1

G.R. No. L-13667 April 29, 1960

PRIMITIVO ANSAY, ETC., ET AL., plaintiffs-appellants,

vs.

THE BOARD OF DIRECTORS OF THE NATIONAL DEVELOPMENT COMPANY, ET AL.,

defendants-appellees.

PARAS, C. J.:

On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a

complaint praying for a 20% Christmas bonus for the years 1954 and 1955. The court a quo

on appellees' motion to dismiss, issued the following order:

Considering the motion to dismiss filed on 15 August, 1956, set for this morning;

considering that at the hearing thereof, only respondents appeared thru counsel

and there was no appearance for the plaintiffs although the court waited for

sometime for them; considering, however, that petitioners have submitted an

opposition which the court will consider together with the arguments presented by

respondents and the Exhibits marked and presented, namely, Exhibits 1 to 5, at the

hearing of the motion to dismiss; considering that the action in brief is one to

compel respondents to declare a Christmas bonus for petitioners workers in the

National Development Company; considering that the Court does not see how

petitioners may have a cause of action to secure such bonus because:

(a) A bonus is an act of liberality and the court takes it that it is not within its

judicial powers to command respondents to be liberal;

(b) Petitioners admit that respondents are not under legal duty to give such bonus

but that they had only ask that such bonus be given to them because it is a moral

obligation of respondents to give that but as this Court understands, it has no

power to compel a party to comply with a moral obligation (Art. 142, New Civil

Code.).

IN VIEW WHEREOF, dismissed. No pronouncement as to costs.

A motion for reconsideration of the afore-quoted order was denied. Hence this appeal.

Appellants contend that there exists a cause of action in their complaint because their claim

rests on moral grounds or what in brief is defined by law as a natural obligation.

Since appellants admit that appellees are not under legal obligation to give such claimed

bonus; that the grant arises only from a moral obligation or the natural obligation that they

discussed in their brief, this Court feels it urgent to reproduce at this point, the definition and

meaning of natural obligation.

Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations

are a right of action to compel their performance. Natural obligations, not being based on

positive law but on equity and natural law, do not grant a right of action to enforce their

performance, but after voluntary fulfillment by the obligor, they authorize the retention of

what has been delivered or rendered by reason thereof".

It is thus readily seen that an element of natural obligation before it can be cognizable by the

court is voluntary fulfillment by the obligor. Certainly retention can be ordered but only after

there has been voluntary performance. But here there has been no voluntary performance.

In fact, the court cannot order the performance.

At this point, we would like to reiterate what we said in the case of Philippine Education Co.

vs. CIR and the Union of Philippine Education Co., Employees (NUL) (92 Phil., 381; 48 Off.

Gaz., 5278) —

x x x x x x x x x

From the legal point of view a bonus is not a demandable and enforceable

obligation. It is so when it is made a part of the wage or salary compensation.

2

And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union, et al.,

95 Phil., 553; 50 Off. Gaz., 4253, we stated that:

Even if a bonus is not demandable for not forming part of the wage, salary or

compensation of an employee, the same may nevertheless, be granted on

equitable consideration as when it was given in the past, though withheld in

succeeding two years from low salaried employees due to salary increases.

still the facts in said Heacock case are not the same as in the instant one, and hence the

ruling applied in said case cannot be considered in the present action.

Premises considered, the order appealed from is hereby affirmed, without pronouncement

as to costs.

3

G.R. No. L-48889 May 11, 1989

DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,

vs.

THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Court of First

Instance of Iloilo and SPOUSES PATRICIO CONFESOR and JOVITA VILLAFUERTE,

respondents.

GANCAYCO, J.:

The issue posed in this petition for review on certiorari is the validity of a promissory note

which was executed in consideration of a previous promissory note the enforcement of

which had been barred by prescription.

On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an

agricultural loan from the Agricultural and Industrial Bank (AIB), now the Development of the

Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory

note of said date whereby they bound themselves jointly and severally to pay the account in

ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even

after the lapse of the aforesaid ten-year period, Confesor, who was by then a member of the

Congress of the Philippines, executed a second promissory note on April 11, 1961 expressly

acknowledging said loan and promising to pay the same on or before June 15, 1961. The new

promissory note reads as follows —

I hereby promise to pay the amount covered by my promissory note on

or before June 15, 1961. Upon my failure to do so, I hereby agree to the

foreclosure of my mortgage. It is understood that if I can secure a

certificate of indebtedness from the government of my back pay I will be

allowed to pay the amount out of it.

Said spouses not having paid the obligation on the specified date, the DBP filed a complaint

dated September 11, 1970 in the City Court of Iloilo City against the spouses for the payment

of the loan.

After trial on the merits a decision was rendered by the inferior court on December 27, 1976,

the dispositive part of which reads as follows:

WHEREFORE, premises considered, this Court renders judgment, ordering

the defendants Patricio Confesor and Jovita Villafuerte Confesor to pay

the plaintiff Development Bank of the Philippines, jointly and severally,

(a) the sum of P5,760.96 plus additional daily interest of P l.04 from

September 17, 1970, the date Complaint was filed, until said amount is

paid; (b) the sum of P576.00 equivalent to ten (10%) of the total claim by

way of attorney's fees and incidental expenses plus interest at the legal

rate as of September 17,1970, until fully paid; and (c) the costs of the

suit.

Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo wherein in

due course a decision was rendered on April 28, 1978 reversing the appealed decision and

dismissing the complaint and counter-claim with costs against the plaintiff.

A motion for reconsideration of said decision filed by plaintiff was denied in an order of

August 10, 1978. Hence this petition wherein petitioner alleges that the decision of

respondent judge is contrary to law and runs counter to decisions of this Court when

respondent judge (a) refused to recognize the law that the right to prescription may be

renounced or waived; and (b) that in signing the second promissory note respondent Patricio

Confesor can bind the conjugal partnership; or otherwise said respondent became liable in

his personal capacity. The petition is impressed with merit. The right to prescription may be

waived or renounced. Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce

prescription already obtained, but not the right to prescribe in the future.

4

Prescription is deemed to have been tacitly renounced when the

renunciation results from acts which imply the abandonment of the right

acquired.

There is no doubt that prescription has set in as to the first promissory note of February 10,

1940. However, when respondent Confesor executed the second promissory note on April

11, 1961 whereby he promised to pay the amount covered by the previous promissory note

on or before June 15, 1961, and upon failure to do so, agreed to the foreclosure of the

mortgage, said respondent thereby effectively and expressly renounced and waived his right

to the prescription of the action covering the first promissory note.

This Court had ruled in a similar case that –

... when a debt is already barred by prescription, it cannot be enforced by

the creditor. But a new contract recognizing and assuming the prescribed

debt would be valid and enforceable ... . 1

Thus, it has been held —

Where, therefore, a party acknowledges the correctness of a debt and

promises to pay it after the same has prescribed and with full knowledge

of the prescription he thereby waives the benefit of prescription. 2

This is not a mere case of acknowledgment of a debt that has prescribed but a new promise

to pay the debt. The consideration of the new promissory note is the pre-existing obligation

under the first promissory note. The statutory limitation bars the remedy but does not

discharge the debt.

A new express promise to pay a debt barred ... will take the case from the

operation of the statute of limitations as this proceeds upon the ground

that as a statutory limitation merely bars the remedy and does not

discharge the debt, there is something more than a mere moral

obligation to support a promise, to wit a – pre-existing debt which is a

sufficient consideration for the new the new promise; upon this sufficient

consideration constitutes, in fact, a new cause of action. 3

... It is this new promise, either made in express terms or deduced from

an acknowledgement as a legal implication, which is to be regarded as

reanimating the old promise, or as imparting vitality to the remedy

(which by lapse of time had become extinct) and thus enabling the

creditor to recover upon his original contract. 4

However, the court a quo held that in signing the promissory note alone, respondent

Confesor cannot thereby bind his wife, respondent Jovita Villafuerte, citing Article 166 of the

New Civil Code which provides:

Art. 166. Unless the wife has been declared a non compos mentis or a

spend thrift, or is under civil interdiction or is confined in a leprosarium,

the husband cannot alienate or encumber any real property of the

conjugal partnership without, the wife's consent. If she ay compel her to

refuses unreasonably to give her consent, the court m grant the same.

We disagree. Under Article 165 of the Civil Code, the husband is the administrator of the

conjugal partnership. As such administrator, all debts and obligations contracted by the

husband for the benefit of the conjugal partnership, are chargeable to the conjugal

partnership. 5 No doubt, in this case, respondent Confesor signed the second promissory

note for the benefit of the conjugal partnership. Hence the conjugal partnership is liable for

this obligation.

WHEREFORE, the decision subject of the petition is reversed and set aside and another

decision is hereby rendered reinstating the decision of the City Court of Iloilo City of

December 27, 1976, without pronouncement as to costs in this instance. This decision is

immediately executory and no motion for extension of time to file motion for

reconsideration shall be granted.

SO ORDERED.

5

6

G.R. No. L-23749 April 29, 1977

FAUSTINO CRUZ, plaintiff-appellant,

vs.

J. M. TUASON & COMPANY, INC., and GREGORIO ARANETA, INC., defendants-appellees.

BARREDO, J.:

FACTS:

- Plaintiff Cruz made permanent improvements on the 20 quinones land claimed by

These amounted to Php30,400 and he also incurred expenses of Php7,781.74 the Deudors.

- 1952- Defendants JM Tuason and Araneta availed Cruz’s services to be their

intermediary to make amicable settlements (compromise agreement) for them with the

Deudors of Civil Case Q-135. This civil case involved 50 quinones of land where the 20

He did so on the defendants’ promise that quinones was part of. they will convey to him

3000sq m of the given land.

- Mar 16, 1963- The compromise agreement between the Duedors and the

defendants was approved but the defendants refused to convey to Cruz the 3000sq m of

land that he now occupies. Cruz filed a petition against defendants

- Defendants filed motion to dismiss saying:

o They do not owe Cruz for the cost of the improvements he made because that

transaction was between him and the Deudors (reimbursement) .

o They do not need to convey to him 3000sq m of land based on their “alleged”

agreement because it is unenforceable under the Statute of Frauds which covers the sale of

real property or of an interest therein. (statute of frauds)

- Cruz commented that:

o They should reimburse him for the improvements because they benefitted from it

and it would be unjust enrichment on their part not to do so given he fulfilled his part. He

bases it on Art2142 NCC that “certain lawful voluntary and unilateral acts give rise to quasi-

contracts so that no one shall be unjustly enriched or benefitted at the expense of

another.” He furthers that while there was no written agreement between him and the

defendants, it was an agreement nonetheless thus is a form of quasi-contract and extra

contractual obligations arise from it.

ISSUE: Can the defendants be compelled to convey the 3000sq m of land and to reimburse

him for the developments there based on the obligation arising from the quasi-contract

with Cruz?

HELD: NO. Cruz misinterpreted Art2124.

Article 2142 of Civil Code

Certain lawful, voluntary and unilateral acts give rise to the juridical

relation of quasi-contract to the end that no one shall be unjustly

enriched or benefited at the expense of another.

From the very language of this provision, it is obvious that a presumed quasi-contract cannot

emerge as against one party when the subject matter thereof is already covered by an

existing contract with another party.

Predicated on the principle that no one should be allowed to unjustly enrich himself at the

expense of another, Article 2124 creates the legal fiction of a quasi-contract precisely

because of the absence of any actual agreement between the parties concerned.

Corollary, if the one who claims having enriched somebody has done so pursuant to a

contract with a third party, his cause of action should be against the latter, who in turn

may, if there is any ground therefor, seek relief against the party benefited.

7

It is essential that the act by which the defendant is benefited must have been voluntary

and unilateral on the part of the plaintiff.

As one distinguished civilian puts it, "The act is voluntary because the actor in quasi-

contracts is not bound by any pre-existing obligation to act. It is unilateral, because it arises

from the sole will of the actor who is not previously bound by any reciprocal or bilateral

agreement. The reason why the law creates juridical relations and imposes certain obligation

is to prevent a situation where a person is able to benefit or take advantage of such lawful,

voluntary and unilateral acts at the expense of said actor."

In the case at bar, since appellant has a clearer and more direct recourse against the

Deudors with whom he had entered into an agreement regarding the improvements and

expenditures made by him on the land of appellees, it cannot be said, in the sense

contemplated in Article 2142, that appellees have been enriched at the expense of

appellant.

8

G.R. No. L-9188 December 4, 1914

GUTIERREZ HERMANOS, plaintiff-appellee,

vs.

ENGRACIO ORENSE, defendant-appellant.

