the resolution3 dated June 11, 1996, denying petitioner's motion for reconsideration.1âwphi1.nêt
Petitioner Ludo & Luym Corporation is a domestic corporation engaged in copra processing with plant and business offices in Cebu City. Private Respondent Gabisan Shipping Lines was the registered owner and operator of the motor vessel MV Miguela, while the other private respondent, Anselmo Olasiman, was its captain.
Petitioner owns and operates a private wharf used by vessels for loading and unloading of copra and other processed products. Among its wharf's facilities are fender pile clusters for docking and mooring.
On May 21, 1990, at around 1:30 P.M., while MV Miguela was docking at petitioner's wharf, it rammed and destroyed a fender pile cluster. Petitioner demanded damages from private respondents. The latter refused. Hence, petitioner filed a complaint for damages before the Regional Trial Court of Cebu.
Petitioner's evidence during trial showed that on May 21, 1990, at 1:30 P.M., MV Miguela came to dock at petitioner's wharf. Ireneo Naval, petitioner's employee, guided the vessel to its docking place. After the guide (small rope) was thrown from the vessel and while the petitioner's security guard was pulling the big rope to be tied to the bolar, MV Miguela did not slow down. The crew did not release the vessel's anchor. Naval shouted "Reverse" to the vessel's crew, but it was too late when the latter responded, for the vessel already rammed the pile cluster. The impact disinclined the pile cluster and deformed the cable wires wound around it. Naval immediately informed the vessel's captain and its chiefmate of the incident, and instructed the guard-on-duty, Alfredo Espina, to make a spot report. The incident was reported to Atty. Du, petitioner's vice-president for legal and corporate affairs. Atty. Du in turn sent formal demand letters to private respondents. Marine surveyor Carlos Degamo inspected the damage on the pile cluster and found that one post was uprooted while two others were loosened and that the pile cluster was leaning shoreward. Degamo hired skin diver Marvin Alferez, who found that one post was broken at about 7 inches from the seabed and two other posts rose and cracked at the bottom. Based on these findings, Degamo concluded that the two raised posts were also broken under the seabed and estimated the cost of repair and replacement at P95,000.00.
Private respondents denied the incident and the damage. Their witnesses claimed that the damage, if any, must have occurred prior to their arrival and caused by another vessel or by ordinary wear and tear. They averred that MV Miguela started to slow down at 100 meters and the crew stopped the engine at 50 meters from the pier; that Capt. Anselmo Olasiman did not order the anchor's release and chief mate Manuel Gabisan did not hear Naval shout "Reverse". Respondents claimed that Naval had no business in the vessels' maneuvering. When Naval informed the vessel's officers of the incident, Olasiman sent their bodega man, Ronilo Lazara, to dive on the same afternoon to check on the alleged damage. Lazara told Olasiman that there was no damage. However, during direct examination, Lazara testified that he found a crack on the side of the pile cluster, one post detached from the seabed at a distance of about 7 inches, and seashells and seaweeds directly underneath the uprooted post. There were scattered pieces of copra at the place where MV Miguela docked, which indicated the prior docking by other vessels. After MV Miguela left, another vessel docked in the same area. Petitioner did not prevent MV Miguela from departing. When chiefmate Gabisan went to Atty. Du, the latter told him not to mind the incident.
On rebuttal, petitioner presented Atty. Du who testified that Gabisan never went to his office after receiving the letter-complaint; that petitioner never received any reply to its demand letters; and that the first time Atty. Du saw Gabisan was during the pre-trial.
On May 14, 1993, the trial court disposed the case in favor of petitioner, thus:
WHEREFORE, premises considered, this court hereby renders judgment in favor of the plaintiff, ordering the defendants, jointly and severally, to pay the plaintiff the following:
1) Php 70,000.00 actual damages, plus interest at the rate of 12% per annum from the time the decision is received by defendants until fully paid;
2) Php 15,000.00 exemplary damages;
3) Php 15,000.00 attorney's fees;
4) Php 10,000.00 litigation expenses.
COSTS AGAINST THE DEFENDANTS.
