CASES TO READ:
sanction of an oath. This seeming lack of scruples and conscientiousness on
1) FIRST DIVISION
[G.R. No. 55372. May 31, 1989.]
LETTY HAHN, petitioner, vs. COURT OF APPEALS, JOSIE M. SANTOS and
FRANCISCO SANTOS, respondents.
Raymundo A. Armovit for petitioner.
Mary Concepcion Bautista for respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS; EXTINGUISHMENT OF OBLIGATIONS;
UPWARD ADJUSTMENT OF ORIGINAL AMOUNT DUE, ERRONEOUS;
FLOATING RATE JUSTIFIED BY EXTRAORDINARY INFLATION. We
agree with the respondent court that (upward) adjustment (of the original
amount due) was erroneous for, as explained by Justice Serafin M. Cuevas:
We, however, find the contention of appellant under her fifth assignment of
error that the lower court erred in applying the floating rate to the purely
peso transaction to be meritorious. In this regard, Article 1250 of the Civil
Code provides In case an extraordinary inflation or deflation of the
currency stipulated should supervene, the value of the currency at the time of
the establishment of the obligation should be the basis of payment, unless
there is an agreement to the contrary. By extraordinary inflation or deflation
of currency is understood to be any uncommon decrease or increase in the
purchasing power of currency which the parties could not have reasonably
foreseen and which has been due to war and the effects thereof, or any
unusual force majeure or fortuitous event. (Civil Code of the Philippines,
Dean Capistrano, Vol. III, p. 186.)
2. ID.; ID.; ID.; DEBTOR OF A THING CANNOT COMPEL CREDITOR
TO RECEIVE A DIFFERENT ONE. As for the private respondent's offer to
return the solitaire ring, which was also refused, the pertinent rule is Article
1244, providing that "the debtor of a thing cannot compel the creditor to
receive a different one, although the latter may be of the same value as, or
more valuable than that which is due." More so then in the case at bar if, as
averred by the petitioner, the ring offered was less valuable than the one that
was due.
3. ID.; DAMAGES; MORAL AND EXEMPLARY DAMAGES;
RESTORED IN LIGHT OF DEFENDANT'S DUBIOUS CONDUCT. We
cannot sustain the respondent court, however, on the moral and exemplary
damages which it disallowed on the ground that "there was no clear showing
of malice and bad faith on the part of the defendant." The Court thinks
otherwise. We hold that the moral and exemplary damages should be
restored in light of her dubious conduct as recounted in the petitioner's brief
and the following findings of the trial court which we have no reason to
disturb: The Court cannot but take note of the relative ease with which Josie
M. Santos says one thing at one given time and another altogether different
version subsequently afterwards, even if the statements are both under the
her part do not place her in a favorable light under the painstaking scrutiny of
the Court. There is so much deviousness and complexity in her testimony
that does not invite the confidence of the Court.
DECISION
CRUZ, J p:
It is said that diamonds are a girl's best friend, but private respondent Josie
M. Santos may have her doubts about this. The fact is that they have caused
her not a little difficulty, and her troubles are not yet over. This case was
decided against her by the trial court and later by the respondent court which,
however, mitigated the judgment of the former. The petitioner does not like
this and wants the earlier decision reinstated. That is why she is now before
this Court.
The basic facts as determined by the trial court 1 and affirmed by the
respondent court 2 are no longer in issue. It has been established that
Santos received two diamond rings with a total value of P47,000.00 in 1966
from the petitioner. She issued separate receipts therefor in which she
acknowledged that they had been delivered by Letty Hahn to her for sale on
commission and that they would be returned upon demand if unsold. 3 The
rings were not sold nor were they returned when demanded by Hahn.
Hahn sued for recovery of the rings or their value. While the civil case was
pending, she also filed a criminal action for estafa against Santos. Santos
was acquitted on reasonable doubt. 4 In the civil action, however, where she
also pleaded that the contracts between her and Hahn were not of agency
but of sale, Santos did not fare as well.
The trial court ordered her to return the two rings or pay the plaintiff their
value, which was increased to P65,000.00, with legal interest, plus P10,000
moral damages, P5,000 exemplary damages, and P6,000.00 attorney's fees.
5 The increase on the original value of the rings was based on Article 1250 of
the Civil Code calling for an adjustment of the payment due in case of
extraordinary inflation or deflation. The moral and exemplary damages were
imposed because of the defendant's "seeming lack of scruples and
conscientiousness."
On appeal, this decision was modified. The Court of Appeals found that
Article 1250 was not applicable and that the appellant had not acted in bad
faith or with malice. Accordingly, it rendered judgment:
A. Ordering the defendants to return to the plaintiff the two rings in
question; to pay plaintiff legal interest on the value of the ring, P47,000.00,
from the time of the filing of the complaint until restitution in made; and
attorney's fees in the amount of P6,000.00.
B. Sentencing the defendants, in case return of the rings is no longer
feasible, to pay to the plaintiff the value thereof, which is P47,000.00, with
interest at the legal rate from the time of the filing of the complaint until full
payment and P6,000.00 attorney's fees. 6
In challenging this decision, the petitioner contends that the respondent erred
in not allowing an upward adjustment of the original price of the two rings and
in disallowing the moral and exemplary damages granted by the trial court.
These are the issues in this petition.
On the first question, the petitioner cites Central Bank figures to show that
the amount of P47,000.00 in 1966, when the obligation to return it or the
rings fell due, was equivalent to about P235,000.00 in 1980 (and necessarily
to an even higher amount now in view of the continued reduction in the
purchasing power of the peso). As the increase ordered by the trial court (to
P65,000.00 on August 7, 1971) was a finding of fact based on official figures,
the Court of Appeals was not justified in reversing the same. LLpr
The petitioner also argues that the award of moral and exemplary damages
by the trial court was entirely justified and should not have been disallowed
by the respondent court. The reason is that there was sufficient showing that
the private respondent had acted with malice and in bad faith toward the
petitioner who had trusted her.
Thus, Santos misrepresented her agreements with the petitioner as contracts
of sale when the very language of the receipts she herself had written and
signed clearly shows that she was receiving the rings in trust from the
petitioner, as later found in both the criminal and civil cases. 7 Second, she
claimed she had made installment payments directly and personally to the
petitioner during the period from August 14 to November 20, 1966, and when
this lie was exposed with evidence that the petitioner was abroad during that
period, changed her testimony to make it appear that the alleged payments
had been made when Hahn was in the country. 8 In fact, the finding of the
trial court as sustained by the respondent court was that she had made no
payment at all at any time. 9 Third, when Santos offered to return the solitaire
ring to the petitioner, the latter readily saw that it was not the same ring she
had entrusted to the private respondent, who evidently wanted to foist
another deception upon her. 10
For her part, the private respondent dismisses the claim for upward
adjustment of the amount due and says Article 1250 of the Civil Code is not
applicable, there being no inflation or deflation. The Central Bank statistics
Hahn invokes are hearsay and immaterial. Not in point either is the case of
Zulueta v. PanAmerican World Airways, 11 as cited by the petitioner, where
the issue of inflation was not even raised. Moreover, the delay in the payment
of the amount due was imputable not to her but to the petitioner, who had
unreasonably prevented her from discharging her obligation.
As early as December of 1966, she says she had offered to return the
marquisette ring to the petitioner but the petitioner's lawyer, acting on her
instructions, refused to accept it and demanded the return also of the
P35,000.00 solitaire ring. 12 She offered to pay for this other ring on
installment but this offer was also rejected. 13 At the trial of the criminal case
against her, she brought the solitaire ring to prove that she had not disposed
of it, but the petitioner denied it was the ring she had delivered to the
accused. 14 Still later, she offered to pay for both rings on installment, but the
offer was also rejected without reason by the petitioner. 15 In sum, it is the
petitioner who has delayed payment of the amount due and not the private
respondent, who was ready to settle her obligation.
The trial court cited no legal basis for the upward adjustment of the original
amount due although the reason was presumably Article 1250 of the Civil
Code. We agree with the respondent court that such adjustment was
erroneous for, as explained by Justice Serafin M. Cuevas (later a member of
this Court):
We, however, find the contention of appellant under her fifth assignment of
error that the lower court erred in applying the floating rate to the purely
peso transaction to be meritorious.
In this regard, Article 1250 of the Civil Code provides
In case an extraordinary inflation or deflation of the currency stipulated
should supervene, the value of the currency at the time of the establishment
of the obligation should be the basis of payment, unless there is an
agreement to the contrary. cdll
By extraordinary inflation or deflation of currency is understood to be any
uncommon decrease or increase in the purchasing power of currency which
the parties could not have reasonably foreseen and which has been due to
war and the effects thereof, or any unusual force majeure or fortuitous event.
(Civil Code of the Philippines, Dean Capistrano, Vol. III, p. 186.)
Under the circumstances, we do not find any legal justification in applying the
so-called "floating rate," since there has been no "extraordinary inflation" of
currency within the meaning of the aforequoted Art. 1250 of the Civil Code.
16
The Court holds that, in determining the accountability of the private
respondent, the trial judge should have applied the following provisions of the
Civil Code, as the respondent court apparently did:
Art. 2209. If the obligation consists in the payment of a sum of money,
and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon,
and in the absence of stipulation, the legal interest, which is six per cent per
annum.
Art. 2210. Interest may, in the discretion of the court, be allowed upon
damages awarded for breach of contract.
Art. 2212. Interest due shall earn legal interest from the time it is
judicially demanded, although the obligation may be silent upon this point.
The Court notes, however, that the respondent court should also have
imposed interest on the interest due on the principal amount of P47,000.00,
conformably to Article 2212. The interest due started to earn interest from the
date it was judicially demanded with the filing of the complaint on January 6,
1967. prcd
As to the delay in the performance of the private respondent's obligation, our
ruling is that it was caused by the private respondent herself and not the
petitioner who had the right to demand performance in full of the former's
obligation she had assumed under their written agreement.
The receipts composed and signed by Santos, which were offered as
Exhibits A and B, read as follows:
June 2, 1966
Received from Mrs. Letty Hahn 1 ring marquise dia, worth P12,000 to be sold
on commission or to be return upon demand.
Josie M. Santos
266 A. del Mundo
Grace Park
Tel. No. 3-57-87
June 7, 1966
Received from Mrs. Letty Hahn 1 ring solo diamond worth P35,000 to be sold
on commission basis or to be return upon demand.
Josie M. Santos
266 A. del Mundo
Grace Park
Tels. 2-28-21 & 2-57-87
From the moment demand was made upon Santos and she did not or could
not comply, she has already incurred in delay. The meaning of the receipts is
unmistakable. Her contention that it was the private respondent who had
prevented her from fulfilling her obligation is simply untenable and
unacceptable.
There is no doubt that the petitioner could validly reject the private
respondent's offer to pay for the rings on installment because Hahn was
entitled to payment in full. If such payment could not be made, Santos was
obligated to return both of the rings and not one or the other only at her
option "upon demand," under the separate receipts she had signed.
According to Article 1233 of the Civil Code, "a debt shall not be understood to
have been paid unless the thing or service in which the obligation consists
has been completely delivered or rendered as the case may be."
As for the private respondent's offer to return the solitaire ring, which was
also refused, the pertinent rule is Article 1244, providing that "the debtor of a
thing cannot compel the creditor to receive a different one, although the latter
may be of the same value as, or more valuable than that which is due." More
so then in the case at bar if, as averred by the petitioner, the ring offered was
less valuable than the one that was due. 17
We cannot sustain the respondent court, however, on the moral and
exemplary damages which it disallowed on the ground that "there was no
clear showing of malice and bad faith on the part of the defendant." The
Court thinks otherwise. We hold that the moral and exemplary damages
should be restored in light of her dubious conduct as recounted in the
petitioner's brief and the following findings of the trial court which we have no
reason to disturb: cdll
The Court cannot but take note of the relative ease with which Josie M.