TORRES, J.:

Appeal through bill of exceptions filed by counsel for the appellant from the judgment on

April 14, 1913, by the Honorable P. M. Moir, judge, wherein he sentenced the defendant to

make immediate delivery of the property in question, through a public instrument, by

transferring and conveying to the plaintiff all his rights in the property described in the

complaint and to pay it the sum of P780, as damages, and the costs of the suit.

On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards amended, in

the Court of First Instance of Albay against Engacio Orense, in which he set forth that on and

before February 14, 1907, the defendant Orense had been the owner of a parcel of land, with

the buildings and improvements thereon, situated in the pueblo of Guinobatan, Albay, the

location, area and boundaries of which were specified in the complaint; that the said

property has up to date been recorded in the new property registry in the name of the said

Orense, according to certificate No. 5, with the boundaries therein given; that, on February

14, 1907, Jose Duran, a nephew of the defendant, with the latter's knowledge and consent,

executed before a notary a public instrument whereby he sold and conveyed to the plaintiff

company, for P1,500, the aforementioned property, the vendor Duran reserving to himself

the right to repurchase it for the same price within a period of four years from the date of

the said instrument; that the plaintiff company had not entered into possession of the

purchased property, owing to its continued occupancy by the defendant and his nephew,

Jose Duran, by virtue of a contract of lease executed by the plaintiff to Duran, which contract

was in force up to February 14, 1911; that the said instrument of sale of the property,

executed by Jose Duran, was publicly and freely confirmed and ratified by the defendant

Orense; that, in order to perfect the title to the said property, but that the defendant Orense

refused to do so, without any justifiable cause or reason, wherefore he should be compelled

to execute the said deed by an express order of the court, for Jose Duran is notoriously

insolvent and cannot reimburse the plaintiff company for the price of the sale which he

received, nor pay any sum whatever for the losses and damages occasioned by the said sale,

aside from the fact that the plaintiff had suffered damage by losing the present value of the

property, which was worth P3,000; that, unless such deed of final conveyance were executed

in behalf of the plaintiff company, it would be injured by the fraud perpetrated by the

vendor, Duran, in connivance with the defendant; that the latter had been occupying the said

property since February 14, 1911, and refused to pay the rental thereof, notwithstanding the

demand made upon him for its payment at the rate of P30 per month, the just and

reasonable value for the occupancy of the said property, the possession of which the

defendant likewise refused to deliver to the plaintiff company, in spite of the continuous

demands made upon him, the defendant, with bad faith and to the prejudice of the firm of

Gutierrez Hermanos, claiming to have rights of ownership and possession in the said

property. Therefore it was prayed that judgment be rendered by holding that the land and

improvements in question belong legitimately and exclusively to the plaintiff, and ordering

the defendant to execute in the plaintiff's behalf the said instrument of transfer and

conveyance of the property and of all the right, interest, title and share which the defendant

has therein; that the defendant be sentenced to pay P30 per month for damages and rental

of the property from February 14, 1911, and that, in case these remedies were not granted

to the plaintiff, the defendant be sentenced to pay to it the sum of P3,000 as damages,

together with interest thereon since the date of the institution of this suit, and to pay the

costs and other legal expenses.

The demurrer filed to the amended complaint was overruled, with exception on the part of

the defendant, whose counsel made a general denial of the allegations contained in the

complaint, excepting those that were admitted, and specifically denied paragraph 4 thereof

to the effect that on February 14, 1907, Jose Duran executed the deed of sale of the property

in favor of the plaintiff with the defendant's knowledge and consent.1awphil.net

As the first special defense, counsel for the defendant alleged that the facts set forth in the

complaint with respect to the execution of the deed did not constitute a cause of action, nor

did those alleged in the other form of action for the collection of P3,000, the value of the

realty.

9

As the second special defense, he alleged that the defendant was the lawful owner of the

property claimed in the complaint, as his ownership was recorded in the property registry,

and that, since his title had been registered under the proceedings in rem prescribed by Act

No. 496, it was conclusive against the plaintiff and the pretended rights alleged to have been

acquired by Jose Duran prior to such registration could not now prevail; that the defendant

had not executed any written power of attorney nor given any verbal authority to Jose Duran

in order that the latter might, in his name and representation, sell the said property to the

plaintiff company; that the defendant's knowledge of the said sale was acquired long after

the execution of the contract of sale between Duran and Gutierrez Hermanos, and that prior

thereto the defendant did not intentionally and deliberately perform any act such as might

have induced the plaintiff to believe that Duran was empowered and authorized by the

defendant and which would warrant him in acting to his own detriment, under the influence

of that belief. Counsel therefore prayed that the defendant be absolved from the complaint

and that the plaintiff be sentenced to pay the costs and to hold his peace forever.

After the hearing of the case and an examination of the evidence introduced by both parties,

the court rendered the judgment aforementioned, to which counsel for the defendant

excepted and moved for a new trial. This motion was denied, an exception was taken by the

defendant and, upon presentation of the proper bill of exceptions, the same was approved,

certified and forwarded to the clerk of his court.

This suit involves the validity and efficacy of the sale under right of redemption of a parcel of

land and a masonry house with the nipa roof erected thereon, effected by Jose Duran, a

nephew of the owner of the property, Engracio Orense, for the sum of P1,500 by means of a

notarial instrument executed and ratified on February 14, 1907.

After the lapse of the four years stipulated for the redemption, the defendant refused to

deliver the property to the purchaser, the firm of Gutierrez Hermanos, and to pay the rental

thereof at the rate of P30 per month for its use and occupation since February 14, 1911,

when the period for its repurchase terminated. His refusal was based on the allegations that

he had been and was then the owner of the said property, which was registered in his name

in the property registry; that he had not executed any written power of attorney to Jose

Duran, nor had he given the latter any verbal authorization to sell the said property to the

plaintiff firm in his name; and that, prior to the execution of the deed of sale, the defendant

performed no act such as might have induced the plaintiff to believe that Jose Duran was

empowered and authorized by the defendant to effect the said sale.

The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said

province, with estafa, for having represented himself in the said deed of sale to be the

absolute owner of the aforesaid land and improvements, whereas in reality they did not

belong to him, but to the defendant Orense. However, at the trial of the case Engracio

Orense, called as a witness, being interrogated by the fiscal as to whether he and consented

to Duran's selling the said property under right of redemption to the firm of Gutierrez

Hermanos, replied that he had. In view of this statement by the defendant, the court

acquitted Jose Duran of the charge of estafa.

As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle,

Engacio Orense, the owner of the property, to the effect that he had consented to his

nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos,

counsel for this firm filed a complainant praying, among other remedies, that the defendant

Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff

company of all the right, title and interest with Orense had in the property sold, and to pay to

the same the rental of the property due from February 14, 1911.itc-alf

Notwithstanding the allegations of the defendant, the record in this case shows that he did

give his consent in order that his nephew, Jose Duran, might sell the property in question to

Gutierrez Hermanos, and that he did thereafter confirm and ratify the sale by means of a

public instrument executed before a notary.

It having been proven at the trial that he gave his consent to the said sale, it follows that the

defendant conferred verbal, or at least implied, power of agency upon his nephew Duran,

who accepted it in the same way by selling the said property. The principal must therefore

fulfill all the obligations contracted by the agent, who acted within the scope of his authority.

(Civil Code, arts. 1709, 1710 and 1727.)

10

Even should it be held that the said consent was granted subsequently to the sale, it is

unquestionable that the defendant, the owner of the property, approved the action of his

nephew, who in this case acted as the manager of his uncle's business, and Orense'r

ratification produced the effect of an express authorization to make the said sale. (Civil Code,

arts. 1888 and 1892.)

Article 1259 of the Civil Code prescribes: "No one can contract in the name of another

without being authorized by him or without his legal representation according to law.

A contract executed in the name of another by one who has neither his

authorization nor legal representation shall be void, unless it should be ratified by

the person in whose name it was executed before being revoked by the other

contracting party.

The sworn statement made by the defendant, Orense, while testifying as a witness at the

trial of Duran for estafa, virtually confirms and ratifies the sale of his property effected by his

nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects which

the contract may have contained from the moment of its execution.

The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void

in the beginning, but afterwards became perfectly valid and cured of the defect of nullity it

bore at its execution by the confirmation solemnly made by the said owner upon his stating

under oath to the judge that he himself consented to his nephew Jose Duran's making the

said sale. Moreover, pursuant to article 1309 of the Code, the right of action for nullification

that could have been brought became legally extinguished from the moment the contract

was validly confirmed and ratified, and, in the present case, it is unquestionable that the

defendant did confirm the said contract of sale and consent to its execution.

On the testimony given by Engacio Orense at the trial of Duran for estafa, the latter was

acquitted, and it would not be just that the said testimony, expressive of his consent to the

sale of his property, which determined the acquittal of his nephew, Jose Duran, who then

acted as his business manager, and which testimony wiped out the deception that in the

beginning appeared to have been practiced by the said Duran, should not now serve in

passing upon the conduct of Engracio Orense in relation to the firm of Gutierrez Hermanos in

order to prove his consent to the sale of his property, for, had it not been for the consent

admitted by the defendant Orense, the plaintiff would have been the victim of estafa.

If the defendant Orense acknowledged and admitted under oath that he had consented to

Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is not just nor is it

permissible for him afterward to deny that admission, to the prejudice of the purchaser, who

gave P1,500 for the said property.

The contract of sale of the said property contained in the notarial instrument of February 14,

1907, is alleged to be invalid, null and void under the provisions of paragraph 5 of section 335

of the Code of Civil Procedure, because the authority which Orense may have given to Duran

to make the said contract of sale is not shown to have been in writing and signed by Orense,

but the record discloses satisfactory and conclusive proof that the defendant Orense gave his

consent to the contract of sale executed in a public instrument by his nephew Jose Duran.

Such consent was proven in a criminal action by the sworn testimony of the principal and

presented in this civil suit by other sworn testimony of the same principal and by other

evidence to which the defendant made no objection. Therefore the principal is bound to

abide by the consequences of his agency as though it had actually been given in writing

(Conlu vs. Araneta and Guanko, 15 Phil. Rep., 387; Gallemit vs. Tabiliran, 20 Phil. Rep., 241;

Kuenzle & Streiff vs. Jiongco, 22 Phil. Rep., 110.)

The repeated and successive statements made by the defendant Orense in two actions,

wherein he affirmed that he had given his consent to the sale of his property, meet the

requirements of the law and legally excuse the lack of written authority, and, as they are a

full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an

express power of agency.

The judgment appealed from in harmony with the law and the merits of the case, and the

errors assigned thereto have been duly refuted by the foregoing considerations, so it should

be affirmed.

The judgment appealed from is hereby affirmed, with the costs against the appellant.

11

12

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,

vs.

THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO

ASEJO, JOSEFA ASEJO and SANTIAGO ASEJO, respondents.

SARMIENTO, J.:

In issue herein are property and property rights, a familiar subject of controversy and a

wellspring of enormous conflict that has led not only to protracted legal entanglements but

to even more bitter consequences, like strained relationships and even the forfeiture of lives.

It is a question that likewise reflects a tragic commentary on prevailing social and cultural

values and institutions, where, as one observer notes, wealth and its accumulation are the

basis of self-fulfillment and where property is held as sacred as life itself. "It is in the defense

of his property," says this modern thinker, that one "will mobilize his deepest protective

devices, and anybody that threatens his possessions will arouse his most passionate enmity."

1

The task of this Court, however, is not to judge the wisdom of values; the burden of

reconstructing the social order is shouldered by the political leadership-and the people

themselves.

The parties have come to this Court for relief and accordingly, our responsibility is to give

them that relief pursuant to the decree of law.

The antecedent facts are quoted from the decision 2 appealed from:

xxx xxx xxx

... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in

Legaspi City with an area of some 11,325 sq. m. originally belonged to

one Felisa Alzul as her own private property; she married twice in her

lifetime; the first, with one Bernabe Adille, with whom she had as an only

child, herein defendant Rustico Adille; in her second marriage with one

Procopio Asejo, her children were herein plaintiffs, — now, sometime in

1939, said Felisa sold the property in pacto de retro to certain 3rd

persons, period of repurchase being 3 years, but she died in 1942 without

being able to redeem and after her death, but during the period of

redemption, herein defendant repurchased, by himself alone, and after

that, he executed a deed of extra-judicial partition representing himself

to be the only heir and child of his mother Felisa with the consequence

that he was able to secure title in his name alone also, so that OCT. No.