SO ORDERED.4
In finding in favor of petitioner, the trial court found that it was able to prove by preponderance of evidence that MV Miguela rammed and damaged the pile cluster; that petitioner's witnesses, Naval and Espina, actually saw the incident; that respondents failed to refute the testimony of marine surveyor Degamo and skin diver Alferez on the damages; that the officers and crew of MV Miguela were negligent; and that respondents are solidarily liable for the damages.
Upon private respondent's appeal, the Court of Appeals reversed the trial court on January 10, 1996, in its decision that reads:
WHEREFORE, in view of the foregoing, judgment is rendered REVERSING and SETTING aside the decision of the Court a quo, hereby entering a new one DISMISSING the Complaint for lack of merit.
No pronouncement as to costs.
SO ORDERED.5
The CA found that petitioner's eyewitness Naval was incompetent to testify on the negligence of the crew and officers of MV Miguela; that there were other vessels that used the wharf for berthing the petitioner's evidence did not positively prove that it was MV Miguela that rammed the pile cluster; that the photographs of the pile cluster taken after the incident showed no visible damages; that, as shown by private respondents' witness, there were seashells and seaweeds directly under the uprooted post, which indicated that the breaking happened a long time ago.
The CA denied the motion for reconsideration. Hence, this petition for review where petitioner assigns the following errors:
A. THE COURT OF APPEALS ACTED IN EXCESS OF ITS JURISDICTION WHEN IT WENT BEYOND THE ISSUES RAISED IN THE ASSIGNMENT OF ERRORS OF PRIVATE RESPONDENT.
B. THE DECISION OF THE COURT OF APPEALS IS GROUNDED ON SPECULATION, SURMISES AND CONJECTURES AND HAS DEPARTED FROM THE RULES ON EVIDENCE.
C. THE COURT OF APPEALS MISAPPREHENDED THE FACTS AND ITS FINDINGS IS TOTALLY NOT IN ACCORD WITH THE EVIDENCE ON RECORD.
D. THE COURT OF APPEALS DEPARTED FROM THE RULE OF RES IPSA LOQUITUR.6
The issues for resolution can be reduced into three:
1. Did the CA go beyond the issues raised?
2. Can this Court review factual questions in this case?
3. Is the doctrine of res ipsa loquitur applicable to this case?
On the first issue, petitioner argues that private respondents did not assign as an error eyewitness Ireneo Naval's incompetence to testify on the negligence of MV Miguela's officers and crew. Private respondent's brief contained nothing but general statements and reproductions of excerpts of the transcript of stenographic notes (TSN) which could not pass for a valid assignment of errors.
We note that Naval's incompetence was not one of the assigned errors in private respondents' brief.7 However, private respondents raised it in connection with the issue of their negligence, which appeared in the second assigned error. In reproducing the portion of the TSN consisting of Naval's cross examination, private respondents' counsel was indirectly attacking Naval's competence and invoking it vis a vis the trial court's finding, based on Naval's testimony, that MV Miguela was sailing at a speed unusual for a docking vessel.8 The CA did not err in addressing the matter. An appellate court can consider an unassigned error on which depends the determination of the question in the properly assigned error.9 The issue of negligence of MV Miguela's officers and crew depends significantly on the determination of whether Naval is competent to testify on the maneuvering of a docking vessel.
The second issue is whether or not we can review questions of fact. Petitioner, in its second and third assigned errors, claims that the appellate court relied on speculations and conjectures when it ruled that MV Miguela could not have rammed the pile cluster because of the presence of other vessels; that petitioner's evidence, corroborated by those of private respondents, is positive and sufficient to prove respondents' liability; that evidence on record showed the negligence and recklessness of MV Miguela's officers and crew; and that the crew were grossly incompetent and incapable to man the vessel.
Private respondents claim that the above are conclusions of fact which this Court may not review.
While the rule is that this Court is limited only to questions of law in a petition for review, there are exceptions, among which are when the factual findings of the Court of Appeals and the trial court conflict, and when the appellate court based its conclusion entirely on speculations, surmises, or conjectures.10
Our review of the records constrains us to conclude that indeed MV Miguela rammed and damaged petitioner's fender pile cluster. Naval and Espina witnessed the incident, saw the impact and heard cracking sounds thereafter. The trial court found them credible. We respect this observation of the trial court, for in the appreciation of testimonial evidence and attribution of values to the declaration of witnesses, it is the trial judge who had the chance to observe the witnesses and was in a position to determine if the witnesses are telling the truth or not.11 Further, private respondents' witnesses, Olasiman and Gabisan, acknowledged that Naval was at the pier waving a handkerchief to direct them to their berthing place.12
Private respondents' claim that they could not have rammed and damaged the pile cluster because other vessels used the same area for berthing is a mere speculation unworthy of credence.