Santos says one thing at one given time and another altogether different
version subsequently afterwards, even if the statements are both under the
sanction of an oath. This seeming lack of scruples and conscientiousness on
her part do not place her in a favorable light under the painstaking scrutiny of
the Court. There is so much deviousness and complexity in her testimony
that does not invite the confidence of the Court. 18
WHEREFORE, the petition is partly GRANTED. The decision of the
respondent court dated August 29, 1980, is MODIFIED as follows: a) the
award of moral damages in the sum of P10,000.00 and exemplary damages
in the sum of P5,000.00 is added to the other amounts to be paid by the
private respondent to the petitioner in accordance with the said decision; and
b) interest on the principal amount of P47,000.00 shall earn interest, also at
the legal rate, from January 6, 1967, and until full payment is made. Costs
against the private respondent.
SO ORDERED.
Narvasa, Gancayco and Medialdea, JJ., concur.
Grio-Aquino, J., took no part.
2) EN BANC
[G.R. No. L-23191. December 19, 1967.]
GERONIMO G, ESGUERRA and CRISTINA G ESGUERRA, petitioners-
appellants, vs. THE HON. FELIPE M. VILLANUEVA, Municipal Judge of
Dagupan City, THE PROVINCIAL SHERIFF OF PANGASINAN, ISIDRO DE
GUZMAN and SEGUNDA DE GUZMAN, respondents-appellees.
Leopoldo Africa for petitioners-appellants.
Alejo de Guzman and Manuel D. Ancheta for respondents-appellees.
SYLLABUS
1. OBLIGATION, EXTINGUISHMENT OF; ARTICLE 1235
CONSTRUED. The verb "accept," as used in article 1235, means to take
as "satisfactory or sufficient," or to "give assent" or to "agree" or "accede" to
an incomplete or irregular performance. The circumstances obtaining in the
case at bar clearly show that Esguerra had neither acceded or assented to
the payment made by the debtor, nor taken the same as satisfactory or
sufficient compliance with the judgment rendered. The law does not require
the protest or objection of the creditor to be made in a particular manner or at
a particular time so long as the acts of the creditor at the time of the
incomplete or irregular payment of the debtor or within a reasonable time
thereafter evince that the former is not satisfied with or agreeable to said
payment or performance. The obligation in this case is deemed not
extinguished.
2. OBLIGATION, PAYMENT OF; PAYMENT MADE NOT DEEMED
ACCEPTED AS FULL PERFORMANCE. The creditors for receiving the
payment of P800.00 and P1,400 patently manifested their dissatisfaction with
the said payment which are necessarily implied objection or protest to said
partial payment, and leave no room for doubt that the creditors have never
received the partial payments as satisfactory compliance with the latter's
obligation under the compromise agreement. Hence the receipt of said
amount do not constitute an acceptance of the incomplete and irregular
performance of respondents obligation under the judgment by compromise.
DECISION
CONCEPCION, C.J p:
Direct appeal, on questions purely of law, from a decision of the Court of First
Instance of Pangasinan dismissing petitioner's complaint.
On July 13, 1961, petitioner Geronimo G. Esguerra hereinafter referred to
as Esguerra and respondent Isidro de Guzman hereinafter referred to
as De Guzman the latter acting in his own behalf and in that of a
corporation (Institute of Electronics) he then intended to organize which
eventually was not organized entered into a contract whereby Esguerra
leased to De Guzman a portion of the Esguerra-Gueco building, belonging to
Esguerra and his wife, Cristina Gueco hereinafter referred to collectively
as the Esguerras and located at Torres Bugallon Street, Dagupan City, for
a term of ten (10) years, beginning from July 12, 1961, at a monthly rental of
P300.00, up to July 11, 1962, and P400.00 thereafter payable in advance
within the first 10 days of each month. Inasmuch as De Guzman had failed to
pay the rental from February to August, 1962, aggregating P1,800.00, in
addition to the sum of P300.00, representing the balance of the purchase
price of equipment bought by him from the Esguerras, on August 6, 1962,
respondent's mother, Segunda de Guzman hereinafter referred to as Mrs.
De Guzman executed, in favor of the Esguerras, a promissory note for
P2,100.00, payable as follows: P1,000.00, not later than August 12, 1962,
and the balance of P1,100.00 not later than August 31, 1962. The promissory
note further stipulated that:
"If the first payment of P1,000.00 as stated above is not paid on the date it
falls due, August 12, 1962, this note or the entire value thereof becomes
immediately due and demandable."
None of the aforementioned payments having been made when due, the
Esguerras commenced, on September 11, 1962, Civil Case No. 1074 of the
Municipal Court of Dagupan City, against Mrs. De Guzman, for the collection
of said sum of P2,100.00, with interest thereon from August 6, 1962, plus
interest, at the legal rate, on the aggregate amount due on September 11,
1962, and P520.00 as and for attorney's fees and expenses of litigation.
Three (3) days later, Esguerra instituted Civil Case No. 1075 of the same
court, against De Guzman, to recover:
"(a) The sum of P160.00 representing the unpaid rentals in arrears for
the period from July 12, 1962 to August 12, 1962, with interest thereon at the
legal rate from and after August 17, 1962, the date of the formal demand;
"(b) The amount of P400.00 monthly rental from and after August 12,
1962, until defendant finally vacates the leased premises;
"(c) The sum of P2,000.00, as liquidated damages, as stipulated in the
lease agreement Annex 'A' and its corresponding interest, at the legal rate,
from the filing of this complaint;
"(d) The sum of P400.00, as and for attorney's fees."
On the same date, writs of attachment were issued in the two cases. Soon
thereafter, or on October 22, 1962, the parties therein reached a compromise
agreement to the effect that:
"1. That both defendants in the above-entitled cases admit, jointly and
severally, liability to plaintiffs in the amount of TWO THOUSAND TWO
HUNDRED AND SIXTY PESOS (P2,260.00) which they promise to pay on or
before November 26, 1962;
"2. That should defendants fail to perform their respective undertakings
in the first two foregoing paragraphs hereof:
"(a) Defendant Segunda D. de Guzman agrees and urges the Honorable
Court to render judgment immediately against her for the total amount
claimed by plaintiffs-spouses in Civil Case No. 1074 now pending before this
court;
"(b) Defendant Isidro de Guzman agrees and urges the Honorable Court
to immediately cause the promulgation of judgment against him for all the
amounts claimed by the plaintiff, Geronimo G. Esguerra, in his complaint in
Civil Case No. 1075;
"(c) That upon failure of any or both of defendants herein to perform their
respective undertakings under this compromise agreement, they agree and
urge the Honorable Court to cause immediate execution of the judgment
against them upon their respective properties which have been attached
under process in connection with the proceedings in the above-mentioned
civil cases;" (Exh. "E," pp. 38-39, Record on Appeal).
This compromise agreement was approved by Judge Felipe M. Villanueva, of
the aforementioned municipal court, in a judgment dated November 27, 1962
the dispositive part of which reads:
"WHEREFORE, finding the said compromise agreement not to be contrary to
moral, public policy and law, the same is hereby approved and judgment is
rendered in these two cases accordingly. Also, the parties are hereby
enjoined to abide with the terms and conditions of the same compromise
agreement."
Admittedly, the sum of P2,260.00 was not paid or delivered to the Esguerras
on or before November 26, 1962. On motion of the Esguerras, Judge
Villanueva issued, therefore, on December 14, 1962, the corresponding writs
of execution in cases Nos. 1074 and 1075. Alleging that De Guzman had,
through his counsel, delivered to Esguerra P800.00, on December 13, 1962,
and P1,460.00, on January 5, 1963, and that the receipt of said sums by the
Esguerras, constituted full satisfaction of the aforementioned judgment by
compromise, De Guzman and his mother, Mrs. De Guzman hereinafter
referred to as the respondents filed, on February 4, 1962, a joint motion
for the release of the properties seized pursuant to the writs of attachment
above referred to. This motion was, on February 11, 1963, granted by Judge
Villanueva.
A reconsideration of the order to this effect having been denied, on February
23, 1963, the Esguerras instituted, against respondents herein, the provincial
sheriff of Pangasinan and Judge Villanueva, on February 28, 1963, the
present action for certiorari, prohibition and mandamus, with preliminary
injunction, which was docketed as Civil Case No. D-1450, of the Court of
First Instance of Pangasinan, to annul the orders of Judge Villanueva of
February 11, and 23, 1963; to restrain Judge Villanueva from enforcing said
orders; and to compel him to issue an alias writ of execution for the
satisfaction of the unpaid balance of the judgment in said Civil Case Nos.
1074 and 1075. After appropriate proceedings, the Court of First Instance
rendered the decision appealed from, dismissing the petition herein. Hence
this appeal by the Esguerras.
Respondents maintain, and the lower court held, that the "receipt" of said
sums of P800.00 and P1,400.00 by the Esguerras constituted "acceptance"
of the incomplete and irregular performance of respondents' obligation under
the judgment in cases Nos. 1074 and 1075, and that, this "acceptance"
having been made without any "protest or objection" on the part of the
Esguerras, said obligation must be "deemed fully complied with," pursuant to
Article 1235 of the Civil Code of the Philippines.
This theory is based upon the premise that "receipt" of a partial payment is
necessarily an "acceptance" thereof, within the purview of said provision, and
that the Esguerras had not protested or objected to said payment. Such
premise is untenable. The verb "accept," as used in Article 1235, means to
take as "satisfactory or sufficient," or to "give assent to," or to "agree" or
"accede" to an incomplete or irregular performance. The circumstances
obtaining in the case at bar clearly show that the Esguerras had neither
acceded or assented to said payment, nor taken the same as satisfactory or
sufficient compliance with the judgment aforementioned.
Indeed, the day immediately following that of the first payment of P800.00, or
on December 14, 1962, the Esguerras asked Judge Villanueva to issue the
corresponding writs of execution in the two (2) cases. Thus, the Esguerras
patently manifested their dissatisfaction with which necessarily implied an
objection or protest to said partial payment. Moreover, Judge Villanueva
must have so understood the reaction of the Esguerras to the same
payment, for he was present when it was made, and still he caused the writs
to be issued. What is more, the respondents evidently had the same
impression, for, otherwise, they would not have paid the additional sum of
P1,460.00 on January 5, 1963. Then, again, the insistence of the Esguerras
in causing the attached properties of respondents herein to be disposed of,
pursuant to the writs of execution, despite said additional payments, leave no
room for doubt that the former had never regarded the partial payments as
satisfactory compliance with the latter's obligation under said judgment.
After all, the law does not require the protest or objection of the creditor to be
made in a particular manner or at a particular time. So long as the acts of the
creditor, at the time of the incomplete or irregular payment by the debtor, or
within a reasonable time thereafter, evince that the former is not satisfied with
or agreeable to said payment or performance, the obligation shall not be
deemed fully extinguished. In the case at bar, the Esguerras had performed
said acts within such time.
WHEREFORE, the decision appealed from should be, as it is hereby,
reversed, and another one shall be entered directing respondent Municipal
Judge to issue the corresponding alias writs of execution, with costs against
respondents Isidro de Guzman and Mrs. Segunda de Guzman. It is so
ordered.
Reyes, J.B.L., Dizon, Makalintal, Bengzon, J.P., Zaldivar, Sanchez, Castro,
Angeles and Fernando, JJ., concur.
3) FIRST DIVISION
[G.R. No. 142938. August 28, 2007.]
MIGUEL INGUSAN, petitioner, vs. HEIRS OF AURELIANO I. REYES,
represented by CORAZON REYES-REGUYAL and ARTEMIO S. REYES, *
respondents.