21137 in the name of his mother was transferred to his name, that was in

1955; that was why after some efforts of compromise had failed, his half-

brothers and sisters, herein plaintiffs, filed present case for partition with

accounting on the position that he was only a trustee on an implied trust

when he redeemed,-and this is the evidence, but as it also turned out

that one of plaintiffs, Emeteria Asejo was occupying a portion, defendant

counterclaimed for her to vacate that, —

Well then, after hearing the evidence, trial Judge sustained defendant in

his position that he was and became absolute owner, he was not a

trustee, and therefore, dismissed case and also condemned plaintiff

occupant, Emeteria to vacate; it is because of this that plaintiffs have

come here and contend that trial court erred in:

I. ... declaring the defendant absolute owner of the property;

II. ... not ordering the partition of the property; and

III. ... ordering one of the plaintiffs who is in possession of the portion of

the property to vacate the land, p. 1 Appellant's brief.

which can be reduced to simple question of whether or not on the basis of evidence and law,

judgment appealed from should be maintained. 3

13

xxx xxx xxx

The respondent Court of appeals reversed the trial Court, 4 and ruled for the plaintiffs-

appellants, the private respondents herein. The petitioner now appeals, by way of certiorari,

from the Court's decision.

We required the private respondents to file a comment and thereafter, having given due

course to the petition, directed the parties to file their briefs. Only the petitioner, however,

filed a brief, and the private respondents having failed to file one, we declared the case

submitted for decision.

The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the

property held in common?

Essentially, it is the petitioner's contention that the property subject of dispute devolved

upon him upon the failure of his co-heirs to join him in its redemption within the period

required by law. He relies on the provisions of Article 1515 of the old Civil Article 1613 of the

present Code, giving the vendee a retro the right to demand redemption of the entire

property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with aspect to his share alone. 5

While the records show that the petitioner redeemed the property in its entirety,

shouldering the expenses therefor, that did not make him the owner of all of it. In other

words, it did not put to end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect

reimbursement from the remaining co-owners. 6 There is no doubt that redemption of

property entails a necessary expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-

owners to contribute to the expenses of preservation of the thing or right

owned in common and to the taxes. Any one of the latter may exempt

himself from this obligation by renouncing so much of his undivided

interest as may be equivalent to his share of the expenses and taxes. No

such waiver shall be made if it is prejudicial to the co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee

a retro, under Article 1613 of the Code, "may not be compelled to consent to a partial

redemption," the redemption by one co-heir or co-owner of the property in its totality does

not vest in him ownership over it. Failure on the part of all the co-owners to redeem it

entitles the vendee a retro to retain the property and consolidate title thereto in his name. 7

But the provision does not give to the redeeming co-owner the right to the entire property. It

does not provide for a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his

name terminate the existing co-ownership. While his half-brothers and sisters are, as we

said, liable to him for reimbursement as and for their shares in redemption expenses, he

cannot claim exclusive right to the property owned in common. Registration of property is

not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if

there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private

respondents. The Civil Code states:

ART. 1456. If property is acquired through mistake or fraud, the person

obtaining it is, by force of law, considered a trustee of an implied trust for

the benefit of the person from whom the property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the

property. The petitioner's pretension that he was the sole heir to the land in the affidavit of

extrajudicial settlement he executed preliminary to the registration thereof betrays a clear

effort on his part to defraud his brothers and sisters and to exercise sole dominion over the

property. The aforequoted provision therefore applies.

14

It is the view of the respondent Court that the petitioner, in taking over the property, did so

either on behalf of his co-heirs, in which event, he had constituted himself a negotiorum

gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is

guilty of fraud, and must act as trustee, the private respondents being the beneficiaries,

under the Article 1456. The evidence, of course, points to the second alternative the

petitioner having asserted claims of exclusive ownership over the property and having acted

in fraud of his co-heirs. He cannot therefore be said to have assume the mere management

of the property abandoned by his co-heirs, the situation Article 2144 of the Code

contemplates. In any case, as the respondent Court itself affirms, the result would be the

same whether it is one or the other. The petitioner would remain liable to the Private

respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand

on property (owned in common) held by another (co-owner) following the required number

of years. In that event, the party in possession acquires title to the property and the state of

co-ownership is ended . 8 In the case at bar, the property was registered in 1955 by the

petitioner, solely in his name, while the claim of the private respondents was presented in

1974. Has prescription then, set in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership,

must have been preceded by repudiation (of the co-ownership). The act of repudiation, in

turn is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an

act of repudiation is clearly made known to the other co-owners; (3) the evidence thereon is

clear and conclusive, and (4) he has been in possession through open, continuous, exclusive,

and notorious possession of the property for the period required by law. 9

The instant case shows that the petitioner had not complied with these requisites. We are

not convinced that he had repudiated the co-ownership; on the contrary, he had deliberately

kept the private respondents in the dark by feigning sole heirship over the estate under

dispute. He cannot therefore be said to have "made known" his efforts to deny the co-

ownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion

of the land up to the present, yet, the petitioner has not taken pains to eject her therefrom.

As a matter of fact, he sought to recover possession of that portion Emeteria is occupying

only as a counterclaim, and only after the private respondents had first sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, 10 but it has

likewise been our holding that the Torrens title does not furnish a shield for fraud. 11 It is

therefore no argument to say that the act of registration is equivalent to notice of

repudiation, assuming there was one, notwithstanding the long-standing rule that

registration operates as a universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974

over the estate registered in 1955. While actions to enforce a constructive trust prescribes in

ten years, 12

reckoned from the date of the registration of the property, 13

we, as we said, are

not prepared to count the period from such a date in this case. We note the petitioner's sub

rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent

misrepresentation in his unilateral affidavit of extrajudicial settlement that he is "the only

heir and child of his mother Feliza with the consequence that he was able to secure title in

his name also." 14 Accordingly, we hold that the right of the private respondents commenced

from the time they actually discovered the petitioner's act of defraudation. 15 According to

the respondent Court of Appeals, they "came to know [of it] apparently only during the

progress of the litigation." 16 Hence, prescription is not a bar.

Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in

a motion to dismiss or in the answer otherwise it is deemed waived, 17 and here, the

petitioner never raised that defense. 18 There are recognized exceptions to this rule, but the

petitioner has not shown why they apply.

WHEREFORE, there being no reversible error committed by the respondent Court of Appeals,

the petition is DENIED. The Decision sought to be reviewed is hereby AFFIRMED in toto. No

pronouncement as to costs.

SO ORDERED,

15

G.R. No. 82670 September 15, 1989

DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING

APPAREL," petitioner,

vs.

MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF APPEALS,

respondents.

CORTES, J.:

Assailed in this petition for review on certiorari is the judgment of the Court of Appeals,

which, applying the doctrine of solutio indebiti, reversed the decision of the Regional Trial

Court, Branch CV, Quezon City by deciding in favor of private respondent.

Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the

manufacture of ladies garments, children's wear, men's apparel and linens for local and

foreign buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as

FACETS) of the United States.

In the course of the business transaction between the two, FACETS from time to time

remitted certain amounts of money to petitioner in payment for the items it had purchased.

Sometime in August 1980, FACETS instructed the First National State Bank of New Jersey,

Newark, New Jersey, U.S.A. (hereinafter referred to as FNSB) to transfer $10,000.00 to

petitioner via Philippine National Bank, Sta. Cruz Branch, Manila (hereinafter referred to as

PNB).

Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and

Trust Corporation to effect the above- mentioned transfer through its facilities and to charge

the amount to the account of FNSB with private respondent. Although private respondent

was able to send a telex to PNB to pay petitioner $10,000.00 through the Pilipinas Bank,

where petitioner had an account, the payment was not effected immediately because the

payee designated in the telex was only "Wearing Apparel." Upon query by PNB, private

respondent sent PNB another telex dated August 27, 1980 stating that the payment was to

be made to "Irene's Wearing Apparel." On August 28, 1980, petitioner received the

remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.

Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the

money to petitioner, FACETS informed FNSB about the situation. On September 8, 1980,

unaware that petitioner had already received the remittance, FACETS informed private

respondent about the delay and at the same time amended its instruction by asking it to

effect the payment through the Philippine Commercial and Industrial Bank (hereinafter

referred to as PCIB) instead of PNB.

Accordingly, private respondent, which was also unaware that petitioner had already

received the remittance of $10,000.00 from PNB instructed the PCIB to pay $10,000.00 to

petitioner. Hence, on September 11, 1980, petitioner received a second $10,000.00

remittance.

Private respondent debited the account of FNSB for the second $10,000.00 remittance

effected through PCIB. However, when FNSB discovered that private respondent had made a

duplication of the remittance, it asked for a recredit of its account in the amount of

$10,000.00. Private respondent complied with the request.

Private respondent asked petitioner for the return of the second remittance of $10,000.00

but the latter refused to pay. On May 12, 1982 a complaint was filed with the Regional Trial

Court, Branch CV, Quezon City which was decided in favor of petitioner as defendant. The

trial court ruled that Art. 2154 of the New Civil Code is not applicable to the case because the

second remittance was made not by mistake but by negligence and petitioner was not

unjustly enriched by virtue thereof [Record, p. 234]. On appeal, the Court of Appeals held

that Art. 2154 is applicable and reversed the RTC decision. The dispositive portion of the

Court of Appeals' decision reads as follows:

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE

and another one entered in favor of plaintiff-appellant and against

defendant-appellee Domelita (sic) M. Andres, doing business under the

name and style "Irene's Wearing Apparel" to reimburse and/or return to

16

plaintiff-appellant the amount of $10,000.00, its equivalent in Philippine

currency, with interests at the legal rate from the filing of the complaint

on May 12, 1982 until the whole amount is fully paid, plus twenty

percent (20%) of the amount due as attomey's fees; and to pay the costs.

With costs against defendant-appellee.

SO ORDERED. [Rollo, pp. 29-30.]

Thereafter, this petition was filed. The sole issue in this case is whether or not the private

respondent has the right to recover the second $10,000.00 remittance it had delivered to

petitioner. The resolution of this issue would hinge on the applicability of Art. 2154 of the

New Civil Code which provides that:

Art. 2154. If something received when there is no right to demand it, and

it was unduly delivered through mistake, the obligation to return it arises.

This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:

Art. 1895. If a thing is received when there was no right to claim it and

which, through an error, has been unduly delivered, an obligation to

restore it arises.

In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo

explained the nature of this article thus:

Article 1895 [now Article 2154] of the Civil Code abovequoted, is

therefore applicable. This legal provision, which determines the quasi-

contract of solution indebiti, is one of the concrete manifestations of the

ancient principle that no one shall enrich himself unjustly at the expense

of another. In the Roman Law Digest the maxim was formulated thus:

"Jure naturae acquum est, neminem cum alterius detrimento et injuria

fieri locupletiorem." And the Partidas declared: "Ninguno non deue

enriquecerse tortizeramente con dano de otro." Such axiom has grown

through the centuries in legislation, in the science of law and in court

decisions. The lawmaker has found it one of the helpful guides in framing

statutes and codes. Thus, it is unfolded in many articles scattered in the

Spanish Civil Code. (See for example, articles, 360, 361, 464, 647, 648,

797, 1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-

honored aphorism has also been adopted by jurists in their study of the

conflict of rights. It has been accepted by the courts, which have not

hesitated to apply it when the exigencies of right and equity demanded

its assertion. It is a part of that affluent reservoir of justice upon which

judicial discretion draws whenever the statutory laws are inadequate

because they do not speak or do so with a confused voice. [at p. 632.]

For this article to apply the following requisites must concur: "(1) that he who paid was not

under obligation to do so; and, (2) that payment was made by reason of an essential mistake

of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563 (1960)].

It is undisputed that private respondent delivered the second $10,000.00 remittance.

However, petitioner contends that the doctrine of solutio indebiti, does not apply because its

requisites are absent.

First, it is argued that petitioner had the right to demand and therefore to retain the second

$10,000.00 remittance. It is alleged that even after the two $10,000.00 remittances are

credited to petitioner's receivables from FACETS, the latter allegedly still had a balance of

$49,324.00. Hence, it is argued that the last $10,000.00 remittance being in payment of a

pre-existing debt, petitioner was not thereby unjustly enriched.

The contention is without merit.

The contract of petitioner, as regards the sale of garments and other textile products, was

with FACETS. It was the latter and not private respondent which was indebted to petitioner.

On the other hand, the contract for the transmittal of dollars from the United States to

petitioner was entered into by private respondent with FNSB. Petitioner, although named as

17

the payee was not privy to the contract of remittance of dollars. Neither was private

respondent a party to the contract of sale between petitioner and FACETS. There being no

contractual relation between them, petitioner has no right to apply the second $10,000.00

remittance delivered by mistake by private respondent to the outstanding account of

FACETS.

