Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-11908 February 4, 1918
ANTONIO M.A ARRETTO, plaintiff-appellant,
vs.
!OSE SANTA MARINA a"# $LA INSULAR,$ defendants-appellees.
Alfredo Chcote and Jose Arnaiz for appellant.
William A. Kincaid and Kincaid and Perkins for appellee.
CARSON, J.%
The material facts upon hich our disposition of this appeal necessaril! turns are set out at len"th in our
opinion in the case of Barretto vs. #anta Marina, decided $ecember %, &'&( )%* Phil rep., %++,. This court
havin" ruled a"ainst the plaintiff-s contention in the former case, he no sets up a claim for interest at the
le"al rate upon the amount of the purchase price of his share )participacion, in the business from the &st
da! of .ul!, &'+', to the %%d da! of November, &'&+, the da! upon hich it as turned over to him.
The findin" of facts, and the reasonin" upon hich e based our rulin"s in the former case, are manifestl!
conclusive in the present case as to the plaintiff-s claim of a ri"ht to interest from the first of .ul!, &'+', to
the third of Ma!, &'&+.
/n the former case e held that the sale of plaintiff-s share )participacion, in the tobacco factor! as
consummated on the latter date0 that the valuation set upon his share )participacion, in business as
determined as of that da! b! the committee char"ed ith the dut! of ascertainin" the cash value of this
share )participacion, in order to determine the e1act amount hich the parties had a"reed upon as the
purchase price to be paid therefor0 and that the committee had included that the plaintiff-s share of the
profits of the business don to the third of Ma!, &'&+, in their estimate of the value of his share
)participacion, in the business of that date.
These rulin"s ere made after a revie of the same record hich is no relied upon b! the plaintiff in
support of his claim of interest upon the amount fi1ed b! the committee as the true value of his share
)participacion, in the business. 2e find nothin" in the record of the contention of counsel in this re"ard
hich ould 3ustif! or necessitate a modification or reversal of the conclusions reached b! us in our former
opinion.
Plaintiff-s share )participacion, in the business havin" been sold on the (rd da! of Ma!, &'&+, for a
stipulated price, that is to sa!, for its value on that da! as fi1ed b! the valuation committee, it is ver! clear
that he is not entitled to interest on the amount fi1ed b! the committee, prior to the date on hich the sale
as consummated )(rd of ma!, &'&+,.
#o also plaintiff-s contention that he should be alloed interest on the amount of the purchase price from
the date of the sale, Ma! (, &'&+, don to the da! upon hich the mone! as actuall! turned over to him,
November %%, &'&+, cannot be sustained. 4nder the e1press terms of the a"reement for the sale on Ma! (,
&'&+, the plaintiff a"reed to accept, and the defendant to pa!, the amount hich the committee should find
to be the true value of plaintiff-s share )participacion, in the business as of that da!. 4nder the a"reement
the defendant neither e1pressl! nor impliedl! obli"ated himself to pa! interest on that amount pendin" the
report of the committee. The onl! contractual obli"ation assumed b! him as that he ould pa! the amount
fi1ed b! the committee in cash immediatel! upon the ma5in" of the aard b! the committee, and in
accordance ith its terms.
The committee-s report is dated November &6, &'&+, and it appears that promptl! upon the submission of
this report, the amount aarded the plaintiff )P%7+,+%8.&*, as paid over b! the defendant to the plaintiff
in cash0 and the letter of counsel for plaintiff dated November &9, &'&+, tenderin" a formal deed of sale of
plaintiff-s share )participacion, in the business and ma5in" demand for the purchase price as fi1ed b! the
committee, read to"ether ith the formal deed of sale e1ecuted November %%, &'&+, ith its
ac5noled"ment of the receipt of the purchase price, leaves no room for doubt that at that time the parties
understood and accepted the purchase price therein set forth as full pa!ment of plaintiff-s share
)participacion, in the business in e1act conformit! ith the conditions imposed in the a"reement
consummated to Ma! (, &'&+.
The ri"ht to interest arises either b! virtue of a contract or b! a! of dama"es for dela! or failure ) demora,
to pa! the principal on hich interest is demanded, at the time hen the debtor is obli"ated to ma5e such
pa!ment. /n the case at bar here as no contract, e1press or implied, for the pa!ment of interest pendin"
the aard of the committee appointed to value the propert! sold on Ma! (, &'&+, and there as no dela! in
the punctual compliance ith defendant-s obli"ation to ma5e immediate pa!ment, in cash, of the amount of
the aard, upon the filin" of the report of the committee.
2e conclude that the 3ud"ment entered in the court belo dismissin" the complaint in this case sine
die should be affirmed, ith the costs of this instance a"ainst the appellant. #o ordered.
Arellano, C.J., Torres, Johnson, Street, Malcolm and Avancea, JJ., concur.
Arallo J., too5 no part.
Republic of the Philippines
SUPREME COURT
Manila
:/R#T $/;/#/<N

G.R. No. L-&9'4( No)e*ber &(, 19'+
INTESTATE ESTATE OF T,E LATE EMILIO CAMON. CONCEPCION
ERE-ETA, administratri1-appellee,
vs.
IGNATIUS ,ENR. E/ORE, EL0OO1 2NIC2EROC2ER, a"# MAR. IRENE FALLON
MCCORMIC2,claimants-appellants0 MARTINIANO O. 1E LA CRU/, administrator.
Manel T. Tono!"ana, Manel S. Tono!"ana, Jr. and #ilado and #ilado for administratri$%appellee.
Martiniano &. de la Crz for Claimants%appellants.

CASTRO, J.:
This is a direct appeal from the order of the Court of :irst /nstance of Ne"ros <ccidental, dated .ul! %+,
&'*7, hich denied a claim of the appellants /"natius =enr! Be>ore, Elood ?nic5erboc5er and Mar!
/rene :allon McCormic5 filed a"ainst the estate of the late Emilio Camon in #pecial Proceedin" 7(** of
the said court.
Emilio Camon as the lessee of the hacienda Rosario, located in Pontevedra, Ne"ros <ccidental, for the
period from crop !ear &'6+-6& to crop !ear &'*+-*&. <ne-half )&@%, pro-indiviso of the said su"ar
plantation belon"ed to the above-named claimants-appellants )as their inheritance from the late Thomas
:allon,, hile the other half belon"ed to Petronila Alunan vda. de #ta. Romana, 3 Amparo #ta. Romana and
Alberta vda. de =opon )as their inheritance from their mother Rosario #ta. Romana,.
4pon the death of Emilio Camon in &'*9, his ido, Concepcion EreAeta, filed a petition in the court a
'o)doc5eted as #pecial Proceedin" 7(**, pra!in" for the "rant to her of letters of administration of the
estate of the deceased Camon. The petition as "ranted. Thereafter, the court issued an order reBuirin" all
persons ith mone! claims a"ainst the estate to file their claims ithin the period prescribed in the order.
The claimants-appellants Be>ore, et al., thru their 3udicial administrator and counsel, Martiniano <. de la
Cru>, filed a claim a"ainst the estate in the amounts of P*%,+*8 as the mone! value of su"ar allotments and
alloances and P%,&++ as the mone! value of pala! and rentals, or a total of P*6,&*8, appertainin" to the
claimants- half-share in the hacienda.
The appellants and the administratri1-appellee are a"reed that the late Emilio Camon appropriated for
himself the amounts claimed. The appellants had demanded pa!ment of their claim from Emilio Camon
hen he as still alive, but the latter i"nored the demands.
At the trial, three documents, the authenticit! of each of hich is not controverted b! the appellants, ere
submitted in evidence b! the administratri1-appellee. These areC
)&, An DA"reement to #ellD )e1hibit D&D,, e1ecuted on .anuar! &&, &'*&, hereb! the claimants Be>ore, et
al., a"reed to sell their one-half )&@%, share in the hacienda Rosario to Amparo #ta. Romana and Alberta
vda. de =opon0
)%, A DRelease and 2aiver of ClaimsD )e1hibit D(D,, e1ecuted on .anuar! &%, &'*&, hereb! Amparo #ta.
Romana and Alberta vda. de =opon, for and in consideration of Dtheir "ratitude for the various services,
financial and personalD e1tended to them b! Emilio Camon, released him from Dan! and all claims that ma!
have accrued pertainin" to the to-fourth )%@6, pro%indiviso share in =acienda RosarioD oned b! the
appellants ho had bound themselves Dto sell their share in the said =acienda RosarioD to Amparo and
Alberta, Dincludin" ri"hts accrued or accruin",D and hereb! Amparo and Alberta bound themselves Dto
aive in favor of Mr. Emilio Camon for his on use and benefit said ri"hts accrued or accruin".D
)(, A D$eed of #aleD )e1hibit D%D,, e1ecuted on Au"ust 6, &'*&, hereb! the claimants Be>ore, et al., for
and in consideration of the sum of P97,+++, to be paid in the manner stated in the instrument, sold,
transferred and conve!ed Dall their ri"hts, title, interest and participation, hether accrued or accruin" in
their to-fourth )%@6, pro%indiviso shareD in the hacienda Rosario, Dto"ether ith all the improvements no
e1istin" thereon, includin" its su"ar Buota,D in favor of Amparo #ta. Romana and Alberta vda. de =opon.