DECISION
CORONA, J p:
This is a petition for review on certiorari 1 of a decision 2 and resolution 3 of
the Court of Appeals (CA) dated January 21, 2000 and April 10, 2000,
respectively, in CA-G.R. CV No. 56105 which modified the decision 4 dated
April 17, 1997 5 of the Regional Trial Court (RTC) of Cabanatuan City, Nueva
Ecija, Branch 25 in Civil Case No. 2145-A1. ESTcIA
This case involves a 1,254 sq. m. residential land located in Poblacion, San
Leonardo, Nueva Ecija 6 originally owned by Leocadio Ingusan who was
unmarried and childless when he died in 1932. His heirs were his two
brothers and a sister, namely, Antonio, Macaria and Juan. 7 Antonio died and
was succeeded by his son Ignacio who also later died and was succeeded
by his son, petitioner Miguel Ingusan. 8 Macaria also died and was
succeeded by her child, Aureliano I. Reyes, Sr. (father of respondents
Artemio Reyes, Corazon Reyes-Reguyal, Elsa Reyes, Estrella Reyes-Razon,
Aureliano Reyes, Jr., Ester Reyes, Reynaldo Reyes and Leonardo Reyes). 9
Thus, petitioner is the grandnephew of Leocadio and Aureliano, Sr. was the
latter's nephew. 10
After the death of Leocadio, Aureliano, Sr. was designated by the heirs as
administrator of the land. 11 In 1972, while in possession of the land and in
breach of trust, he applied for and was granted a free patent over it. 12 As a
result, he was issued OCT No. P-6176 in 1973. 13
In 1976, petitioner filed an accion reivindicatoria against Aureliano, Sr. and
his wife Jacoba Solomon seeking the recovery of Lot 120-A with an area of
502 sq. m. which was part of the land at issue here. 14 But the case was
dismissed because petitioner did not pursue it. EHCaDS
Also in 1976, Aureliano, Sr. executed a special power of attorney (SPA) in
favor of his son Artemio authorizing him to mortgage the land in question to
any bank. Using that SPA, Artemio mortgaged the land to secure a loan of
P10,000 from the Philippine National Bank (PNB). 15
In 1983, Aureliano, Sr. died intestate. He was survived by his children, the
respondents. 16
In 1986, petitioner paid the PNB loan. The mortgage over the land was
released and the owner's duplicate copy of OCT No. P-6176 was given to
him. 17
On June 19, 1988, respondents and petitioner entered into a Kasulatan ng
Paghahati-hati Na May Bilihan wherein they adjudicated unto themselves the
land in question and then sold it to their co-heirs, as follows: (a) to petitioner,
1,171 sq. m. and (b) to respondent Estrella, 83 sq. m. This deed was
notarized but not registered. 18
On January 8, 1990, respondent Corazon, despite signing the Kasulatan,
executed an affidavit of loss, stating that she could not find the owner's
duplicate copy of OCT No. P-6176. This was registered and annotated on the
original copy of said title. 19
Subsequently, the following documents appeared purportedly with the
following dates: cACEHI
a) April 23, 1994 20 notarized deed of donation of titled property
supposedly executed by the spouses Aureliano, Sr. and Jacoba, 21 whereby
said spouses donated 297 sq. m. of the subject land to respondent Artemio
and the remaining 957 sq. m. to petitioner;
b) September 5, 1994 cancellation of affidavit of loss supposedly
executed by respondent Corazon stating that the annotation of the affidavit of
loss on the title should be canceled and the petition for a new title was no
longer necessary because she had already found the missing owner's
duplicate copy of OCT No. P-6176;
c) September 27, 1994 agreement of subdivision with sale
purportedly executed by respondent Artemio and petitioner, with the consent
of their wives. Pursuant to this document, the land was subdivided into Lot
120-A with an area of 297 sq. m. corresponding to the share of Artemio and
Lot 120-B with an area of 957 sq. m. which was the share of petitioner. The
document also indicated that Artemio sold Lot 120-A to one Florentina
Fernandez. 22 IEaATD
When respondent Corazon learned about the cancellation of the annotation
of her affidavit of loss, she executed an affidavit of adverse claim on January
17, 1995 stating that the cancellation of affidavit of loss and the agreement of
subdivision with sale were both spurious and the signatures appearing
thereon were forgeries. This affidavit of adverse claim was not registered. 23
On April 17, 1995, petitioner brought the owner's duplicate copy of OCT No.
P-6176, the cancellation of affidavit of loss, deed of donation of titled property
and agreement of subdivision with sale to the Registry of Deeds for
registration. Consequently, the following took place on that same day:
1. Corazon's annotated affidavit of loss was canceled;
2. by virtue of Aureliano, Sr. and Jacoba's deed of donation of titled
property to Artemio and petitioner, OCT No. P-6176 was canceled and in lieu
thereof, TCT No. NT-241155 in the name of petitioner and TCT No. NT-
241156 in the name of respondent Artemio were issued and
3. by virtue of the agreement of subdivision with sale, TCT Nos. NT-
241155 and NT-241156 were canceled and TCT Nos. NT-239747 and NT-
239748 were issued in the names of petitioner and Florentina Fernandez,
respectively. 24 HASTCa
On June 27, 1995, petitioner took possession of his portion and built his
house thereon. 25
On July 4, 1995, respondents filed an action for cancellation, annulment and
surrender of titles with damages against petitioner and Florentina Fernandez
in the RTC of Cabanatuan City, Nueva Ecija, Branch 25. In their complaint,
they alleged the following, among others: they inherited the land in question
from their father, Aureliano, Sr.; petitioner caused the preparation of the
spurious deed of donation of titled property, cancellation of affidavit of loss,
agreement of subdivision with sale and forged the signatures appearing
thereon except his (petitioner's) own and, in conspiracy with Fernandez,
fraudulently registered said documents which resulted in the cancellation of
OCT No. P-6176 and the eventual issuance to them of TCT Nos. NT-239747
and NT-239748. They prayed that these titles be declared null and void and
that petitioner and Fernandez be ordered to surrender the land and pay
damages to them. 26 acCTIS
In his defense, petitioner alleged that respondents' father, Aureliano, Sr.,
fraudulently secured a free patent in his name over the land using a fictitious
affidavit dated April 10, 1970 purportedly executed by Leocadio selling to him
the land in question and, as a result, OCT No. P-6176 was issued to him;
that it was respondent Artemio who proposed to petitioner the scheme of
partition that would assure the latter of his share with the condition, however,
that he (Artemio) would get a portion of 297 sq. m. (which included the share
of respondent Estrella of 83 sq. m.) because he had already earlier sold it to
Fernandez and in fact had already been partially paid P60,000 for it; that to
implement this scheme, respondent Artemio caused the execution of several
documents namely: (1) deed of donation of titled property; (2) agreement of
subdivision with sale and (3) cancellation of affidavit of loss and that,
thereafter, he instructed petitioner to present the said documents to the
Registry of Deeds of Nueva Ecija for registration. 27
On October 26, 1995, respondents moved that Fernandez be dropped as
defendant because she was no longer contesting their claim and in fact had
surrendered to them her owner's duplicate copy of TCT No. NT-239748.
Thus, she was excluded from the suit. 28 CEDScA
In a decision dated April 17, 1997, the RTC dismissed the case and declared
OCT No. P-6176 as well as the subsequent certificates of title (TCT Nos. NT-
239747 and NT-239748), the deed of donation of titled property, agreement
of subdivision with sale and cancellation of affidavit of loss as null and void. It
held that the aforementioned documents were spurious since the signatures
were falsified by respondent Artemio.
Furthermore, having found that OCT No. P-6176 was issued on the basis of
a document falsified by Aureliano, Sr., the RTC ordered the reversion of the
land to its status before the OCT was issued.
Finally, it held that petitioner, being an innocent victim, was entitled to
damages. 29
On appeal, the CA modified the RTC decision. It ruled that only TCT Nos.
NT-241155, NT-241156, NT-239747 and NT-239748 were null and void. Their
source, OCT No. P-6176, remained valid because it had already become
indefeasible and could no longer be attacked collaterally. It also found that
petitioner schemed with Artemio in defrauding their co-heirs and was
therefore in pari delicto. Consequently, neither party was entitled to claim
damages from the other. 30 Petitioner's motion for reconsideration was
denied.
Hence this petition raising the following issues:
1) whether OCT No. P-6176 was valid or invalid, and
2) whether or not petitioner is entitled to damages. cSIADH
There is no doubt that the deed of donation of titled property, cancellation of
affidavit of loss and agreement of subdivision with sale, being falsified
documents, were null and void. It follows that TCT Nos. NT-241155, NT-
241156, NT-239747 and NT-239748 which were issued by virtue of these
spurious documents were likewise null and void. Neither side disputes these
findings and conclusions.
The question is whether the source of these titles, OCT No. P-6176, was
valid. Petitioner argues that it should be invalidated because it was issued
based on a fictitious affidavit purportedly executed in 1970 by Leocadio (who
died in 1932) wherein the latter supposedly sold the land to Aureliano, Sr.
According to petitioner, Aureliano, Sr. used this to fraudulently and in breach
of trust secure a free patent over the land in his name.
We agree with the CA that OCT No. P-6176 remains valid. The issue of the
validity of title (e.g. whether or not it was issued fraudulently or in breach of
trust) can only be assailed in an action expressly instituted for that purpose.
31 A certificate of title cannot be attacked collaterally. Section 48 of PD 1529
32 states:
SEC. 48. Certificate not subject to collateral attack. A certificate of
title shall not be subject to collateral attack. It cannot be altered, modified, or
canceled except in a direct proceeding in accordance with law. EADSIa
The rationale behind the Torrens System is that the public should be able to
rely on a registered title. The Torrens System was adopted in this country
because it was believed to be the most effective measure to guarantee the
integrity of land titles and to protect their indefeasibility once the claim of
ownership is established and recognized. In Fil-estate Management, Inc. v.
Trono, 33 we explained:
It has been invariably stated that the real purpose of the Torrens System is to
quiet title to land and to stop forever any question as to its legality. Once a
title is registered, the owner may rest secure, without the necessity of waiting
in the portals of the court, or sitting on the "mirador su casa" to avoid the
possibility of losing his land. 34
Petitioner merely invoked the invalidity of OCT No. P-6176 as an affirmative
defense in his answer and prayed for the declaration of its nullity. Such a
defense partook of the nature of a collateral attack against a certificate of
title. 35
Moreover, OCT No. P-6176 which was registered under the Torrens System
on the basis of a free patent became indefeasible and incontrovertible after
the lapse of one year as provided in Section 32 of PD 1529: AIcECS
Sec. 32. Review of decree of registration; Innocent purchaser for
value. The decree of registration shall not be reopened or revised by
reason of absence, minority, or other disability of any person adversely
affected thereby, nor by any proceeding in any court for reversing judgment,
subject, however, to the right of any person, including the government and
the branches thereof, deprived of land or of any estate or interest therein by
such adjudication or confirmation of title obtained by actual fraud, to file in the
proper Court of First Instance a petition for reopening and review of the
decree of registration not later than one year from and after the date of the
entry of such decree of registration, but in no case shall such petition be
entertained by the court where an innocent purchaser for value has acquired
the land or an interest therein whose rights may be prejudiced. Whenever the
phrase "innocent purchaser for value" or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or
other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and
the certificate of title issued shall become incontrovertible. Any person
aggrieved by such decree of registration in any case may pursue his remedy
by action for damages against the applicant or any other person responsible
for the fraud. (Emphasis supplied) ECaAHS
Indeed, both the RTC and CA found that Aureliano, Sr. fraudulently and in
breach of trust secured OCT No. P-6176 in his name. Unfortunately,
petitioner chose not to pursue a direct proceeding to have this certificate of
title annulled. In 1976, he filed an accion reivindicatoria 36 against the
spouses Aureliano, Sr. and Jacoba questioning the validity of OCT No. P-
6176 and seeking to recover a portion of the land (specifically, Lot 120-A with
an area of 502 sq. m.) but he voluntarily withdrew the case. 37 Now, the title
has undeniably become incontrovertible since it was issued in 1973 or more
than 30 years ago. 38
We now proceed to the issue of whether petitioner is entitled to damages.