Petitioner next contends that the payment by respondent bank of the second $10,000.00

remittance was not made by mistake but was the result of negligence of its employees. In

connection with this the Court of Appeals made the following finding of facts:

The fact that Facets sent only one remittance of $10,000.00 is not

disputed. In the written interrogatories sent to the First National State

Bank of New Jersey through the Consulate General of the Philippines in

New York, Adelaide C. Schachel, the investigation and reconciliation clerk

in the said bank testified that a request to remit a payment for Facet

Funwear Inc. was made in August, 1980. The total amount which the First

National State Bank of New Jersey actually requested the plaintiff-

appellant Manufacturers Hanover & Trust Corporation to remit to Irene's

Wearing Apparel was US $10,000.00. Only one remittance was requested

by First National State Bank of New Jersey as per instruction of Facets

Funwear (Exhibit "J", pp. 4-5).

That there was a mistake in the second remittance of US $10,000.00 is

borne out by the fact that both remittances have the same reference

invoice number which is 263 80. (Exhibits "A-1- Deposition of Mr. Stanley

Panasow" and "A-2-Deposition of Mr. Stanley Panasow").

Plaintiff-appellant made the second remittance on the wrong assumption

that defendant-appellee did not receive the first remittance of US

$10,000.00. [Rollo, pp. 26-27.]

It is evident that the claim of petitioner is anchored on the appreciation of the attendant

facts which petitioner would have this Court review. The Court holds that the finding by the

Court of Appeals that the second $10,000.00 remittance was made by mistake, being based

on substantial evidence, is final and conclusive. The rule regarding questions of fact being

raised with this Court in a petition for certiorari under Rule 45 of the Revised Rules of Court

has been stated in Remalante v. Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:

The rule in this jurisdiction is that only questions of law may be raised in a

petition for certiorari under Rule 45 of the Revised Rules of Court. "The

jurisdiction of the Supreme Court in cases brought to it from the Court of

Appeals is limited to reviewing and revising the errors of law imputed to

it, its findings of fact being conclusive" [Chan v. Court of Appeals, G.R. No.

L-27488, June 30, 1970, 33 SCRA 737, reiterating a long line of decisions].

This Court has emphatically declared that "it is not the function of the

Supreme Court to analyze or weigh such evidence all over again, its

jurisdiction being limited to reviewing errors of law that might have been

committed by the lower court" [Tiongco v. De la Merced, G.R. No. L-

24426, July 25, 1974, 58 SCRA 89; Corona v. Court of Appeals, G.R. No. L-

62482, April 28, 1983, 121 SCRA 865; Baniqued v. Court of Appeals, G. R.

No. L-47531, February 20, 1984, 127 SCRA 596]. "Barring, therefore, a

showing that the findings complained of are totally devoid of support in

the record, or that they are so glaringly erroneous as to constitute serious

abuse of discretion, such findings must stand, for this Court is not

expected or required to examine or contrast the oral and documentary

evidence submitted by the parties" [Santa Ana, Jr. v. Hernandez, G.R. No.

L-16394, December 17, 1966, 18 SCRA 9731. [at pp. 144-145.]

Petitioner invokes the equitable principle that when one of two innocent persons must suffer

by the wrongful act of a third person, the loss must be borne by the one whose negligence

was the proximate cause of the loss.

The rule is that principles of equity cannot be applied if there is a provision of law specifically

applicable to a case [Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No. L-29701, March 16,

1987,148 SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958, July 10, 1986, 142 SCRA

18

587; Rural Bank of Paranaque, Inc. v. Remolado, G.R. No. 62051, March 18, 1985, 135 SCRA

409; Cruz v. Pahati, 98 Phil. 788 (1956)]. Hence, the Court in the case of De Garcia v. Court of

Appeals, G.R. No. L-20264, January 30, 1971, 37 SCRA 129, citing Aznar v. Yapdiangco, G.R.

No. L-18536, March 31, 1965, 13 SCRA 486, held:

... The common law principle that where one of two innocent persons

must suffer by a fraud perpetrated by another, the law imposes the loss

upon the party who, by his misplaced confidence, has enabled the fraud

to be committed, cannot be applied in a case which is covered by an

express provision of the new Civil Code, specifically Article 559. Between

a common law principle and a statutory provision, the latter must prevail

in this jurisdiction. [at p. 135.]

Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio

indebiti, applies in the case at bar, the Court must reject the common law principle invoked

by petitioner.

Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the

fact that from the time the second $10,000.00 remittance was made, five hundred and ten

days had elapsed before private respondent demanded the return thereof. Needless to say,

private respondent instituted the complaint for recovery of the second $10,000.00

remittance well within the six years prescriptive period for actions based upon a quasi-

contract [Art. 1145 of the New Civil Code].

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is hereby

AFFIRMED.

SO ORDERED.

19

G.R. No. L-17447 April 30, 1963

GONZALO PUYAT & SONS, INC., plaintiff-appelle,

vs.

CITY OF MANILA AND MARCELO SARMIENTO, as City Treasurer of Manila, defendants-

appellants

PAREDES, J.:

This is an appeal from the judgment of the CFI of Manila, the dispostive portion of which

reads:

"xxx Of the payments made by the plaintiff, only that made on October 25, 1950 in

the amount of P1,250.00 has prescribed Payments made in 1951 and thereafter are

still recoverable since the extra-judicial demand made on October 30, 1956 was

well within the six-year prescriptive period of the New CivilCode.

In view of the foregoing considerations, judgment is hereby rendered in favor of

the plaintiff, ordering the defendants to refund the amount of P29,824.00, without

interest. No costs.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be

admitted and approved by this Honorable Court, without prejudice to the parties

adducing other evidence to prove their case not covered by this stipulation of facts.

1äwphï1.ñët

Defendants' counterclaim is hereby dismissed for not having been substantiated."

On August 11, 1958, the plaintiff Gonzalo Puyat & Sons, Inc., filed an action for refund of

Retail DealerlsTaxes paid by it, corresponding to the first Quarter of 1950 up to the third

Quarter of 1956, amounting to P33,785.00, against the City of Manila and its City

Treasurer.The case was submitted on the following stipulation of facts, to wit--

"1. That the plaintiff is a corporation duly organized and existing according to the

laws of the Philippines, with offices at Manila; while defendant City Manila is a

Municipal Corporation duly organized in accordance with the laws of the

Philippines, and defendant Marcelino Sarmiento is the dulyqualified incumbent City

Treasurer of Manila;

"2. That plaintiff is engaged in the business of manufacturing and selling all kinds of

furniture at its factory at 190 Rodriguez-Arias, San Miguel, Manila, and has a

display room located at 604-606 Rizal Avenue, Manila, wherein it displays the

various kind of furniture manufactured by it and sells some goods imported by it,

such as billiard balls, bowling balls and other accessories;

"3. That acting pursuant to the provisions of Sec. 1. group II, of Ordinance No. 3364,

defendant City Treasurer of Manilaassessed from plaintiff retail dealer's tax

corresponding to the quarters hereunder stated on the sales of furniture

manufactured and sold by it at its factory site, all of which assessments plaintiff

paid without protest in the erroneous belief that it was liable therefor, on the dates

and in the amount enumerated herein below:

Period Date

Paid O.R. No.

Amount

Assessed

and Paid.

First Quarter 1950 Jan. 25,

1950 436271X P1,255.00

Second Quarter 1950 Apr. 25,

1950 215895X 1,250.00

Third Quarter 1950 Jul. 25,

1950 243321X 1,250.00

Fourth Quarter 1950 Oct. 25, 271165X 1,250.00

20

1950

(Follows the assessment for different quarters in 1951, 1952,

1953, 1954 and 1955, fixing the same amount quarterly.) x x x..

First Quarter 1956 Jan. 25,

1956 823047X 1,250.00

Second Quarter 1956 Apr. 25,

1956 855949X 1,250.00

Third Quarter 1956 Jul. 25,

1956 880789X 1,250.00

T O T A L . . . . . . . . . . . . .

P33,785.00

===========

"4. That plaintiff, being a manufacturer of various kinds of furniture, is exempt from

the payment of taxes imposed under the provisions of Sec. 1, Group II, of

Ordinance No. 3364,which took effect on September 24, 1956, on the sale of the

various kinds of furniture manufactured by it pursuant to the provisions of Sec.

18(n) of Republic Act No. 409 (Revised Charter of Manila), as restated in Section 1

of Ordinance No.3816.

"5. That, however, plaintiff, is liable for the payment of taxes prescribed in Section

1, Group II or Ordinance No. 3364mas amended by Sec. 1, Group II of Ordinance

No. 3816, which took effect on September 24, 1956, on the sales of imported

billiard balls, bowling balls and other accessories at its displayroom. The taxes paid

by the plaintiff on the sales of said article are as follows:

x x x x x x x x x

"6. That on October 30, 1956, the plaintiff filed with defendant City Treasurer of

Manila, a formal request for refund of the retail dealer's taxes unduly paid by it as

aforestated in paragraph 3, hereof.

"7. That on July 24, 1958, the defendant City Treasurer of Maniladefinitely denied

said request for refund.

"8. Hence on August 21, 1958, plaintiff filed the present complaint.

"9. Based on the above stipulation of facts, the legal issues to be resolved by this

Honorable Court are: (1) the period of prescription applicable in matters of refund

of municipal taxes errenously paid by a taxpayer and (2) refund of taxes not paid

under protest. x x x."

Said judgment was directly appealed to this Court on two dominant issues to wit: (1)

Whether or not the amounts paid by plaintiff-appelle, as retail dealer's taxes under

Ordinance 1925, as amended by Ordinance No. 3364of the City of Manila, without protest,

are refundable;(2) Assuming arguendo, that plaintiff-appellee is entitled to the refund of the

retail taxes in question, whether or not the claim for refund filed in October 1956, in so far as

said claim refers to taxes paid from 1950 to 1952 has already prescribed. .

Under the first issue, defendants-appellants contend tht the taxes in question were

voluntarily paid by appellee company and since, in this jurisdiction, in order that a legal basis

arise for claim of refund of taxes erroneously assessed, payment thereof must be made

under protest, and this being a condition sine qua non, and no protest having been made, --

verbally or in writing, therebyindicating that the payment was voluntary, the action must fail.

Cited in support of the above contention, are the cases of Zaragoza vs. Alfonso, 46 Phil. 160-

161, and Gavino v. Municipality of Calapan, 71 Phil. 438..

In refutation of the above stand of appellants, appellee avers tht the payments could not

have been voluntary.At most, they were paid "mistakenly and in good faith"and "without

protest in the erroneous belief that it was liable thereof." Voluntariness is incompatible with

protest and mistake. It submits that this is a simple case of "solutio indebiti"..

21

Appellants do not dispute the fact that appellee-companyis exempted from the payment of

the tax in question.This is manifest from the reply of appellant City Treasurer stating that

sales of manufactured products at the factory site are not taxable either under the

Wholesalers Ordinance or under the Retailers' Ordinance. With this admission, it would seem

clear that the taxes collected from appellee were paid, thru an error or mistake, which places

said act of payment within the pale of the new Civil Code provision on solutio indebiti. The

appellant City of Manila, at the very start, notwithstanding the Ordinance imposing the

Retailer's Tax, had no right to demand payment thereof..

"If something is received when there is no right to demand it, and it was unduly delivered

through mistake, the obligationto retun it arises" (Art. 2154, NCC)..

Appelle categorically stated that the payment was not voluntarily made, (a fact found also by

the lower court),but on the erronoues belief, that they were due. Under this circumstance,

the amount paid, even without protest is recoverable. "If the payer was in doubt whether the

debt was due, he may recover if he proves that it was not due" (Art. 2156, NCC). Appellee

had duly proved that taxes were not lawfully due. There is, therefore, no doubt that the

provisions of solutio indebtiti, the new Civil Code, apply to the admitted facts of the case..

With all, appellant quoted Manresa as saying: "x x x De la misma opinion son el Sr. Sanchez

Roman y el Sr. Galcon, et cual afirma que si la paga se hizo por error de derecho, ni existe el

cuasi-contrato ni esta obligado a la restitucion el que cobro, aunque no se debiera lo que se

pago" (Manresa, Tomo 12, paginas 611-612). This opinion, however, has already lost its

persuasiveness, in view of the provisions of the Civil Code, recognizing "error de derecho" as

a basis for the quasi-contract, of solutio indebiti. .

"Payment by reason of a mistake in the contruction or application of a doubtful or difficult

question of law may come within the scope of the preceding article" (Art. 21555)..