The loer court re3ected the appellants- contention that the su"ar allotments and alloances, sub3ect of their
claim a"ainst the estate of Emilio Camon, ere not included in the sale, and held that b! the positive and
cate"orical terms of the deed of sale, all benefits accrued and accruin" to the appellants before of Au"ust 6,
&'*& ere included in the sale. The court then dismissed the claim per its order dated .ul! %+, &'*7.
To issues are here tendered for resolution, to itC )&, hether the phrase Daccrued or accruin"D )in the
deed of sale, havin" reference to the claimants- ri"hts, title, interest and participation in the plantation,
should be interpreted to e1clude the su"ar allotments and alloances adherent to the hacienda0 and )%,
hether, notithstandin" the absence of a ritten contract of lease for the crop !ears &'8%-8( to &'*+-*&,
Emilio Camon-s continued cultivation of the hacienda created an e1press trust in favor of the claimants.
The premises upon hich the appellants ould conclude that the allotments and alloances ere not
included in the sale areC that on .anuar! &%, &'*& there as then no sale and, therefore, b! the DRelease and
2aiver of ClaimsD Amparo #ta. Romana and Alberta vda. de =opon released and aived nothin" in favor
of Emilio Camon0 that the aiver as made in advance, hich is contrar! to public polic!0 that Emilio
Camon as not the vendee in the sale0 that the vendees represented to Martiniano <. de la Cru> that the
su"ar Buedans and pala! claimed ere not included in the sale and that such as the intention of the
parties0 that the ords Daccrued and accruin"D in the deeds are obscure, and since the deeds ere prepared
b! Ramon #. EreAeta ho is a brother of the administrati1 Concepcion EreAeta ho, in turn, is the ido
of Emilio Camon, the obscure ords should not favor the part! hich caused the obscurit!0 that the
consideration in the sale, hich is eBuivalent to P&,(++ per hectare, is Dcheap0D and that Camon-s silence
re"ardin" the demands made upon him to pa! the claim as an admission of his debt.
The claimants-appellants- vie that at the time of the e1ecution, on .anuar! &%, &'*&, of the deed of
DRelease and 2aiver of Claims,D Amparo #ta. Romana and Alberta vda. de =opon could not release or
aive accrued claims belon"in" the claimants, is correct because the ri"ht that Amparo and Alberta then
had as a mere promise b! the claimants to sell their share in the hacienda, not the ri"ht to the accrued
claims. 2hat as a"reed to be sold in the future as different from hat as purportedl! aived0 and even
if the ob3ect in both contracts ere the same, the aiver ould still be invalid for it is essential that a ri"ht,
in order that it ma! be validl! aived, must be in e1istence at the time of the aiver.
1
Nonetheless,
hatever defect there as in the aiver as subseBuentl! cured b! the deed of sale of Au"ust 6, &'*& b!
virtue of hich the appellants sold not onl! their pro%indiviso half-share in the hacienda but also their
accrued ri"hts therein. /t is immaterial that Emilio Camon as not the vendee since hat mattered is that
the appellants parted ith their accrued ri"hts for a valuable consideration. That the vendees represented to
Martiniano <. de la Cru> that the su"ar Buedans and pala! ere not included in the sale and that such as
the intention of the parties, involves a Buestion of fact hich is not revieable in a direct appeal to the
#upreme Court.
&
The ords Daccrued or accruin"D the deed of sale are not obscure and, as the loer court
declared, are in fact positive and cate"orical enou"h to include accrued allotments and alloances. #ince
the said ords are not ambi"uous, there is no need to interpret them.
Art. &(9+. /f the terms of a contract are clear and leave no doubt upon the intention of the contractin"
parties, the literal meanin" of its stipulations shall control. ... )Civil Code,
That the consideration in the sale as DcheapD is not a "round for the infirmit! of the sale. /nadeBuac! of
cause in a contract does not of itself invalidate the contract.
+
The appellants- stand that the silence of
Camon ith respect to the several demand letters sent to him as an admission of his debt, is ithout
support or sanction in our la of evidence.
Nor as there a chan"e in the 3uridical relationship beteen the hacienda oners and Emilio Camon hen,
after the e1piration of their ritten contract of lease, he continued cultivatin" the hacienda durin" the crop
!ears &'8%-8( to &'*+-*&. The continuance in the cultivation, ith the acBuiescence of the oners, did not
convert the ori"inal relationship into an e1press trust, as contended b! appellants, but merel! implied a ne
lease over the propert!, ith the same terms and conditions provided in the ori"inal contract, e1cept as to
the period of the lease.
Art. &*9+. /f at the end of the contract the lessee should continue en3o!in" the thin" leased for fifteen da!s
ith the acBuiescence of the lessor, and unless a notice to the contrar! b! either part! has previousl! been
"iven, it is understood that there is an implied ne lease, not for the period of the ori"inal contract, but for
the time established in articles &*7% and &*79. The other terms of the ori"inal contract shall be revived.
)Civil Code,
There is nothin" in the record that evidence the creation of a fiduciar! relationship beteen the lessors and
the lessee after the e1piration of their ritten contract of lease, hich fiduciar! relationship is an essential
characteristic of trust,
4
and no ritten instrument has been pointed to as establishin" an e1press trust, hich
ritin" is reBuired in e1press trusts over immovables.
4
There is therefore no basis for the appellants- claim
that an e1press trust as created hen Camon continued to cultivate the land after the e1piration of the
ritten contract of lease.
ACC<R$/NEFG, the order a 'o of .ul! %+, &'** is affirmed, at claimants-appellants- cost.
Makalintal, C.J., Teehankee, Makasiar, (s!erra and Moz Palma, JJ., concr.
EN ANC
5G.R. No. L-+08'1.
1e6e*ber &8, 19'0.7
AURORA P. 1E LEON, Petitioner, ). ,ON. SERAFIN SAL8A1OR, a9 !u#:e o;
ra"6< =I8 o; ><e Cour> o; F?r9> I"9>a"6e o; R?@aA BCaAoo6a" C?>yC, a"# EUSEIO
ERNAE, ALERTO A. 8ALINO, SDe6?aA 1eDu>y S<er?;; o; ><e O;;?6e o; ><e
Pro)?"6?aA S<er?;;, Pro)?"6e o; R?@aA, a"# ><e REGISTER OF 1EE1S ;or CaAoo6a"
C?>y, )espondents.
5G.R. No. L-+1(0+. 1e6e*ber &8, 19'07
EUSEIO ERNAE, Petitioner, ). T,E ,ONORALE !U1GE FERNAN1O A.
CRU/ o; ><e Cour> o; F?r9> I"9>a"6e o; R?@aA, CaAoo6a" C?>y, ra"6< =II, SPECIAL
1EPUT. S,ERIFF, ALERTO A. 8ALINO o; ><e Pro)?"6?aA S<er?;; o; R?@aA a"#
AURORA P. 1E LEON, )espondents.
!o9e A. Gar6?a a"# I9*aeA M. E9>reAAa ;or Petitioner.
1e Ao9 Sa">o9, 1e Ao9 Sa">o9 E 1e Ao9 Sa">o9 a"# FeA?De L. AbeA ;or )espondents.
FeA?De L. AbeA ;or Petitioner.
I9*aeA M. E9>reAAa a"# !o9e A. Gar6?a ;or )espondents.
$ E C / # / < N
TEE=AN?EE, J.%
.oint decision of to special civil actions hich ere ordered consolidated since the!
involve the same properties and the common issue of conflict of 3urisdiction of the to
Caloocan Cit! branches of the Court of :irst /nstance of Ri>al.
Case F-(+79& arose from the folloin" factsC A 3ud"ment for P(8,+++.++-actual, moral
and e1emplar! dama"es obtained b! EnriBue de Feon a"ainst private respondent Eusebio
Bernabe in Civil Case No. C-&7' of Branch H// of the Ri>al court of first instance,
Caloocan Cit! branch presided b! .ud"e :ernando A. Cru>, havin" become final and
e1ecutor!, a rit of e1ecution as issued b! said court. Pursuant thereto, the cit! sheriff,
on November 7, &'** levied on e1ecution on to parcels of land of *7%.8 sBuare meters
each re"istered in the names of Bernabe under T.C.T. Nos. '6'78 and '6'7* of Caloocan
Cit!. At the e1ecution sale held on :ebruar! &6, &'*9, the cit! sheriff sold the said
properties to herein petitioner, Aurora )sister of the 3ud"ment creditor, as the hi"hest
bidder for the total sum of P(+,&'6.++, )the propert! then bein" sub3ect to an e1istin"
mort"a"e lien in the amount of P&%+,+++.++,. The sheriff e1ecuted the correspondin"
certificate of sale in her favor, hich as dul! re"istered on :ebruar! %&, &'*9 ith the
Caloocan Cit! re"ister of deeds.
<n :ebruar! 9, &'*7, 3ust about to ee5s before the e1piration of the one-!ear period to
redeem the properties sold in e1ecution, the 3ud"ment debtor Bernabe filed a separate
civil action doc5eted as Civil Case No. C-&%&9 a"ainst his 3ud"ment creditor EnriBue de
Feon, herein petitioner Aurora P. de Feon as purchaser and the sheriff as defendants for
the settin" aside or annulment of the e1ecution sale on :ebruar! &6, &'*9 Dfor bein"
anomalous and irre"ular,D and for the orderin" of a ne auction sale. This second case,
instead of bein" referred to .ud"e Cru> presidin" over Branch H// hich had issued the
rit of e1ecution, as assi"ned to Branch H/;, the other Caloocan Cit! branch of the
Ri>al Court of :irst /nstance presided b! .ud"e #erafin #alvador, ho issued on :ebruar!
