Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 61594 September 28, 1990
PAKISTAN INTERNATIONAL AIRLINES CORPORATION, petitioner,
vs
HON. BLAS F. OPLE, in his capacity as Minister of Labor; HON. VICENTE LEOGARDO, JR., in his
capacity as Deputy Minister; ETHELYNNE B. FARRALES and MARIA MOONYEEN
MAMASIG, respondents.
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for petitioner.
Ledesma, Saludo & Associates for private respondents.

FELICIANO, J.:
On 2 December 1978, petitioner Pakistan International Airlines Corporation ("PIA"), a foreign corporation
licensed to do business in the Philippines, executed in Manila two (2) separate contracts of employment, one
with private respondent Ethelynne B. Farrales and the other with private respondent Ma. M.C. Mamasig. 1 The

contracts, which became effective on 9 January 1979, provided in pertinent portion as follows:
5. DURATION OF EMPLOYMENT AND PENALTY
This agreement is for a period of three (3) years, but can be extended by the mutual consent
of the parties.
xxx xxx xxx
6. TERMINATION
xxx xxx xxx
Notwithstanding anything to contrary as herein provided, PIA reserves the right to terminate
this agreement at any time by giving the EMPLOYEE notice in writing in advance one month
before the intended termination or in lieu thereof, by paying the EMPLOYEE wages equivalent
to one month's salary.
xxx xxx xxx
10. APPLICABLE LAW:

This agreement shall be construed and governed under and by the laws of Pakistan, and only
the Courts of Karachi, Pakistan shall have the jurisdiction to consider any matter arising out of
or under this agreement.
Respondents then commenced training in Pakistan. After their training period, they began discharging their job
functions as flight attendants, with base station in Manila and flying assignments to different parts of the Middle
East and Europe.
On 2 August 1980, roughly one (1) year and four (4) months prior to the expiration of the contracts of
employment, PIA through Mr. Oscar Benares, counsel for and official of the local branch of PIA, sent separate
letters both dated 1 August 1980 to private respondents Farrales and Mamasig advising both that their services
as flight stewardesses would be terminated "effective 1 September 1980, conformably to clause 6 (b) of the
employment agreement [they had) executed with [PIA]." 2
On 9 September 1980, private respondents Farrales and Mamasig jointly instituted a complaint, docketed as
NCR-STF-95151-80, for illegal dismissal and non-payment of company benefits and bonuses, against PIA with
the then Ministry of Labor and Employment ("MOLE"). After several unfruitful attempts at conciliation, the
MOLE hearing officer Atty. Jose M. Pascual ordered the parties to submit their position papers and evidence
supporting their respective positions. The PIA submitted its position paper, 3 but no evidence, and there

claimed that both private respondents were habitual absentees; that both were in the habit of bringing in
from abroad sizeable quantities of "personal effects"; and that PIA personnel at the Manila International
Airport had been discreetly warned by customs officials to advise private respondents to discontinue that
practice. PIA further claimed that the services of both private respondents were terminated pursuant to
the provisions of the employment contract.
In his Order dated 22 January 1981, Regional Director Francisco L. Estrella ordered the reinstatement of
private respondents with full backwages or, in the alternative, the payment to them of the amounts equivalent to
their salaries for the remainder of the fixed three-year period of their employment contracts; the payment to
private respondent Mamasig of an amount equivalent to the value of a round trip ticket Manila-USA Manila; and
payment of a bonus to each of the private respondents equivalent to their one-month salary. 4 The Order

stated that private respondents had attained the status of regular employees after they had rendered
more than a year of continued service; that the stipulation limiting the period of the employment contract
to three (3) years was null and void as violative of the provisions of the Labor Code and its implementing
rules and regulations on regular and casual employment; and that the dismissal, having been carried out
without the requisite clearance from the MOLE, was illegal and entitled private respondents to
reinstatement with full backwages.
On appeal, in an Order dated 12 August 1982, Hon. Vicente Leogardo, Jr., Deputy Minister, MOLE, adopted the
findings of fact and conclusions of the Regional Director and affirmed the latter's award save for the portion
thereof giving PIA the option, in lieu of reinstatement, "to pay each of the complainants [private respondents]
their salaries corresponding to the unexpired portion of the contract[s] [of employment] . . .". 5
In the instant Petition for Certiorari, petitioner PIA assails the award of the Regional Director and the Order of
the Deputy Minister as having been rendered without jurisdiction; for having been rendered without support in
the evidence of record since, allegedly, no hearing was conducted by the hearing officer, Atty. Jose M. Pascual;
and for having been issued in disregard and in violation of petitioner's rights under the employment contracts
with private respondents.
1. Petitioner's first contention is that the Regional Director, MOLE, had no jurisdiction over the subject matter of
the complaint initiated by private respondents for illegal dismissal, jurisdiction over the same being lodged in

the Arbitration Branch of the National Labor Relations Commission ("NLRC") It appears to us beyond dispute,
however, that both at the time the complaint was initiated in September 1980 and at the time the Orders
assailed were rendered on January 1981 (by Regional Director Francisco L. Estrella) and August 1982 (by
Deputy Minister Vicente Leogardo, Jr.), the Regional Director had jurisdiction over termination cases.
Art. 278 of the Labor Code, as it then existed, forbade the termination of the services of employees with at least
one (1) year of service without prior clearance from the Department of Labor and Employment:
Art. 278. Miscellaneous Provisions . . .
(b) With or without a collective agreement, no employer may shut down his establishment or
dismiss or terminate the employment of employees with at least one year of service during the
last two (2) years, whether such service is continuous or broken, without prior written authority
issued in accordance with such rules and regulations as the Secretary may promulgate . . .
(emphasis supplied)
Rule XIV, Book No. 5 of the Rules and Regulations Implementing the Labor Code, made clear that in
case of a termination without the necessary clearance, the Regional Director was authorized to order
the reinstatement of the employee concerned and the payment of backwages; necessarily, therefore,
the Regional Director must have been given jurisdiction over such termination cases:
Sec. 2. Shutdown or dismissal without clearance. Any shutdown or dismissal without prior
clearance shall be conclusively presumed to be termination of employment without a just
cause. The Regional Director shall, in such case order the immediate reinstatement of the
employee and the payment of his wages from the time of the shutdown or dismissal until the
time of reinstatement. (emphasis supplied)
Policy Instruction No. 14 issued by the Secretary of Labor, dated 23 April 1976, was similarly very
explicit about the jurisdiction of the Regional Director over termination of employment cases:
Under PD 850, termination cases with or without CBA are now placed under the original
jurisdiction of the Regional Director. Preventive suspension cases, now made cognizable for
the first time, are also placed under the Regional Director. Before PD 850, termination cases
where there was a CBA were under the jurisdiction of the grievance machinery and voluntary
arbitration, while termination cases where there was no CBA were under the jurisdiction of the
Conciliation Section.
In more details, the major innovations introduced by PD 850 and its implementing rules and
regulations with respect to termination and preventive suspension cases are:
1. The Regional Director is now required to rule on every application for clearance, whether
there is opposition or not, within ten days from receipt thereof.
xxx xxx xxx
(Emphasis supplied)
2. The second contention of petitioner PIA is that, even if the Regional Director had jurisdiction, still his order
was null and void because it had been issued in violation of petitioner's right to procedural due process . 6 This

claim, however, cannot be given serious consideration. Petitioner was ordered by the Regional Director to

submit not only its position paper but also such evidence in its favor as it might have. Petitioner opted to
rely solely upon its position paper; we must assume it had no evidence to sustain its assertions. Thus,
even if no formal or oral hearing was conducted, petitioner had ample opportunity to explain its side.
Moreover, petitioner PIA was able to appeal his case to the Ministry of Labor and Employment. 7
There is another reason why petitioner's claim of denial of due process must be rejected. At the time the
complaint was filed by private respondents on 21 September 1980 and at the time the Regional Director issued
his questioned order on 22 January 1981, applicable regulation, as noted above, specified that a "dismissal
without prior clearance shall be conclusively presumed to be termination of employment without a cause", and
the Regional Director was required in such case to" order the immediate reinstatement of the employee and the
payment of his wages from the time of the shutdown or dismiss until . . . reinstatement." In other words, under
the then applicable rule, the Regional Director did not even have to require submission of position papers by
the parties in view of the conclusive (juris et de jure) character of the presumption created by such applicable
law and regulation. In Cebu Institute of Technology v. Minister of Labor and Employment, 8 the Court pointed

out that "under Rule 14, Section 2, of the Implementing Rules and Regulations, the termination of [an
employee] which was without previous clearance from the Ministry of Labor is conclusively presumed to
be without [just] cause . . . [a presumption which] cannot be overturned by any contrary proof however
strong."
3. In its third contention, petitioner PIA invokes paragraphs 5 and 6 of its contract of employment with private
respondents Farrales and Mamasig, arguing that its relationship with them was governed by the provisions of
its contract rather than by the general provisions of the Labor Code. 9
Paragraph 5 of that contract set a term of three (3) years for that relationship, extendible by agreement
between the parties; while paragraph 6 provided that, notwithstanding any other provision in the Contract, PIA
had the right to terminate the employment agreement at any time by giving one-month's notice to the employee
or, in lieu of such notice, one-months salary.
A contract freely entered into should, of course, be respected, as PIA argues, since a contract is the law
between the parties. 10 The principle of party autonomy in contracts is not, however, an absolute principle.

The rule in Article 1306, of our Civil Code is that the contracting parties may establish such stipulations as
they may deem convenient, "providedthey are not contrary to law, morals, good customs, public order or
public policy." Thus, counter-balancing the principle of autonomy of contracting parties is the equally
general rule that provisions of applicable law, especially provisions relating to matters affected with public
policy, are deemed written into the contract. 11 Put a little differently, the governing principle is that parties
may not contract away applicable provisions of law especially peremptory provisions dealing with matters
heavily impressed with public interest. The law relating to labor and employment is clearly such an area
and parties are not at liberty to insulate themselves and their relationships from the impact of labor laws
and regulations by simply contracting with each other. It is thus necessary to appraise the contractual
provisions invoked by petitioner PIA in terms of their consistency with applicable Philippine law and
regulations.
As noted earlier, both the Labor Arbiter and the Deputy Minister, MOLE, in effect held that paragraph 5 of that
employment contract was inconsistent with Articles 280 and 281 of the Labor Code as they existed at the time
the contract of employment was entered into, and hence refused to give effect to said paragraph 5. These
Articles read as follows:
Art. 280. Security of Tenure. In cases of regular employment, the employer shall not
terminate the services of an employee except for a just cause or when authorized by this Title

An employee who is unjustly dismissed from work shall be entitled to reinstatement without
loss of seniority rights and to his backwages computed from the time his compensation was
withheld from him up to the time his reinstatement.
Art. 281. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an employment
shall be deemed to be regular where the employee has been engaged to perform activities
which are usually necessary or desirable in the usual business or trade of the employer,
except where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement of the
employee or where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceding paragraph:
provided, that, any employee who has rendered at least one year of service, whether such
service is continuous or broken, shall be considered as regular employee with respect to the
activity in which he is employed and his employment shall continue while such actually exists.
(Emphasis supplied)

the Court had occasion to examine in detail the

question of whether employment for a fixed term has been outlawed under the above quoted provisions of
the Labor Code. After an extensive examination of the history and development of Articles 280 and 281,
the Court reached the conclusion that a contract providing for employment with a fixed period was not
necessarily unlawful:
In Brent School, Inc., et al. v. Ronaldo Zamora, etc., et al.,