The RTC held that he is entitled to moral damages (P50,000), exemplary
damages (P30,000) and attorney's fees (P20,000) because he was not
aware that the documents were falsified and he was merely instructed by
respondent Artemio to have them registered. The CA shared the finding of
the RTC that it was respondent Artemio who masterminded the preparation
and use of the spurious documents. 39 Nevertheless, it did not find petitioner
an innocent victim who was merely dragged into litigation:
. . .[Petitioner] was far from innocent. [Respondent Artemio] and [petitioner]
signed the bogus "Deed of Donation of Titled Property" and the fraudulently
baseless "Agreement of Subdivision with Sale." It was [petitioner] who
personally submitted all the bogus documents with the Registry of Deeds of
Nueva Ecija. He stood to benefit from the registration of said fake
documents. It was he who received the titles issued in consequence of said
fraudulent registration. In the natural course of things and in the ordinary
experience of man, the conclusion is inevitable that [he] knew [about] the
spurious nature of said documents but he made use of them because of the
benefit which he would derive therefrom. In short, [petitioner] confabulated
with [respondent Artemio] in defrauding all their co-heirs of their shares in
said property. 40 cSDIHT
We agree. Petitioner was not in good faith when he registered the fake
documents.
Good faith is ordinarily used to describe that state of mind denoting "honesty
of intention, and freedom from knowledge of circumstances which ought to
put the holder upon inquiry; an honest intention to abstain from taking any
unconscientious advantage of another, even through technicalities of law,
together with absence of all information, notice, or benefit or belief of facts
which render the transaction unconscientious." 41
Petitioner claims that he was not aware of the contents of the falsified
documents and their legal consequences because of his low level of
intelligence and educational attainment. But from his own narration, it is clear
that he was aware of the fraudulent scheme conceived by respondent
Artemio:
[Respondent Artemio] approached [petitioner] and propose[d] a [scheme] of
partition that [would] assure [petitioner] of getting his share including that
which he and his predecessor-in-interest have purchased from the other
heirs of the late LEOCADIO INGUSAN, but with the condition that in
implementing the document known as PAGHAHATI-HATI NA MAY BILIHAN,
the corresponding shares of ESTRELLA RAZON will go to him [respondent
Artemio who] has agreed to have it sold in favor of one FLORENTINA
FERNANDEZ for P120,000.00, partial payment of which has already been
received by [respondent Artemio], which negotiation of SALE and the
payment made by FLORENTINA FERNANDEZ was acknowledged to be
true. Without much ado, a survey of Lot No. 120 was conducted by one
Restituto Hechenova upon instruction of [respondent Artemio], partitioning
the land into two (2), one share goes to [petitioner] with an area of 957
square meters and the other with an area of 297 square meters in the name
of [respondent Artemio], the latter share was to be sold in favor of Florentina
Fernandez. To have this IMPLEMENTED, incidental documentation must be
made thus; A DEED OF DONATION OF REAL PROPERTY allegedly
executed by Sps. Aureliano Reyes and JACOBA SOLOMON; SUBDIVISION
AGREEMENT WITH SALE by and between [petitioner] and [respondent
Artemio] as alleged DONEES and SALE in the same document in favor of
Florentina Fernandez, making in the process [petitioner] presentor of all
these questioned documents, adding among others an AFFIDAVIT OF LOSS
of Original Certificate of Title No. P-6176 allegedly falsified by [petitioner] of
the signature of [respondent] CORAZON REYES REGUYAL. 42 THAECc
Petitioner does not deny that he signed the fictitious deed of donation of titled
property and the agreement of subdivision with sale. Even if he reached only
grade 3, he could not have feigned ignorance of the net effect of these
documents, which was to exclude the other heirs of the spouses and the
original owner Leocadio from inheriting the property and, in the process,
acquiring a big chunk of the property at their expense. The cancellation of
respondent Corazon's affidavit of loss of the owner's duplicate copy of OCT
No. P-6176 also removed all obstacles to the registration of the title covering
his portion of the lot. In short, by registering the spurious documents, he had
everything to gain.
Although it was respondent Artemio, an educated individual, who engineered
the whole scheme and prepared the fraudulent documents, still petitioner
cannot deny that he was a willing co-conspirator in a plan that he knew was
going to benefit him handsomely.
As a result, there is no basis for the award of damages to petitioner. Coming
to the court with unclean hands, he cannot obtain relief. Neither does he fall
under any of the provisions for the entitlement to damages. aIcDCH
Respondents presented an additional issue involving the recovery of
possession of the subject land. They contend that petitioner, his heirs and
relatives illegally occupied it and constructed houses thereon. 43 However, it
is well-settled that a party who has not appealed cannot obtain from the
appellate court any affirmative relief other than those obtained from the lower
court whose decision is brought up on appeal. 44 While there are exceptions
to this rule, such as if they involve (1) errors affecting the lower court's
jurisdiction over the subject matter; (2) plain errors not specified and (3)
clerical errors, none applies here. 45
Lastly, we note that petitioner entered into certain agreements with
respondents to ensure that he would obtain a portion of the subject land. He
not only paid the loan of respondent Artemio to PNB in order to release the
mortgage over the land but also bought from respondents 1,171 sq. m.
(almost 94% of the 1,254 sq. m. lot) under the Kasulatan ng Paghahati-hati
Na May Bilihan. These are undisputed facts. Ultimately, however, he failed to
get his portion of the property. Although petitioner did not demand the return
of the amounts he paid, we deem it just and equitable to direct respondents
to reimburse him for these. ADaSEH
Article 1236 of the Civil Code provides:
Art. 1236. The creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the obligation,
unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid,
except that if he paid without the knowledge or against the will of the debtor,
he can recover only insofar as the payment has been beneficial to the debtor.
(emphasis ours)
Respondent Artemio was the debtor in this case, PNB the creditor and
petitioner the third person who paid the obligation of the debtor. The amount
petitioner may recover will depend on whether Artemio knew or approved of
such payment.
Petitioner should also be able recover the amount (if any) he paid to
respondents under the Kasulatan since this agreement was never
implemented. Otherwise, it will result in the unjust enrichment of respondents
at the expense of petitioner, a situation covered by Art. 22 of the Civil Code:
Every person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him. acCTSE
Petitioner is not entitled to legal interest since he never made a demand for
it.
WHEREFORE, the petition is hereby DENIED. However, respondents are
ordered to return to petitioner the amounts he paid to the Philippine National
Bank and under the Kasulatan ng Paghahati-hati Na May Bilihan. The court a
quo is directed to determine the exact amount due to petitioner. The January
21, 2000 decision and April 10, 2000 resolution of the Court of Appeals in
CA-G.R. CV No. 56105 are AFFIRMED.
Costs against petitioner.
SO ORDERED.
Puno, C.J., Sandoval-Gutierrez, Azcuna and Garcia, JJ., concur.
4) EN BANC
[G.R. No. L-18639. January 31, 1963.]
"JAVIER SECURITY SPECIAL WATCHMAN AGENCY" and CONCEPCION
D. JAVIER, in her own behalf and as guardian ad litem of the minors CLARO
D. JAVIER and RENE D. JAVIER, plaintiffs-appellants, vs. SHELL CRAFT &
BUTTON CORPORATION, defendant-appellee.
Navarro & Layosa for plaintiffs-appellants.
Concepcion & Llacer for defendant-appellee.
SYLLABUS
1. OBLIGATIONS AND CONTRACTS; CONTRACTS WHEREIN THE
PERSONAL QUALIFICATIONS OF THE DEBTOR HAVE BEEN TAKEN
INTO CONSIDERATION; PRINCIPLE IN OLD CIVIL CODE BROADENED IN
NEW CIVIL CODE. Although Article 1161 of the old Civil code has not
been reenacted in the new Civil Code, its spirits is latent in other provisions
of the said Code, such as its Articles 1311 and 1726, which have broadened
the principle that the creditor cannot be compelled to accept the performance
of the obligation or the rendition of a service by a third person whom the
personal qualifications and circumstances of the debtor have been taken into
consideration in the fulfillment of the obligation, making it applicable not only
to obligations to do but to all kinds of obligations.
2. ID.; ID.; ID.; APPLICATION OF PRINCIPLE IN CASE AT BAR.
The fact that the owner and manager of the watchman agency in the present
case was not required to guard in person the premises of the company, does
not negate that the guarding job was entrusted to him by reason of his
personal qualifications. After his death, therefore, the company is free to
engage other guards, and it can not be compelled to repose its trust and
confidence in the deceased owner's wife and heirs as to whom the contract is
to be deemed not transmissible.
DECISION
REYES, J.B.L., J p:
This case for breach of contract with damages was filed originally with the
Court of First Instance of Manila. After trial, the court a quo dismissed the
complaint on 14 October 1958. Plaintiffs elevated it to the Court of Appeals,
but the latter remanded it to this Court, because only questions of law are
involved.
The facts are simple and undisputed.
Since 1954, H. L. Swiryn had engaged at P290.00 a month the services of
Federico E. Javier to guard the premises of appellee Shell-Craft & Button
Corporation, of which Swiryn is the vice-president and manager. Because the
services rendered by Federico E. Javier were efficient, defendant corporation
renewed annually its contract with him. The last renewal, on 4 May 1956
(Exhibit 3), would have expired on 1 December 1957, as per agreement,
which stipulated the following:
"For and in consideration of the sum of P290.00 per month, the JAVIER
SECURITY SPECIAL WATCHMAN AGENCY with business address at 3195
Sta. Mesa Blvd., Manila, through its representative, Federico E. Javier,
hereby agrees to guard the establishment of SHELL-CRAFT and BUTTON
CORPORATION, located at 114 Beata, Pandacan, subject to the following
conditions;
1. That in order to carry out this agreement, the JAVIER SECURITY
SPECIAL WATCHMAN AGENCY will furnish the necessary guards or
watchmen between the hours of 4:00 P.M. and 8:00 A.M. daily, seven days a
week;
2. That the number of said guards or watchmen will not be less than
two (2);
3. That Javier Security Special Watchman Agency shall be responsible
for the payment of the salaries of said guards or watchmen and such other
benefits to which they may be entitled under existing labor laws;
4. That the JAVIER SECURITY SPECIAL WATCHMAN AGENCY shall
furnish the SHELL-CRAFT & BUTTON CORPORATION every 15th and end
of the month a copy of the payrolls and time records duly signed by each and
every guard or watchman who might be employed by the said JAVIER
SECURITY SPECIAL WATCHMAN AGENCY;
5. That this Contract shall expire on December 1, 1957 renewable for
another year upon mutual consent."
It is pertinent to note that the "Javier Security Special Watchman Agency" is
merely a service name adopted by the late Federico E. Javier to identify his
business, which was owned and managed exclusively by him. The "Javier
Security Special Watchman Agency" is not a corporation nor a registered
partnership. Hence, it has no personality to sue or to be sued.
Before the contract expired, Federico E. Javier died suddenly on 9 May
1957. His widow, appellant Concepcion D. Javier, was then in Hongkong. To
guard the compound of the corporation, Swiryn engaged the services of
another agency on the same day. For this reason, the heirs of Federico E.
Javier sued for breach of contract, with damages for its unexpired term from
9 May to 1 December 1957.
The only issue to be resolved is whether or not said Exhibit "C" is a personal
contract, in the sense that the rights and obligations thereunder are
intransmissible to the heirs of a party thereto. The trial court held the contract
to be "intuitu personae", and dismissed the action; whereupon the plaintiffs
appealed.
From the conditions of Exhibit "C", and according to the findings of fact of the
trial court, the primordial consideration which prompted Swiryn to enter into
the contract was the personality (i.e., the qualifications) of the deceased, who
supervised personally the watchmen employed and controlled by him. To the
corporation, it was immaterial who were the guards assigned by Federico E.
Javier to watch its establishment. The lower court, in its decision above-
referred to, aptly stated:
". . . In the matter of security guard duty, discipline and promptness on the
part of the guards is indispensable, and this was the primary reason why the
defendant engaged the services of the Javier Security Special Watchman
Agency, because with the personal supervision and attention the late
Federico Javier had over his guards, the defendant had found their services
very satisfactory, for which reason since 1954, it had retained the services of
said watchman agency until the death of said Federico Javier on May 9,
1957, as testified to by Mr. H. L. Swiryn, manager of the defendant
corporation. Considering that at that time Mr. Swiryn could not have expected
any other person to render the same personal supervision and attention that
the deceased Federico Javier had exercised over his guards during his
lifetime, and considering further the immediate need of guard duty in the
premises of the defendant after his death, specially so when it was not until
one week after his death that the widow went to see Mr. Swiryn to have
plaintiffs' guards continue guarding its premises, the defendant was justified
in replacing the guards of plaintiffs' agency." (Record on Appeal, pp. 25-26).