There is no gainsaying the fact that the payments made by appellee was due to a mistake in

the construction of a doubtful question of law. The reason underlying similar provisions, as

applied to illegal taxation, in the United States, is expressed in the case of Newport v. Ringo,

37 Ky. 635, 636; 10 S.W. 2, in the following manner:.

"It is too well settled in this state to need the citation of authority that if money be paid

through a clear mistake of law or fact, essentially affecting the rights of the parties, and

which in law or conscience was not payable, and should not be retained by the party

receiving it, it may be recovered. Both law and sound morality so dictate. Especially should

this be the rule as to illegal taxation. The taxpayer has no voice in the impositionof the

burden. He has the right to presume that the taxing power has been lawfully exercised. He

should not be required to know more than those in authority over him, nor should he suffer

loss by complying with what he bona fide believe to be his duty as a good citizen. Upon the

contrary, he should be promoted to its ready performance by refunding to him any legal

exaction paid by him in ignorance of its illegality; and, certainly, in such a case, if be subject

to a penalty for nonpayment, his compliance under belief of its legality, and without

awaitinga resort to judicial proceedings should not be regrded in law as so far voluntary as to

affect his right of recovery.".

"Every person who through an act or performance by another, or any other means, acquires

or comes into possession of something at the expense of the latter without just or legal

grounds, shall return the same to him"(Art. 22, Civil Code). It would seems unedifying for the

government, (here the City of Manila), that knowing it has no right at all to collect or to

receive money for alleged taxes paid by mistake, it would be reluctant to return the same. No

one should enrich itself unjustly at the expense of another (Art. 2125, Civil Code)..

Admittedly, plaintiff-appellee paid the tax without protest.Equally admitted is the fact that

section 76 of the Charter of Manila provides that "No court shall entertain any suit assailing

the validity of tax assessed under this article until the taxpayer shall have paid, under protest

the taxes assessed against him, xx". It should be noted, however, that the article referred to

in said section is Article XXI, entitled Department of Assessment and the sections thereunder

manifestly show that said article and its sections relate to asseessment, collection and

recovery of real estate taxes only. Said section 76, therefor, is not applicable to the case at

bar, which relates to the recover of retail dealer taxes..

In the opinion of the Secretary of Justice (Op. 90,Series of 1957, in a question similar to the

case at bar, it was held that the requiredment of protest refers only to the payment of taxes

22

which are directly imposed by the charter itself, that is, real estate taxes, which view was

sustained by judicial and administrative precedents, one of which is the case of Medina, et

al., v. City of Baguio, G.R. No. L-4269, Aug. 29, 1952. In other words, protest is not necessary

for the recovery of retail dealer's taxes, like the present, because they are not directly

imposed by the charter. In the Medina case, the Charter of Baguio (Chap. 61, Revised Adm.

Code), provides that "no court shall entertain any suit assailing the validity of a tax assessed

unde this charter until the tax-payer shall have paid, under protest, the taxes assessed

against him (sec.25474[b], Rev. Adm. Code), a proviso similar to section 76 of the Manila

Charter. The refund of specific taxes paid under a void ordinance was ordered, although it did

not appear that payment thereof was made under protest..

In a recent case, We said: "The appellants argue that the sum the refund of which is sought

by the appellee, was not paid under protest and hence is not refundable. Again, the trial

court correctly held that being unauthorized, it is not a tax assessed under the Charter of the

Appellant City of Davao and for that reason, no protest is necessary for a claim or demand for

its refund" (Citing the Medina case, supra; East Asiatic Co., Ltd. v. City of Davao, G.R. No. L-

16253, Aug. 21, 1962). Lastly, being a case of solutio indebiti, protest is not required as a

condition sine qua non for its application..

The next issue in discussion is that of prescription. Appellants maintain that article 1146

(NCC), which provides for a period of four (4) years (upon injury to the rights of the plaintiff),

apply to the case. On the other hand, appellee contends that provisions of Act 190 (Code of

Civ. Procedure) should apply, insofar as payments made before the effectivity of the New

Civil Code on August 30, 1950, the period of which is ten (10) years, (Sec. 40,Act No. 190;

Osorio v. Tan Jongko, 51 O.G. 6211) and article 1145 (NCC), for payments made after said

effectivity, providing for a period of six (6) years (upon quasi-contracts like solutio indebiti).

Even if the provisionsof Act No. 190 should apply to those payments made before the

effectivity of the new Civil Code, because "prescription already runnig before the effectivity

of this Code shall be governed by laws previously in force x x x" (art. 1116, NCC), for

payments made after said effectivity,providing for a period of six (6) years (upon quasi-

contracts like solutio indebiti). Even if the provisions of Act No. 190should apply to those

payments made before the effectivity of the new Civil Code, because "prescription already

running before the effectivity of of this Code shall be govern by laws previously in force xxx "

(Art. 1116, NCC), Still payments made before August 30, 1950 are no longer recoverable in

view of the second paragraph of said article (1116), which provides:"but if since the time this

Code took effect the entire period herein required for prescription should elapse the present

Code shall be applicable even though by the former laws a longer period might be required".

Anent the payments made after August 30, 1950, it is abvious that the action has prescribed

with respect to those made before October 30, 1950 only, considering the fact that the

prescription of action is interrupted xxx when is a writteen extra-judicial demand x x x" (Art.

1155, NCC), and the written demand in the case at bar was made on October 30, 1956

(Stipulation of Facts).MODIFIED in the sense that only payments made on or after October

30, 1950 should be refunded, the decision appealed from is affirmed, in all other respects. No

costs. .

23

G.R. No. L-3756 June 30, 1952

SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS, plaintiff-

appellee,

vs.

NATIONAL COCONUT CORPORATION, defendant-appellant.

LABRADOR, J.:

This is an action to recover the possession of a piece of real property (land and warehouses)

situated in Pandacan Manila, and the rentals for its occupation and use. The land belongs to

the plaintiff, in whose name the title was registered before the war. On January 4, 1943,

during the Japanese military occupation, the land was acquired by a Japanese corporation by

the name of Taiwan Tekkosho for the sum of P140,00, and thereupon title thereto issued in

its name (transfer certificate of title No. 64330, Register of Deeds, Manila). After liberation,

more specifically on April 4, 1946, the Alien Property Custodian of the United States of

America took possession, control, and custody thereof under section 12 of the Trading with

the Enemy Act, 40 Stat., 411, for the reason that it belonged to an enemy national. During

the year 1946 the property was occupied by the Copra Export Management Company under

a custodianship agreement with United States Alien Property Custodian (Exhibit G), and

when it vacated the property it was occupied by the defendant herein. The Philippine

Government made representations with the Office Alien Property Custodian for the use of

property by the Government (see Exhibits 2, 2-A, 2-B, and 1). On March 31, 1947, the

defendant was authorized to repair the warehouse on the land, and actually spent thereon

the repairs the sum of P26,898.27. In 1948, defendant leased one-third of the warehouse to

one Dioscoro Sarile at a monthly rental of P500, which was later raised to P1,000 a month.

Sarile did not pay the rents, so action was brought against him. It is not shown, however, if

the judgment was ever executed.

Plaintiff made claim to the property before the Alien Property Custodian of the United States,

but as this was denied, it brought an action in court (Court of First Instance of Manila, civil

case No. 5007, entitled "La Sagrada Orden Predicadores de la Provinicia del Santisimo Rosario

de Filipinas," vs. Philippine Alien Property Administrator, defendant, Republic of the

Philippines, intervenor) to annul the sale of property of Taiwan Tekkosho, and recover its

possession. The Republic of the Philippines was allowed to intervene in the action. The case

did not come for trial because the parties presented a joint petition in which it is claimed by

plaintiff that the sale in favor of the Taiwan Tekkosho was null and void because it was

executed under threats, duress, and intimidation, and it was agreed that the title issued in

the name of the Taiwan Tekkosho be cancelled and the original title of plaintiff re-issued;

that the claims, rights, title, and interest of the Alien Property Custodian be cancelled and

held for naught; that the occupant National Coconut Corporation has until February 28, 1949,

to recover its equipment from the property and vacate the premises; that plaintiff, upon

entry of judgment, pay to the Philippine Alien Property Administration the sum of P140,000;

and that the Philippine Alien Property Administration be free from responsibility or liability

for any act of the National Coconut Corporation, etc. Pursuant to the agreement the court

rendered judgment releasing the defendant and the intervenor from liability, but reversing to

the plaintiff the right to recover from the National Coconut Corporation reasonable rentals

for the use and occupation of the premises. (Exhibit A-1.)

The present action is to recover the reasonable rentals from August, 1946, the date when the

defendant began to occupy the premises, to the date it vacated it. The defendant does not

contest its liability for the rentals at the rate of P3,000 per month from February 28, 1949

(the date specified in the judgment in civil case No. 5007), but resists the claim therefor prior

to this date. It interposes the defense that it occupied the property in good faith, under no

obligation whatsoever to pay rentals for the use and occupation of the warehouse. Judgment

was rendered for the plaintiff to recover from the defendant the sum of P3,000 a month, as

reasonable rentals, from August, 1946, to the date the defendant vacates the premises. The

judgment declares that plaintiff has always been the owner, as the sale of Japanese

purchaser was void ab initio; that the Alien Property Administration never acquired any right

to the property, but that it held the same in trust until the determination as to whether or

not the owner is an enemy citizen. The trial court further declares that defendant can not

claim any better rights than its predecessor, the Alien Property Administration, and that as

defendant has used the property and had subleased portion thereof, it must pay reasonable

rentals for its occupation.

24

Against this judgment this appeal has been interposed, the following assignment of error

having been made on defendant-appellant's behalf:

The trial court erred in holding the defendant liable for rentals or compensation for

the use and occupation of the property from the middle of August, 1946, to

December 14, 1948.

1. Want to "ownership rights" of the Philippine Alien Property Administration did

not render illegal or invalidate its grant to the defendant of the free use of

property.

2. the decision of the Court of First Instance of Manila declaring the sale by the

plaintiff to the Japanese purchaser null and void ab initio and that the plaintiff was

and has remained as the legal owner of the property, without legal interruption, is

not conclusive.

3. Reservation to the plaintiff of the right to recover from the defendant

corporation not binding on the later;

4. Use of the property for commercial purposes in itself alone does not justify

payment of rentals.

5. Defendant's possession was in good faith.

6. Defendant's possession in the nature of usufruct.

In reply, plaintiff-appellee's counsel contends that the Philippine Allien Property

Administration (PAPA) was a mere administrator of the owner (who ultimately was decided

to be plaintiff), and that as defendant has used it for commercial purposes and has leased

portion of it, it should be responsible therefore to the owner, who had been deprived of the

possession for so many years. (Appellee's brief, pp. 20, 23.)

We can not understand how the trial court, from the mere fact that plaintiff-appellee was

the owner of the property and the defendant-appellant the occupant, which used for its own

benefit but by the express permission of the Alien Property Custodian of the United States,

so easily jumped to the conclusion that the occupant is liable for the value of such use and

occupation. If defendant-appellant is liable at all, its obligations, must arise from any of the

four sources of obligations, namley, law, contract or quasi-contract, crime, or negligence.

(Article 1089, Spanish Civil Code.) Defendant-appellant is not guilty of any offense at all,

because it entered the premises and occupied it with the permission of the entity which had

the legal control and administration thereof, the Allien Property Administration. Neither was

there any negligence on its part. There was also no privity (of contract or obligation) between

the Alien Property Custodian and the Taiwan Tekkosho, which had secured the possession of

the property from the plaintiff-appellee by the use of duress, such that the Alien Property

Custodian or its permittee (defendant-appellant) may be held responsible for the supposed

illegality of the occupation of the property by the said Taiwan Tekkosho. The Allien Property

Administration had the control and administration of the property not as successor to the

interests of the enemy holder of the title, the Taiwan Tekkosho, but by express provision of

law (Trading with the Enemy Act of the United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither

is it a trustee of the former owner, the plaintiff-appellee herein, but a trustee of then

Government of the United States (32 Op. Atty. Gen. 249; 50 U.S.C.A. 283), in its own right, to

the exclusion of, and against the claim or title of, the enemy owner. (Youghioheny & Ohio

Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis., 347; U.S.C.A., 282-283.) From August,

1946, when defendant-appellant took possession, to the late of judgment on February 28,

1948, Allien Property Administration had the absolute control of the property as trustee of

the Government of the United States, with power to dispose of it by sale or otherwise, as

though it were the absolute owner. (U.S vs. Chemical Foundation [C.C.A. Del. 1925], 5 F. [2d],

191; 50 U.S.C.A., 283.) Therefore, even if defendant-appellant were liable to the Allien

Property Administration for rentals, these would not accrue to the benefit of the plaintiff-

appellee, the owner, but to the United States Government.

But there is another ground why the claim or rentals can not be made against defendant-

appellant. There was no agreement between the Alien Property Custodian and the

defendant-appellant for the latter to pay rentals on the property. The existence of an implied

25

agreement to that effect is contrary to the circumstances. The copra Export Management

Company, which preceded the defendant-appellant, in the possession and use of the

property, does not appear to have paid rentals therefor, as it occupied it by what the parties

denominated a "custodianship agreement," and there is no provision therein for the

payment of rentals or of any compensation for its custody and or occupation and the use.