12

There can of course be no quarrel with the proposition that where from the circumstances it is
apparent that periods have been imposed to preclude acquisition of tenurial security by the
employee, they should be struck down or disregarded as contrary to public policy, morals, etc.
But where no such intent to circumvent the law is shown, or stated otherwise, where the
reason for the law does not exist e.g. where it is indeed the employee himself who insists
upon a period or where the nature of the engagement is such that, without being seasonal or
for a specific project, a definite date of termination is a sine qua non would an agreement
fixing a period be essentially evil or illicit, therefore anathema Would such an agreement come
within the scope of Article 280 which admittedly was enacted "to prevent the circumvention of
the right of the employee to be secured in . . . (his) employment?"
As it is evident from even only the three examples already given that Article 280 of the Labor
Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of
employment contracts to which the lack of a fixed period would be an anomaly, but would also
appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate
with his employer the duration of his engagement, it logically follows that such a literal
interpretation should be eschewed or avoided. The law must be given reasonable
interpretation, to preclude absurdity in its application. Outlawing the whole concept of term
employment and subverting to boot the principle of freedom of contract to remedy the evil of
employers" using it as a means to prevent their employees from obtaining security of tenure is
like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off
the head.
xxx xxx xxx

Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed,
to prevent circumvention of the employee's right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral agreements conflicting with
the concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure. It should have no application to instances where a fixed period
of employment was agreed upon knowingly and voluntarily by the parties, without any force,
duress or improper pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral dominance
whatever being exercised by the former over the latter. Unless thus limited in its purview, the
law would be made to apply to purposes other than those explicitly stated by its framers; it
thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences. (emphasis supplied)
It is apparent from Brent School that the critical consideration is the presence or absence of a
substantial indication that the period specified in an employment agreement was designed to
circumvent the security of tenure of regular employees which is provided for in Articles 280 and 281 of
the Labor Code. This indication must ordinarily rest upon some aspect of the agreement other than the
mere specification of a fixed term of the ernployment agreement, or upon evidence aliunde of the
intent to evade.
Examining the provisions of paragraphs 5 and 6 of the employment agreement between petitioner PIA and
private respondents, we consider that those provisions must be read together and when so read, the fixed
period of three (3) years specified in paragraph 5 will be seen to have been effectively neutralized by the
provisions of paragraph 6 of that agreement. Paragraph 6 in effect took back from the employee the fixed three
(3)-year period ostensibly granted by paragraph 5 by rendering such period in effect a facultative one at the
option of the employer PIA. For petitioner PIA claims to be authorized to shorten that term, at any time and for
any cause satisfactory to itself, to a one-month period, or even less by simply paying the employee a month's
salary. Because the net effect of paragraphs 5 and 6 of the agreement here involved is to render the
employment of private respondents Farrales and Mamasig basically employment at the pleasure of petitioner
PIA, the Court considers that paragraphs 5 and 6 were intended to prevent any security of tenure from accruing
in favor of private respondents even during the limited period of three (3) years, 13 and thus to escape

completely the thrust of Articles 280 and 281 of the Labor Code.
Petitioner PIA cannot take refuge in paragraph 10 of its employment agreement which specifies, firstly, the law
of Pakistan as the applicable law of the agreement and, secondly, lays the venue for settlement of any dispute
arising out of or in connection with the agreement "only [in] courts of Karachi Pakistan". The first clause of
paragraph 10 cannot be invoked to prevent the application of Philippine labor laws and regulations to the
subject matter of this case, i.e., the employer-employee relationship between petitioner PIA and private
respondents. We have already pointed out that the relationship is much affected with public interest and that
the otherwise applicable Philippine laws and regulations cannot be rendered illusory by the parties agreeing
upon some other law to govern their relationship. Neither may petitioner invoke the second clause of paragraph
10, specifying the Karachi courts as the sole venue for the settlement of dispute; between the contracting
parties. Even a cursory scrutiny of the relevant circumstances of this case will show the multiple and
substantive contacts between Philippine law and Philippine courts, on the one hand, and the relationship
between the parties, upon the other: the contract was not only executed in the Philippines, it was also
performed here, at least partially; private respondents are Philippine citizens and respondents, while petitioner,
although a foreign corporation, is licensed to do business (and actually doing business) and hence resident in
the Philippines; lastly, private respondents were based in the Philippines in between their assigned flights to the

Middle East and Europe. All the above contacts point to the Philippine courts and administrative agencies as a
proper forum for the resolution of contractual disputes between the parties. Under these circumstances,
paragraph 10 of the employment agreement cannot be given effect so as to oust Philippine agencies and
courts of the jurisdiction vested upon them by Philippine law. Finally, and in any event, the petitioner PIA did not
undertake to plead and prove the contents of Pakistan law on the matter; it must therefore be presumed that
the applicable provisions of the law of Pakistan are the same as the applicable provisions of Philippine law. 14
We conclude that private respondents Farrales and Mamasig were illegally dismissed and that public
respondent Deputy Minister, MOLE, had not committed any grave abuse of discretion nor any act without or in
excess of jurisdiction in ordering their reinstatement with backwages. Private respondents are entitled to three
(3) years backwages without qualification or deduction. Should their reinstatement to their former or other
substantially equivalent positions not be feasible in view of the length of time which has gone by since their
services were unlawfully terminated, petitioner should be required to pay separation pay to private respondents
amounting to one (1) month's salary for every year of service rendered by them, including the three (3) years
service putatively rendered.
ACCORDINGLY, the Petition for certiorari is hereby DISMISSED for lack of merit, and the Order dated 12
August 1982 of public respondent is hereby AFFIRMED, except that (1) private respondents are entitled to
three (3) years backwages, without deduction or qualification; and (2) should reinstatement of private
respondents to their former positions or to substantially equivalent positions not be feasible, then petitioner
shall, in lieu thereof, pay to private respondents separation pay amounting to one (1)-month's salary for every
year of service actually rendered by them and for the three (3) years putative service by private respondents.
The Temporary Restraining Order issued on 13 September 1982 is hereby LIFTED. Costs against petitioner.
SO ORDERED.
Fernan (C.J., Chairman), Gutierrez, Jr., Bidin and Corts, JJ., concur.

Footnotes
1 Rollo, pp. 12 and 17.
2 Id., p. 22.
3 Id., pp. 36-41.
4 Id., p. 43.
5 Id., p. 64.
6 Rollo, p. 6.
7 See Llora Motors, Inc., et al. v. Hon. Franklin Drilon, et al., G.R. No. 82895, 7 November
1989.
8 113 SCRA 257 (1982).
9 Rollo, p. 8.

10 Henson v. Intermediate Appellate Court, 148 SCRA 11 (1987).

11 Commissioner of Internal Revenue v. United Lines Co., 5 SCRA 175 (1962).
12 G.R. No. L-48494, promulgated 5 February 1990.
13 See Biboso v. Victorias Milling Co., Inc., 76 SCRA 250 (1977).
14 Miciano v. Brimo, 50 Phil. 867 (1924); Collector of Internal Revenue v. Fisher, 110 Phil. 686
(1961).

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-32749 January 22, 1988
SABAS H. HOMENA and ILUMINADA JUANEZA, plaintiffs-appellants,
vs.
DIMAS CASA AND MARIA CASTOR and the REGISTER OF DEEDS FOR THE PROVINCE OF
COTABATO,defendants-appellees.

YAP, J.:
This is an appeal from the order of the Court of Flint Instance of Cotabato dated January 4,1968 dismissing
plaintiffs-appellants' complaint and from its order dated May 8,1968, denying their motion for reconsideration.
The complaint, filed by plaintiffs-appellants against the spouses Dimas Casa and Maria Castor, the defendantsappellees herein, was for alleged unlawful acts of dispossession disturbing plaintiffs peaceful, continuous,
open, uninterrupted adverse and public possession of the property in question. In their complaint, plaintiffs also
sought to annull the original certificate of title issued by the Register of Deeds for the province of Cotabato in
favor of defendant spouses pursuant to a Homestead Patent on the ground that said patent was obtained by
defendant spouses through fraud and misrepresentation by stating, among others, in their application, that the
lot was not claimed and occupied by another person. Plaintiffs alleged that on June 15, 1967, they purchased
from the defendants two (2) hectares of the aforementioned parcel of land, it being agreed in the deed of sale
that the said portion would be reconveyed to plaintiffs after the five-year prohibitory period, as provided for in
the Homestead Patent Law, shall have elapsed, and that defendants failed to abide by said agreement.
The defendants moved to dismiss the complaint, based on the following grounds: (1) the complaint is barred by
prescription, since thirteen years had elapsed from the issuance of the homestead patent before the action was
filed; (2) plaintiff has no cause of action, since the deed of sale executed on June 15, 1952 or prior to the
approval of the application and issuance of the homestead patent was null and void and inoperative to convey
the land in question, which was at that time still public land; and (3) plaintiff is not the proper party to institute
the action to annul the homestead patent.
In their opposition to the motion to dismiss, plaintiffs averred that they were not assailing the validity of the
patent as a whole, but only with respect to that portion of two (2) hectares owned by them which defendants,
through fraud, were able to register in their name. Because of such fraud, the action of the plaintiffs cannot be
deemed to have prescribed, since such action can be brought within four (4) years from discovery of the fraud.
Moreover, the defense of prescription can not be set up in an action to recover property held in trust by a
person for another. On January 4, 1968, the court a quo issued the questioned order dismissing the complaint.
The plaintiffs appealed the case to the Court of Appeals, assigning the following errors:
1. The lower court erred in holding that the allegations in the complaint do not conform with
the terms and conditions of the contract as to amount to a justifiable cause of action.
2. The lower court erred in holding that the plaintiffs-appellants have no personality to bring
the present action as they do not seek the land for themselves but for the government.
3. The lower court erred in holding that the present action based on fraud is barred by the
statute of limitations.
4. Finally, the lower court erred in holding that the deed of sale is not lawful as the same was
made to circumvent the provisions of the Public Land Act.
The Court of Appeals certified the case to this Court as it involved only questions of law.
We find no merit in the petition. The lower court committed no reversible error in dismissing the complaint.
Basically, the plaintiffs' supposed cause of action rests upon the deed of sale executed by defendants in their
favor on June 15, 1962 wherein the latter sold a two-hectare portion of the homestead which they were
applying for to the plaintiffs on the understanding that the actual conveyance of the said portion to plaintiffs

would be made only after the lapse of the five-year period during which, under the Public Land Act, the
homestead owner was prohibited from transferring his rights. The agreement is clearly illegal and void ab initio;
it is intended to circumvent and violate the law. As parties to a void contract, the plaintiffs have no rights which
they can enforce and the court can not lend itself to its enforcement. Plaintiffs can neither invoke the doctrine of
implied trust based on an illegal contract. The issue of prescription or laches becomes irrelevant in a case such
as this, where plaintiffs clearly have no cause of action.
WHEREFORE, the petition is hereby DENIED and the orders appealed from are AFFIRMED.
SO ORDERED.
Melencio-Herrera, Paras, Padilla and Sarmiento, JJ., concur.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION
G.R. No. L-65425 November 5, 1987
IRENEO LEAL, JOSE LEAL, CATALINA LEAL, BERNABELA LEAL, VICENTE LEAL EUIOGIA LEAL
PATERNO RAMOS, MACARIO DEL ROSARIO, MARGARITA ALBERTO, VICTORIA TORRES, JUSTINA
MANUEL, JULIAN MANUEL, MELANIA SANTOS, CLEMENTE SAMARIO, MARIKINA VALLEY, INC.,
MIGUELA MENDOZA, and REGISTER OF DEEDS OF RIZAL, petitioners,
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (4th Civil Cases Division), and VICENTE
SANTIAGO (Substituted by SALUD M. SANTIAGO), respondents.