While the Civil Code of the Philippines of 1950 has not seen fit to reenact
Article 1161 of the Civil Code of 1889 to the effect that
"In obligations to do the creditor can not be compelled to accept the
performance of the obligation or the rendition of a service by third person
when the personal qualifications and circumstances of the debtor have been
taken into consideration in the creation of the obligation."
it is not to be assumed that the omission implies that the rule embodied in
that article has been discarded altogether. The spirit of Article 1161 of the old
Civil Code is latent in other provisions of the new Code, such as its Articles
1311 and 1726.
"ART. 1311. Contracts take effect only between the parties, their assigns
and heirs, except in case where the rights and obligations arising from the
contract are not transmissible by their nature, or by stipulation or by provision
of law. The heir is not liable beyond the value of the property he received
from the decedent."
"ART. 1726. When a piece of work has been entrusted to a person by
reason of his personal qualifications, the contract is rescinded upon his
death."
If at all, the Civil Code of the Philippines appears to have broadened the
principle, and made it applicable to all kinds of obligations, not only to
obligations to do; for among the rules governing performance (payment) of
obligations, Article 1236 (paragraph 1) prescribes that:
"ART. 1236. The creditor is not bound to accept payment or performance
by a third person who has no interest in the fulfillment of the obligation,
unless there is a stipulation to the contrary."
The fact that the late Federico Javier was not required to guard in person the
premises of the appellee company does not negate that the guarding job was
entrusted to him by reason of his personal qualifications. It is clear that the
failure to specify in the contract the conditions required of the individual
guards and watchmen proves, not that they were of no concern to the
company, but that the latter relied upon their proper selection and supervision
by Javier himself. This trust and confidence the company can not be
compelled to repose in Javier's wife or heirs, and as to them, the contract is
to be deemed not transmissible.
Because the widow could not be expected to perform the contract for
custodial services celebrated by her husband, and because upon the death
of Javier no one could take his place (his widow being at the time in
Hongkong and his children minors), while the premises could not be left
unguarded by trusted persons, the appellee was entitled to regard its
contract with Javier terminated then and there. Hence it was free to engage
other guards.
The decision appealed from is affirmed, with costs against the plaintiffs-
appellants.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Barrera,
Paredes, Dizon, Regala and Makalintal, JJ., concur.
5) FIRST DIVISION
[G.R. No. 152317. November 10, 2004.]
VICTORIA MOREO-LENTFER, * GUNTER LENTFER and JOHN CRAIGIE
YOUNG CROSS, petitioners, vs. HANS JURGEN WOLFF, respondent.
Rodrigo C. Dimayacyac for petitioners.
Manolo Puno & Jocson Law Offices for respondent.
SYNOPSIS
Respondent filed a complaint for annulment of sale and reconveyance of
property with damages and prayer for a writ of attachment against
petitioners. He alleged that the Lentfer spouses, who held in trust for him a
time deposit account, urged him to buy petitioner Cross' beach house and
lease rights in Puerto Galera, Oriental Mindoro. Respondent agreed, and
through a bank-to-bank transaction, he paid Cross the amount of 221,700
Deutsche marks as total consideration for the sale and assignment of the
lease rights. However, petitioners executed a deed of sale whereby the
beach house was made to appear as sold to Victoria Moreo-Lentfer for only
P100,000. The assignment of the lease right was likewise made in favor of
Moreo-Lentfer. After trial, the court dismissed the complaint for failure to
establish a cause of action. Upon appeal, the Court of Appeals reversed the
decision of the trial court. Hence, the instant petition which resolved the issue
on the applicability of Article 1238 of the New Civil Code, the principle of
solutio indebiti under Article 2154 and the principle of justice and equity.
AICHaS
In denying the petition, the Supreme Court ruled that Article 1238 is not
applicable in the instant case. The absence of intention to be reimbursed,
which is the qualifying circumstance in Article 1238, was negated by the facts
of this case. Respondent's acts contradicted any intention to donate the
properties to petitioner Moreo-Lentfer.
The Court likewise held that the principle of solutio indebiti applies in the
present case. Since Moreo-Lentfer received something when there was no
right to demand it, she had an obligation to return it. Moreover, she acquired
the subject properties through deceit, fraud and abuse of confidence. The
principle of justice and equity does not wok in her favor but in favor of
respondent. Whatever she may have received by mistake from and at the
expense of respondent should thus be returned to the latter, if the demands
of justice are to be served.
SYLLABUS
1. CIVIL LAW; ARTICLE 1238 OF THE NEW CIVIL CODE;
INAPPLICABLE IN CASE AT BAR. The absence of intention to be
reimbursed, the qualifying circumstance in Art. 1238, is negated by the facts
of this case. Respondent's acts contradict any intention to donate the
properties to petitioner Moreo-Lentfer. When respondent learned that the
sale of the beach house and assignment of the lease right were in favor of
Victoria Moreo-Lentfer, he immediately filed a complaint for annulment of
the sale and reconveyance of the property with damages and prayer for a
writ of attachment. DEcTIS
2. ID.; DONATION; MUST COMPLY WITH THE MANDATORY
FORMAL REQUIREMENTS SET FORTH BY LAW FOR ITS VALIDITY. A
donation is a simple act of liberality where a person gives freely of a thing or
right in favor of another, who accepts it. But when a large amount of money is
involved, equivalent to P3,297,800, based on the exchange rate in the year
1992, we are constrained to take the petitioners' claim of liberality of the
donor with more than a grain of salt. Petitioners could not brush aside the
fact that a donation must comply with the mandatory formal requirements set
forth by law for its validity. Since the subject of donation is the purchase
money, Art. 748 of the New Civil Code is applicable. Accordingly, the
donation of money equivalent to P3,297,800 as well as its acceptance should
have been in writing. It was not. Hence, the donation is invalid for non-
compliance with the formal requisites prescribed by law.
3. ID.; OBLIGATIONS AND CONTRACTS; QUASI-CONTRACTS;
PRINCIPLE OF SOLUTIO INDEBITI; WHEN APPLICABLE. The quasi-
contract of solutio indebiti harks back to the ancient principle that no one
shall enrich himself unjustly at the expense of another. It applies where (1) a
payment is made when there exists no binding relation between the payor,
who has no duty to pay, and the person who received the payment, and (2)
the payment is made through mistake, and not through liberality or some
other cause.
4. ID.; PRINCIPLE OF JUSTICE AND EQUITY; APPLIED IN CASE AT
BAR. Following Article 22 of the New Civil Code, two conditions must
concur to declare that a person has unjustly enriched himself or herself,
namely: (a) a person is unjustly benefited, and (b) such benefit is derived at
the expense of or to the damage of another. We are convinced petitioner
Moreo-Lentfer had been unjustly enriched at the expense of respondent.
She acquired the properties through deceit, fraud and abuse of confidence.
The principle of justice and equity does not work in her favor but in favor of
respondent Wolff. Whatever she may have received by mistake from and at
the expense of respondent should thus be returned to the latter, if the
demands of justice are to be served.
5. ID.; DAMAGES; NOMINAL DAMAGES; AWARDED IN CASE AT
BAR. [W]e deem it just and equitable under the circumstances to award
respondent nominal damages in the amount of P50,000, pursuant to Articles
2221 and 2222 of the New Civil Code, since respondent's property right has
been invaded through defraudation and abuse of confidence committed by
petitioners. ACaDTH
DECISION
QUISUMBING, J p:
For review on certiorari are the Decision 1 dated June 14, 2001, and
Resolution 2 dated February 22, 2002, of the Court of Appeals in CA-G.R.
CV No. 48272. The decision reversed the judgment 3 of the Regional Trial
Court of Calapan City, Oriental Mindoro, Branch 39, in Civil Case No. R-
4219. IaHDcT
The facts are as follows:
The petitioners are Gunter Lentfer, a German citizen; his Filipina wife,
Victoria Moreo-Lentfer; and John Craigie Young Cross, an Australian
citizen, all residing in Sabang, Puerto Galera, Oriental Mindoro. Respondent
Hans Jurgen Wolff is a German citizen, residing in San Lorenzo Village,
Makati City.
Petitioners alleged that with respondent, on March 6, 1992, they engaged the
notarial services of Atty. Rodrigo C. Dimayacyac for: (1) the sale of a beach
house owned by petitioner Cross in Sabang, Puerto Galera, Oriental
Mindoro, and (2) the assignment of Cross' contract of lease on the land
where the house stood. The sale of the beach house and the assignment of
the lease right would be in the name of petitioner Victoria Moreo-Lentfer, but
the total consideration of 220,000 Deutschmarks (DM) would be paid by
respondent Hans Jurgen Wolff. A promissory note was executed by said
respondent in favor of petitioner Cross.
According to respondent, however, the Lentfer spouses were his confidants
who held in trust for him, a time deposit account in the amount of DM
200,000 4 at Solid Bank Corporation. Apprised of his interest to own a house
along a beach, the Lentfer couple urged him to buy petitioner Cross' beach
house and lease rights in Puerto Galera. Respondent agreed and through a
bank-to-bank transaction, he paid Cross the amount of DM 221,700 5 as total
consideration for the sale and assignment of the lease rights. However,
Cross, Moreo-Lentfer and Atty. Dimayacyac surreptitiously executed a deed
of sale whereby the beach house was made to appear as sold to Moreo-
Lentfer for only P100,000. 6 The assignment of the lease right was likewise
made in favor of Moreo-Lentfer. 7 Upon learning of this, respondent filed a
Complaint docketed as Civil Case No. R-4219 with the lower court for
annulment of sale and reconveyance of property with damages and prayer
for a writ of attachment. DEHaAS
After trial, the court a quo dismissed the complaint for failure to establish a
cause of action, thus:
ACCORDINGLY, judgment is hereby rendered in favor of the defendants and
against the plaintiff, dismissing the complaint for the reason that plaintiff has
not established a cause of action against the defendants with costs against
the plaintiff.
SO ORDERED. 8
Aggrieved, respondent appealed to the Court of Appeals. 9
But in its Decision 10 dated June 14, 2001, the appellate court reversed the
decision of the trial court, thus:
WHEREFORE, the judgment appealed from is hereby REVERSED and a
new one is hereby rendered, as follows:
1. Defendants-appellees spouses Genter 11 and Victoria Moreno-
Lentfer and John Craigie Young Cross are jointly and severally held liable to
pay plaintiff-appellant the amount of 220,000.00 DM German Currency or its
present peso equivalent plus legal interest starting from March 8, 1993, the
date of the last final demand letter;
2. The above defendants-appellees are jointly and severally held liable
to pay plaintiff-appellant the amount of P200,000.00 Philippine Currency,
representing the amount of expenses incurred in the repairs and
maintenance of the property plus legal interest starting from October 28,
1992, the date the amount was received by defendant-appellee Victoria
Moreno-Lentfer; and
3. The case against defendant-appellee Rodrigo Dimayacyac is
dismissed. ATaDHC
SO ORDERED. 12
Hence, the instant petition raising the following issues:
1) DOES ARTICLE 1238 OF THE NEW CIVIL CODE APPLY IN THE
CASE AT BAR? 13
2) DOES THE PRINCIPLE OF SOLUTIO INDEBITI UNDER ARTICLE
2154 OF THE NEW CIVIL CODE, THE PRINCIPLE OF JUSTICE AND
EQUITY, APPLY IN THE CASE AT BAR? 14
Article 1238 of the New Civil Code provides:
ART. 1238. Payment made by a third person who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires the
debtor's consent. But the payment is in any case valid as to the creditor who
has accepted it.
Petitioners posit that in a contract of sale, the seller is the creditor, who in this
case is Cross, and the buyer is the debtor, namely Moreo-Lentfer in this
case. Respondent is the third person who paid the consideration on behalf of
Moreo-Lentfer, the debtor. Petitioners insist that respondent did not intend
to be reimbursed for said payment and debtor Moreo-Lentfer consented to
it. Thus, by virtue of Article 1238, payment by respondent is considered a
donation.