&', &'*7 a rit of preliminar! in3unction en3oinin" therein defendants, particularl! the
sheriff to desist Dfrom ta5in" further proceedin"s a"ainst the properties of the plaintiff
IBernabeJ that ere sold at public auction on :ebruar! &6, &'*9, and from issuin" a
sheriffs deed of sale at the e1piration of the period of redemption on :ebruar! %&, &'*7
in favor of defendant Aurora P. de Feon.D Aurora moved to dissolve the in3unction and to
dismiss this second case on the "rounds of laches and lac5 of 3urisdiction of .ud"e
#alvadors court to interfere ith the e1ecution proceedin"s pendin" in the first case
before .ud"e Cru> court hich is of eBual and co-ordinate 3urisdiction, but .ud"e
#alvador denied the same for not bein" indubitable and tried the case, notithstandin"
Auroras pleas before and after the trial to resolve the issue of his courts lac5 of
3urisdiction.
Pendin" his decision, .ud"e #alvador issued on Ma! %+, &'*' an order "rantin" to e1-
parte motions of Bernabe of Ma! &%, and Ma! &8, &'*' and orderin" the sheriff to allo
Bernabe to redeem the to properties sold at public auction more than to !ears a"o on
:ebruar! &6, &'*9 under the rit of e1ecution issued b! .ud"e Cru> court in the first
case. <n the folloin" da!, Ma! %&, &'*', Bernabe deposited ith the sheriff the sum of
P((,7&9.%7 as the redemption price )P&8,'79,++ per lot plus interests,, ho issued a
certificate of redemption. Bernabe then re"istered on the folloin" da!, Ma! %%, &'*',
the sheriffs certificate of redemption ith the re"ister of deeds, ho in turn cancelled
the entr! of the e1ecution sale in favor of Aurora, as ell as re"istered on one of the
properties covered b! T.C.T. No. '6'7* a deed of first mort"a"e e1ecuted on Ma! %+,
&'*' b! Bernabe in favor of one Antonio de Ku>uarre"ui to secure a loan of P&(+,+++.++.
Auroras motion of Ma! %7, &'*' in the second case to set aside the order and
certificate of redemption and re"istration of mort"a"e on the "round of lac5 of
3urisdiction as denied b! .ud"e #alvador, ho ruled in his order of .une %(, &'*' that
Dthere is no Buestion that this Court has 3urisdiction to hear and determine this case hich
Buestions the re"ularit! and le"alit! of the auction sale of properties held on :ebruar! &6,
&'*9, hence the authorit! "ranted b! the Court to redeem said properties ithin the
redemption period in order to rite finis to the pendin" case.D & =ence, this action
for certiorari filed b! Aurora impleadin" the sheriff and the re"ister of deeds for the
annulment and settin" aside for lac5 of 3urisdiction of the Buestioned orders of .ud"e
#alvadors court as ell as of the challen"ed actuations of the other respondent officials
pursuant thereto. As pra!ed for, the Court issued a rit of preliminar! in3unction
en3oinin" said respondents from doin" or ta5in" an! other act in connection ith the said
properties.
<n Ma! (+, &'*', Aurora also filed in the first case before .ud"e Cru> court a motion
ith proper notice for consolidation of title and for the court to order the sheriff to issue
in her favor a final deed of sale over the sub3ect parcels of land. .ud"e Cru> order of
#eptember 8, &'*', "rantin" Auroras motion over Bernabes opposition that he had
redeemed on Ma! %&, &'*' the said properties b! virtue of .ud"e #alvadors order of
Ma! %+, &'*' in the second case and orderin" Bernabe to surrender his oners
duplicates of title for transfer to Aurora, in turn "ave rise to Case F-(&*+( filed b!
Bernabe. After Bernabes motion for reconsideration ur"in" .ud"e Cru> to hold in
abe!ance Auroras motion for consolidation of title until this Courts decision in Case
F-(+79& Dhich ill end once and for all the le"al controvers!D over the conflict of
3urisdiction beteen the to courts, as denied b! .ud"e Cru> order of .anuar! 7,
&'9+, he filed this action for certiorari, impleadin" the sheriff, for the annulment and
revocation of the Buestioned orders of .ud"e Cru>, on the "round of the latters lac5 of
3urisdiction to issue the same. As pra!ed for, the Court also issued a rit of preliminar!
in3unction a"ainst the enforcement of .ud"e Cru> orders, until the conflict beteen the
parties could be finall! resolved.
The decisive issue at bar is a simple one of 3urisdictionC hich court, Branch H// presided
b! .ud"e Cru> or Branch H/; presided b! .ud"e #alvador has e1clusive 3urisdiction to
set aside for alle"ed irre"ularities the e1ecution sale held on :ebruar! &6, &'*9 b! virtue
of the rit for the e1ecution of the final 3ud"ment in the first case )No. C-&7', issued b!
.ud"e Cru> court and to order a ne auction sale hich as the relief sou"ht b! the
3ud"ment debtor in the second case )No. C-&%&9, in .ud"e #alvadors courtL
/t is patent that such e1clusive 3urisdiction as vested in .ud"e Cru> court. =avin"
acBuired 3urisdiction over Case No. C-&7' and rendered 3ud"ment that had become final
and e1ecutor!, it retained 3urisdiction over its 3ud"ment, to the e1clusion of all other co-
ordinate courts for its e1ecution and all incidents thereof, and to control, in furtherance of
3ustice, the conduct of its ministerial officers in connection thereith. % E1ecution of its
3ud"ment havin" been carried out b! the sheriff ith the lev! and sale of the 3ud"ment
debtors properties, Eusebio Bernabe as 3ud"ment debtor could not in the "uise of a ne
and separate second action )Case No. &%&9, as5 another court of coordinate 3urisdiction,
.ud"e #alvadors court, to interfere b! in3unction ith the e1ecution proceedin"s, to set
them aside and to order the holdin" of a ne e1ecution sale instead of see5in" such
relief b! proper motion and application from .ud"e Cru> court hich had e1clusive
3urisdiction over the e1ecution proceedin"s and the properties sold at the e1ecution sale.
As earl! as &'%%, in Cabi"ao v. del Rosario, ( this Court laid don the doctrine that Dno
court has poer to interfere b! in3unction ith the 3ud"ments or decrees of a court of
concurrent or coordinate 3urisdiction havin" poer to "rant the relief sou"ht b!
in3unction,D pointin" out thatD )T,he various branches of the Court of :irst /nstance of
Manila are in a sense coordinate courts and to allo them to interfere ith each others
3ud"ments or decrees b! in3unctions ould obviousl! lead to confusion and mi"ht
seriousl! hinder the administration of 3ustice.Dcrala virtua&a librar!
The Court similarl! ruled in =ubahib v. /nsular $ru" Co., /nc., 6 ith reference to
Branch // of the Cebu court of first instance havin" ta5en co"ni>ance of an independent
action for the annulment of a rit of e1ecution issued b! Branch /// of the same court
hich has rendered the 3ud"ment, that Dthe institution of said action as not onl!
improper but also absolutel! un3ustified, on the "round that the appellant had the remed!
of appl!in" to the same Branch /// of the loer court, hich issued the orders in Buestion,
for reconsideration thereof . . . or of appealin" from said orders or from that den!in" his
motion in case such order has been issued. The various branches of a Court of :irst
/nstance of a province or cit!, havin" as the! have the same or eBual authorit! and
e1ercisin" as the! do concurrent and coordinate 3urisdiction, should not, cannot, and are
not permitted to interfere ith their respective cases, much less ith their orders or
3ud"ments, b! means of in3unction.Dcrala virtua&a librar!
/n National Poer Corporation v. $e ;e!ra, 8 the Court, throu"h former Chief .ustice
Ben">on, thus e1plained that the "arnishment or lev! of propert! on e1ecution brin"s the
propert! into custodia le"is of the court issuin" the rit of e1ecution, be!ond the
interference of all other co-ordinate courts, thereb! avoidin" conflicts of poer beteen
such courtsCD )T,he "arnishment of propert! to satisf! a rit of e1ecution operates as
an attachment and fastens upon the propert! a lien b! hich the propert! is brou"ht under
the 3urisdiction of the court issuin" the rit.D /t is brou"ht into custodia le"is, under the
sole control of such court. Propert! is in the custod! of the court hen it has been sei>ed
b! an officer either under a rit of attachment on mesne process or under a rit of
e1ecution. A court hich has control of such propert!, e1ercises e1clusive 3urisdiction
over the same. No court, e1cept one havin" a supervisor! control or superior 3urisdiction
in the premises, has a ri"ht to interfere ith and chan"e that possession.Dcrala
virtua&a librar!