SARMIENTO, J.:
In its resolution dated September 27, 1983, the respondent Intermediate Appellate Court,

1 speaking through Justice

Porfirio V, Sison, ordered, in part, the petitioners to accept the sum of P5,600.00 from the private respondent as repurchase price of the lots
described in the "Compraventa" and, thereafter, to execute a Deed of Repurchase to effect transfer over ownership over the same properties
to the private respondent.

This ruling was a complete reversal of the earlier decision, 2 dated June 28, 1.978, penned by Justice Paras,

of the Court of Appeals, in the same case, affirming the trial court's dismissal of the private respondent's
complaint.
The petitioners, feeling aggrieved and astonished by the complete turnaround of the respondent court, come to
Us with this petition for review by certiorari.
The antecedent facts are undisputed.
This case brings us back almost half a century ago, on March 21, 1941, when a document entitled
"Compraventa," written entirely in the Spanish language, involving three parcels of land, was executed by the
private respondent's predecessors-in-interest, Vicente Santiago and his brother, Luis Santiago, in favor of
Cirilio Leal the deceased father of some of the petitioners, Pursuant to this "Compraventa," the title over the
three parcels of land in the name of the vendors was cancelled and a new one was issued in the name of Cirilo
Leal who immediately took possession and exercised ownership over the said lands. When Cirilo died on
December 10, 1959, the subject lands were inherited by his six children, who are among the petitioners, and
who caused the consolidation and subdivision of the properties among themselves.
Between the years 1960 and 1965, the properties were either mortgaged or leased by the petitioners-children
of Cirilo Leal to their co-petitioners.
Sometime before the agricultural year 1966-1967, Vicente Santiago approached the petitioners and offered rerepurchase the subject properties. Petitioners, however, refused the offer. Consequently, Vicente Santiago
instituted a complaint for specific performance before the then Court of First Instance of Quezon City on August
2, 1967.
All the trial, the court a quo rendered its decision,-dismissing the complaint on the ground that the same was
still premature considering that there was, as yet, no sale nor any alienation equivalent to a sale. Not satisfied
with this decision, the private respondent appealed to the Court of Appeals and the latter, acting through the
Fourth Division and with Justice Edgardo Paras as ponente affirmed the decision of the court a quo.
The petitioners seasonably filed a motion to amend the dispositive portion of the decision so as to include an
order for the cancellation of the annotations at the back of the Transfer certificates of Title issued in their favor.
The private respondent,-on the other hand, filed a-timely motion for reconsideration of the above decision and
an opposition to petitioners' motion to amend. These incidents were not resolved until then Court of Appeals

was abolished and in lieu of which the Intermideate Appellate Court was established In view of the said
reorganization, case was reassigned to the Fourth Civil in this cases Division.
Resolving the abovestated motion for reconsideration, the respondent court, in a resolution penned by Justice
Sison and promulgated on September 27, 1983, ruled, as follows:
WHEREFORE, Our decision of June 28, 1978 is hereby reversed and set aside and another
one is rendered ordering: (1) defendants-appellees surnamed Leal to accept the sum of
P5,600.00 from plaintiff-appellant (substituted by Salud M. Santiago) as repurchase price of
the lots described in the "Compraventa" of March 21, 1941, and thereafter to execute a deed
of repurchase sufficient in law to transfer ownership of the properties to appellant Salud M.
Santiago, the same to be done within five (5) days from payment; (2) ordering the same
defendants Leals and defendant Clemente Samario to indemnify appellant in the sum of
P3,087.50 as rental for the year 1967-1968 and the same amount every year thereafter; (3)
ordering an the defendants jointly and severally to pay the sum of Pl,500.00 as attorney's fees
and other expenses of litigation; and (4) ordering defendant Register of Deeds of Rizal to
cancel Transfer Certificate of Title No. 42535 in the names of Vicente Santiago and Luis
Santiago upon presentation of the deed of sale herein ordered to be executed by the
appellees in favor of Salud M. Santiago and to issue thereof another Transfer Certificate of
Title in the name alone of Salud M. Santiago. No costs here and in the courts (sic) below.
SO ORDERED.
Verily, the well-spring whence the present controversy arose is the abovementioned "Compraventa," more
particularly paragraph (b) thereof, to wit:
xxx xxx xxx
(b) En caso de venta, no podran vender a otros dichos tres lotes de terreno sino al aqui
vendedor Vicente Santiago, o los herederos o sucesores de este por el niismo precio de
CINCO MIL SEISCIENTOS PESOS (P5,600.00) siempre y cuando estos ultimos pueden
hacer la compra. 3

xxx xxx xxx

which is now the subject of varying and conflicting interpretations.
xxx xxx xxx
It is admitted by both parties that the phrase "they shall not sell to others these three lots but only to the seller
Vicente Santiago or to his heirs or successors" is an express prohibition against the sale of the lots described in
the "Compraventa" to third persons or strangers to the contract. However, while private respondent naturally
lauds the resolution of Justice Sison, which sustains the validity of this prohibition, the petitioners, on the other
hand, endorse the decision penned by Justice Paras, which states, in part:
xxx xxx xxx
Finally, there is grave doubt re the validity of the ostensible resolutory condition here, namely,
the prohibition to sell the lots to persons other than the vendor (appellant); uncertainly, a
prohibition to alienate should not exceed at most a period of twenty years, otherwise there
would be subversion of public policy, which naturally frowns on unwarranted restrictions on the
right of ownership. 4

xxx xxx xxx

We agree with the Paras ponencia.

Contracts are generally binding between the parties, their assigns and heirs; however, under Art. 1255 of the
Civil Code of Spain, which is applicable in this instance, pacts, clauses, and conditions which are contrary to
public order are null and void, thus, without any binding effect.
Parenthetically, the equivalent provision in the Civil Code of the Philippines is that of Art. 1306, which states:
"That contracting parties may establish such stipulations, clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Public
order signifies the public weal public policy. 5 Essentially, therefore, public order and public policy mean

one and the same thing. Public policy is simply the English equivalent of "order publico" in Art. 1255 of the
Civil Code of Spain. 6
One such condition which is contrary to public policy is the present prohibition to self to third parties, because
the same virtually amounts to a perpetual restriction to the right of ownership, specifically the owner's right to
freely dispose of his properties. This, we hold that any such prohibition, indefinite and stated as to time, so
much so that it shall continue to be applicable even beyond the lifetime of the original parties to the contract, is,
without doubt, a nullity. In the light of this pronouncement, we grant the petitioners' prayer for the cancellation of
the annotations of this prohibition at the back of their Transfer Certificates 'Title.
It will be noted, moreover, that the petitioners have never sold, or even attempted to sell, the properties subject
of the "Compraventa. "
We now come to what we believe is the very issue in this case which is, whether or not under the aforequoted
paragraph (b) of the "Compraventa" a right of repurchase in favor of the private respondent exist.
The ruling of the Fourth Division (Justice Paras) is that the said stipulation does not grant a right to repurchase.
Contrarily, the resolution of the Fourth Civil Cases Division (Justice P. V. Sison) interpreted the same provision
as granting the right to repurchase subject to a condition precedent.
Thus, the assailed Resolution, reversing the earlier decision of the same respondent court, ruled
xxx xxx xxx
The all-importartant phrase "en caso de venta," must of necessity refer to the sale of the
properties either by Cirilo or his heirs to the Santiago brothers themselves or to their heirs,
including appellants Vicente Santiago including appellants Vicente Santiago and Salud M
Santiago, for the same sum of P5,600.00, "siempre y cuando estos ultimos pueden hacer la
compra" (when the latter shall be able to buy it).
xxx xxx xxx
... We repeat, The words envision the situation contemplated by the contracting parties
themselves, the resale of the lots to their owners, and NOT to a sale of the lots to third parties
or strangers to the contracts. ... 7

xxx xxx xxx

The law provides that for conventional redemption to take place, the vendor should reserve, in no uncertain
terms, the right to repurchase the thing sold. 8 Thus, the right to redeem must be expressly stipulated in the

contract of sale in order that it may have legal existence.

In the case before us, we cannot and any express or implied grant of a right to repurchase, nor can we infer,
from any word or words in the questioned paragraph, the existence of any such right. The interpretation in the

resolution (Justice Sison) is rather strained. The phrase "in case case" of should be construed to mean "should
the buyers wish to sell which is the plain and simple import of the words, and not "the buyers should sell,"
which is clearly a contorted construction of the same phrase. The resort to Article 1373 of the Civil Code of the
Philippines is erroneous. The subject phrase is patent and unambiguous, hence, it must not be given another
interpretation
But even assuming that such a right of repurchase is granted under the "Compraventa," the petitioner correctly
asserts that the same has already prescribed. Under Art. 1508 of the Civil Code of Spain (Art,. 1606 of the Civil
Code of the Philippines), the right to redeem or repurchase, in the absence of an express agreement as to
time, shall last four years from the date of the contract. In this case then, the right to repurchase, if it was at four
guaranteed under in the "Compraventa," should have been exercise within four years from March 21, 1941
(indubitably the date of execution of the contract), or at the latest in 1945.
In the respondent court's resolution, it is further ruled that the right to repurchase was given birth by the
condition precedent provided for in the phrase "siempre y cuando estos ultimos pueden hacer la compra"
(when the buyer has money to buy). In other words, it is the respondent court's contention that the right may be
exercised only when the buyer has money to buy. If this were so, the second paragraph of Article 1508 would
apply there is agreement as to the time, although it is indefinite, therefore, the right should be exercised
within ten years, because the law does not favor suspended ownership. Since the alleged right to repurchase
was attempted to be exercised by Vicente Santiago only in 1966, or 25 years from the date of the contract, the
said right has undoubtedly expired.
WHEREFORE, in view of the foregoing, the Resolution dated September 27, 1983, of the respondent court is
SET ASIDE and the Decision promulgated on June 28, 1978 is hereby REINSTATED. The annotations of the
prohibition to sell at the back of TCT Nos. 138837, 138838, 138839, 138840, 138841, and 138842 are hereby
ordered CANCELLED. Costs against the private respondent.
SO ORDERED.
Yap (Chairman), Melencio-Herrera and Padilla, JJ., concur.
Paras, J., took no part.

Footnotes
1 Intermediate Appellate Court, Fourth Civil Cases Division: Justice P.V. Sison, ponente and
Chairman, with the concurence of Justices Bidin, Veloso, and Jurado.
2 Court of Appeals, Fourth Division: Justices Paras, Gaviola, and de la Fuente.
3 Translated into English, it reads: "In case of sale, they shall not sell to others these three lots
but only to the seller Vicente Santiago, or to his heirs or successors for the same price of P
5,600.00, when the latter shall be able to pay it. "
4 Decision 9-10; Rollo 64-65.
5 Bough v. Cantiveros, No. 13300, September 29, 1919, 40 Phil. 209,
6 Ferrazzini v. Gsell No. 10712 August 10, 1916, 34 Phil. 697
7 Decision, 12 Rollo, 90.