The Trading with the Enemy Act, as originally enacted, was purely a measure of conversation,

hence, it is very unlikely that rentals were demanded for the use of the property. When the

National coconut Corporation succeeded the Copra Export Management Company in the

possession and use of the property, it must have been also free from payment of rentals,

especially as it was Government corporation, and steps where then being taken by the

Philippine Government to secure the property for the National Coconut Corporation. So that

the circumstances do not justify the finding that there was an implied agreement that the

defendant-appellant was to pay for the use and occupation of the premises at all.

The above considerations show that plaintiff-appellee's claim for rentals before it obtained

the judgment annulling the sale of the Taiwan Tekkosho may not be predicated on any

negligence or offense of the defendant-appellant, or any contract, express or implied,

because the Allien Property Administration was neither a trustee of plaintiff-appellee, nor a

privy to the obligations of the Taiwan Tekkosho, its title being based by legal provision of the

seizure of enemy property. We have also tried in vain to find a law or provision thereof, or

any principle in quasi contracts or equity, upon which the claim can be supported. On the

contrary, as defendant-appellant entered into possession without any expectation of liability

for such use and occupation, it is only fair and just that it may not be held liable therefor. And

as to the rents it collected from its lessee, the same should accrue to it as a possessor in good

faith, as this Court has already expressly held. (Resolution, National Coconut Corporation vs.

Geronimo, 83 Phil. 467.)

Lastly, the reservation of this action may not be considered as vesting a new right; if no right

to claim for rentals existed at the time of the reservation, no rights can arise or accrue from

such reservation alone.

Wherefore, the part of the judgment appealed from, which sentences defendant-appellant

to pay rentals from August, 1946, to February 28, 1949, is hereby reversed. In all other

respects the judgment is affirmed. Costs of this appeal shall be against the plaintiff-appellee.

26

G.R. No. L-36840 May 22, 1973

PEOPLE'S CAR INC., plaintiff-appellant,

vs.

COMMANDO SECURITY SERVICE AGENCY, defendant-appellee.

TEEHANKEE, J.:

In this appeal from the adverse judgment of the Davao court of first instance limiting

plaintiff-appellant's recovery under its complaint to the sum of P1,000.00 instead of the

actual damages of P8,489.10 claimed and suffered by it as a direct result of the wrongful acts

of defendant security agency's guard assigned at plaintiff's premises in pursuance of their

"Guard Service Contract", the Court finds merit in the appeal and accordingly reverses the

trial court's judgment.

The appeal was certified to this Court by a special division of the Court of Appeals on a four-

to-one vote as per its resolution of April 14, 1973 that "Since the case was submitted to the

court a quo for decision on the strength of the stipulation of facts, only questions of law can

be involved in the present appeal."

The Court has accepted such certification and docketed this appeal on the strength of its own

finding from the records that plaintiff's notice of appeal was expressly to this Court (not to

the appellate court)" on pure questions of law" 1 and its record on appeal accordingly prayed

that" the corresponding records be certified and forwarded to the Honorable Supreme

Court." 2 The trial court so approved the same 3 on July 3, 1971 instead of having required the

filing of a petition for review of the judgment sought to be appealed from directly with this

Court, in accordance with the provisions of Republic Act 5440. By some unexplained and

hitherto undiscovered error of the clerk of court, furthermore, the record on appeal was

erroneously forwarded to the appellate court rather than to this Court.

The parties submitted the case for judgment on a stipulation of facts. There is thus no

dispute as to the factual bases of plaintiff's complaint for recovery of actual damages against

defendant, to wit, that under the subsisting "Guard Service Contract" between the parties,

defendant-appellee as a duly licensed security service agency undertook in consideration of

the payments made by plaintiff to safeguard and protect the business premises of (plaintiff)

from theft, pilferage, robbery, vandalism and all other unlawful acts of any person or person

prejudicial to the interest of (plaintiff)." 4

On April 5, 1970 at around 1:00 A.M., however, defendant's security guard on duty at

plaintiff's premises, "without any authority, consent, approval, knowledge or orders of the

plaintiff and/or defendant brought out of the compound of the plaintiff a car belonging to its

customer, and drove said car for a place or places unknown, abandoning his post as such

security guard on duty inside the plaintiff's compound, and while so driving said car in one of

the City streets lost control of said car, causing the same to fall into a ditch along J.P. Laurel

St., Davao City by reason of which the plaintiff's complaint for qualified theft against said

driver, was blottered in the office of the Davao City Police Department." 5

As a result of these wrongful acts of defendant's security guard, the car of plaintiff's

customer, Joseph Luy, which had been left with plaintiff for servicing and maintenance,

"suffered extensive damage in the total amount of P7,079." 6 besides the car rental value

"chargeable to defendant" in the sum of P1,410.00 for a car that plaintiff had to rent and

make available to its said customer to enable him to pursue his business and occupation for

the period of forty-seven (47) days (from April 25 to June 10, 1970) that it took plaintiff to

repair the damaged car, 7 or total actual damages incurred by plaintiff in the sum of

P8,489.10.

Plaintiff claimed that defendant was liable for the entire amount under paragraph 5 of their

contract whereunder defendant assumed "sole responsibility for the acts done during their

watch hours" by its guards, whereas defendant contended, without questioning the amount

of the actual damages incurred by plaintiff, that its liability "shall not exceed one thousand

(P1,000.00) pesos per guard post" under paragraph 4 of their contract.

The parties thus likewise stipulated on this sole issue submitted by them for adjudication, as

follows:

27

Interpretation of the contract, as to the extent of the liability of the

defendant to the plaintiff by reason of the acts of the employees of the

defendant is the only issue to be resolved.

The defendant relies on Par. 4 of the contract to support its contention

while the plaintiff relies on Par. 5 of the same contract in support of its

claims against the defendant. For ready reference they are quoted

hereunder:

'Par. 4. — Party of the Second Part (defendant)

through the negligence of its guards, after an

investigation has been conducted by the Party of the

First Part (plaintiff) wherein the Party of the Second

Part has been duly represented shall assume full

responsibilities for any loss or damages that may

occur to any property of the Party of the First Part for

which it is accountable, during the watch hours of the

Party of the Second Part, provided the same is

reported to the Party of the Second Part within

twenty-four (24) hours of the occurrence, except

where such loss or damage is due to force majeure,

provided however that after the proper investigation

to be made thereof that the guard on post is found

negligent and that the amount of the loss shall not

exceed ONE THOUSAND (P1,000.00) PESOS per guard

post.'

'Par. 5 — The party of the Second Part assumes the

responsibility for the proper performance by the

guards employed, of their duties and (shall) be solely

responsible for the acts done during their watch

hours, the Party of the First Part being specifically

released from any and all liabilities to the former's

employee or to the third parties arising from the acts

or omissions done by the guard during their tour of

duty.' ... 8

The trial court, misreading the above-quoted contractual provisions, held that "the liability of

the defendant in favor of the plaintiff falls under paragraph 4 of the Guard Service Contract"

and rendered judgment "finding the defendant liable to the plaintiff in the amount of

P1,000.00 with costs."

Hence, this appeal, which, as already indicated, is meritorious and must be granted.

Paragraph 4 of the contract, which limits defendant's liability for the amount of loss or

damage to any property of plaintiff to "P1,000.00 per guard post," is by its own terms

applicable only for loss or damage 'through the negligence of its guards ... during the watch

hours" provided that the same is duly reported by plaintiff within 24 hours of the occurrence

and the guard's negligence is verified after proper investigation with the attendance of both

contracting parties. Said paragraph is manifestly inapplicable to the stipulated facts of

record, which involve neither property of plaintiff that has been lost or damaged at its

premises nor mere negligence of defendant's security guard on duty.

Here, instead of defendant, through its assigned security guards, complying with its

contractual undertaking 'to safeguard and protect the business premises of (plaintiff) from

theft, robbery, vandalism and all other unlawful acts of any person or persons," defendant's

own guard on duty unlawfully and wrongfully drove out of plaintiffs premises a customer's

car, lost control of it on the highway causing it to fall into a ditch, thereby directly causing

plaintiff to incur actual damages in the total amount of P8,489.10.

Defendant is therefore undoubtedly liable to indemnify plaintiff for the entire damages thus

incurred, since under paragraph 5 of their contract it "assumed the responsibility for the

proper performance by the guards employed of their duties and (contracted to) be solely

responsible for the acts done during their watch hours" and "specifically released (plaintiff)

from any and all liabilities ... to the third parties arising from the acts or omissions done by

28

the guards during their tour of duty." As plaintiff had duly discharged its liability to the third

party, its customer, Joseph Luy, for the undisputed damages of P8,489.10 caused said

customer, due to the wanton and unlawful act of defendant's guard, defendant in turn was

clearly liable under the terms of paragraph 5 of their contract to indemnify plaintiff in the

same amount.

The trial court's approach that "had plaintiff understood the liability of the defendant to fall

under paragraph 5, it should have told Joseph Luy, owner of the car, that under the Guard

Service Contract, it was not liable for the damage but the defendant and had Luy insisted on

the liability of the plaintiff, the latter should have challenged him to bring the matter to

court. If Luy accepted the challenge and instituted an action against the plaintiff, it should

have filed a third-party complaint against the Commando Security Service Agency. But if Luy

instituted the action against the plaintiff and the defendant, the plaintiff should have filed a

crossclaim against the latter," 9 was unduly technical and unrealistic and untenable.

Plaintiff was in law liable to its customer for the damages caused the customer's car, which

had been entrusted into its custody. Plaintiff therefore was in law justified in making good

such damages and relying in turn on defendant to honor its contract and indemnify it for

such undisputed damages, which had been caused directly by the unlawful and wrongful acts

of defendant's security guard in breach of their contract. As ordained in Article 1159, Civil

Code, "obligations arising from contracts have the force of law between the contracting

parties and should be complied with in good faith."

Plaintiff in law could not tell its customer, as per the trial court's view, that "under the Guard

Service Contract it was not liable for the damage but the defendant" — since the customer

could not hold defendant to account for the damages as he had no privity of contract with

defendant. Such an approach of telling the adverse party to go to court, notwithstanding his

plainly valid claim, aside from its ethical deficiency among others, could hardly create any

goodwill for plaintiff's business, in the same way that defendant's baseless attempt to evade

fully discharging its contractual liability to plaintiff cannot be expected to have brought it

more business. Worse, the administration of justice is prejudiced, since the court dockets are

unduly burdened with unnecessary litigation.

ACCORDINGLY, the judgment appealed from is hereby reversed and judgment is hereby

rendered sentencing defendant-appellee to pay plaintiff-appellant the sum of P8,489.10 as

and by way of reimbursement of the stipulated actual damages and expenses, as well as the

costs of suit in both instances. It is so ordered.

29

G.R. No. L-12191 October 14, 1918

JOSE CANGCO, plaintiff-appellant,

vs.

MANILA RAILROAD CO., defendant-appellee.

FISHER, J.:

At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was

in the employment of Manila Railroad Company in the capacity of clerk, with a monthly wage

of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon

the line of the defendant railroad company; and in coming daily by train to the company's

office in the city of Manila where he worked, he used a pass, supplied by the company, which

entitled him to ride upon the company's trains free of charge. Upon the occasion in question,

January 20, 1915, the plaintiff arose from his seat in the second class-car where he was riding

and, making, his exit through the door, took his position upon the steps of the coach, seizing

the upright guardrail with his right hand for support.

On the side of the train where passengers alight at the San Mateo station there is a cement

platform which begins to rise with a moderate gradient some distance away from the

company's office and extends along in front of said office for a distance sufficient to cover

the length of several coaches. As the train slowed down another passenger, named Emilio

Zuñiga, also an employee of the railroad company, got off the same car, alighting safely at

the point where the platform begins to rise from the level of the ground. When the train had

proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his

feet came in contact with a sack of watermelons with the result that his feet slipped from

under him and he fell violently on the platform. His body at once rolled from the platform

and was drawn under the moving car, where his right arm was badly crushed and lacerated.

It appears that after the plaintiff alighted from the train the car moved forward possibly six

meters before it came to a full stop.

The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station

was lighted dimly by a single light located some distance away, objects on the platform

where the accident occurred were difficult to discern especially to a person emerging from a

lighted car.

The explanation of the presence of a sack of melons on the platform where the plaintiff

alighted is found in the fact that it was the customary season for harvesting these melons

and a large lot had been brought to the station for the shipment to the market. They were

contained in numerous sacks which has been piled on the platform in a row one upon

another. The testimony shows that this row of sacks was so placed of melons and the edge of

platform; and it is clear that the fall of the plaintiff was due to the fact that his foot alighted

upon one of these melons at the moment he stepped upon the platform. His statement that

he failed to see these objects in the darkness is readily to be credited.