The Court in stri5in" don the Ba"uio courts issuance of a rit of preliminar!
in3unction a"ainst the Ba"uio Cit! sheriffs "arnishment of cash funds of Ba"uio Cit!
deposited in the Ba"uio branch of the Philippine National Ban5 pursuant to a rit of
e1ecution issued b! the Manila court of first instance for the satisfaction of a final
3ud"ment rendered in favor of the National Poer Corporation, and its assumin"
co"ni>ance of the separate complaint filed ith it, dul! indicated the proper procedure in
such cases and the fundamental reason thereforCD )T,he reason advanced b! the
respondent court of Ba"uio Cit! that it should "rant relief hen there is apparentl! an
ille"al service of the rit )the propert! "arnished bein" alle"edl! e1empt from
e1ecution, ma! not be upheld, there bein" a better procedure to follo, i.e., a resort to the
Manila court, herein the remed! ma! be obtained, it bein" the court under hose
authorit! the ille"al lev! had been made. Needless to sa!, an effective orderin" of le"al
relationships in civil societ! is possible onl! hen each court is "ranted e1clusive
3urisdiction over the propert! brou"ht to it.D *
The Court time and a"ain has applied this lon" established doctrine admonishin" court
and liti"ant ali5e last !ear in Fuciano v. Provincial Eovernor 9 that a 3ud"e of a branch of
a court ma! not interfere ith the proceedin"s before a 3ud"e of another branch of the
same court.
The properties in Buestion ere brou"ht into custodia le"is of .ud"e Cru> court and came
under its e1clusive 3urisdiction hen the! ere levied upon b! the sheriff pursuant to the
rit for e1ecution of the 3ud"ment rendered b! said court. The lev! is the essential act b!
hich the 3ud"ment debtor s propert! is set apart for the satisfaction of the 3ud"ment and
ta5en into custod! of the la, and from such time the court issuin" the e1ecution acBuires
e1clusive 3urisdiction over the propert! and all subseBuent claims of other parties are
subordinated thereto, irrespective of the time hen the propert! is actuall! sold. 7 The
e1ecution sale havin" been carried out upon order of .ud"e Cru> court, an! and all
Buestions concernin" the validit! and re"ularit! of the sale necessaril! had to be
addressed to his court hich had e1clusive 3urisdiction over the properties and ere
be!ond interference b! .ud"e #alvador s court. .ustice Cru> court alone had 3urisdiction
sub3ect onl! to the supervisor! control or appellate 3urisdiction of superior courts to
rule upon the re"ularit! and validit! of the sale conducted b! its ministerial officers from
the sheriffs office, and his affirmative rulin" thereon could not be interfered ith b!
in3unction of, nor sou"ht to be foreclosed b!, the challen"ed orders of .ud"e #alvadors
court.
Bernabes contention that Dhe does not attempt to annul or nullif! the 3ud"ment or order
issued b! ).ud"e Cru> court, . . . /f ).ud"e #alvadors Court, finds the alle"ations of
the complaint to be true, then it has the 3urisdiction to order a ne auction sale, hich has
nothin" to do ith the 3ud"ments or decrees issued b! .ud"e Cru> court,D ' is
untenable. As above stated, the properties upon bein" levied on and sold b! virtue of
.ud"e Cru> order of e1ecution ere brou"ht into the e1clusive custodia le"is of .ud"e
Cru> court This is but in accordance ith the established principle that DA case in
hich an e1ecution has been issued is re"arded as still pendin", so that all proceedin"s on
the e1ecution are proceedin"s in the suitD &+ and thatD )A,n e1ecution is the fruit and end
of the suit, and is ver! aptl! called the life of the la. The suit does not terminate ith the
3ud"ment0 and all proceedin"s on the e1ecution, are proceedin"s in the suit, and hich
are e1pressl!, b! the act of Con"ress, put under the re"ulation and control of the Court of
hich it issues. /t is a poer incident to ever! Court from hich process issues, hen
delivered to the proper officer, to enforce upon such officer a compliance ith his dut!.D
&& An! and all Buestions involvin" the e1ecution sale concerned the proceedin"s in .ud"e
Cru> court and had to be raised and determined in that court, sub3ect to revie b! the
hi"her courts. The! could not be improperl! passed upon b! another co-ordinate court
behind the bac5, as it ere of .ud"e Cru> court.
.ud"e #alvadors order of Ma! %+, &'*' "rantin" to e1-parte motions of the 3ud"ment
debtor Bernabe and directin" the sheriff to allo the redemption of the properties
notithstandin" that the one-!ear redemption period had alread! lapsed more than one
!ear a"o on :ebruar! %&, &'*7 )one !ear after re"istration on Ma! %&, &'*9 of the
sheriffs sale of Ma! &6, &'*9, as eBuall! untenable. /t must be noted that Bernabes
action in .ud"e #alvadors court filed on :ebruar! 9, &'*7 to ee5s before the
e1piration of the redemption period sou"ht to set aside the e1ecution sale and to have a
ne auction sale ordered, on the "rounds that the sheriff had alle"edl! sold the to
parcels of land 3ointl! instead of separatel!, and that the total sales price of P(+,&'6.++
as shoc5in" to the conscience, alle"in" that the to parcels, if sold separatel!, could
easil! be sold at P%(8,+++.++ and P&8+,+++.++. Pendin" decision and ithout rulin"
sBuarel! on his courts lac5 of 3urisdiction over the properties, .ud"e #alvador
peremptoril! issued his redemption order on Bernabes bare manifestation thatD )he, has
but barel! to da!s left of the one )&, !ear period "ranted b! la to redeemD and thatD
)he, is no read! and illin" to redeemD the properties.
Aside from the basic lac5 of 3urisdiction of .ud"e #alvadors court to issue the
redemption order, the order per se suffered from other "rave flas. Bernabes motions
in effect amounted to an abandonment of his position on the alle"ed irre"ularit! of the
e1ecution sale, and the lo"ical conseBuence thereof hich have been the dismissal of his
suit. )Thus, soon after Auroras filin" of her action for certiorari in this Court, Bernabe
filed his so-called D4r"ent Motion to $ismissD of Au"ust %9, &'*' ith .ud"e
#alvadors court pra!in" for the dismissal of the ver! case filed b! him on the "round
that havin" redeemed the properties, Dthe case can therefore be considered closed and
terminated considerin" that defendants IAurora, Et. Al.J did not interpose an! appealD
from the redemption order, But Bernabes motions ere presented on Ma! &% and Ma!
&8, &'*' and it as self-evident from the record that the one-!ear period for redemption
had lon" e1pired more than a !ear a"o on :ebruar! %&, &'*7 as above stated and that
Bernabes alle"ations that he had to da!s left of the redemption period as a
"ratuitous one. Nothin" in the record indicates that Bernabe had ever timel! made a valid
offer of redemption so as to safe"uard his ri"ht thereto prior to his filin" his separate
action Buestionin" the validit! of the e1ecution sale. /t as therefore void and illo"ical
for .ud"e #alvador to rule, in den!in" Auroras motion for reconsideration, that Dthere
is no Buestion that this Court has 3urisdiction to hear and determine this case hich
Buestions the re"ularit! and le"alit! of the auction sale of properties held on :ebruar! &6,
&'*9, hence the authorit! "ranted b! the Court to redeem said properties ithin the
redemption period in order to rite finis to the pendin" case.D :or .ud"e #alvador thereb!
be""ed the basic pre3udicial Buestions of his courts lac5 of 3urisdiction and the
e1piration over a !ear a"o of Bernabes alle"ed ri"ht of redemption, not to mention that
an! "rant of such ri"ht to redeem could not be decreed in a summar! unreasoned order
but ould have to be ad3ud"ed in a formal decision recitin" the facts and the la on
hich it is based, and hich ma! not be immediatel! e1ecuted, ithout a special order
therefor. 4nder .ud"e #alvadors void orders, all that a 3ud"ment debtor hose
properties have been sold at e1ecution sale but ho does not have the funds to effect
redemption has to do to unilaterall! e1tend the one-!ear redemption period ould be to
file a separate action before another court of co-ordinate 3urisdiction Buestionin" the
re"ularit! of the e1ecution sale and upon his "ettin" the funds, notithstandin" the
e1piration of the redemption period, "et an order of redemption and as5 the court Dto
rite finis to the pendin" caseD hich should have been dismissed in the first instance
for lac5 of 3urisdiction.
The doctrine cited that a court or a branch thereof ma! not interfere ith the proceedin"s
before a 3ud"e of another court or branch of the same court since the! are all courts of
eBual and co-ordinate 3urisdiction is an elementar! doctrine that has been established ith
the ver! s!stem of courts. 4nderstandable as Bernabes pli"ht and financial
predicament ma! be, still it is incomprehensible h! he should futilel! resort, as he did,
to filin" his separate action ith .ud"e #alvadors court hich patentl! lac5ed
3urisdiction over the properties sold in e1ecution instead of Buestionin" the re"ularit! of
the e1ecution sale before .ud"e Cru> court as the court of competent and e1clusive
3urisdiction, and properl! appl!in", if he had 3ust "rounds, for e1tension of the
redemption period.
As to the alle"ed "ross inadeBuac! of the price of P(+,&'6.++ paid b! Aurora hen
accordin" to Bernabe the properties could have been easil! sold for a total price of
P(78,+++.++, Bernabe has admitted that there as an e1istin" mort"a"e lien on the
properties in the amount of P&%+,+++,++ hich necessaril! affected their value. This
Buestion as not raised at all before .ud"e Cru> court nor did .ud"e #alvador rule
thereupon, since he merel! issued his void order of redemption. #uffice it to state on the
basis of the record, hoever, that the failure of Bernabe to timel! sell the properties for
their fair value throu"h ne"otiated sales ith third persons either before or after the
e1ecution sale in order to be able to dischar"e his 3ud"ment debt or redeem the properties
ithin the redemption period, or to raise the necessar! amount therefrom to so effect
redemption notithstandin" that the! have been collectin" the substantial monthl! rentals
thereof of P%,8++.++ monthl! even up to no &% can be attributed onl! to his on
failin"s and "ross improvidence. The! cannot be cited in la or in eBuit! to defeat the
laful claim of Aurora nor to "ive validit! to the void orders of .ud"e #alvadors court.