8 Art. 1507, Civil Code of Spain (Art. 1601 of the Civil Code of the Philippines): "Conventional
redemption shall take place when the vendor reserves the right to repurchase the thing sold
with, the obligation to comply with the provisions of Art. 1616 and other stipulations which may
have been agree d upon."

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-65510 March 9, 1987
TEJA MARKETING AND/OR ANGEL JAUCIAN, petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT * AND PEDRO N. NALE, respondents.
Cirilo A. Diaz, Jr. for petitioner.
Henry V. Briguera for private respondent.

PARAS, J.:
"'Ex pacto illicito' non oritur actio" (No action arises out of illicit bargain) is the time-honored maxim that must be
applied to the parties in the case at bar. Having entered into an illegal contract, neither can seek relief from the
courts, and each must bear the consequences of his acts." (Lita Enterprises vs. IAC, 129 SCRA 81.)
The factual background of this case is undisputed. The same is narrated by the respondent court in its now
assailed decision, as follows:
On May 9, 1975, the defendant bought from the plaintiff a motorcycle with complete
accessories and a sidecar in the total consideration of P8,000.00 as shown by Invoice No.
144 (Exh. "A"). Out of the total purchase price the defendant gave a downpayment of
P1,700.00 with a promise that he would pay plaintiff the balance within sixty days. The
defendant, however, failed to comply with his promise and so upon his own request, the
period of paying the balance was extended to one year in monthly installments until January
1976 when he stopped paying anymore. The plaintiff made demands but just the same the
defendant failed to comply with the same thus forcing the plaintiff to consult a lawyer and file
this action for his damage in the amount of P546.21 for attorney's fees and P100.00 for
expenses of litigation. The plaintiff also claims that as of February 20, 1978, the total account
of the defendant was already P2,731.06 as shown in a statement of account (Exhibit. "B").
This amount includes not only the balance of P1,700.00 but an additional 12% interest per
annum on the said balance from January 26, 1976 to February 27, 1978; a 2% service
charge; and P 546.21 representing attorney's fees.
In this particular transaction a chattel mortgage (Exhibit 1) was constituted as a security for
the payment of the balance of the purchase price. It has been the practice of financing firms
that whenever there is a balance of the purchase price the registration papers of the motor
vehicle subject of the sale are not given to the buyer. The records of the LTC show that the
motorcycle sold to the defendant was first mortgaged to the Teja Marketing by Angel Jaucian
though the Teja Marketing and Angel Jaucian are one and the same, because it was made to
appear that way only as the defendant had no franchise of his own and he attached the unit to
the plaintiff's MCH Line. The agreement also of the parties here was for the plaintiff to

undertake the yearly registration of the motorcycle with the Land Transportation Commission.
Pursuant to this agreement the defendant on February 22, 1976 gave the plaintiff P90.00, the
P8.00 would be for the mortgage fee and the P82.00 for the registration fee of the motorcycle.
The plaintiff, however failed to register the motorcycle on that year on the ground that the
defendant failed to comply with some requirements such as the payment of the insurance
premiums and the bringing of the motorcycle to the LTC for stenciling, the plaintiff saying that
the defendant was hiding the motorcycle from him. Lastly, the plaintiff explained also that
though the ownership of the motorcycle was already transferred to the defendant the vehicle
was still mortgaged with the consent of the defendant to the Rural Bank of Camaligan for the
reason that all motorcycle purchased from the plaintiff on credit was rediscounted with the
bank.
On his part the defendant did not dispute the sale and the outstanding balance of P1,700. 00
still payable to the plaintiff. The defendant was persuaded to buy from the plaintiff the
motorcycle with the side car because of the condition that the plaintiff would be the one to
register every year the motorcycle with the Land Transportation Commission. In 1976,
however, the plaintfff failed to register both the chattel mortgage and the motorcycle with the
LTC notwithstanding the fact that the defendant gave him P90.00 for mortgage fee and
registration fee and had the motorcycle insured with La Perla Compana de Seguros (Exhibit
"6") as shown also by the Certificate of cover (Exhibit "3"). Because of this failure of the
plaintiff to comply with his obligation to register the motorcycle the defendant suffered
damages when he failed to claim any insurance indemnity which would amount to no less
than P15,000.00 for the more than two times that the motorcycle figured in accidents aside
from the loss of the daily income of P15.00 as boundary fee beginning October 1976 when the
motorcycle was impounded by the LTC for not being registered.
The defendant disputed the claim of the plaintiff that he was hiding from the plaintiff the
motorcycle resulting in its not being registered. The truth being that the motorcycle was being
used for transporting passengers and it kept on travelling from one place to another. The
motor vehicle sold to him was mortgaged by the plaintiff with the Rural Bank of Camaligan
without his consent and knowledge and the defendant was not even given a copy of the
mortgage deed. The defendant claims that it is not true that the motorcycle was mortgaged
because of re-discounting for rediscounting is only true with Rural Banks and the Central
Bank. The defendant puts the blame on the plaintiff for not registering the motorcycle with the
LTC and for not giving him the registration papers inspite of demands made. Finally, the
evidence of the defendant shows that because of the filing of this case he was forced to retain
the services of a lawyer for a fee on not less than P1,000.00.
xxx xxx xxx
... it also appears and the Court so finds that defendant purchased the motorcycle in question,
particularly for the purpose of engaging and using the same in the transportation business and
for this purpose said trimobile unit was attached to the plaintiffs transportation line who had
the franchise, so much so that in the registration certificate, the plaintiff appears to be the
owner of the unit. Furthermore, it appears to have been agreed, further between the plaintiff
and the defendant, that plaintiff would undertake the yearly registration of the unit in question
with the LTC. Thus, for the registration of the unit for the year 1976, per agreement, the
defendant gave to the plaintiff the amount of P82.00 for its registration, as well as the
insurance coverage of the unit.

Eventually, petitioner Teja Marketing and/or Angel Jaucian filed an action for "Sum of Money with Damages"
against private respondent Pedro N. Nale in the City Court of Naga City. The City Court rendered judgment in
favor of petitioner, the dispositive portion of which reads:
WHEREFORE, decision is hereby rendered dismissing the counterclaim and ordering the
defendant to pay plaintiff the sum of P1,700.00 representing the unpaid balance of the
purchase price with legal rate of interest from the date of the filing of the complaint until the
same is fully paid; to pay plaintiff the sum of P546.21 as attorney's fees; to pay plaintiff the
sum of P200.00 as expenses of litigation; and to pay the costs.
SO ORDERED.
On appeal to the Court of First Instance of Camarines Sur, the decision was affirmed in toto. Private
respondent filed a petition for review with the Intermediate Appellate Court and on July 18, 1983 the said Court
promulgated its decision, the pertinent portion of which reads
However, as the purchase of the motorcycle for operation as a trimobile under the franchise of
the private respondent Jaucian, pursuant to what is commonly known as the "kabit system",
without the prior approval of the Board of Transportation (formerly the Public Service
Commission) was an illegal transaction involving the fictitious registration of the motor vehicle
in the name of the private respondent so that he may traffic with the privileges of his franchise,
or certificate of public convenience, to operate a tricycle service, the parties being in pari
delicto, neither of them may bring an action against the other to enforce their illegal contract
[Art. 1412 (a), Civil Code].
xxx xxx xxx
WHEREFORE, the decision under review is hereby set aside. The complaint of respondent
Teja Marketing and/or Angel Jaucian, as well as the counterclaim of petitioner Pedro Nale in
Civil Case No. 1153 of the Court of First Instance of Camarines Sur (formerly Civil Case No.
5856 of the City Court of Naga City) are dismissed. No pronouncement as to costs.
SO ORDERED.
The decision is now before Us on a petition for review, petitioner Teja Marketing and/or Angel Jaucian
presenting a lone assignment of error whether or not respondent court erred in applying the doctrine of "pari
delicto."
We find the petition devoid of merit.
Unquestionably, the parties herein operated under an arrangement, commonly known as the "kabit system"
whereby a person who has been granted a certificate of public convenience allows another person who owns
motor vehicles to operate under such franchise for a fee. A certificate of public convenience is a special
privilege conferred by the government. Abuse of this privilege by the grantees thereof cannot be countenanced.
The "kabit system" has been Identified as one of the root causes of the prevalence of graft and corruption in the
government transportation offices.
Although not outrightly penalized as a criminal offense, the kabit system is invariably recognized as being
contrary to public policy and, therefore, void and in existent under Article 1409 of the Civil Code. It is a
fundamental principle that the court will not aid either party to enforce an illegal contract, but will leave both

where it finds then. Upon this premise it would be error to accord the parties relief from their predicament.
Article 1412 of the Civil Code denies them such aid. It provides:
Art. 1412. If the act in which the unlawful or forbidden cause consists does not constitute a
criminal offense, the following rules shall be observed:
1. When the fault is on the part of both contracting parties, neither may recover that he has
given by virtue of the contract, or demand, the performance of the other's undertaking.
The defect of in existence of a contract is permanent and cannot be cured by ratification or by prescription. The
mere lapse of time cannot give efficacy to contracts that are null and void.
WHEREFORE, the petition is hereby dismissed for lack of merit. The assailed decision of the Intermediate
Appellate Court (now the Court of Appeals) is AFFIRMED. No costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortez, JJ., concur.
Alampay, J., took no part.

Footnotes
* Penned by Justice Carolina C. Grio-Aquino; concurred in by Justices Nestor B. Alampay
and Reynato S. Puno.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC

G.R. No. L-31018 June 29, 1973

LORENZO VELASCO AND SOCORRO J. VELASCO, petitioners,
vs.
HONORABLE COURT OF APPEALS and MAGDALENA ESTATE, INC., respondents.
Napoleon G. Rama for petitioners.
Dominador L. Reyes for private respondent.

CASTRO, J.:
This is a petition for certiorari and mandamus filed by Lorenzo Velasco and Socorro J. Velasco (hereinafter
referred to as the petitioners) against the resolution of the Court of Appeals dated June 28, 1969 in CA-G.R.
42376, which ordered the dismissal of the appeal interposed by the petitioners from a decision of the Court of
First Instance of Quezon City on the ground that they had failed seasonably to file their printed record on
appeal.