The plaintiff was drawn from under the car in an unconscious condition, and it appeared that

the injuries which he had received were very serious. He was therefore brought at once to a

certain hospital in the city of Manila where an examination was made and his arm was

amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried

to another hospital where a second operation was performed and the member was again

amputated higher up near the shoulder. It appears in evidence that the plaintiff expended

the sum of P790.25 in the form of medical and surgical fees and for other expenses in

connection with the process of his curation.

Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city

of Manila to recover damages of the defendant company, founding his action upon the

negligence of the servants and employees of the defendant in placing the sacks of melons

upon the platform and leaving them so placed as to be a menace to the security of passenger

alighting from the company's trains. At the hearing in the Court of First Instance, his Honor,

the trial judge, found the facts substantially as above stated, and drew therefrom his

conclusion to the effect that, although negligence was attributable to the defendant by

reason of the fact that the sacks of melons were so placed as to obstruct passengers passing

to and from the cars, nevertheless, the plaintiff himself had failed to use due caution in

alighting from the coach and was therefore precluded form recovering. Judgment was

accordingly entered in favor of the defendant company, and the plaintiff appealed.

30

It can not be doubted that the employees of the railroad company were guilty of negligence

in piling these sacks on the platform in the manner above stated; that their presence caused

the plaintiff to fall as he alighted from the train; and that they therefore constituted an

effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the

defendant company is liable for the damage thereby occasioned unless recovery is barred by

the plaintiff's own contributory negligence. In resolving this problem it is necessary that each

of these conceptions of liability, to-wit, the primary responsibility of the defendant company

and the contributory negligence of the plaintiff should be separately examined.

It is important to note that the foundation of the legal liability of the defendant is the

contract of carriage, and that the obligation to respond for the damage which plaintiff has

suffered arises, if at all, from the breach of that contract by reason of the failure of

defendant to exercise due care in its performance. That is to say, its liability is direct and

immediate, differing essentially, in legal viewpoint from that presumptive responsibility for

the negligence of its servants, imposed by article 1903 of the Civil Code, which can be

rebutted by proof of the exercise of due care in their selection and supervision. Article 1903

of the Civil Code is not applicable to obligations arising ex contractu, but only to extra-

contractual obligations — or to use the technical form of expression, that article relates only

to culpa aquiliana and not to culpa contractual.

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code,

clearly points out this distinction, which was also recognized by this Court in its decision in

the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon

article 1093 Manresa clearly points out the difference between "culpa, substantive and

independent, which of itself constitutes the source of an obligation between persons not

formerly connected by any legal tie" and culpa considered as an accident in the performance

of an obligation already existing . . . ."

In the Rakes case (supra) the decision of this court was made to rest squarely upon the

proposition that article 1903 of the Civil Code is not applicable to acts of negligence which

constitute the breach of a contract.

Upon this point the Court said:

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are

understood to be those not growing out of pre-existing duties of the parties to one

another. But where relations already formed give rise to duties, whether springing

from contract or quasi-contract, then breaches of those duties are subject to article

1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7

Phil. Rep., 359 at 365.)

This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in

certain cases imposed upon employers with respect to damages occasioned by the

negligence of their employees to persons to whom they are not bound by contract, is not

based, as in the English Common Law, upon the principle of respondeat superior — if it were,

the master would be liable in every case and unconditionally — but upon the principle

announced in article 1902 of the Civil Code, which imposes upon all persons who by their

fault or negligence, do injury to another, the obligation of making good the damage caused.

One who places a powerful automobile in the hands of a servant whom he knows to be

ignorant of the method of managing such a vehicle, is himself guilty of an act of negligence

which makes him liable for all the consequences of his imprudence. The obligation to make

good the damage arises at the very instant that the unskillful servant, while acting within the

scope of his employment causes the injury. The liability of the master is personal and direct.

But, if the master has not been guilty of any negligence whatever in the selection and

direction of the servant, he is not liable for the acts of the latter, whatever done within the

scope of his employment or not, if the damage done by the servant does not amount to a

breach of the contract between the master and the person injured.

It is not accurate to say that proof of diligence and care in the selection and control of the

servant relieves the master from liability for the latter's acts — on the contrary, that proof

shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability

arising from extra-contractual culpa is always based upon a voluntary act or omission which,

without willful intent, but by mere negligence or inattention, has caused damage to another.

A master who exercises all possible care in the selection of his servant, taking into

consideration the qualifications they should possess for the discharge of the duties which it is

his purpose to confide to them, and directs them with equal diligence, thereby performs his

31

duty to third persons to whom he is bound by no contractual ties, and he incurs no liability

whatever if, by reason of the negligence of his servants, even within the scope of their

employment, such third person suffer damage. True it is that under article 1903 of the Civil

Code the law creates a presumption that he has been negligent in the selection or direction

of his servant, but the presumption is rebuttable and yield to proof of due care and diligence

in this respect.

The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto

Rico Code, has held that these articles are applicable to cases of extra-contractual culpa

exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

This distinction was again made patent by this Court in its decision in the case of Bahia vs.

Litonjua and Leynes, (30 Phil. rep., 624), which was an action brought upon the theory of the

extra-contractual liability of the defendant to respond for the damage caused by the

carelessness of his employee while acting within the scope of his employment. The Court,

after citing the last paragraph of article 1903 of the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the

negligence of a servant or employee there instantly arises a presumption of law

that there was negligence on the part of the master or employer either in selection

of the servant or employee, or in supervision over him after the selection, or both;

and (2) that that presumption is juris tantum and not juris et de jure, and

consequently, may be rebutted. It follows necessarily that if the employer shows to

the satisfaction of the court that in selection and supervision he has exercised the

care and diligence of a good father of a family, the presumption is overcome and

he is relieved from liability.

This theory bases the responsibility of the master ultimately on his own negligence

and not on that of his servant. This is the notable peculiarity of the Spanish law of

negligence. It is, of course, in striking contrast to the American doctrine that, in

relations with strangers, the negligence of the servant in conclusively the

negligence of the master.

The opinion there expressed by this Court, to the effect that in case of extra-contractual

culpa based upon negligence, it is necessary that there shall have been some fault

attributable to the defendant personally, and that the last paragraph of article 1903 merely

establishes a rebuttable presumption, is in complete accord with the authoritative opinion of

Manresa, who says (vol. 12, p. 611) that the liability created by article 1903 is imposed by

reason of the breach of the duties inherent in the special relations of authority or superiority

existing between the person called upon to repair the damage and the one who, by his act or

omission, was the cause of it.

On the other hand, the liability of masters and employers for the negligent acts or omissions

of their servants or agents, when such acts or omissions cause damages which amount to the

breach of a contact, is not based upon a mere presumption of the master's negligence in

their selection or control, and proof of exercise of the utmost diligence and care in this

regard does not relieve the master of his liability for the breach of his contract.

Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual

obligation has its source in the breach or omission of those mutual duties which civilized

society imposes upon it members, or which arise from these relations, other than

contractual, of certain members of society to others, generally embraced in the concept of

status. The legal rights of each member of society constitute the measure of the

corresponding legal duties, mainly negative in character, which the existence of those rights

imposes upon all other members of society. The breach of these general duties whether due

to willful intent or to mere inattention, if productive of injury, give rise to an obligation to

indemnify the injured party. The fundamental distinction between obligations of this

character and those which arise from contract, rests upon the fact that in cases of non-

contractual obligation it is the wrongful or negligent act or omission itself which creates the

vinculum juris, whereas in contractual relations the vinculum exists independently of the

breach of the voluntary duty assumed by the parties when entering into the contractual

relation.

With respect to extra-contractual obligation arising from negligence, whether of act or

omission, it is competent for the legislature to elect — and our Legislature has so elected —

32

whom such an obligation is imposed is morally culpable, or, on the contrary, for reasons of

public policy, to extend that liability, without regard to the lack of moral culpability, so as to

include responsibility for the negligence of those person who acts or mission are imputable,

by a legal fiction, to others who are in a position to exercise an absolute or limited control

over them. The legislature which adopted our Civil Code has elected to limit extra-

contractual liability — with certain well-defined exceptions — to cases in which moral

culpability can be directly imputed to the persons to be charged. This moral responsibility

may consist in having failed to exercise due care in the selection and control of one's agents

or servants, or in the control of persons who, by reason of their status, occupy a position of

dependency with respect to the person made liable for their conduct.

The position of a natural or juridical person who has undertaken by contract to render

service to another, is wholly different from that to which article 1903 relates. When the

sources of the obligation upon which plaintiff's cause of action depends is a negligent act or

omission, the burden of proof rests upon plaintiff to prove the negligence — if he does not

his action fails. But when the facts averred show a contractual undertaking by defendant for

the benefit of plaintiff, and it is alleged that plaintiff has failed or refused to perform the

contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the

contract is due to willful fault or to negligence on the part of the defendant, or of his servants

or agents. Proof of the contract and of its nonperformance is sufficient prima facie to

warrant a recovery.

As a general rule . . . it is logical that in case of extra-contractual culpa, a suing

creditor should assume the burden of proof of its existence, as the only fact upon

which his action is based; while on the contrary, in a case of negligence which

presupposes the existence of a contractual obligation, if the creditor shows that it

exists and that it has been broken, it is not necessary for him to prove negligence.

(Manresa, vol. 8, p. 71 [1907 ed., p. 76]).

As it is not necessary for the plaintiff in an action for the breach of a contract to show that

the breach was due to the negligent conduct of defendant or of his servants, even though

such be in fact the actual cause of the breach, it is obvious that proof on the part of

defendant that the negligence or omission of his servants or agents caused the breach of the

contract would not constitute a defense to the action. If the negligence of servants or agents

could be invoked as a means of discharging the liability arising from contract, the anomalous

result would be that person acting through the medium of agents or servants in the

performance of their contracts, would be in a better position than those acting in person. If

one delivers a valuable watch to watchmaker who contract to repair it, and the bailee, by a

personal negligent act causes its destruction, he is unquestionably liable. Would it be logical

to free him from his liability for the breach of his contract, which involves the duty to

exercise due care in the preservation of the watch, if he shows that it was his servant whose

negligence caused the injury? If such a theory could be accepted, juridical persons would

enjoy practically complete immunity from damages arising from the breach of their contracts

if caused by negligent acts as such juridical persons can of necessity only act through agents

or servants, and it would no doubt be true in most instances that reasonable care had been

taken in selection and direction of such servants. If one delivers securities to a banking

corporation as collateral, and they are lost by reason of the negligence of some clerk

employed by the bank, would it be just and reasonable to permit the bank to relieve itself of

liability for the breach of its contract to return the collateral upon the payment of the debt

by proving that due care had been exercised in the selection and direction of the clerk?

This distinction between culpa aquiliana, as the source of an obligation, and culpa

contractual as a mere incident to the performance of a contract has frequently been

recognized by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, 1896;

and December 13, 1896.) In the decisions of November 20, 1896, it appeared that plaintiff's

action arose ex contractu, but that defendant sought to avail himself of the provisions of

article 1902 of the Civil Code as a defense. The Spanish Supreme Court rejected defendant's

contention, saying:

These are not cases of injury caused, without any pre-existing obligation, by fault or

negligence, such as those to which article 1902 of the Civil Code relates, but of

damages caused by the defendant's failure to carry out the undertakings imposed

by the contracts . . . .

33

A brief review of the earlier decision of this court involving the liability of employers for

damage done by the negligent acts of their servants will show that in no case has the court

ever decided that the negligence of the defendant's servants has been held to constitute a

defense to an action for damages for breach of contract.

In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a

carriage was not liable for the damages caused by the negligence of his driver. In that case

the court commented on the fact that no evidence had been adduced in the trial court that

the defendant had been negligent in the employment of the driver, or that he had any

knowledge of his lack of skill or carefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the

plaintiff sued the defendant for damages caused by the loss of a barge belonging to plaintiff

which was allowed to get adrift by the negligence of defendant's servants in the course of

the performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69)

that if the "obligation of the defendant grew out of a contract made between it and the

plaintiff . . . we do not think that the provisions of articles 1902 and 1903 are applicable to

the case."

In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to

recover damages for the personal injuries caused by the negligence of defendant's chauffeur

while driving defendant's automobile in which defendant was riding at the time. The court

found that the damages were caused by the negligence of the driver of the automobile, but

held that the master was not liable, although he was present at the time, saying:

. . . unless the negligent acts of the driver are continued for a length of time as to

give the owner a reasonable opportunity to observe them and to direct the driver

to desist therefrom. . . . The act complained of must be continued in the presence

of the owner for such length of time that the owner by his acquiescence, makes the

driver's acts his own.