The applicable rule on forced sales here the la "ives the oner the ri"ht of redemption
as thus stated b! the Court in ;elasBue> v. CoronelC &( D=oever, hile in ordinar!
sales for reasons of eBuit! a transaction ma! be invalidated on the "round of inadeBuac!
of price, or hen such inadeBuac! shoc5s ones conscience as to 3ustif! the courts to
interfere, such does not follo hen the la "ives to the oner the ri"ht to redeem, as
hen a sale is made at public auction, upon the theor! that the lesser the price the easier it
is for the oner to effect the redemption. And so it as aptl! saidC 2hen there is the
ri"ht to redeem, inadeBuac! of price should not be material, because the 3ud"ment debtor
ma! reacBuire the propert! or also sell his ri"ht to redeem and thus recover the loss he
claims to have suffered b! reason of the price obtained at the auction sale.D
Bernabes petition challen"in" the 3urisdiction of .ud"e Cru> court to issue its orders
of #eptember 8, &'*' and .anuar! 8, &'9+, confirmin" Auroras acBuisition of title to
the properties b! virtue of the e1ecution sale and orderin" Bernabe to transfer possession
thereof to her, because of the separate civil action filed b! him in .ud"e #alvadors
court, must necessaril! fail since said orders ere ithin the e1clusive competence
and 3urisdiction of .ud"e Cru> court.
ACC<R$/NEFG, in Case F-(+79&, the rit of certiorari pra!ed for his "ranted0
respondent .ud"e #alvadors court is declared ithout 3urisdiction over Civil Case No.
C-&%&9 other than to dismiss the same and the rit of preliminar! in3unction of :ebruar!
&', &'*7 therein issued and the orders of Ma! %+, &'*' and .une %(, &'*' therein issued,
as ell as respondent sheriffs certificate of redemption issued on Ma! %&, &'*' are set
aside and declared null and void0 and the rit of preliminar! in3unction issued b! the
Court on #eptember %, &'*', is made permanent. /n Case F-(&*+(, the petition
forcertiorari is dismissed and the rit of preliminar! in3unction issued b! this Court on
:ebruar! &&, &'9+ is dissolved. No pronouncement as to costs.
Re!es, ..B.F., $i>on, Ma5alintal, Kaldivar, :ernando, Barredo, ;illamor and
Ma5asiar, JJ., concur.
Concepcion, C.J., concurs in the result.
Castro, J., did not ta5e part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-&1881 Mar6< 1, 19(8
PACIFIC O=.GEN E ACET.LENE COMPAN., plaintiff-appellee,
vs.
CENTRAL AN2 OF T,E P,ILIPPINES, defendant-appellant.
*ienvenido +. ,arcia for plaintiff%appellee.
-at. M. *al"ao, .. (. (van!elista / M. A"a0a for defendant%appellant.
FERNAN1O, J.:
/n this suit for the recover! of a sum of mone! from defendant-appellant Central Ban5, the sole le"al
issue before us, as before the loer court, is the validit! Dof the collection made b! the defendant from the
plaintiff in the amount of P(+,7('.6' constitutin" the mar"in fee for its commercial credit )letter of credit,
in favor of the independent En"ineerin" Co., /nc., <-:allon, /llinois, 4.#., in the amount of M*(,'*6.++
hich as increased later to M*9,796.++.D
&
The loer court decided in favor of plaintiff. 2e do not see it
that a! and accordin"l! reverse the decision.
The facts as stated b! the trial court ere not in dispute. /ts findin", moreover, cannot be
controverted on appeal. Plaintiff Pacific <1!"en and Acet!lene Co. applied on #ept. %&, &'*& ith the
Philippine Trust compan!, an a"ent of the Central Ban5, for commercial credit in the amount of M*(,'*6.++
in favor of the /ndependent En"ineerin" Co., /nc., <-:allon, a 4nited #tates corporation located in
/llinois,
%
to cover the shipment of a plant. The application as approved on <ctober 6, &'*&, ith the
Philippine Trust Compan! establishin" an irrevocable letter of credit at the free mar5et rate of P(.+&798 to
ever! dollar, the letter of credit,
(
e1pirin" on :ebruar! &, &'*%. The plaintiff also on #eptember %&, &'*&,
applied ith the Philippine Trust Compan! for the purchase of forard e1chan"e in the same amount of
M*(,'*6.++ and for the same purpose.
6
<n <ctober 8, &'*&, the Philippine Trust Compan! applied ith the
Central Ban5 for the purchase of forard e1chan"e in the amount of M*(,*'6.++ to cover its 4.#. dollar
commitment a"ainst the letter of credit opened under free mar5et rate for the plaintiff. Then on <ctober *,
&'*&, the Central Ban5 in turn e1ecuted a forard e1chan"e contract for the sale of forei"n e1chan"e in the
said amount to be delivered on .anuar! %, &'*%.
8
<n November 9, &'*&, upon plaintiff-s application, the
letter of credit as amended to increase the amount b! M(,'&+.++ to cover the estimated frei"ht and ship
char"es,
*
to be folloed as in the case of the ori"inal letter of credit ith the purchase0 of forard e1chan"e
for a similar amount. <n .anuar! &9, &'*%, the Philippine Trust Compan! applied for the purchase of
forard e1chan"e ith the Central Ban5 in the amount of M9&,*&9.++ of hich M*9,796.++ ould cover its
4.#. dollar commitments a"ainst the letter of credit opened under free mar5et rate for the plaintiff. Then the
ne1t da! the Central Ban5 e1ecuted the correspondin" forard e1chan"e contract for the same amount to
be delivered on March &9, &'*%.
9
<n .anuar! %&, &'*%, the Central Ban5 suspended the mar"in lev!. <n :ebruar! 7, &'*%, the
/ndependent En"ineerin" Co., /nc., <-:allon, /llinois, 4.#.A., the beneficiar!, dre to drafts a"ainst said
letter of credit in the sums of M&',%99.6& )E1h. A-8, and M67,8'*.8' )E1h. A-*,, and the Continental /llinois
National Ban5 and Trust Compan! of Chica"o, Chica"o, /llinois, correspondent of the Philippine Trust
Compan!, Manila, honored the first draft on :ebruar! ', &'*%, and the second draft on :ebruar! &(, &'*%,
as shon b! the debit advices on the same dates addressed to Philippine Trust Compan!.
7
<n :ebruar! &7
and %(, &'*%, the Philippine Trust Compan! sent to the plaintiff statements of account on the importation in
hich ere included the &8N mar"in fee.
'
<n March &6, &'*%, the plaintiff paid under protest to the
Central Ban5, thru the Philippine Trust Compan!, the amounts of P%%,+87.++ and P7,97+.*8, or a total of
P(+,7('.6', representin" the &8N mar"in fee, the amount sou"ht to be recovered.
The applicable la is Republic Act No. %*+', hich insofar as pertinent, empoers the Central Ban5
Din respect of all sales of forei"n e1chan"e b! IitJ and its authori>ed a"ent ban5s, . . . to establish a uniform
mar"in of not more than 6+N over the ban5-s sellin" rates stipulated b! the Monetar! Board . . ..D
&+
After
Buotin" the above le"al provision referrin" to the correspondin" Central Ban5 circular that fi1ed the mar"in
fee, and citin" the doctrine in Belman Cia., /nc. v. Central Ban5 of the Philippines,
&&
Dthat the date of such
pa!ment or deliver! of the amount in forei"n currenc! to the creditor determines hether such amount of
forei"n currenc! is sub3ect to ta1 imposed b! the "overnmentD
&%
of the countr! issuin" such letter of credit,
the loer court rendered 3ud"ment in favor of the plaintiff and a"ainst the defendant orderin" the refund of
the above sum of P(+,7('.6'. A motion to set aside 3ud"ment b! defendant Central Ban5 havin" been filed
and thereafter denied, this appeal as ta5en.
The appeal, as earlier mentioned, possesses merit. The lan"ua"e of the la is clear. A mar"in fee ma!
be collected from Dall sales of forei"n e1chan"e b! the Central Ban5 and its authori>ed a"ent ban5s, . . . .D
/t as e1pressl! found b! the loer courtC D<n .anuar! &9, &'*%, the Philippine Trust Compan! applied for
the purchase of forard e1chan"e ith the Central Ban5 in the amount of M9&,*&9.+%, of hich M*9,796.++
to cover its 4.#. dollar commitments a"ainst the letter of credit opened under free mar5et rate for the
plaintiff, and on the ne1t da! the Central Ban5 e1ecuted the correspondin" forard e1chan"e contract )No.