Under date of November 3, 1968, the Court of First Instance of Quezon City, after hearing on the merits,
rendered a decision in civil case 7761, dismissing the complaint filed by the petitioners against the Magdalena
Estate, Inc. (hereinafter referred to as the respondent) for the purpose of compelling specific performance by
the respondent of an alleged deed of sale of a parcel of residential land in favor of the petitioners. The basis for
the dismissal of the complaint was that the alleged purchase and sale agreement "was not perfected".
On November 18, 1968, after the perfection of their appeal to the Court of Appeals, the petitioners received a
notice from the said court requiring them to file their printed record on appeal within sixty (60) days from receipt
of said notice. This 60-day term was to expire on January 17, 1969.
Allegedly under date of January 15, 1969, the petitioners allegedly sent to the Court of Appeals and to counsel
for the respondent, by registered mail allegedly deposited personally by its mailing clerk, one Juanito D.
Quiachon, at the Makati Post Office, a "Motion For Extension of Time To File Printed Record on Appeal." The
extension of time was sought on the ground "of mechanical failures of the printing machines, and the
voluminous printing jobs now pending with the Vera Printing Press. ..."
On February 10, 1969, the petitioners filed their printed record on appeal in the Court of Appeals. Thereafter,
the petitioners received from the respondent a motion filed on February 8, 1969 praying for the dismissal of the
appeal on the ground that the petitioners had failed to file their printed record on appeal on time. Acting on the
said motion to dismiss the appeal, the Court of Appeals, on February 25, 1969, issued the following resolution:
Upon consideration of the motion of counsel for defendant-appellee praying on the grounds
therein stated that the appeal be dismissed in accordance with Rules of Court, and of the
opposition thereto filed by counsel for plaintiff-appellants, the Court RESOLVED to DENY the
said motion to dismiss.
Upon consideration of the registry-mailed motion of counsel for plaintiffs appellants praying on
the grounds therein stated for an extension of 30 days from January 15, 1969 within which to
file the printed record on appeal, the Court RESOLVED to GRANT the said motion and the
printed record on appeal which has already been filed is ADMITTED.
On March 11, 1969, the respondent prayed for a reconsideration of the above-mentioned resolution, averring
that the Court of Appeals had been misled bythe petitioners' "deceitful allegation that they filed the printed
record on appeal within the reglementary period," because according to a certification issued by the postmaster
of Makati, Rizal, the records of the said post office failed to reveal that on January 15, 1969 the date when
their motion for extension of time to file the printed record on appeal was supposedly mailed by the petitioners
there was any letter deposited there by the petitioners' counsel. The petitioners opposed the motion for
reconsideration. They submitted to the appellate court the registry receipts (numbered 0215 and 0216), both
stampled January 15, 1969, which were issued by the receiving clerk of the registry section of the Makati Post
Office covering the mails for the disputed motion for extension of time to file their printed record on appeal and
the affidavit of its mailing clerk Juanito D. Quiachon, to prove that their motion for extension was timely filed
and served on the Court of Appeals and the respondent, respectively. After several other pleadings and
manifestations were filed by the parties relative to the issue raised by the respondent's above-mentioned
motion for reconsideration, the Court of Appeals promulgated on June 28, 1969, its questioned resolution, the
dispositive portion of which reads as follows:
WHEREFORE, the motion for reconsideration filed on March 11, 1969 is granted and appeal
interposed by plaintiff-appellants from the judgment of the court below is hereby dismissed for
their failure to file their printed Record on Appeal within the period authorized by this Court.
Atty. Patrocino R. Corpuz [counsel of the petitioner] is required to show cause within ten (10)

days from notice why he should not be suspended from the practice of his necessary
investigation against Juanito D. Quiachon of the Salonga, Ordoez, Yap, Sicat & Associates
Law Office, Suite 319 337 Rufino Building, Ayala Avenue, Makati Post Office, to file the
appropriate criminal action against them as may be warranted in the premises, and to report
to this Court within thirty (30) days the action he has taken thereon.
The foregoing desposition was based on the following findings of the Court of Appeals:
An examination of the Rollo of this case, particularly the letter envelope on page 26 thereof,
reveals that on January 15, 1969, plaintiffs supposedly mailed via registered mail from the
Post Office of Makati, Rizal their motion for extension of 30 days from that date to file their
printed Record on Appeal, under registered letter No. 0216. However, in an official
certification, the Postmaster of Makati states that the records of his office disclose: (a) that
there were no registered letters Nos. 0215 and 0216 from the Salonga, Ordoez, Yap, Sicat &
Associates addressed to Atty. Abraham F. Sarmiento, 202 Magdalena Building, Espaa Ext.,
Quezon City, and to the Court of Appeals, Manila, respectively, that were posted in the Post
Office of Makati, Rizal, on January 15, 1969; (b) that there is a registered letter numbered 215
but that the same was posted on January 3, 1969 by Enriqueta Amada of 7 Angel, Pasillo F-2,
Cartimar, Pasay City, as sender, and Giral Amasan of Barrio Cabuniga-an, Sto. Nio, Samar,
as addressee; and that there is also a registered letter numbered 216; but that the same was
likewise posted on January 3, 1969 with E.B.A. Construction of 1049 Belbar Building,
Metropolitan, Pasong Tamo, Makati, as sender, and Pres. R. Nakaya of the United Pacific
Trading Co., Ltd., 79, 6 Chamo, Nakatu, Yokohari, Japan, as addressee; (c) that on January
15, 1969, the registered letters posted at the Makati Post Office were numbered consecutively
from 1001-2225, inclusive, and none of these letters was addressed to Atty. Abraham F.
Sarmiento of to the Court of Appeals; (d) that in Registry Bill Book No. 30 for Quezon City as
well as that Manila, corresponding to February 7, 1969, there are entries covering registered
letters Nos. 0215 and 0216 for dispatch to Quezon City and Manila, respectively; however,
such registry book for February 7, 1969 shows no letters with such numbers posted on the
said date.
The Acting Postmaster of the Commercial Center Post Office of Makati, Rizal, further certifies
that "Registry Receipts Nos. 0215 and 0216 addressed to Atty. Abraham F. Sarmiento of the
Magdalena Estate, Quezon City and the Honorable Court of Appeals, respectively, does not
appear in our Registry Record Book which was allegedly posted at this office on January 15,
1969."
From the foregoing, it is immediately apparent that the motion for extension of time to file their
Record on Appeal supposedly mailed by the plaintiffs on January 15, 1969 was not really
mailed on that date but evidently on a date much later than January 15, 1969. This is further
confirmed by the affidavit of Flaviano Malindog, a letter carrier of the Makati Post Office, which
defendant attached as Annex 1 to its supplemental reply to plaintiffs' opposition to the motion
for reconsideration. In his said affidavit, Malindog swore among others:
'That on February 7, 1969, between 12:00 o'clock noon and 1:00 o'clock in
the afternoon, JUANITO D. QUIACHON approached me at the Makati Post
Office and talked to me about certain letters which his employer had asked
him to mail and that I should help him do something about the matter; but I
asked him what they were all about, and he told me that they were letters for
the Court of Appeals and for Atty. Abraham Sarmiento and that his purpose
was to show that they were posted on January 15, 1969; that I inquired

further, and he said that the letters were not so important and that his only
concern was to have them post maker January 15, 1969;
'That believing the word of JUANITO D. QUIACHON that the letters were not
really important I agreed to his request; whereupon, I got two (2) registry
receipts from an old registry receipt booklet which is no longer being used
and I numbered them 0215 for the letter addressed to Atty. Abraham
Sarmiento in Quezon City and 0216 for the letter addressed to the Court of
Appeals, Manila; that I placed the same numbering on the respective
envelopes containing the letters; and that I also post maker them January
15, 1969;
'That to the best of my recollection I wrote the correct date of posting,
February 7, 1969, on the back of one or both of the registry receipts above
mentioned;
'That the correct date of posting, February 7, 1969 also appears in the
Registry Bill Books for Quezon City and Manila where I entered the subject
registered letters;
Of course, plaintiff's counsel denies the sworn statement of Malindog and even presented the
counter-affidavit of one of his clerk by the name of Juanito D. Quiachon. But between
Malindog, whose sworn statement is manifestly a declaration against interest since he can be
criminally prosecuted for falsification on the basis thereof, and that of Quiachon, whose
statement is self-serving, we are very much inclined to give greater weight and credit to the
former. Besides, plaintiffs have not refuted the facts disclosed in the two (2) official
certifications above mentioned by the Postmakers of Makati, Rizal. These two (2) certifications
alone, even without to move this Court to reconsider its resolution of February 25, 1969 and
order the dismissal of this appeal.
On September 5, 1969, after the rendition of the foregoing resolution, the Court of Appeals promulgated
another, denying the motion for reconsideration of the petitioner, but, at the same time, accepting as
satisfactory the explanation of Atty. Patrocino R. Corpuz why he should not be suspended from the practice of
the legal profession.
On September 20, 1969, the First Assistant Fiscal of Rizal notified the Court of Appeals that he had found
a prima facie case against Flaviano C. Malindog and would file the corresponding information for falsification of
public documents against him. The said fiscal, however, dismissed the complaint against Quiachon for lack of
sufficient evidence. The information subsequently filed against Malindog by the first Assistance Fiscal of Rizal
reads as follow:
That on or about the 7th day of February 1969, in the municipality of Makati, province of Rizal,
and a place within the jurisdiction of this Honorable Court, the above-named accused,
conspiring and confederating together and mutually helping and aiding with John Doe, whose
true identity and present whereabout is still unknown, did then and there willfully, unlawfully
and feloniously falsify two registry receipts which are public documents by reason of the fact
that said registry receipts are printed in accordance with the standard forms prescribed by the
Bureau of Posts, committed as follows: the above-named accused John Doe, on the date
above-mentioned approached and induced the accused Malindog, a letter-carrier at the
Makati Post Office, to postmark on Abraham Sarmiento in Quezon City, and the other to the

Court of Appeals, Manila, and the accused Malindog, acceding to the inducement of, and in
conspiracy with, his co-accused John Doe, did then and there willfully and feloniously falsify
said registry receipts of the Makati Post Office on January 15, 1969, thereby making it appear
that the said sealed envelopes addressed to Atty. Sarmiento and the Court of Appeals were
actually posted, and causing it to appear that the Postmaster of Makati participated therein by
posting said mail matters on January 15, 1969, when in truth and in fact he did not so
participate.
The petitioner contend that in promulgating its questioned resolution, the Court of Appeals acted without or in
excess of jurisdiction, or with such whimsical and grave abuse of discretion as to amount to lack of jurisdiction,
because (a) it declared that the motion for extension of time to file the printed record on appeal was not mailed
on January 15, 1969, when, in fact, it was mailed on the record on appeal was filed only on February 10, 1969,
beyond the time authorized by the appellate court, when the truth is that the said date of filing was within the
30-day extension granted by it; (c) the adverse conclusion of the appellate court are not supported by the
records of the case, because the said court ignored the affidavit of the mailing clerk of the petitioners' counsel,
the registry receipts and postmarked envelopes (citing Henning v. Western Equipment, 62 Phil. 579, and Caltex
Phil., Inc. v. Katipunan Labor Union, 52 O.G. 6209), and, instead, chose to rely upon the affidavit of the mail
carrier Malindog, which affidavit was prepared by counsel for the respondent at the affiant himself so declared
at the preliminary investigation at the Fiscal's office which absolved the petitioners' counsel mailing clerk
Quiachon from any criminal liability; (d) section 1, Rule 50 of the Rules of Court, which enumerates the grounds
upon which the Court of Appeals may dismiss an appeal, does not include as a ground the failure to file a
printed record on appeal; (e) the said section does not state either that the mismailing of a motion to extend the
time to file the printed record on appeal, assuming this to be the case, may be a basis for the dismissal of the
appeal; (f) the Court of Appeals has no jurisdiction to revoke the extention of time to file the printed record on
appeal it had granted to the petitioners based on a ground not specified in section 1, Rule 50 of the Rules of
Court; and (g) the objection to an appeal may be waived as when the appellee has allowed the record on
appeal to be printed and approved (citing Moran, Vol. II, p. 519).
Some of the objections raised by the petitioners to the questioned resolution of the Court of Appeals are
obviously matters involving the correct construction of our rules of procedure and, consequently, are proper
subjects of an appeal by way of certiorari under Rule 45 of the Rules of Court, rather than a special civil action
for certiorari under Rule 65. The petitioners, however, have correctly appreciated the nature of its objections
and have asked this Court to treat the instant petition as an appeal by way of certiorari under Rule 45 "in the
event ... that this Honorable Supreme Court should deem that an appeal is an adequate remedy ..." The nature
of the case at bar permits, in our view, a disquisition of both types of assignments.
We do not share the view of the petitioners that the Court of Appeals acted without or in excess of jurisdiction
or gravely abused its discretion in promulgating the questioned resolution.
While it is true that stamped on the registry receipts 0215 and 0215 as well as on the envelopes covering the
mails in question is the date "January 15, 1969," this, by itself, does not establish an unrebuttable presumption
of the fact of date of mailing. Henning and Caltex, cited by the petitioners, are not in point because the specific
adjective issue resolved in those cases was whether or not the date of mailing a pleading is to be considered
as the date of its filing. The issue in the case at bar is whether or not the motion of the petitioners for extension
of time to file the printed record on appeal was, in point of fact, mailed (and, therefore, filed) on January 15,
1969.
In resolving this issue in favor of the respondent, this Court finds, after a careful study and appraisal of the
pleadings, admissions and denials respectively adduced and made by the parties, that the Court of Appeals did
not gravely abuse its discretion and did not act without or in excess of its jurisdiction. We share the view of the
appellate court that the certifications issued by the two postmasters of Makati, Rizal and the sworn declaration