Respondent counters that Article 1238 bears no relevance to the case since
it applies only to contracts of loan where payment is made by a third person
to a creditor in favor of a debtor of a previously incurred obligation. The
instant case, in contrast, involves a contract of sale where no real creditor-
debtor relationship exists between the parties. Further, respondent argues
his conduct never at any time intimated any intention to donate in favor of
petitioner Moreo-Lentfer. aCTcDH
Moreover, respondent contends that the alleged donation is void for non-
compliance with the formal requirements set by law. Citing Article 748 15 of
the New Civil Code, respondent avers that since the amount involved
exceeds P5,000, both the donation and its acceptance must be in writing for
the donation to be valid. Respondent further says there was no simultaneous
delivery of the money as required by Art. 748 for instances of oral donation.
Respondent also calls our attention to the sudden change in petitioners'
theory. Previously, before the Court of Appeals, the petitioners claimed that
what was donated were the subject properties. But before this Court, they
insist that what was actually donated was the money used in the purchase of
subject properties.
On this point, we find petitioners' stance without merit. Article 1238 of the
New Civil Code is not applicable in this case.
Trying to apply Art. 1238 to the instant case is like forcing a square peg into a
round hole. The absence of intention to be reimbursed, the qualifying
circumstance in Art. 1238, is negated by the facts of this case. Respondent's
acts contradict any intention to donate the properties to petitioner Moreo-
Lentfer. When respondent learned that the sale of the beach house and
assignment of the lease right were in favor of Victoria Moreo-Lentfer, he
immediately filed a complaint for annulment of the sale and reconveyance of
the property with damages and prayer for a writ of attachment. Respondent
Moreo-Lentfer at that time claimed the beach house, together with the lease
right, was donated to her. Noteworthy, she had changed her theory, to say
that it was only the money used in the purchase that was donated to her. But
in any event, respondent actually stayed in the beach house in the concept of
an owner and shouldered the expenses for its maintenance and repair
amounting to P200,000 for the entire period of his stay for ten weeks.
Moreover, the appellate court found that respondent is not related or even
close to the Lentfer spouses. Obviously, respondent had trusted the Lentfer
spouses to keep a time deposit account for him with Solid Bank for the
purpose of making the purchase of the cited properties. CEIHcT
Petitioner Moreo-Lentfer's claim of either cash or property donation rings
hollow. A donation is a simple act of liberality where a person gives freely of a
thing or right in favor of another, who accepts it. 16 But when a large amount
of money is involved, equivalent to P3,297,800, based on the exchange rate
in the year 1992, we are constrained to take the petitioners' claim of liberality
of the donor with more than a grain of salt.
Petitioners could not brush aside the fact that a donation must comply with
the mandatory formal requirements set forth by law for its validity. Since the
subject of donation is the purchase money, Art. 748 of the New Civil Code is
applicable. Accordingly, the donation of money equivalent to P3,297,800 as
well as its acceptance should have been in writing. It was not. Hence, the
donation is invalid for non-compliance with the formal requisites prescribed
by law.
Anent the second issue, petitioners insist that since the deed of sale in favor
of Moreo-Lentfer was neither identified or marked nor formally offered in
evidence, the same cannot be given any evidentiary value. They add that
since it was not annulled, it remains valid and binding. Hence, petitioners
argue, the principle of solutio indebiti under Article 2154 17 of the New Civil
Code should be the applicable provision in the resolution of this controversy.
If so, the parties unjustly enriched would be liable to the other party who
suffered thereby by being correspondingly injured or damaged.
The quasi-contract of solutio indebiti harks back to the ancient principle that
no one shall enrich himself unjustly at the expense of another. 18 It applies
where (1) a payment is made when there exists no binding relation between
the payor, who has no duty to pay, and the person who received the
payment, and (2) the payment is made through mistake, and not through
liberality or some other cause. 19
In the instant case, records show that a bank-to-bank payment was made by
respondent Wolff to petitioner Cross in favor of co-petitioner Moreo-Lentfer.
Respondent was under no duty to make such payment for the benefit of
Moreo-Lentfer. There was no binding relation between respondent and the
beneficiary, Moreo-Lentfer. The payment was clearly a mistake. Since
Moreo-Lentfer received something when there was no right to demand it,
she had an obligation to return it. 20
Following Article 22 21 of the New Civil Code, two conditions must concur to
declare that a person has unjustly enriched himself or herself, namely: (a) a
person is unjustly benefited, and (b) such benefit is derived at the expense of
or to the damage of another. 22
We are convinced petitioner Moreo-Lentfer had been unjustly enriched at
the expense of respondent. She acquired the properties through deceit, fraud
and abuse of confidence. The principle of justice and equity does not work in
her favor but in favor of respondent Wolff. Whatever she may have received
by mistake from and at the expense of respondent should thus be returned to
the latter, if the demands of justice are to be served. aEHTSc
The Court of Appeals held that respondent was not entitled to the
reconveyance of the properties because, inter alia, of the express prohibition
under the Constitution 23 that non-Filipino citizens cannot acquire land in the
Philippines. We note, however, that subject properties consist of a beach
house and the lease right over the land where the beach house stands. The
constitutional prohibition against aliens from owning land in the Philippines
has no actual bearing in this case. A clear distinction exists between the
ownership of a piece of land and the mere lease of the land where the
foreigner's house stands. Thus, we see no legal reason why reconveyance
could not be allowed.
Since reconveyance is the proper remedy, respondent's expenses for the
maintenance and repair of the beach house is for his own account as owner
thereof. It need not be an issue for now.
However, we deem it just and equitable under the circumstances to award
respondent nominal damages in the amount of P50,000, 24 pursuant to
Articles 2221 25 and 2222 26 of the New Civil Code, since respondent's
property right has been invaded through defraudation and abuse of
confidence committed by petitioners.
WHEREFORE, the petition is hereby DENIED. The assailed Decision, dated
June 14, 2001 and Resolution dated February 22, 2002, of the Court of
Appeals in CA-G.R. CV No. 48272 reversing the lower court's judgment are
AFFIRMED with MODIFICATION. Petitioners particularly the spouses
Gunter Lentfer and Victoria Moreo-Lentfer are hereby ORDERED to:
1. RECONVEY to respondent Hans Jurgen Wolff the beach house and
the lease right over the land on which it is situated; and
2. PAY respondent Wolff nominal damages in the amount of
P50,000.00.
Costs against petitioners. IAcDET
SO ORDERED.
Davide, Jr., C .J ., Ynares-Santiago, Carpio and Azcuna, JJ ., concur.
6) SECOND DIVISION
[G.R. No. 125862. April 15, 2004.]
FRANCISCO CULABA and DEMETRIA CULABA, doing business under the
name and style "Culaba Store," petitioners, vs. COURT OF APPEALS and
SAN MIGUEL CORPORATION, respondents.
Public Attorney's Office for petitioners.
Dollete Blanco Ejercito & Associates for private respondent.
SYNOPSIS
Petitioner spouses were engaged in the sale and distribution of San Miguel
Corporation's (SMC) beer products. Respondent SMC filed an action for
collection of a sum of money against them as they failed to pay the balance
of P24,910.00 despite repeated demands. During trial, petitioners testified
that they made payments to an SMC supervisor who came to collect using
an SMC van. For its part, however, SMC submitted a publisher's affidavit to
prove that the entire booklet of receipts, which reflected payments of the
petitioners, were reported lost and such notice of loss was published in the
Daily Express. After trial on the merits, the trial court rendered judgment in
favor of SMC, and held petitioners liable on the balance of its obligation. The
Court of Appeals affirmed the decision of the trial court. Hence, the instant
petition. HSIADc
The Supreme Court dismissed the instant petition. According to the Court,
the petitioners question the findings of the Court of Appeals as to whether the
payment of the petitioners' obligation to SMC was properly made, thus,
extinguishing the same. This is clearly a factual issue, and beyond the
purview of the Court to delve into. The issue raised by the petitioners did not
involve a question of law, but a question of fact, not cognizable by the
Supreme Court in a petition for review under Rule 45 of the Rules of Court.
SYLLABUS
1. REMEDIAL LAW; EVIDENCE; FINDINGS OF FACT OF THE TRIAL
COURT; ACCORDED HIGHEST RESPECT ESPECIALLY WHEN
AFFIRMED BY THE COURT OF APPEALS AS A RULE. The petitioners
question the findings of the Court of Appeals as to whether the payment of
the petitioner's obligation to the private respondent was properly made, thus,
extinguishing the same. This is clearly a factual issue, and beyond the
purview of the Court to delve into. This is in consonance with the well-settled
rule that findings of fact of the trial court, especially when affirmed by the
Court of Appeals, are accorded the highest degree of respect, and generally
will not be disturbed on appeal. Such findings are binding and conclusive on
the Court. Furthermore, it is not the Court's function under Rule 45 of the
Rules of Court, as amended, to review, examine and evaluate or weigh the
probative value of the evidence presented. To reiterate, the issue being
raised by the petitioners does not involve a question of law, but a question of
fact, not cognizable by this Court in a petition for review under Rule 45. The
jurisdiction of the Court in such a case is limited to reviewing only errors of
law, unless the factual findings being assailed are not supported by evidence
on record or the impugned judgment is based on a misapprehension of facts.
HDIATS
2. CIVIL LAW; OBLIGATIONS; PAYMENT AS A MODE OF
EXTINGUISHING OBLIGATION SHOULD BE MADE TO THE PERSON IN
WHOSE FAVOR THE OBLIGATION HAS BEEN CONSTITUTED; NOT
PRESENT IN CASE AT BAR. Payment is a mode of extinguishing an
obligation. Article 1240 of the Civil Code provides that payment shall be
made to the person in whose favor the obligation has been constituted, or his
successor-in-interest, or any person authorized to receive it. In this case, the
payment were purportedly made to a "supervisor" of the private respondent,
who was clad in an SMC uniform and drove an SMC van. He appeared to be
authorized to accept payments as he showed a list of customers'
accountabilities and even issued SMC liquidation receipts which looked
genuine. Unfortunately for petitioner Francisco Culaba, he did not ascertain
the identity and authority of the said supervisor, nor did he ask to be shown
any identification to prove that the latter was, indeed, an SMC supervisor.
The petitioners relied solely on the man's representation that he was
collecting payments for SMC. Thus, the payments the petitioners claimed
they made were not the payments that discharged their obligation to the
private respondent. acADIT
3. ID.; AGENCY; A PERSON DEALING WITH AN AGENT IS PUT
UPON INQUIRY AND MUST DISCOVER UPON HIS PERIL THE
AUTHORITY OF THE AGENT; WHEN NOT COMPLIED WITH; CASE AT
BAR. The basis of agency is representation. A person dealing with an
agent is put upon inquiry and must discover upon his peril the authority of the
agent. In the instant case, the petitioners' loss could have been avoided if
they had simply exercised due diligence in ascertaining the identity of the
person to whom they allegedly made the payments. The fact that they were
parting with valuable consideration should have made them more
circumspect in handling their business transactions. Persons dealing with an
assumed agent are bound at their peril to ascertain not only the fact of
agency but also the nature and extent of authority, and in case either is
controverted, the burden of proof is upon them to establish it. The petitioners
in this case failed to discharge this burden, considering that the private
respondent vehemently denied that the payments were accepted by it and
were made to its authorized representative.
4. ID.; ID.; ID.; ID.; WHEN NEGLIGENCE IS PRESENT; EFFECT
THEREOF. Negligence is the omission to do something which a
reasonable man, guided by those considerations which ordinarily regulate
the conduct of human affairs, would do, or the doing of something, which a
prudent and reasonable man would not do. In the case at bar, the most
prudent thing the petitioners should have done was to ascertain the identity
and authority of the person who collected their payments. Failing this, the
petitioners cannot claim that they acted in good faith when they made such
payments. Their claim therefor is negated by their negligence, and they are
bound by its consequences. Being negligent in this regard, the petitioners
cannot seek relief on the basis of a supposed agency. cTDIaC
DECISION
CALLEJO, SR., J p:
This is a petition for review under Rule 45 of the Revised Rules of Civil
Procedure of the Decision 1 of the Court of Appeals in CA-G.R. CV No.