Petitioner's witnesses, marine surveyor Degamo and diver Alferez, confirmed the damage. Degamo had eighteen years of experience as marine surveyor and belonged to an independent survey company. Alferez was hired and directly supervised by Degamo for the task.13 The latter testified during trial that he examined the pile cluster at the portion above the water line by going near it and found that one cluster pile was moving, two were loose, and the whole pile cluster was leaning shoreward and misalligned.14 Alferez, under oath, testified that he dived two or three times and saw one broken post and two slightly uprooted ones with a crack on each.15
On the other hand, private respondents' evidence on this matter was contradictory. As testified by Olasiman, when he asked Lazara on the result of his diving, the latter said that there was no damage.16 However, when Lazara testified in court, he said he found a crack on the side of the pile cluster, with one pile no longer touching the seabed and directly underneath it were seashells and seaweeds. Further, he said that he informed the captain about this.17 We find Lazara's testimony as an afterthought, lacking credibility. In addition, Leonilo Lazara, was a mere bodegero of MV Miguela. He could not possibly be a competent witness on marine surveys.18
Finally, is the doctrine of res ipsa loquitur applicable to this case? Petitioner argues that the Court of Appeals erred when it reversed the trial court for the latter's heavy reliance on Naval's testimony. The appellate court overlooked the fact that aside from Naval's testimony, the trial court also relied on the principle of res ipsa loquitur to establish private respondents' negligence.
The doctrine of res ipsa loquitur was explained in Batiquin vs. Court of Appeals, 258 SCRA 334 (1996), thus:
Where the thing which causes injury is shown to be under the management of the defendant, and the accident is such as in the ordinary course of things does not happen if those who have the management use proper care, it affords reasonable evidence, in the absence of an explanation by the defendant, that the accident arose from want of care.
The doctrine recognizes that parties may establish prima facie negligence without direct proof and allows the principle to substitute for specific proof of negligence. This is invoked when under the circumstances, direct evidence is absent and not readily available.19
In our view, all the requisites for recourse to this doctrine exist. First, MV Miguela was under the exclusive control of its officers and crew. Petitioner did not have direct evidence on what transpired within as the officers and crew maneuvered the vessel to its berthing place. We note the Court of Appeals' finding that Naval and Espina were not knowledgeable on the vessel's maneuverings, and could not testify on the negligence of the officers and crew. Second, aside from the testimony that MV Miguela rammed the cluster pile, private respondent did not show persuasively other possible causes of the damage.
Applying now the above, there exists a presumption of negligence against private respondents which we opine the latter failed to overcome. Additionally, petitioner presented tangible proof that demonstrated private respondents' negligence. As testified by Capt. Olasiman, from command of "slow ahead" to "stop engine", the vessel will still travel 100 meters before it finally stops. However, he ordered "stop engine" when the vessel was only 50 meters from the pier. Further, he testified that before the vessel is put to slow astern, the engine has to be restarted. However, Olasiman can not estimate how long it takes before the engine goes to slow astern after the engine is restarted. From these declarations, the conclusion is that it was already too late when the captain ordered reverse. By then, the vessel was only 4 meters from the pier,20 and thus rammed it.
Respondent company's negligence consists in allowing incompetent crew to man its vessel. As shown also by petitioner, both Captain Olasiman and Chief Mate Gabisan did not have a formal training in marine navigation. The former was a mere elementary graduate21 while the latter is a high school graduate. Their experience in navigation22 was only as a watchman and a quartermaster, respectively.1âwphi1.nêt
WHEREFORE, the petition is GRANTED. The decision and resolution of the Court of Appeals are ANNULLED AND SET ASIDE, and the decision of the Regional Trial Court of Cebu City, Branch IX, is hereby REINSTATED.
Costs against private respondents.
SO ORDERED.
Bellosillo, Mendoza, Buena, and De Leon, Jr., JJ., concur.
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