of the mail carrier Malindog describing how the said registry receipts came to be issued, are worthy of belief. It
will be observed that the said certifications explain clearly and in detail how it was improbable that the
petitioners' counsel in the ordinary course of official business, while Malindog's sworn statement, which
constitutes a very grave admission against his own interest, provides ample basis for a finding that where
official duty was not performed it was at the behest of a person interested in the petitioners' side of the action
below. That at the preliminary investigation at the Fiscal's office, Malindog failed to identify Quiachon as the
person who induced him to issue falsified receipts, contrary to what he declared in his affidavit, is of no moment
since the findings of the inquest fiscal as reflected in the information for falsification filed against Malindog
indicate that someone did induce Malindog to make and issue false registry receipts to the counsel for the
petitioners.
This Court held in Bello vs. Fernando 1 that the right to appeal is nota natural right nor a part of due process;

it is merely a statutory privilege, and may be exercised only in the manner provided by law. In this
connection, the Rule of Court expressly makes it the duty of an appellant to file a printed record on appeal
with the Court of Appeals within sixty (60) record on appeal approved by the trial court has already been
received by the said court. Thus, section 5 of Rule 46 states:
Sec. 5. Duty of appellant upon receipt of notice. It shall be the duty of the appellant within
fifteen (15) days from the date of the notice referred to in the preceding section, to pay the
clerk of the Court of Appeals the fee for the docketing of the appeal, and within sixty (60) days
from such notice to submit to the court forty (40) printed copies of the record on appeal,
together with proof of service of fifteen (15) printed copies thereof upon the appelee.
As the petitioners failed to comply with the above-mentioned duty which the Rules of Court enjoins, and
considering that, as found by the Court of Appeals, there was a deliberate effort on their part to mislead the
said Court in grating them an extension of time within which to file their printed record on appeal, it stands to
reason that the appellate court cannot be said to have abused its discretion or to have acted without or in
excess of its jurisdiction in ordering the dismissal of their appeal.
Our jurisprudence is replete with cases in which this Court dismissed an appeal on grounds not mentioned
specifically in Section 1, Rule 50 of the Rules of Court. (See, for example, De la Cruz vs. Blanco, 73 Phil. 596
(1942); Government of the Philippines vs. Court of Appeals, 108 Phil. 86 (1960); Ferinion vs. Sta. Romana, L25521, February 28, 1966, 16 SCRA 370, 375).
It will likewise be noted that inasmuch as the petitioners' motion for extension of the period to file the printed
record on appeal was belated filed, then, it is as though the same were non-existent, since as this Court has
already stated in Baquiran vs. Court of Appeals, 2 "The motion for extension of the period for filing pleadings

and papers in court must be made before the expiration of the period to be extended." The soundness of
this dictum in matters of procedure is self-evident. For, were the doctrine otherwise, the uncertainties that
would follow when litigants are left to determine and redetermine for themselves whether to seek further
redress in court forthwith or take their own sweet time will result in litigations becoming more unreable
than the very grievances they are intended to redness.
The argument raised by the petitioner that the objection to an appeal maybe waived, as when the appellee
allows the record on appeal to be printed and approved is likewise not meritorious considering that the
respondent did file a motion in the Court of Appeals on February 8, 1969 praying for the dismissal of the below
of the petitioners had not yet filed their record on appeal and, therefore, must be considered to have
abandoned their appeal.

In further assailing the questioned resolution of the Court of Appeals, the petitioners also point out that on the
merits the equities of the instant case are in their favor. A reading of the record, however, persuades us that the
judgment a quo is substantially correct and morally just.
The appealed decision of the court a quo narrates both the alleged and proven facts of the dispute between the
petitioners and the respondent, as follows:
This is a suit for specific performance filed by Lorenzo Velasco against the Magdalena Estate,
Inc. on the allegation that on November 29, 1962 the plaintiff and the defendant had entered
into a contract of sale (Annex A of the complaint) by virtue of which the defendant offered to
sell the plaintiff and the plaintiff in turn agreed to buy a parcel of land with an area of 2,059
square meters more particularly described as Lot 15, Block 7, Psd-6129, located at No. 39
corner 6th Street and Pacific Avenue, New Manila, this City, for the total purchase price of
P100,000.00.
It is alleged by the plaintiff that the agreement was that the plaintiff was to give a down
payment of P10,000.00 to be followed by P20,000.00 and the balance of P70,000.00 would
be paid in installments, the equal monthly amortization of which was to be determined as soon
as the P30,000.00 down payment had been completed. It is further alleged that the plaintiff
paid down payment of P10,000.00 on November 29, 1962 as per receipt No. 207848 (Exh.
"A")and that when on January 8, 1964 he tendered to the defendant the payment of the
additional P20,000.00 to complete the P30,000.00 the defendant refused to accept and that
eventually it likewise refused to execute a formal deed of sale obviously agreed upon. The
plaintiff demands P25,000.00 exemplary damages, P2,000.00 actual damages and P7,000.00
attorney's fees.
The defendant, in its Answer, denies that it has had any direct dealings, much less,
contractual relations with the plaintiff regarding the property in question, and contends that the
alleged contract described in the document attached to the complaint as Annex A is entirely
unenforceable under the Statute of Frauds; that the truth of the matter is that a portion of the
property in question was being leased by a certain Socorro Velasco who, on November 29,
1962, went to the office of the defendant indicated her desire to purchase the lot; that the
defendant indicated its willingness to sell the property to her at the price of P100,000.00 under
the condition that a down payment of P30,000.00 be made, P20,000.00 of which was to be
paid on November 31, 1962, and that the balance of P70,000.00 including interest a 9% per
annum was to be paid on installments for a period of ten years at the rate of P5,381.32 on
June 30 and December of every year until the same shall have been fully paid; that on
November 29, 1962 Socorro Velasco offered to pay P10,000.00 as initial payment instead of
the agreed P20,000.00 but because the amount was short of the alleged P20,000.00 the
same was accepted merely as deposited and upon request of Socorro Velasco the receipt
was made in the name of her brother-in-law the plaintiff herein; that Socorro Velasco failed to
complete the down payment of P30,000.00 and neither has she paid any installments on the
balance of P70,000.00 up to the present time; that it was only on January 8, 1964 that
Socorro Velasco tendered payment of P20,000.00, which offer the defendant refused to
accept because it had considered the offer to sell rescinded on account of her failure to
complete the down payment on or before December 31, 1962.
The lone witness for the plaintiff is Lorenzo Velasco, who exhibits the receipt, Exhibits A,
issued in his favor by the Magdalena Estate, Inc., in the sum of P10,000.00 dated November
29, 1962. He also identifies a letter (Exh. B)of the Magdalena Estate, Inc. addressed to him
and his reply thereto. He testifies that Socorro Velasco is his sister-in-law and that he had

requested her to make the necessary contacts with defendant referring to the purchase of the
property in question. Because he does not understand English well, he had authorized her to
negotiate with the defendant in her whenever she went to the office of the defendant, and as a
matter of fact, the receipt for the P10,000.00 down payment was issued in his favor. The
plaintiff also depends on Exhibit A to prove that there was a perfected follows: "Earnest money
for the purchase of Lot 15, Block 7, Psd-6129, Area 2,059 square meters including
improvements thereon P10,000.00." At the bottom of Exhibit A the following appears:
"Agreed price: P100,000.00, P30,000.00 down payment, bal. in 10 years."
To prove that the Magdalena Estate, Inc. had been dealing all along with him and not with his
sister-in-law and that the Magdalena Estate, Inc. knew very well that he was the person
interested in the lot in question and not his sister-in-law, the plaintiff offers in evidence five
checks all drawn by him in favor of Magdalena Estate, Inc. for payment of the lease of the
property. ....
There does not seem to be any dispute regarding the fact that the Velasco family was leasing
this property from the Magdalena Estate, Inc. since December 29, 1961; that the Velasco
family sometime in 1962 offered to purchase the lot as a result of which Lorenzo Velasco thru
Socorro Velasco made the P10,000.00 deposit or, in the language of the defendant 'earnest
money or down payment' as evidenced by Exhibit A. The only matter that remains to be
decided is whether the talks between the Magdalena Estate, Inc. and Lorenzo Velasco either
directly or thru his sister-in-law Socorro Velasco ever ripened into a consummated sale. It is
the position of the defendant (1) that the sale was never consummated and (2) that the
contract is unenforceable under the Statute of Frauds.
The court a quo agreed with the respondent's (defendant therein) contention that no contract of sale was
perfected because the minds of the parties did not meet "in regard to the manner of payment." The court a quo
appraisal of this aspect of the action below is correct. The material averments contained in the petitioners'
complaint themselves disclose a lack of complete "agreement in regard to the manner of payment" of the lot in
question. The complaint states pertinently:
4. That plaintiff and defendant further agreed that the total down payment shall by P30,000.00,
including the P10,000.00 partial payment mentioned in paragraph 3 hereof, and that upon
completion of the said down payment of P30,000.00, the balance of P70,000.00 shall be said
by the plaintiff to the defendant in 10 years from November 29, 1962;
5. That the time within the full down payment of the P30,000.00 was to be completed was not
specified by the parties but the defendant was duly compensated during the said time prior to
completion of the down payment of P30,000.00 by way of lease rentals on the house existing
thereon which was earlier leased by defendant to the plaintiff's sister-in-law, Socorro J.
Velasco, and which were duly paid to the defendant by checks drawn by plaintiff.
It is not difficult to glean from the aforequoted averments that the petitioners themselves admit that they and the
respondent still had to meet and agree on how and when the down-payment and the installment payments
were to be paid. Such being the situation, it cannot, therefore, be said that a definite and firm sales agreement
between the parties had been perfected over the lot in question. Indeed, this Court has already ruled before
that a definite agreement on the manner of payment of the purchase price is an essential element in the
formation of a binding and unforceable contract of sale. 3 The fact, therefore, that the petitioners delivered to

the respondent the sum of P10,000 as part of the down-payment that they had to pay cannot be
considered as sufficient proof of the perfection of any purchase and sale agreement between the parties

herein under article 1482 of the new Civil Code, as the petitioners themselves admit that some essential
matter the terms of payment still had to be mutually covenanted.
ACCORDINGLY, the instant petitioner is hereby denied. No pronouncement as to costs.
Makalintal, Makasiar and Esguerra, JJ., concur.
Fernando, J., took no part.
Barredo, J.: The petitioners having clearly and without sufficient justification failed to prosecute their appeal
within the period allowed by the rules, I vote to deny the petition, and consistently with my view already
expressed on previous occasions, any discussion of the merits of the appeal is unwarranted, particularly, in
instances like the present, wherein the same does not appear to me, upon cursory examination to be beyond
doubt..