19836 affirming in toto the Decision 2 of the Regional Trial Court of Makati,
Branch 138, in Civil Case No. 1033 for collection of sum of money, and the
Resolution 3 denying the motion for reconsideration of the said decision.
cSaADC
The Undisputed Facts
The spouses Francisco and Demetria Culaba were the owners and
proprietors of the Culaba Store and were engaged in the sale and distribution
of San Miguel Corporation's (SMC) beer products. SMC sold beer products
on credit to the Culaba spouses in the amount of P28,650.00, as evidenced
by Temporary Credit Invoice No. 42943. 4 Thereafter, the Culaba spouses
made a partial payment of P3,740.00, leaving an unpaid balance of
P24,910.00. As they failed to pay despite repeated demands, SMC filed an
action for collection of a sum of money against them before the RTC of
Makati, Branch 138.
The defendant-spouses denied any liability, claiming that they had already
paid the plaintiff in full on four separate occasions. To substantiate this claim,
the defendants presented four (4) Temporary Charge Sales (TCS)
Liquidation Receipts, as follows:
April 19, 1983 Receipt No. 27331 for P8,000 5
April 22, 1983 Receipt No. 27318 for P9,000 6
April 27, 1983 Receipt No. 27339 for P4,500 7
April 30, 1983 Receipt No. 27346 for P3,410 8
Defendant Francisco Culaba testified that he made the foregoing payments
to an SMC supervisor who came in an SMC van. He was then showed a list
of customers' accountabilities which included his account. The defendant, in
good faith, then paid to the said supervisor, and he was, in turn, issued
genuine SMC liquidation receipts.
For its part, SMC submitted a publisher's affidavit 9 to prove that the entire
booklet of TCSL Receipts bearing Nos. 27301-27350 were reported lost by it,
and that it caused the publication of the notice of loss in the July 9, 1983
issue of the Daily Express, as follows:
NOTICE OF LOSS
OUR CUSTOMERS ARE HEREBY INFORMED THAT TEMPORARY
CHARGE SALES LIQUIDATION RECEIPTS WITH SERIAL NOS. 27301-
27350 HAVE BEEN LOST.
ANY TRANSACTION, THEREFORE, ENTERED INTO WITH THE USE OF
THE ABOVE RECEIPTS WILL NOT BE HONORED. cITaCS
SAN MIGUEL CORPORATION
BEER DIVISION
Makati Beer Region 10
The Trial Court's Ruling
After trial on the merits, the trial court rendered judgment in favor of SMC,
and held the Culaba spouses liable on the balance of its obligation, thus:
Wherefore, judgment is hereby rendered in favor of the plaintiff, as follows:
1. Ordering defendants to pay the amount of P24,910.00 plus legal
interest of 6% per annum from April 12, 1983 until the whole amount is fully
paid;
2. Ordering defendants to pay 20% of the amount due to plaintiff as and
for attorney's fees plus costs.
SO ORDERED. 11
According to the trial court, it was unusual that defendant Francisco Culaba
forgot the name of the collector to whom he made the payments and that he
did not require the said collector to print his name on the receipts. The court
also noted that although they were part of a single booklet, the TCS
Liquidation Receipts submitted by the defendants did not appear to have
been issued in their natural sequence. Furthermore, they were part of the lost
booklet receipts, which the public was duly warned of through the Notice of
Loss the plaintiff caused to be published in a daily newspaper. This confirmed
the plaintiff's claim that the receipts presented by the defendants were
spurious ones.
The Case on Appeal
On appeal, the appellants interposed the following assignment of errors:
I
THE TRIAL COURT ERRED IN FINDING THAT THE RECEIPTS
PRESENTED BY DEFENDANTS EVIDENCING HIS PAYMENTS TO
PLAINTIFF SAN MIGUEL CORPORATION, ARE SPURIOUS.
II
THE TRIAL COURT ERRED IN CONCLUDING THAT PLAINTIFF-
APPELLEE HAS SUFFICIENTLY PROVED ITS CAUSE OF ACTION
AGAINST THE DEFENDANTS. AaDSEC
III
THE TRIAL COURT ERRED IN ORDERING DEFENDANTS TO PAY 20%
OF THE AMOUNT DUE TO PLAINTIFF AS ATTORNEY'S FEES. 12
The appellants asserted that while the trial court's observations were true, it
was the usual business practice in previous transactions between them and
SMC. The SMC previously honored receipts not bearing the salesman's
name. According to appellant Francisco Culaba, he even lost some of the
receipts, but did not encounter any problems.
According to appellant Francisco, he could not be faulted for paying the SMC
collector who came in a van and was in uniform, and that any regular
customer would, without any apprehension, transact with such an SMC
employee. Furthermore, the respective receipts issued to him at the time he
paid on the four occasions mentioned had not yet then been declared lost.
Thus, the subsequent publication in a daily newspaper declaring the booklets
lost did not affect the validity and legality of the payments made. Accordingly,
by its actuations, the SMC was estopped from questioning the legality of the
payments and had no cause of action against the appellants.
Anent the issue of attorney's fees, the order of the trial court for payment
thereof is without basis. According to the appellant, the provision for
attorney's fees is a contingent fee, already provided for in the SMC's contract
with the law firm. To further order them to pay 20% of the amount due as
attorney's fees is double payment, tantamount to undue enrichment and
therefore improper. 13
The appellee, for its part, contended that the primary issue in the case at bar
revolved around the basic and fundamental principles of agency. 14 It was
incumbent upon the defendants-appellants to exercise ordinary prudence
and reasonable diligence to verify and identify the extent of the alleged
agent's authority. It was their burden to establish the true identity of the
assumed agent, and this could not be established by mere representation,
rumor or general reputation. As they utterly failed in this regard, the
appellants must suffer the consequences.
The Court of Appeals affirmed the decision of the trial court, thus:
In the face of the somewhat tenuous evidence presented by the appellants,
we cannot fault the lower court for giving more weight to appellee's
testimonial and documentary evidence, all of which establish with some
degree of preponderance the existence of the account sued upon. CTEacH
ALL CONSIDERED, we cannot find any justification to reject the factual
findings of the lower court to which we must accord respect, for which
reason, the judgment appealed from is hereby AFFIRMED in all respects.
SO ORDERED. 15
Hence, the instant petition.
The petitioners pose the following issues for the Court's resolution:
I. WHETHER OR NOT THE RESPONDENT HAD PROVEN BY
PREPONDERANT EVIDENCE THAT IT HAD PROPERLY AND TIMELY
NOTIFIED PETITIONER OF LOST BOOKLET OF RECEIPTS.
II. WHETHER OR NOT RESPONDENT HAD PROVEN BY
PREPONDERANT EVIDENCE THAT PETITIONER WAS REMISS IN THE
PAYMENT OF HIS ACCOUNTS TO ITS AGENT. 16
According to the petitioners, receiving receipts from the private respondent's
agents instead of its salesmen was a usual occurrence, as they had been
operating the store since 1979. Thus, on four occasions in April 1983, when
an agent of the respondent came to the store wearing an SMC uniform and
driving an SMC van, petitioner Francisco Culaba, without question, paid his
accounts. He received the receipts without fear, as they were similar to what
he used to receive before. Furthermore, the petitioners assert that, common
experience will attest that unless the attention of the customers is called for,
they would not take note of the serial number of the receipts.
The petitioners contend that the private respondent advertised its warning to
the public only after the damage was done, or on July 9, 1993. Its belated
notice showed its glaring lack of interest or concern for its customers'
welfare, and, in sum, its negligence.
Anent the second issue, petitioner, Francisco Culaba avers that the agent to
whom the accounts were paid had all the physical and material attributes or
indications of a representative of the private respondent, leaving no doubt
that he was duly authorized by the latter. Petitioner Francisco Culaba's
testimony that "he does not necessarily check the contents of the receipts
issued to him except for the amount indicated if [the] same accurately reflects
his actual payment" is a common attitude of customers. He could, thus, not
be faulted for paying the private respondent's agent on four occasions.
Petitioner Francisco Culaba asserts that he made the payment in good faith,
to an agent who issued SMC receipts which appeared to be genuine. Thus,
according to the petitioners, they had duly paid their obligation in accordance
with Articles 1240 and 1242 of the New Civil Code. ISCaDH
The private respondent, for its part, avers that the burden of proving payment
is with the debtor, in consonance with the express provision of Article 1233 of
the New Civil Code. The petitioners miserably failed to prove the self-serving
allegation that they already paid their liability to the private respondent.
Furthermore, under normal circumstances, an obligor would not just pay a
substantial amount to someone whom he saw for the first time, without even
asking for the latter's name.
The Ruling of the Court
The petition is dismissed.
The petitioners question the findings of the Court of Appeals as to whether
the payment of the petitioners' obligation to the private respondent was
properly made, thus, extinguishing the same. This is clearly a factual issue,
and beyond the purview of the Court to delve into. This is in consonance with
the well-settled rule that findings of fact of the trial court, especially when
affirmed by the Court of Appeals, are accorded the highest degree of respect,
and generally will not be disturbed on appeal. Such findings are binding and
conclusive on the Court. 17 Furthermore, it is not the Court's function under
Rule 45 of the Rules of Court, as amended, to review, examine and evaluate
or weigh the probative value of the evidence presented. 18
To reiterate, the issue being raised by the petitioners does not involve a
question of law, but a question of fact, not cognizable by this Court in a
petition for review under Rule 45. The jurisdiction of the Court in such a case
is limited to reviewing only errors of law, unless the factual findings being
assailed are not supported by evidence on record or the impugned judgment
is based on a misapprehension of facts. 19
A careful study of the records of the case reveal that the appellate court
affirmed the trial court's factual findings as follows:
First. Receipts Nos. 27331, 27318, 27339 and 27346 were included in the
private respondent's lost booklet, which loss was duly advertised in a
newspaper of general circulation; thus, the private respondent could not have
officially issued them to the petitioners to cover the alleged payments on the
dates appearing thereon.
Second. There was something amiss in the way the receipts were issued to
the petitioners, as one receipt bearing a higher serial number was issued
ahead of another receipt bearing a lower serial number, supposedly covering
a later payment. The petitioners failed to explain the apparent mix-up in
these receipts, and no attempt was made in this regard. HTSIEa
Third. The fact that the salesman's name was invariably left blank in the four
receipts and that the petitioners could not even remember the name of the
supposed impostor who received the said payments strongly argue against
the veracity of the petitioners' claim.
We find no cogent reason to reverse the said findings.
The dismissal of the petition is inevitable even upon close perusal of the
merits of the case.
Payment is a mode of extinguishing an obligation. 20 Article 1240 of the Civil
Code provides that payment shall be made to the person in whose favor the
obligation has been constituted, or his successor-in-interest, or any person
authorized to receive it. 21 In this case, the payments were purportedly made
to a "supervisor" of the private respondent, who was clad in an SMC uniform
and drove an SMC van. He appeared to be authorized to accept payments
as he showed a list of customers' accountabilities and even issued SMC
liquidation receipts which looked genuine. Unfortunately for petitioner
Francisco Culaba, he did not ascertain the identity and authority of the said
supervisor, nor did he ask to be shown any identification to prove that the
latter was, indeed, an SMC supervisor. The petitioners relied solely on the
man's representation that he was collecting payments for SMC. Thus, the
payments the petitioners claimed they made were not the payments that
discharged their obligation to the private respondent.
The basis of agency is representation. 22 A person dealing with an agent is
put upon inquiry and must discover upon his peril the authority of the agent.
23 In the instant case, the petitioners' loss could have been avoided if they
had simply exercised due diligence in ascertaining the identity of the person
to whom they allegedly made the payments. The fact that they were parting
with valuable consideration should have made them more circumspect in
handling their business transactions. Persons dealing with an assumed agent
are bound at their peril to ascertain not only the fact of agency but also the
nature and extent of authority, and in case either is controverted, the burden
of proof is upon them to establish it. 24 The petitioners in this case failed to
discharge this burden, considering that the private respondent vehemently
denied that the payments were accepted by it and were made to its
authorized representative.