&%&68, for the same amount to be delivered on March &9, &'*% . . . .D
&(
/t is ell-settled in our la that a contract of sale e1ists from the moment Done of the contractin"
parties obli"ates himself to transfer the onership of and to deliver a determinate thin", and the other to
pa! therefor a price certain in mone! or its eBuivalent.D
&6
There is a perfection of such a contract Dat the
moment there is a meetin" of minds upon the thin" hich is the ob3ect of the contract and upon the priceD
from hich moment, Dthe parties ma! reciprocall! demand performance, sub3ect to the provisions of the
la "overnin" the form of contracts.D
&8
/t is a fair restatement of the prevailin" principle in American la
that an a"reement b! one part! to sell and deliver, and b! the other to purchase at a mentioned price and
terms certain personal propert! on or before a specified future date is a contract of sale and not an option.
&*
2ith the cate"orical findin" in the decision appealed from that the purchase of the forard e1chan"e
b! the Central Ban5 occurred on .anuar! &9, &'*%, prior to the suspension of the mar"in lev! on .anuar!
%&, &'*%, it cannot be denied that deference must be paid to the le"al provision callin" for a mar"in fee Din
respect of all sales of forei"n e1chan"e b! the Central Ban5 and its authori>ed a"ents . . . .D :rom +izarra!a
#ermanos v. 1ap Tico,
&9
this Court has steadfastl! adhered to the doctrine that its first and fundamental dut!
is the application of the la accordin" to its e1press terms, interpretation bein" called for onl! hen such
literal application is impossible.
&7
As thus vieed, the fact that it as not until :ebruar! ' and &(, &'*%, that the Continental /llinois
National Ban5 and Trust Compan! honored the above drafts cannot therefore be controllin". The plain and
e1plicit command of the la is too cate"orical to be misinterpreted. A contrar! impression that mi"ht be
!ielded b! Belman Cia /nc. v. Central Ban5 of the Philippines dealin" ith the #eventeen )&9N, percent
e1cise ta1 cannot prove decisive of this controvers!, as as erroneousl! held b! the loer court. To the
e1tent that there is an inconsistenc! beteen this decision and the Belman dictum, it cannot be considered
authoritative, at least under the circumstances as herein disclosed.
2=ERE:<RE, the appealed 3ud"ment is reversed. 2ith costs a"ainst plaintiff-appellee.234ph52.6t
)e0es, J.*.+., 7izon, Makalintal, *en!zon, J.P., 8aldivar, Sanchez, Castro and An!eles, JJ., concr.
Concepcion, C.J., is on leave.
Foo>"o>e9
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-1189' O6>ober +1, 19(4
FERNAN1O A. FROILAN, plaintiff-appellee,
vs.
PAN ORIENTAL S,IPPING COMPAN., defendant-appellant,
REPULIC OF T,E P,ILIPPINES, a"# COMPANIA MARITIMA, intervenors-appellees.
S0cip, Salazar / Associates and (nri'e .ernando / (mma 9ism"in!%.ernando for defendant%
appellant.
The ,overnment Corporate Consel for intervenors%appellees.
)afael 7in!lasan for plaintiff%appellee.
ARRERA, J.:
<n March 9, &'69, :ernando A. :roilan purchased from the #hippin" Administration a boat described as
M;@:# &'9 for the sum of P%++,+++.++, ith a don pa!ment of P8+,+++,++. To secure pa!ment of the
unpaid balance of the purchase price, a mort"a"e as constituted on the vessel in favor of the #hippin"
Administration in a contract hich provides, amon" others, the folloin"C
/n the event that the :/R#T PARTG should elect to e1ercise its ri"hts to rescind under the terms of this
contract, it shall have the ri"ht to ta5e possession of the vessel herein sold in the condition that it is at the
time of rescission but in no case in a orse condition than hen ori"inall! delivered to the second part!,
ordinar! ear and tear e1cepted and in case at the time of rescission the condition of the vessel is not
satisfactor! to the :/R#T PARTG, it shall have the ri"ht to have the vessel reconditioned, repaired, dr!-
doc5ed at the e1pense of the #EC<N$ PARTG. The same ri"ht is hereb! "ranted to the :/R#T PARTG in
case the #EC<N$ PARTG should for an! reason refuse or fail to compl! ith this condition of sale and
return the vessel herein sold in a condition not satisfactor! to the :/R#T PARTG.
The ri"ht of rescission shall be considered as a cumulative remed! "ranted to the :/R#T PARTG and shall
not in an! a! pre3udice his ri"ht to demand immediate and complete pa!ment of the purchase price of the
vessel under the terms herein provided, and to demand and collect from the #EC<N$ PARTG such
dama"es caused b! the non-compliance ith this contract.
This contract as dul! approved b! the President of the Philippines.
:roilan appeared to have defaulted in spite of demands, not onl! in the pa!ment of the first installment on
the unpaid balance of the purchase price and the interest thereon hen the! fell due, but also failed in his
e1press underta5in" to pa! the premiums on the insurance covera"e of the vessel, obli"in" the #hippin"
Administration to advance such pa!ment to the insurance compan!. ConseBuentl!, the #hippin"
Administration reBuested the Commissioner of Customs on .une &, &'67 to refuse clearance on the vessel
and the vo!a"e thereof as ordered suspended.
Thereafter, :roilan as5ed for a reconsideration of the action ta5en b! the #hippin" Administration, claimin"
that his failure to pa! the reBuired installments as due to the fact that he as aaitin" the decision of the
President on the petition of the shiponers for an e1tension of the period of pa!ment of the purchased
vessels, hich petition as favorabl! acted upon.
<n .ul! (, &'67, the #hippin" Administration and :roilan entered into an a"reement hereb! the latter
undertoo5 to liBuidate immediatel! all of his outstandin" accounts, includin" the insurance premiums,
ithin (+ da!s, and have the vessel overhauled, and promised that in case of his default, he shall Daive,
an! formal notice of demand and to redeliver the said vessel peaceabl! and amicabl! ithout an! other
proceedin"sD )E1h. (',.
A"ain, :roilan failed to settle his accounts ithin the prescribed period, thus, the #hippin" Administration
threatened to rescind the contract unless pa!ment be immediatel! made. <n Au"ust %7, &'67, upon
:roilan-s reBuest, the #hippin" Administration a"reed to release the vessel on condition that the same ould
be overhauled and repaired and the accrued interest on the first installment ould be paid. The
Administration also alloed the mort"a"or to pa! his overdue accounts, amountin" no to P67,8++.++ in
monthl! installments, ith armin" that in case of further default, it ould immediatel! repossess the
vessel and rescind the contract. :roilan failed to pa!. <n .anuar! &9, &'6', the #hippin" Administration
reBuired him to return the vessel or else file a bond for P%8,+++.++ in five da!s. /n a letter dated .anuar! %7,
&'6', :roilan reBuested that the period for filin" the bond be e1tended to :ebruar! &8, &'6', upon the
e1press condition and understandin" thatC
... . /f / fail to file the reBuired bond on the said date, :ebruar! &8, &'6', to the satisfaction of the #hippin"
Administration, / am illin" to relinBuish and / do hereb! relinBuish an! and all ri"hts / have or ma! have
on the said vessel includin" an! pa!ments made thereon to the #hippin" Administration, ithout pre3udice
to other ri"hts the #hippin" Administration ma! have a"ainst me under the contract of sale e1ecuted in m!
favor.
/ ish to reiterate that if / fail to file the bond ithin the period / have reBuested, an! and all ri"hts / have
on the vessel and an! pa!ments made to the #hippin" Administration shall be considered automaticall!
forfeited in favor of the #hippin" Administration and the onership of the said vessel ill be as it is hereb!
automaticall! transferred to the #hippin" Administration hich is then hereb! authori>ed to ta5e immediate
possession of said vessel. )E1h. **,
This letter of :roilan as submitted b! the Eeneral Mana"er of the #hippin" Administration to the board of
directors for proper consideration. B! resolution of .anuar! (&, &'6', the petition as "ranted sub3ect
specificall! to the conditions set forth therein. :roilan a"ain failed to ma5e "ood his promises. =ence, on
:ebruar! &7, &'6', the Eeneral Mana"er of the #hippin" Ad-ministration rote the Collector of Customs of
Manila, advisin" the latter that the #hippin" Administration, b! action of its board, terminated the contract
ith :roilan, and reBuestin" the suspension of the clearance of the boat effective that date )E1h. 9+,.
<n :ebruar! %&, &'6', the Eeneral Mana"er directed its officers, Capt. Faconico and others, to ta5e
immediate possession of the vessel and to suspend the unloadin" of all car"oes on the same until the
oners thereof made the correspondin" arran"ement ith the #hippin" Administration. Pursuant to these
instructions, the boat as, not onl! actuall! repossessed, but the title thereto as re"istered a"ain in the
name of the #hippin" Administration, thereb! re-transferrin" the onership thereof to the "overnment.
<n :ebruar! %%, &'6', Pan <riental #hippin" Co., hereinafter referred to as Pan <riental, offered to charter
said vessel :#-&'9 for a monthl! rent of P(,+++.++. Because the "overnment as then spendin" for the
"uardin" of the boat and subsistence of the cre-members since repossession, the #hippin" Administration
on April &, &'6', accepted Pan <riental-s offer Din principleD sub3ect to the condition that the latter shall
cause the repair of the vessel, advancin" the cost of labor and dr!doc5in" thereof, and the #hippin"
Administration to furnish the necessar! spare parts. /n accordance ith this charter contract, the vessel as
delivered to the possession of Pan <riental.