Separate Opinions

TEEHANKEE, J., dissenting:

I dissent from the main opinion penned by Mr. Justice Castro affirming the appellate court's dismissal of
petitioner' pending appeal before it because of late submittal of the printed record on appeal (by 24 days), on
appeal when the appeal was indisputably timely perfected does not call for the imposition of the capital
penalty of dismissal of the appeal.
As in my separate opinion in Sison vs. Gatchalian 1 promulgated just a few weeks earlier, I must note with

gratification the special pains taken in the main opinion to discuss nevertheless the substance and merit
of the aborted appeal and to record the Court's policy in such cases (of dismissal of appeals timely
perfected for failure to comply with certain requirements of the Rules) of invariably satisfying itself that
there is "a rational basis for the result by the trial court" 2 in the judgment sought to be reviewed by the
appeal.
In the case at bar, however, I believe that the merits and equities invoked by petitioners-appellants in support of
their action for specific performance of their agreement with respondent for the purchase of the parcel of land
described in the complaint for the "agreement price (of): P10,000.00, P30,000.00 down payment, bal. in 10
years" (which is a matter of mathematical computation), with petitioners having admittedly made a down
payment of P10,000.00 as "earnest money" which was accepted by respondent and continuing to pay
respondent lease rentals for the time taken to complete the full down payment pending formalization of their
contract, deserve a full-dress consideration of the appeal and legal principles involved with a decision on the
merits of the case itself.

Since two other members of the Court, viz, Justices Barredo and Antonio, have reserved their opinions on the
merits of the appeals, as stated in their respective concurrences, I further consider this to be a case where the
paramount considerations of substantial justice must take precedence over the lateness (by 24 days) in the
submittal of the printed record on appeal which in no way can be claimed to have prejudiced the substantial
rights of respondent or delayed the cause of the administration of justice and that accordingly, such a
technical trangression on counsel's part should not result in the drastic forfeiture of petitioners' right of appeal
and of securing a possible of the adverse verdict of the lower court.
As stated by Chief Justice Concepcion for the Court in Concepcion vs. Payatas Estate Improvements Co.,
Inc., 3"After all, pleadings, as well as remedial laws, should by construed literally, in order that litigants may

have ample opportunity to prove their respective claims, and that a possible denial of substantial justice,
due to legal technicalities, may be avoided." This is but the very mandate of the Rules of Court: that they
be "liberally construed in order to promote theirobject and to assist the determination of every action and
proceeding" 4 and that "All pleadings shall be liberally construed so as to do substantial justice." 5
Here, the 60-day period for petitioners appellants "to submit .... forty (40) printed copies of the record on
appeal" from notice on November 18, 1968 of receipt of the original typewritten record on appeal" from notice
on November 18, 1968 of receipt of the original typewritten record on appeal in the appellate court 6 was to

expire on January 17, 1969. Petitioners submitted their printed record on appeal on the 24th day after
such expiry date, viz, on viz, onFebruary 10, 1969.
The appellate court admitted the printed record on appeal as per its original resolution of February 25, 1969
denying respondent's motion to dismiss the appeal, wherein it granted the registry-mailed motion of petitioners'
counsel for a 30-day extension from January 15, 1969 within which to submit the same. Counsel's ground for
such extension was from ground for such extension machines and voluminous printing jobs of the Vera Pinting
Press, which they had contracted to do the printing job.
Upon complaint of respondent, however, that petitioners' counsel, through its mailing clerk Juanito D.
Quiachon, had deceived the appellate court into believing that their motion for extension had been registry
mailed January 15, 1969 when actually it was so mailed late only on February 7, 1969, as borne out by the
affidavit of Flaviano Malindog, a said post office which the appellate court believed as against Quiachon's
counter-affidavit to the contrary the said court as per its resolution of June 28, 1969 granted respondent's
motion for reconsideration and ordered the dismissal of petitioners' appeal "for their failure to file their printed
record on appeal within the period authorized by this court."
In the same resolution, Atty. Patrocino R. Corpus, as petitioners' counsel, was required to show cause "why he
should not be suspended from the practice of his profession for deceit, falsehood and violation of his sworn
duty to the Court," but subsequently, the appellate court as per its resolution of September 5, 1969 accepted as
satisfactory said counsel's explanation and disclaimer of any wrongdoing.
Acting upon the appellate court's directive to investigate the incident for the filing of appropriate criminal action
against Quiachon and Malindog, the Rizal provincial fiscal found a prima facie case against Malindog (the
letter-carrier) and charged him in the corresponding information for falsification of public documents but
dismissed the complaint against Quiachon (the mailing clerk of petitioners' counsel) for lack of sufficient
evidence since Malindog could not identify Quiachon ass the person who induced him to issue falsified registry
receipts.
I concur with the main opinion in its ruling upholding the appellate court's factual findings, which I don't consider
to be reviewable by this Court, grounded as they are on substantial evidence. Hence, for purposes of this
review, such factual findings must be postulated, to wit, that the printed record on appeal was submitted 24

days late on February 10, 1969, that there was a deliberate effort on the part of an unknown person (John Doe
in the in information) not petitioners nor their counsel nor Quiachon, the mailing clerk to induce Malindog
to make and issue false registry receipts that showed that petitioners' counsel's motion for a 30-day extension
to submit the printed record on appeal was filed timely on January 15, 1959 rather late(by 21 days) on February
7, 1969.
The general issue of law that confronts us then is this: is the 60-day period for submitting the printed record on
appeal mandatory and jurisdictional or is this merely a procedural period on appeal (owing to a valid reason of
mechanical failures and pressure of work of the printer) regardless of whether a motion for extension of time to
submit the printed record on appeal was in fact filed or filed out of time after expiration of the original 60-day
period, may in the appellate court's sound discretion in the interest of justice and equity be nevertheless
allowed and appeal heard and decided on its merits?
The 60-day period for submitting the printed record on appeal is obviously imposed as a procedural rule, under
Rule 46, section 5, like many other time limitations imposed by the Rule of Court as indispensable to the
prevention of needless dalays and necessary to the orderly and speedy discharge of judicial business. 7
But this 60-day period for submitting the printed record on appeal is to be distinguished from a court of first
instance judgment under Rule 41, section 3, where failure to file the necessary notice, bond and record on
appeal within the said 30-day period, if not duly extended, is fatal and calls for dismissal of the unperfected
appeal under Rule 41, section 13.
Here, the appeal had been long and timely duly perfected by petitioners. What is merely involved here is late
filing (by 24 days) of the printed copies of the record on appeal, which this Court has held in Ever Ice Drop
Factory vs. Court of Appeals 8 as "not indispensable to the jurisdiction of the appellate courts, the sole

purpose of such printing beingconvenience in the handling, keeping and reading of the record on appeal."
In the cited case of Ever, the Court applied the salutary rule of overlooking procedural deficiencies in the
interest of substantial justice and set aside the appellate court's dismissal of the appeal (for non-inclusion in the
joint record on appeal of the appellants' notice of appeal and date of receipt of the appealed decision on
appeal"), ruling that "Inasmuch as Rule 41 is in that portion of the rules pertaining to the stage of the appeal
process taking place in the trial court, it is but logical that the frame of reference, when the completeness of a
record on appeal, as therein provided, is in question, must be the contents of said record as filed with said
court, and not necessarily those of the printed one filed with the appellant court."
As applied to the case at bar, therefore, I vote for the granting of the petition and to demand the appeal to the
appellate court for disposition and decision of the merits, for the following considerations, in addition to those
stated above and in my separate opinion in Sison, supra:
Since the use of the false registry receipts appears in no way to be the making of petitioners themselves,
who as clients may be presumed to be entirely unaware of the procedural requirements and of their counsel's
action or inaction in complying therewith, the imposition of the capital of dismissal of petitioners' appeal is
unduly severe;
Such a harsh penalty appears to be in derogation of the interest and purpose of the Rules of Court the
proper and just determination of a litigation. No substantial right of respondent has been prejudiced by the late
submittal of the late submittal of the printed record, whereas petitioners' appeal would be forfeited through no
fault or negligence on their part; While clients are generally bound by the actions or mistakes of their
counsels, here no fault or wrongdoing has been attributed to either petitioners or their counsel. Their counsel's

late submittal of the brief and of the corresponding motions for extension (by less than a month's time) is not
rank failure to comply with the rule's requirements;
The specific rule (Rule 46, section 5) does not provided for dismissal of the appeal for failure to submit
theprinted record on appeal whereas section 7 of the rule prohibits "alternations, omissions or additions to the
printed record" and does provide that "a violation of this prohibition shall be a ground for dismissal of the
appeal."
Even Rule 50, section 1 which provides that the appellate court may dismissal pending appeal for certain
specific infractions of the rules, e.g. failure to pay the docketing fee or to file appellant's brief on time or
"unauthorized alterations, omissions or additions in the printed record on appeal" (paragraph(e)) or want of
specific assignment of errors or of page references to the record in appellant's brief, merely confers a power,
not a duty, upon the mandatory, upon the said court to exercise its power to dismiss an appeal and dismissal
has been ordered sparingly and only in extreme cases warranting dismissal;
Withal, this Court may dismiss an appeal even on grounds not specifically mentioned in Rule 50, section 1,
as where the wanton or inexcusable conduct of appellant in not complying with the rules warrants such
dismissal. 9 But the Rules certainly do not authorize dismissal of a duly perfected appeal within the original 60day period, such failure not being wanton or inexcusable. Yet such failure to file the printed record on appeal
within the 60-day period (which was filed late by 24 days and had already been admitted) was the only ground
stated by the appellate court for its peremptory dismissal of the appeal;
Thus, the appellate court did not sustain respondent's contention that petitioners through counsel had
deceived it through knowing use of the false registry receipts, since it exonerated counsel of any complicity.
One gets the impression that the unnamed person had perhaps induced Malindog to issue the false receipts to
cover up some neglect or fault on Quiachon's part in not having timely mailed counsel's extension motion, but
neither the appellate court nor the fiscal made any such Quiachon was responsible for the deception, it does
not seem fair to penalize petitioners with dismissal of their appeal;
The appellate court thus disregarded the harmless error rule as provided in Rule 51, section 5 that "no error
or defect in any ruling or order ... [such as its first order admitting the printed record on appeal in the belief that
petitioners' motion for extension had been timely filed] .... is ground.... for setting aside, modifying or otherwise
disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent
withsubstantial justice. The court at every stage of the proceeding must disregard any error or defect which
does notaffect the substantial rights of the parties;" 10
Since the enactment as of September 9, 1968 of Republic Act 5440 providing that in most cases as
specified therein, 11 review by this Court of final judgments and decrees of inferior courts shall be by

petition for writ of certiorari and no longer by record on appeal some parties-appellants aggrieved by
adverse to submit their appeals to this Court by means of records on appeal as approved by the lower
court, contrary to the act's mandate that they should by presented by means of "petition .... filed and
served in the form required for petitions for review by certiorari of decisions of the Court of Appeals." 12
Strictly speaking, such an error although abetted by the trial court's act of approving a record on appeal
that is not required by the Act, could be considered fatal to the appeal. But following paramount
considerations of substantial justice in preference to transgressions of form, as stressed in Sonora vs.
Tongoy, 13 "the Court has been liberal in the implementation of Republic Act 5440 and instead of
dismissing appeals coming up to Us by record on appeal, We have allowed the appellants to file the
corresponding petition(for review by certiorari) provided the appeal by record on appeal had been duly
perfected within the reglementary period. 14