Negligence is the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something, which a prudent and reasonable
man would not do. 25 In the case at bar, the most prudent thing the
petitioners should have done was to ascertain the identity and authority of
the person who collected their payments. Failing this, the petitioners cannot
claim that they acted in good faith when they made such payments. Their
claim therefor is negated by their negligence, and they are bound by its
consequences. Being negligent in this regard, the petitioners cannot seek
relief on the basis of a supposed agency. 26
WHEREFORE, the instant petition is hereby DENIED. The assailed Decision
dated April 16, 1996, and the Resolution dated July 19, 1996 of the Court of
Appeals are AFFIRMED. Costs against the petitioners. ATICcS
SO ORDERED.
Puno, Quisumbing, Austria-Martinez and Tinga, JJ ., concur.
7) SECOND DIVISION
[G.R. No. 82233. March 22, 1990.]
JOSE BARITUA and EDGAR BITANCOR, petitioners, vs. HONORABLE
COURT OF APPEALS, NICOLAS NACARIO and VICTORIA RONDA
NACARIO, respondents.
Ernesto A. Atienza for private respondents.
SYLLABUS
1. CIVIL LAW; OBLIGATION; MODES OF EXTINGUISHMENT.
Obligations are extinguished by various modes among them being by
payment. Article 1231 of the Civil Code of the Philippines provides: Art. 1231.
Obligations are extinguished: (1) By payment or performance; (2) By the loss
of the thing due; (3) By the condonation or remission of the debt; (4) By the
confusion or merger of the rights of creditor and debtor; (5) By compensation;
(6) By novation.
2. ID.; ID.; ID.; SUCCESSORS IN INTEREST AUTHORIZED TO
RECEIVE PAYMENT IN FAVOR OF DECEASED PERSON. Article 1240
of the Civil Code of the Philippines enumerates the persons to whom
payment to extinguish an obligation should be made. Art. 1240. Payment
shall be made to the person in whose favor the obligation has been
constituted, or his successor in interest, or any person authorized to receive
it. Certainly there can be no question that Alicia and her son with the
deceased are the successors in interest referred to in law as the persons
authorized to receive payment.
3. ID.; WILLS AND SUCCESSION; COMPULSORY HEIRS; PARENTS
OF THE DECEASED SUCCEED ONLY WHEN THE LATTER DIES
WITHOUT A LEGITIMATE DESCENDANT. The Civil Code states: Article
887. The following are compulsory heirs: 1. Legitimate children and
descendants, with respect to their legitimate parents and ascendants; 2. In
default of the foregoing, legitimate parents and ascendants, with respect to
their legitimate children and descendants; 3. The widow or widower; 4.
Acknowledged natural children, and natural children by legal fiction; 5. Other
illegitimate children referred to in Article 287. Compulsory heirs mentioned in
Nos. 3, 4 and 5 are not excluded by those in Nos. 1 and 2. Neither do they
exclude one another. Article 985. In default of legitimate children and
descendants of the deceased, his parents and ascendants shall inherit from
him, to the exclusion of collateral relatives. It is patently clear that the parents
of the deceased succeed only when the latter dies without a legitimate
descendant. On the other hand, the surviving spouse concurs with all classes
of heirs. As it has been established that Bienvenido was married to Alicia and
that they begot a child, the private respondents are not successors-in-interest
of Bienvenido; they are not compulsory heirs.
4. ID.; ID.; ID.; ESTRANGEMENT OF SURVIVING SPOUSE WITH
THE DECEASED SPOUSE, NOT A GROUND FOR DISQUALIFICATION.
The petitioners acted correctly in settling their obligation with Alicia as the
widow of Bienvenido and as the natural guardian of their lone child. This is so
even if Alicia had been estranged from Bienvenido. Mere estrangement is not
a legal ground for the disqualification of a surviving spouse as an heir of the
deceased spouse.
5. REMEDIAL LAW; SPECIAL PROCEEDINGS; CLAIMS AGAINST
THE ESTATE; LOAN FOR THE PURCHASE OF PERSONAL PROPERTY
AND FUNERAL EXPENSES CONSIDERED MONEY CLAIMS AGAINST
THE ESTATE OF THE DECEASED. Private respondents, as alleged
creditors of Bienvenido, seek relief and compensation from the petitioners.
While it may be true that the private respondents loaned to Bienvenido the
purchase price of the damaged tricycle and shouldered the expenses for his
funeral, the said purchase price and expenses are but money claims against
the estate of their deceased son.
DECISION
SARMIENTO, J p:
This petition for review on certiorari assails as erroneous and contrary to
existing relevant laws and applicable jurisprudence the decision 1 of the
Court of Appeals dated December 11, 1987 which reversed and set aside
that of the Regional Trial Court, Branch XXXII, at Pili, Camarines Sur. 2 The
challenged decision adjudged the petitioners liable to the private respondents
in the total amount of P20,505.00 and for costs. LexLib
The facts are as follows:
In the evening of November 7, 1979, the tricycle then being driven by
Bienvenido Nacario along the national highway at Barangay San Cayetano,
in Baao, Camarines Sur, figured in an accident with JB Bus No. 80 driven by
petitioner Edgar Bitancor and owned and operated by petitioner Jose Baritua.
3 As a result of that accident Bienvenido and his passenger died, 4 and the
tricycle was damaged. 5 No criminal case arising from the incident was ever
instituted. 6
Subsequently, on March 27, 1980, as a consequence of the extra-judicial
settlement of the matter negotiated by the petitioners and the bus' insurer
Philippine First Insurance Company, Incorporated (PFICI for brevity)
Bienvenido Nacario's widow, Alicia Baracena Vda. de Nacario, received
P18,500.00. In consideration of the amount she received, Alicia executed on
March 27, 1980 a "Release of Claim" in favor of the petitioners and PFICI,
releasing and forever discharging them from all actions, claims, and
demands arising from the accident which resulted in her husband's death
and the damage to the tricycle which the deceased was then driving. Alicia
likewise executed an affidavit of desistance in which she formally manifested
her lack of interest in instituting any case, either civil or criminal, against the
petitioners. 7
On September 2, 1981, or about one year and ten months from the date of
the accident on November 7, 1979, the private respondents, who are the
parents of Bienvenido Nacario, filed a complaint for damages against the
petitioners with the then Court of First Instance of Camarines Sur. 8 In their
complaint, the private respondents alleged that during the vigil for their
deceased son, the petitioners through their representatives promised them
(the private respondents) that as extra-judicial settlement, they shall be
indemnified for the death of their son, for the funeral expenses incurred by
reason thereof, and for the damage to the tricycle the purchase price of
which they (the private respondents) only loaned to the victim. The
petitioners, however, reneged on their promise and instead negotiated and
settled their obligations with the long-estranged wife of their late son. The
Nacario spouses prayed that the defendants, petitioners herein, be ordered
to indemnify them in the amount of P25,000.00 for the death of their son
Bienvenido, P10,000.00 for the damaged tricycle, P25,000.00 for
compensatory and exemplary damages, P5,000.00 for attorney's fees, and
for moral damages. 9
After trial, the court a quo dismissed the complaint, holding that the payment
by the defendants (herein petitioners) to the widow and her child, who are the
preferred heirs and successors-in-interest of the deceased Bienvenido to the
exclusion of his parents, the plaintiffs (herein private respondents),
extinguished any claim against the defendants (petitioners). 10
The parents appealed to the Court of Appeals which reversed the judgment
of the trial court. The appellate court ruled that the release executed by Alicia
Baracena Vda. de Nacario did not discharge the liability of the petitioners
because the case was instituted by the private respondents in their own
capacity and not as "heirs, representatives, successors, and assigns" of
Alicia; and Alicia could not have validly waived the damages being prayed for
(by the private respondents) since she was not the one who suffered these
damages arising from the death of their son. Furthermore, the appellate court
said that the petitioners "failed to rebut the testimony of the appellants
(private respondents) that they were the ones who bought the tricycle that
was damaged in the incident. Appellants had the burden of proof of such fact,
and they did establish such fact in their testimony . . . ." 11 Anent the funeral
expenses," (T)he expenses for the funeral were likewise shouldered by the
appellants (the private respondents). This was never contradicted by the
appellees (petitioners). . . . Payment (for these) were made by the appellants,
therefore, the reimbursement must accrue in their favor." 12
Consequently, the respondent appellate court ordered the petitioners to pay
the private respondents P10,000.00 for the damage of the tricycle, P5,000.00
for "complete" funeral services, P450.00 for cemetery lot, P55.00 for oracion
adulto, and P5,000.00 for attorney's fees. 13 The petitioners moved for a
reconsideration of the appellate court's decision 14 but their motion was
denied. 15 Hence, this petition. cdll
The issue here is whether or not the respondent appellate court erred in
holding that the petitioners are still liable to pay the private respondents the
aggregate amount of P20,505.00 despite the agreement of extrajudicial
settlement between the petitioners and the victim's compulsory heirs.
The petition is meritorious.
Obligations are extinguished by various modes among them being by
payment. Article 1231 of the Civil Code of the Philippines provides:
Art. 1231. Obligations are extinguished:
(1) By payment or performance;
(2) By the loss of the thing due;
(3) By the condonation or remission of the debt;
(4) By the confusion or merger of the rights of creditor and debtor; extra-judicial settlement they concluded with Alicia Baracena Vda. de
(5) By compensation; Nacario, the victim's widow and heir, as well as the natural guardian of their
(6) By novation. child, her co-heir. As a matter of fact, she executed a "Release Of Claim" in
(Emphasis ours.) favor of the petitioners.
There is no denying that the petitioners had paid their obligation arising from
the accident that occurred on November 7, 1979. The only question now is WHEREFORE, the petition is GRANTED; the decision of the Court of
whether or not Alicia, the surviving spouse and the one who received the Appeals is REVERSED and SET ASIDE and the decision of the Regional
petitioners' payment, is entitled to it. LLpr Trial Court is hereby REINSTATED. Costs against the private respondents.
Article 1240 of the Civil Code of the Philippines enumerates the persons to prLL
whom payment to extinguish an obligation should be made. SO ORDERED.
Art. 1240. Payment shall be made to the person in whose favor the Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.
obligation has been constituted, or his successor in interest, or any person
authorized to receive it.
Certainly there can be no question that Alicia and her son with the deceased
are the successors in interest referred to in law as the persons authorized to
receive payment. The Civil Code states:
Article 887. The following are compulsory heirs:
1. Legitimate children and descendants, with respect to their legitimate
parents and ascendants;
2. In default of the foregoing, legitimate parents and ascendants, with
respect to their legitimate children and descendants;
3. The widow or widower;
4. Acknowledged natural children, and natural children by legal fiction;
5. Other illegitimate children referred to in Article 287.
Compulsory heirs mentioned in Nos. 3, 4 and 5 are not excluded by those in
Nos. 1 and 2. Neither do they exclude one another. (Emphasis ours.)
Article 985. In default of legitimate children and descendants of the
deceased, his parents and ascendants shall inherit from him, to the exclusion
of collateral relatives.(Emphasis ours.) Cdpr
It is patently clear that the parents of the deceased succeed only when the
latter dies without a legitimate descendant. On the other hand, the surviving
spouse concurs with all classes of heirs. As it has been established that
Bienvenido was married to Alicia and that they begot a child, the private
respondents are not successors-in-interest of Bienvenido; they are not
compulsory heirs. The petitioners therefore acted correctly in settling their
obligation with Alicia as the widow of Bienvenido and as the natural guardian
of their lone child. This is so even if Alicia had been estranged from
Bienvenido. Mere estrangement is not a legal ground for the disqualification
of a surviving spouse as an heir of the deceased spouse.
Neither could the private respondents, as alleged creditors of Bienvenido,
seek relief and compensation from the petitioners. While it may be true that
the private respondents loaned to Bienvenido the purchase price of the
damaged tricycle and shouldered the expenses for his funeral, the said
purchase price and expenses are but money claims against the estate of
their deceased son. 16 These money claims are not the liabilities of the
petitioners who, as we have said, had been released by the agreement of the