/n the meantime, or on :ebruar! %%, &'6', :roilan tried to e1plain his failure to compl! ith the obli"ations
he assumed and as5ed that he be "iven another e1tension up to March &8, &'6' to file the necessar! bond.
Then on March 7, :roilan offered to pa! all his overdue accounts. =oever, as he failed to fulfill even these
offers made b! him in these to communications, the #hippin" Administration denied his petition for
reconsideration )of the rescission of the contract, on March %%, &'6'. /t should be noted that hile his
petition for reconsideration as denied on March %%, it does not appear hen he formall! formulated his
appeal. /n the meantime, as alread! stated, the boat has bein" repossessed b! the #hippin" Administration
and the title thereto re-re"istered in the name of the "overnment, and delivered to the Pan <riental in virtue
of the charter a"reement. <n .une %, &'6', :roilan protested to the President a"ainst the charter of the
vessel.
<n the same date, the E1ecutive <ffice advised the Administration and the Commissioner of Customs not
to dispose of the vessel in favor of another part! pendin" final decision b! the President on the appeal of
:roilan )E1hs. '(-A and '(-$,. But since the vessel as alread! cleared in favor of Pan <riental prior to
the receipt of the fore"oin" communication, and alle"edl! in order to prevent its bein" made anserable for
dama"es, the Eeneral Mana"er of the #hippin" Administration advised the Collector of Customs not to
suspend the vo!a"e of the vessel pendin" final decision on the appeal of :roilan. #imilar manifestation, to
allo the Pan <riental-s operation of the vessel ithout pre3udice to hatever action the President ma! ta5e
in the case, as also made b! the Administration to the E1ecutive #ecretar!.
<n .une 6, &'6', the #hippin" Administration and the Pan <riental formali>ed the charter a"reement and
si"ned a bareboat contract ith option to purchase, containin" the folloin" pertinent provisionsC
///. C#A)T() #:)(, T:M( &. PA1M(-T. The C=ARTERER shall pa! to the oner a monthl! charter
hire of T=REE T=<4#AN$ )P(,+++.++, PE#<# from date of deliver! of the vessel, pa!able in advance
on or before the 8th of ever! current month until the return of the vessel to <2NER or purchase of the
vessel b! C=ARTERER.
H//. ):,#T &. &PT:&- T& P;)C#AS(. The ri"ht of option to purchase the vessel at the price of
P&8+,+++.++ plus the amount e1pended for its present repairs is hereb! "ranted to the C=ARTERER ithin
&%+ da!s from the e1ecution of this Contract, unless otherise e1tended b! the <2NER. This ri"ht shall be
deemed e1ercised onl! if, before the e1piration of the said period, or its e1tension b! the <2NER the
C=ARTERER completes the pa!ment, includin" an! amount paid as Charter hire, of a total sum of not less
than tent!-five percentum )%8N, of said price of the vessel.
The period of option ma! be e1tended b! the <2NER ithout in an! a! affectin" the other provisions,
stipulations, and terms of this contract.
/f, for an! reason hatsoever, the C=ARTERER fails to e1ercise its option to purchase ithin the period
stipulated, or ithin the e1tension thereof b! the <2NER, its ri"ht of option to purchase shall be deemed
terminated, ithout pre3udice to the continuance of the Charter Part! provisions of this contract. The ri"ht
to dispose of the vessel or terminate the Charter Part! at its discretion is reserved to the <2NER.
H///. T)A-S.() &. &W-()S#:P &. T#( <(SS(+. After the C=ARTERER has e1ercised his ri"ht
of option as provided in the precedin" para"raph )H//,, the vessel shall be deemed conditionall! sold to the
purchaser, but the onership thereof shall not be deemed transferred unless and until all the price of the
vessel, to"ether ith the interests thereon, and an! other obli"ation due and pa!able to the <2NER under
this contract, have been full! paid b! the C=ARTERER.
111 111 111
HH/. APP)&<A+ &. T#( P)(S:7(-T. This contract shall ta5e effect onl! upon approval of =is
E1cellenc!, the President.
<n #eptember *, &'6', the Cabinet revo5ed the cancellation of :roilan-s contract of sale and restored to
him all his ri"hts thereunder, on condition that he ould "ive not less than P&+,+++.++ to settle partiall! his
overdue accounts and that reimbursement of the e1penses incurred for the repair and dr!doc5in" of the
vessel performed b! Pan <riental as to be made in accordance ith future ad3ustment beteen him and
the #hippin" Administration )E1h. /,. Fater, pursuant to this reservation, :roilan-s reBuest to the E1ecutive
#ecretar! that the Administration advance the pa!ment of the e1penses incurred b! Pan <riental in the
dr!doc5in" and repair of the vessel, as "ranted on condition that :roilan assume to pa! the same and file a
bond to cover said underta5in" )E1h. &&&,.
<n #eptember 9, &'6', the formal bareboat charter ith option to purchase filed on .une 6, &'6', in favor
of the Pan <riental as returned to the Eeneral Mana"er of the #hippin" Administration ithout action )not
disapproval,, onl! because of the Cabinet resolution of #eptember *, &'6' restorin" :roilan to his ri"hts
under the conditions set forth therein, namel!, the pa!ment of P&+,+++.++ to settle partiall! his overdue
accounts and the filin" of a bond to "uarantee the reimbursement of the e1penses incurred b! the Pan
<riental in the dr!doc5in" and repair of the vessel. But :roilan a"ain failed to compl! ith these
conditions. And so the Cabinet, considerin" :roilan-s consistent failure to compl! ith his obli"ations,
includin" those imposed in the resolution of #eptember *, &'6', resolved to reconsider said previous
resolution restorin" him to his previous ri"hts. And, in a letter dated $ecember (, &'6', the E1ecutive
#ecretar! authori>ed the Administration to continue its charter contract ith Pan <riental in respect to :#-
&'9 and enforce hatever ri"hts it ma! still have under the ori"inal contract ith :roilan )E1h. &77,.
:roilan, for his part, petitioned ane for a reconsideration of this action of the Cabinet, claimin" that other
ship purchasers, includin" the President-Treasurer of the Pan <riental himself, had also defaulted in
pa!ment and !et no action to rescind their contracts had been ta5en a"ainst them. =e also offered to ma5e a
cash partial pa!ment of P&+,+++.++ on his overdue accounts and reimburse Pan <riental of all its necessar!
e1pense on the vessel. Pan <riental, hoever, not onl! e1pressed its unillin"ness to relinBuish possession
of the vessel, but also tendered the sum of P&8,+++.++ hich, to"ether ith its alle"ed e1penses alread!
made on the vessel, cover %8N of the cost of the vessel, as provided in the option "ranted in the bareboat
contract )E1h. &%%,. This amount as accepted b! the Administration as deposit, sub3ect to the final
determination of :roilan-s appeal b! the President. The E1ecutive #ecretar! as also informed of the
e1ercise b! Pan <riental of said option to purchase.
<n Au"ust %8, &'8+, the Cabinet resolved once more to restore :roilan to his ri"hts under the ori"inal
contract of sale, on condition that he shall pa! the sum of P&+,+++.++ upon deliver! of the vessel to him,
said amount to be credited to his outstandin" accounts0 that he shall continue pa!in" the remainin"
installments due, and that he shall assume the e1penses incurred for the repair and dr!doc5in" of the vessel
)E1h. &(6,. Pan <riental protested to this restoration of :roilan-s ri"hts under the contract of sale, for the
reason that hen the vessel as delivered to it, the #hippin" Administration had authorit! to dispose of the
said propert!, :roilan havin" alread! relinBuished hatever ri"hts he ma! have thereon. :roilan paid the
reBuired cash of P&+,+++.++, and as Pan <riental refused to surrender possession of the vessel, he filed an
action for replevin in the Court of :irst /nstance of Manila )Civil Case No. &(&'*, to recover possession
thereof and to have him declared the ri"htful oner of said propert!.
4pon plaintiff-s filin" a bond of P6++,+++.++, the court ordered the sei>ure of the vessel from Pan <riental
and its deliver! to the plaintiff. Pan <riental tried to Buestion the validit! of this order in a petition
for certiorari filed in this Court )E.R. No. F-6899,, but the same as dismissed for lac5 of merit b!
resolution of :ebruar! %%, &'8&. $efendant accordin"l! filed an anser, den!in" the averments of the
complaint.
The Republic of the Philippines, havin" been alloed to intervene in the proceedin", also pra!ed for the
possession of the vessel in order that the chattel mort"a"e constituted thereon ma! be foreclosed. $efendant
Pan <riental resisted said intervention, claimin" to have a better ri"ht to the possession of the vessel b!
reason of a valid and subsistin" contract in its favor, and of its ri"ht of retention, in vie of the e1penses it
had incurred for the repair of the said vessel. As counterclaim, defendant demanded of the intervenor to
compl! ith the latter-s obli"ation to deliver the vessel pursuant to the provisions of the charter contract.