In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil.

Rep., 8), it is true that the court rested its conclusion as to the liability of the defendant upon

article 1903, although the facts disclosed that the injury complaint of by plaintiff constituted

a breach of the duty to him arising out of the contract of transportation. The express ground

of the decision in this case was that article 1903, in dealing with the liability of a master for

the negligent acts of his servants "makes the distinction between private individuals and

public enterprise;" that as to the latter the law creates a rebuttable presumption of

negligence in the selection or direction of servants; and that in the particular case the

presumption of negligence had not been overcome.

It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as

though founded in tort rather than as based upon the breach of the contract of carriage, and

an examination of the pleadings and of the briefs shows that the questions of law were in

fact discussed upon this theory. Viewed from the standpoint of the defendant the practical

result must have been the same in any event. The proof disclosed beyond doubt that the

defendant's servant was grossly negligent and that his negligence was the proximate cause of

plaintiff's injury. It also affirmatively appeared that defendant had been guilty of negligence

in its failure to exercise proper discretion in the direction of the servant. Defendant was,

therefore, liable for the injury suffered by plaintiff, whether the breach of the duty were to

be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points out (vol.

8, pp. 29 and 69) whether negligence occurs an incident in the course of the performance of

a contractual undertaking or its itself the source of an extra-contractual undertaking

obligation, its essential characteristics are identical. There is always an act or omission

productive of damage due to carelessness or inattention on the part of the defendant.

Consequently, when the court holds that a defendant is liable in damages for having failed to

exercise due care, either directly, or in failing to exercise proper care in the selection and

direction of his servants, the practical result is identical in either case. Therefore, it follows

that it is not to be inferred, because the court held in the Yamada case that defendant was

liable for the damages negligently caused by its servants to a person to whom it was bound

by contract, and made reference to the fact that the defendant was negligent in the selection

and control of its servants, that in such a case the court would have held that it would have

been a good defense to the action, if presented squarely upon the theory of the breach of

the contract, for defendant to have proved that it did in fact exercise care in the selection

and control of the servant.

34

The true explanation of such cases is to be found by directing the attention to the relative

spheres of contractual and extra-contractual obligations. The field of non- contractual

obligation is much more broader than that of contractual obligations, comprising, as it does,

the whole extent of juridical human relations. These two fields, figuratively speaking,

concentric; that is to say, the mere fact that a person is bound to another by contract does

not relieve him from extra-contractual liability to such person. When such a contractual

relation exists the obligor may break the contract under such conditions that the same act

which constitutes the source of an extra-contractual obligation had no contract existed

between the parties.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to

carry him in safety and to provide safe means of entering and leaving its trains (civil code,

article 1258). That duty, being contractual, was direct and immediate, and its non-

performance could not be excused by proof that the fault was morally imputable to

defendant's servants.

The railroad company's defense involves the assumption that even granting that the

negligent conduct of its servants in placing an obstruction upon the platform was a breach of

its contractual obligation to maintain safe means of approaching and leaving its trains, the

direct and proximate cause of the injury suffered by plaintiff was his own contributory

negligence in failing to wait until the train had come to a complete stop before alighting.

Under the doctrine of comparative negligence announced in the Rakes case (supra), if the

accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's

negligence and plaintiff's negligence merely contributed to his injury, the damages should be

apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of

negligence.

It may be admitted that had plaintiff waited until the train had come to a full stop before

alighting, the particular injury suffered by him could not have occurred. Defendant contends,

and cites many authorities in support of the contention, that it is negligence per se for a

passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in

its absolute form. We are of the opinion that this proposition is too badly stated and is at

variance with the experience of every-day life. In this particular instance, that the train was

barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop

within six meters from the place where he stepped from it. Thousands of person alight from

trains under these conditions every day of the year, and sustain no injury where the company

has kept its platform free from dangerous obstructions. There is no reason to believe that

plaintiff would have suffered any injury whatever in alighting as he did had it not been for

defendant's negligent failure to perform its duty to provide a safe alighting place.

We are of the opinion that the correct doctrine relating to this subject is that expressed in

Thompson's work on Negligence (vol. 3, sec. 3010) as follows:

The test by which to determine whether the passenger has been guilty of

negligence in attempting to alight from a moving railway train, is that of ordinary or

reasonable care. It is to be considered whether an ordinarily prudent person, of the

age, sex and condition of the passenger, would have acted as the passenger acted

under the circumstances disclosed by the evidence. This care has been defined to

be, not the care which may or should be used by the prudent man generally, but

the care which a man of ordinary prudence would use under similar circumstances,

to avoid injury." (Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37

Phil. rep., 809), we may say that the test is this; Was there anything in the circumstances

surrounding the plaintiff at the time he alighted from the train which would have

admonished a person of average prudence that to get off the train under the conditions then

existing was dangerous? If so, the plaintiff should have desisted from alighting; and his failure

so to desist was contributory negligence.1awph!l.net

As the case now before us presents itself, the only fact from which a conclusion can be drawn

to the effect that plaintiff was guilty of contributory negligence is that he stepped off the car

without being able to discern clearly the condition of the platform and while the train was

yet slowly moving. In considering the situation thus presented, it should not be overlooked

that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused

by the sacks of melons piled on the platform existed; and as the defendant was bound by

35

reason of its duty as a public carrier to afford to its passengers facilities for safe egress from

its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn

him to the contrary, that the platform was clear. The place, as we have already stated, was

dark, or dimly lighted, and this also is proof of a failure upon the part of the defendant in the

performance of a duty owing by it to the plaintiff; for if it were by any possibility concede

that it had right to pile these sacks in the path of alighting passengers, the placing of them

adequately so that their presence would be revealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case

the following circumstances are to be noted: The company's platform was constructed upon

a level higher than that of the roadbed and the surrounding ground. The distance from the

steps of the car to the spot where the alighting passenger would place his feet on the

platform was thus reduced, thereby decreasing the risk incident to stepping off. The nature

of the platform, constructed as it was of cement material, also assured to the passenger a

stable and even surface on which to alight. Furthermore, the plaintiff was possessed of the

vigor and agility of young manhood, and it was by no means so risky for him to get off while

the train was yet moving as the same act would have been in an aged or feeble person. In

determining the question of contributory negligence in performing such act — that is to say,

whether the passenger acted prudently or recklessly — the age, sex, and physical condition

of the passenger are circumstances necessarily affecting the safety of the passenger, and

should be considered. Women, it has been observed, as a general rule are less capable than

men of alighting with safety under such conditions, as the nature of their wearing apparel

obstructs the free movement of the limbs. Again, it may be noted that the place was

perfectly familiar to the plaintiff as it was his daily custom to get on and of the train at this

station. There could, therefore, be no uncertainty in his mind with regard either to the length

of the step which he was required to take or the character of the platform where he was

alighting. Our conclusion is that the conduct of the plaintiff in undertaking to alight while the

train was yet slightly under way was not characterized by imprudence and that therefore he

was not guilty of contributory negligence.

The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month

as a copyist clerk, and that the injuries he has suffered have permanently disabled him from

continuing that employment. Defendant has not shown that any other gainful occupation is

open to plaintiff. His expectancy of life, according to the standard mortality tables, is

approximately thirty-three years. We are of the opinion that a fair compensation for the

damage suffered by him for his permanent disability is the sum of P2,500, and that he is also

entitled to recover of defendant the additional sum of P790.25 for medical attention,

hospital services, and other incidental expenditures connected with the treatment of his

injuries.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the

sum of P3,290.25, and for the costs of both instances. So ordered.

36

G.R. No. 34840 September 23, 1931

NARCISO GUTIERREZ, plaintiff-appellee,

vs.

BONIFACIO GUTIERREZ, MARIA V. DE GUTIERREZ, MANUEL GUTIERREZ, ABELARDO

VELASCO, and SATURNINO CORTEZ, defendants-appellants.

MALCOLM, J.:

This is an action brought by the plaintiff in the Court of First Instance of Manila against the

five defendants, to recover damages in the amount of P10,000, for physical injuries suffered

as a result of an automobile accident. On judgment being rendered as prayed for by the

plaintiff, both sets of defendants appealed.

On February 2, 1930, a passenger truck and an automobile of private ownership collided

while attempting to pass each other on the Talon bridge on the Manila South Road in the

municipality of Las Piñas, Province of Rizal. The truck was driven by the chauffeur Abelardo

Velasco, and was owned by Saturnino Cortez. The automobile was being operated by

Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacio's father and mother,

Mr. and Mrs. Manuel Gutierrez. At the time of the collision, the father was not in the car, but

the mother, together will several other members of the Gutierrez family, seven in all, were

accommodated therein. A passenger in the autobus, by the name of Narciso Gutierrez, was

en route from San Pablo, Laguna, to Manila. The collision between the bus and the

automobile resulted in Narciso Gutierrez suffering a fracture right leg which required medical

attendance for a considerable period of time, and which even at the date of the trial appears

not to have healed properly.

It is conceded that the collision was caused by negligence pure and simple. The difference

between the parties is that, while the plaintiff blames both sets of defendants, the owner of

the passenger truck blames the automobile, and the owner of the automobile, in turn,

blames the truck. We have given close attention to these highly debatable points, and having

done so, a majority of the court are of the opinion that the findings of the trial judge on all

controversial questions of fact find sufficient support in the record, and so should be

maintained. With this general statement set down, we turn to consider the respective legal

obligations of the defendants.

In amplification of so much of the above pronouncement as concerns the Gutierrez family, it

may be explained that the youth Bonifacio was in incompetent chauffeur, that he was driving

at an excessive rate of speed, and that, on approaching the bridge and the truck, he lost his

head and so contributed by his negligence to the accident. The guaranty given by the father

at the time the son was granted a license to operate motor vehicles made the father

responsible for the acts of his son. Based on these facts, pursuant to the provisions of article

1903 of the Civil Code, the father alone and not the minor or the mother, would be liable for

the damages caused by the minor.

We are dealing with the civil law liability of parties for obligations which arise from fault or

negligence. At the same time, we believe that, as has been done in other cases, we can take

cognizance of the common law rule on the same subject. In the United States, it is uniformly

held that the head of a house, the owner of an automobile, who maintains it for the general

use of his family is liable for its negligent operation by one of his children, whom he

designates or permits to run it, where the car is occupied and being used at the time of the

injury for the pleasure of other members of the owner's family than the child driving it. The

theory of the law is that the running of the machine by a child to carry other members of the

family is within the scope of the owner's business, so that he is liable for the negligence of

the child because of the relationship of master and servant. (Huddy On Automobiles, 6th ed.,

sec. 660; Missell vs. Hayes [1914], 91 Atl., 322.) The liability of Saturnino Cortez, the owner of

the truck, and of his chauffeur Abelardo Velasco rests on a different basis, namely, that of

contract which, we think, has been sufficiently demonstrated by the allegations of the

complaint, not controverted, and the evidence. The reason for this conclusion reaches to the

findings of the trial court concerning the position of the truck on the bridge, the speed in

operating the machine, and the lack of care employed by the chauffeur. While these facts are

not as clearly evidenced as are those which convict the other defendant, we nevertheless

hesitate to disregard the points emphasized by the trial judge. In its broader aspects, the

case is one of two drivers approaching a narrow bridge from opposite directions, with neither

37

being willing to slow up and give the right of way to the other, with the inevitable result of a

collision and an accident.

The defendants Velasco and Cortez further contend that there existed contributory

negligence on the part of the plaintiff, consisting principally of his keeping his foot outside

the truck, which occasioned his injury. In this connection, it is sufficient to state that, aside

from the fact that the defense of contributory negligence was not pleaded, the evidence

bearing out this theory of the case is contradictory in the extreme and leads us far afield into

speculative matters.

The last subject for consideration relates to the amount of the award. The appellee suggests

that the amount could justly be raised to P16,517, but naturally is not serious in asking for

this sum, since no appeal was taken by him from the judgment. The other parties unite in

challenging the award of P10,000, as excessive. All facts considered, including actual

expenditures and damages for the injury to the leg of the plaintiff, which may cause him

permanent lameness, in connection with other adjudications of this court, lead us to

conclude that a total sum for the plaintiff of P5,000 would be fair and reasonable. The

difficulty in approximating the damages by monetary compensation is well elucidated by the

divergence of opinion among the members of the court, three of whom have inclined to the

view that P3,000 would be amply sufficient, while a fourth member has argued that P7,500

would be none too much.

In consonance with the foregoing rulings, the judgment appealed from will be modified, and

the plaintiff will have judgment in his favor against the defendants Manuel Gutierrez,

Abelardo Velasco, and Saturnino Cortez, jointly and severally, for the sum of P5,000, and the

costs of both instances.