Thereafter, and upon plaintiff-s presentin" proof that he had made pa!ment to the intervenor Republic of the
Philippines, of the sum of P&*%,89*.'*, coverin" the insurance premiums, unpaid balance of the purchase
price of the vessel and interest thereon, the loer court b! order of :ebruar! 7, &'8%, dismissed the
complaint in intervention on the "round that the claim or demand therein had alread! been released. #aid
dismissal, hoever, as made ithout pre3udice to the determination of defendant-s ri"ht, and that the
release and cancellation of the chattel mort"a"e did not Dpre3ud"e the Buestion involved beteen the
plaintiff and the defendant hich is still the sub3ect of determination in this case.D
/n vie of the dismissal of its complaint, intervenor Republic of the Philippines also moved for the
dismissal of defendant-s counterclaims a"ainst it, hich as "ranted b! the court. <n appeal b! Pan
<riental to this Court )E.R. No. F-*+*+,, said order as reversed and the case remanded to the loer court
for further proceedin"s.
#ubseBuentl!, CompaAia Maritima, as purchaser of the vessel from :roilan, as alloed to intervene in the
proceedin"s )in the loer court,, said intervenor ta5in" common cause ith the plaintiff :roilan. /n its
anser to the complaint in intervention, defendant set up a counterclaim for dama"es in the sum of
P8+,+++.++, alle"in" that plaintiff secured the Cabinet resolutions and the rit of replevin, resultin" in its
deprivation of possession of the, vessel, at the insti"ation and inducement of CompaAia Maritima. This
counterclaim as denied b! both plaintiff and intervenor Maritima.
<n #eptember %7, &'8*, the loer court rendered a decision upholdin" :roilan-s )and CompaAia
Maritima-s, ri"ht to the onership and possession of the :#-&'9. /t as ruled that :roilan-s violations of the
conditions of the contract of sale in his favor did not automaticall! deprive him of his ri"ht of onership of
the vessel, hich passed to him upon e1ecution of the contract, but merel! "ave rise to the #hippin"
Administration-s ri"ht either to foreclose the mort"a"e or rescind the contract b! court action. As the
#hippin" Administration failed to avail itself of an! of these remedies, :roilan-s ri"ht of onership
remained unaffected. And the subseBuent resolutions of the Cabinet, restorin" him to his ri"hts under the
said contract, reaffirmed the same. The charter contract beteen the #hippin" Administration and defendant
as declared null and void, not onl! because the former could not have le"all! bound the vessel, but also
due to the fact that said a"reement has not been perfected for lac5 of approval b! the President of the
Philippines. And, even assumin" that the said charter contract as valid, the loer court held that, as the
oner )Republic of the Philippines, under the same a"reement as "iven the ri"ht to terminate the charter
or dispose of the vessel an!time, the action of the Cabinet in cancellin" or ithdrain" the rescission of
:roilan-s contract, had the effect of terminatin" the charter a"reement ith the defendant. The court also
dismissed )&, defendant-s counterclaims a"ainst plaintiff :roilan and intervenor CompaAia Maritima, on the
"round that it )defendant, as a possessor in bad faith, and conseBuentl!, not entitled to dama"es0 )%,
plaintiff-s counterclaims a"ainst defendant, for the reason that the same should have been directed a"ainst
intervenor Republic of the Philippines0 and )(, defendant-s counterclaims said intervenor Republic, on the
"round that the order dismissin" the complaint in intervention had alread! become final and it as
materiall! impossible for the latter to secure possession of the vessel. :rom this decision, Pan <riental
brou"ht the instant appeal.
Contrar! to appellant-s contention, the rulin" of the loer court that under the contract of sale ith
mort"a"e, onership of the vessel passed to :roilan, upon deliver! of the propert! to the latter, must be
sustained. /t is to be noted that unli5e in the charter contract here it as specificall! prescribed that
onership of the vessel shall be transferred to the vendee onl! upon full pa!ment of the purchase price, no
similar provision appears in the contract of sale in favor of :roilan. /n the absence of stipulation to the
contrar!, the onership of the thin" sold passes to the vendee upon the actual or constructive deliver!
thereof )Art. &699, ne Civil Code,. /t is for this reason that :roilan as able to constitute a mort"a"e on
the vessel in favor of the Administration, to secure pa!ment of the unpaid balance of the purchase price.
There is no "ainsa!in" the fact that there as continuous violation b! :roilan of the terms of said contract
of sale. The records conclusivel! sho that notithstandin" the numerous opportunities "iven him, :roilan
had been remiss in the fulfillment of his obli"ations thereunder. Nevertheless, the loer court upheld his
alle"ation that the Administration ma! not le"all! rescind the contract ithout filin" the correspondin"
complaint in court.
4nder Article &&'&
&
of the Civil Code, in case of reciprocal obli"ations, the poer to rescind the contract
here a part! incurs in default, is impliedl! "iven to the in3ured part!. Appellee maintains hoever, that the
la contemplates of rescission of contract b! 3udicial action and not a unilateral act b! the in3ured part!0
conseBuentl!, the action of the #hippin" Administration contravenes said provision of the la. This is not
entirel! correct, because there is also nothin" in the la that prohibits the parties from enterin" into
a"reement that violation of the terms of the contract ould cause cancellation thereof, even ithout court
intervention. /n other ords, it is not ala!s necessar! for the in3ured part! to resort to court for rescission
of the contract. As alread! held
%
3udicial action is needed here there, is absence of special provision in the
contract "rantin" to a part! the ri"ht of rescission.
/n the instant case, hile it ma! be true that the contract of sale did not e1pressl! "ive to the mort"a"ee the
ri"ht to cancel the a"reement it as, nevertheless, provided therein that said part! ma! rescind the contract
as it ma! see fit in case of breach of the terms thereof b! the mort"a"or. Ta5in" into account the promises,
aivers and representations made b! :roilan, to the e1tent that he a"reed to the automatic transfer of
onership of the vessel to the Administration, should he fall to fulfill hat as incumbent upon him, hich
did happen, the rescission of the contract ithout 3udicial action is proper.
The ne1t Buestion to be determined is hether there had been a valid and enforceable charter contract in
favor of appellant Pan <riental, and hat as the effect thereon of the subseBuent restoration to :roilan b!
the Cabinet, of his ri"hts under the ori"inal contract of sale ith mort"a"e.
/t is not disputed that appellant Pan <riental too5 possession of the vessel in Buestion after it had been
repossessed b! the #hippin" Administration and title thereto reacBuired b! the "overnment, and operated
the same from .une %, &'6' after it had repaired the vessel until it as dispossessed of the propert! on
:ebruar! (, &'8&, in virtue of a bareboat charter contract entered into beteen said compan! and the
#hippin" Administration. /n the same a"reement, appellant as charterer, as "iven the option to purchase
the vessel, hich ma! be e1ercised upon pa!ment of a certain amount ithin a specified period. The
President and Treasurer of the appellant compan!, tendered the stipulated initial pa!ment on .anuar! &*,
&'8+. Appellant no contends that havin" e1ercised the option, the subseBuent Cabinet resolutions
restorin" :roilan-s ri"hts on the vessel violated its e1istin" ri"hts over the same propert!. To the contention
of plaintiff :roilan that the charter contract never became effective because it never received presidential
approval, as reBuired therein, Pan <riental ansers that the letter of the E1ecutive #ecretar! dated
$ecember (, &'6' )E1h. &&7,, authori>in" the #hippin" Administration to continue its charter contract ith
appellant, satisfies such reBuirement )of presidential approval,. /t is to be noted, hoever, that said letter
as si"ned b! the E1ecutive #ecretar! onl! and not under authorit! of the President. The same, therefore,
cannot be considered to have attached unto the charter contract the reBuired consent of the Chief E1ecutive
for its validit!.
4pon the other hand, the Cabinet resolutions purportin" to restore :roilan to his former ri"hts under the
deed of sale, cannot also be considered as an act of the President hich is specificall! reBuired in all
contracts relatin" to these vessels )E1ecutive <rder No. (&, series of &'6*,. Actions of the Cabinet are
merel! recommendator! or advisor! in character. 4nless afterards specificall! adopted b! the President as
his on e1ecutive act, the! cannot be considered as eBuivalent to the act of approval of the President
e1pressl! reBuired in cases involvin" disposition of these vessels.
/n the circumstances of this case, therefore, the resultin" situation is that neither :roilan nor the Pan
<riental holds a valid contract over the vessel. =oever, since the intervenor #hippin" Administration,
representin" the "overnment practicall! ratified its proposed contract ith :roilan b! receivin" the full
consideration of the sale to the latter, for hich reason the complaint in intervention as dismissed as to
:roilan, and since Pan <riental has no capacit! to Buestion this actuation of the #hippin" Administration
because it had no valid contract in its favor, the decision of the loer court ad3udicatin" the vessel to
:roi/an and its successor CompaAia Maritima, must be sustained. Nevertheless, under the circumstances
alread! adverted to, Pan <riental cannot be considered a possessor in bad faith until after the institution of
the instant case. =oever, since it is not disputed that said appellant made useful and necessar! e1penses
on the vessel, appellant is entitled to the refund of such e1penses ith the ri"ht to retain the vessel until he
has been reimbursed therefor )Art. 86*, Civil Code,. As it is b! the concerted acts of defendants and
intervenor Republic of the Philippines that appellant as deprived of the possession of the vessel over
hich appellant had a lien for his e1penses, appellees :roilan, CompaAia Maritima, and the Republic of the
Philippines
(
are declared liable for the reimbursement to appellant of its le"itimate e1penses, as alloed b!
la, ith le"al interest from the time of disbursement.
Modified in this manner, the decision appealed from is affirmed, ithout costs. Case is remanded to the
loer court for further proceedin"s in the matter of e1penses. #o ordered