 This is to stress that even though the provision of Republic Act 5440 that such appeals shall be only on
petitions for review by petitions by certiorari and no longer as a matter of right by record on appeal is of a
mandatory character, this Court has nevertheless adopted a liberal construction and chosen to apply the
principle of substantial justice in favor of one whose appeal was actually perfected on time rather than to
sacrifice substance to form. In the language of Sonora, vis a vis the case at bar, "it is less than fair for
respondents to attempt to cut off (petitioners') right to appeal by invoking the literal meaning of the language of
the rules, disregarding their wise and practical construction already laid down by the Supreme Court." 15
In sensu contrario, applying the same principles of substantial justice the Court has in many cases seeking
mandamus or reinstatement of disallowed appeals (although timely made) looked at the "substantive merits" of
the proposed appeal and where "there is hardly any prospect of its being ultimately sucessful," denied
mandamus, ruling as in Espiritu vs. CFI of Cavite 16 that" this Court has already ruled on several occasions,

since as early as De la Cruz vs. Blanco, 73 Phil. 596 that mandamus to compel approval and certification
of an appeal, even if otherwise well grounded, procedurally speaking, has to be appeal itself, and 'it would
serve no useful purpose to reinstate' the same." Lucas vs. Mariano 17 was to the same effect with the
Court sustaining therein petitioner's submittal "that from the point of view of the time of the taking of the
appeal, petitioners, We are sufficiently convinced that their claim of title has no chance of being sustained
even if other and further proceedings were to be held in the court below;" and
Finally, adherence to a liberal construction of the procedural rules in order to attain their objective of
substantial justice and of avoiding possible denials of substantial justice due to procedural technicalities does
not mean non-enforcement of the Rules of Court which are universally recognized to be necessary to the
orderly and speedy discharge of judicial business with the least delay. Compliance with the rules, which are not
of mandatory character (such as the period for perfecting appeals, failure to observe which results in the
automatic penalty of loss of the right to appeal) but of directory character to provide time tables and prevent
needless delay in readying a duly perfected appeal for consideration and decision (such as the 60-day period
for submittal of the printed record on appeal involved here, periods for filling of briefs and transcripts, through
the imposition of appropriate disciplinary admonition or offending counsel, ranging from an contempt to even
more drastic measures of administrative proceedings for disbarment against him, depending upon the gravity of
the offense.

Separate Opinions
TEEHANKEE, J., dissenting:
I dissent from the main opinion penned by Mr. Justice Castro affirming the appellate court's dismissal of
petitioner' pending appeal before it because of late submittal of the printed record on appeal (by 24 days), on
appeal when the appeal was indisputably timely perfected does not call for the imposition of the capital
penalty of dismissal of the appeal.
As in my separate opinion in Sison vs. Gatchalian 1 promulgated just a few weeks earlier, I must note with

gratification the special pains taken in the main opinion to discuss nevertheless the substance and merit
of the aborted appeal and to record the Court's policy in such cases (of dismissal of appeals timely
perfected for failure to comply with certain requirements of the Rules) of invariably satisfying itself that
there is "a rational basis for the result by the trial court" 2 in the judgment sought to be reviewed by the
appeal.

In the case at bar, however, I believe that the merits and equities invoked by petitioners-appellants in support of
their action for specific performance of their agreement with respondent for the purchase of the parcel of land
described in the complaint for the "agreement price (of): P10,000.00, P30,000.00 down payment, bal. in 10
years" (which is a matter of mathematical computation), with petitioners having admittedly made a down
payment of P10,000.00 as "earnest money" which was accepted by respondent and continuing to pay
respondent lease rentals for the time taken to complete the full down payment pending formalization of their
contract, deserve a full-dress consideration of the appeal and legal principles involved with a decision on the
merits of the case itself.
Since two other members of the Court, viz, Justices Barredo and Antonio, have reserved their opinions on the
merits of the appeals, as stated in their respective concurrences, I further consider this to be a case where the
paramount considerations of substantial justice must take precedence over the lateness (by 24 days) in the
submittal of the printed record on appeal which in no way can be claimed to have prejudiced the substantial
rights of respondent or delayed the cause of the administration of justice and that accordingly, such a
technical trangression on counsel's part should not result in the drastic forfeiture of petitioners' right of appeal
and of securing a possible of the adverse verdict of the lower court.
As stated by Chief Justice Concepcion for the Court in Concepcion vs. Payatas Estate Improvements Co.,
Inc., 3"After all, pleadings, as well as remedial laws, should by construed literally, in order that litigants may

have ample opportunity to prove their respective claims, and that a possible denial of substantial justice,
due to legal technicalities, may be avoided." This is but the very mandate of the Rules of Court: that they
be "liberally construed in order to promote theirobject and to assist the determination of every action and
proceeding" 4 and that "All pleadings shall be liberally construed so as to do substantial justice." 5
Here, the 60-day period for petitioners appellants "to submit .... forty (40) printed copies of the record on
appeal" from notice on November 18, 1968 of receipt of the original typewritten record on appeal" from notice
on November 18, 1968 of receipt of the original typewritten record on appeal in the appellate court 6 was to

expire on January 17, 1969. Petitioners submitted their printed record on appeal on the 24th day after
such expiry date, viz, on viz, onFebruary 10, 1969.
The appellate court admitted the printed record on appeal as per its original resolution of February 25, 1969
denying respondent's motion to dismiss the appeal, wherein it granted the registry-mailed motion of petitioners'
counsel for a 30-day extension from January 15, 1969 within which to submit the same. Counsel's ground for
such extension was from ground for such extension machines and voluminous printing jobs of the Vera Pinting
Press, which they had contracted to do the printing job.
Upon complaint of respondent, however, that petitioners' counsel, through its mailing clerk Juanito D.
Quiachon, had deceived the appellate court into believing that their motion for extension had been registry
mailed January 15, 1969 when actually it was so mailed late only on February 7, 1969, as borne out by the
affidavit of Flaviano Malindog, a said post office which the appellate court believed as against Quiachon's
counter-affidavit to the contrary the said court as per its resolution of June 28, 1969 granted respondent's
motion for reconsideration and ordered the dismissal of petitioners' appeal "for their failure to file their printed
record on appeal within the period authorized by this court."
In the same resolution, Atty. Patrocino R. Corpus, as petitioners' counsel, was required to show cause "why he
should not be suspended from the practice of his profession for deceit, falsehood and violation of his sworn
duty to the Court," but subsequently, the appellate court as per its resolution of September 5, 1969 accepted as
satisfactory said counsel's explanation and disclaimer of any wrongdoing.

Acting upon the appellate court's directive to investigate the incident for the filing of appropriate criminal action
against Quiachon and Malindog, the Rizal provincial fiscal found a prima facie case against Malindog (the
letter-carrier) and charged him in the corresponding information for falsification of public documents but
dismissed the complaint against Quiachon (the mailing clerk of petitioners' counsel) for lack of sufficient
evidence since Malindog could not identify Quiachon ass the person who induced him to issue falsified registry
receipts.
I concur with the main opinion in its ruling upholding the appellate court's factual findings, which I don't consider
to be reviewable by this Court, grounded as they are on substantial evidence. Hence, for purposes of this
review, such factual findings must be postulated, to wit, that the printed record on appeal was submitted 24
days late on February 10, 1969, that there was a deliberate effort on the part of an unknown person (John Doe
in the in information) not petitioners nor their counsel nor Quiachon, the mailing clerk to induce Malindog
to make and issue false registry receipts that showed that petitioners' counsel's motion for a 30-day extension
to submit the printed record on appeal was filed timely on January 15, 1959 rather late(by 21 days) on February
7, 1969.
The general issue of law that confronts us then is this: is the 60-day period for submitting the printed record on
appeal mandatory and jurisdictional or is this merely a procedural period on appeal (owing to a valid reason of
mechanical failures and pressure of work of the printer) regardless of whether a motion for extension of time to
submit the printed record on appeal was in fact filed or filed out of time after expiration of the original 60-day
period, may in the appellate court's sound discretion in the interest of justice and equity be nevertheless
allowed and appeal heard and decided on its merits?
The 60-day period for submitting the printed record on appeal is obviously imposed as a procedural rule, under
Rule 46, section 5, like many other time limitations imposed by the Rule of Court as indispensable to the
prevention of needless dalays and necessary to the orderly and speedy discharge of judicial business. 7
But this 60-day period for submitting the printed record on appeal is to be distinguished from a court of first
instance judgment under Rule 41, section 3, where failure to file the necessary notice, bond and record on
appeal within the said 30-day period, if not duly extended, is fatal and calls for dismissal of the unperfected
appeal under Rule 41, section 13.
Here, the appeal had been long and timely duly perfected by petitioners. What is merely involved here is late
filing (by 24 days) of the printed copies of the record on appeal, which this Court has held in Ever Ice Drop
Factory vs. Court of Appeals 8 as "not indispensable to the jurisdiction of the appellate courts, the sole

purpose of such printing beingconvenience in the handling, keeping and reading of the record on appeal."
In the cited case of Ever, the Court applied the salutary rule of overlooking procedural deficiencies in the
interest of substantial justice and set aside the appellate court's dismissal of the appeal (for non-inclusion in the
joint record on appeal of the appellants' notice of appeal and date of receipt of the appealed decision on
appeal"), ruling that "Inasmuch as Rule 41 is in that portion of the rules pertaining to the stage of the appeal
process taking place in the trial court, it is but logical that the frame of reference, when the completeness of a
record on appeal, as therein provided, is in question, must be the contents of said record as filed with said
court, and not necessarily those of the printed one filed with the appellant court."
As applied to the case at bar, therefore, I vote for the granting of the petition and to demand the appeal to the
appellate court for disposition and decision of the merits, for the following considerations, in addition to those
stated above and in my separate opinion in Sison, supra:

 Since the use of the false registry receipts appears in no way to be the making of petitioners themselves,
who as clients may be presumed to be entirely unaware of the procedural requirements and of their counsel's
action or inaction in complying therewith, the imposition of the capital of dismissal of petitioners' appeal is
unduly severe;
Such a harsh penalty appears to be in derogation of the interest and purpose of the Rules of Court the
proper and just determination of a litigation. No substantial right of respondent has been prejudiced by the late
submittal of the late submittal of the printed record, whereas petitioners' appeal would be forfeited through no
fault or negligence on their part; While clients are generally bound by the actions or mistakes of their
counsels, here no fault or wrongdoing has been attributed to either petitioners or their counsel. Their counsel's
late submittal of the brief and of the corresponding motions for extension (by less than a month's time) is not
rank failure to comply with the rule's requirements;
The specific rule (Rule 46, section 5) does not provided for dismissal of the appeal for failure to submit
theprinted record on appeal whereas section 7 of the rule prohibits "alternations, omissions or additions to the
printed record" and does provide that "a violation of this prohibition shall be a ground for dismissal of the
appeal."
Even Rule 50, section 1 which provides that the appellate court may dismissal pending appeal for certain
specific infractions of the rules, e.g. failure to pay the docketing fee or to file appellant's brief on time or
"unauthorized alterations, omissions or additions in the printed record on appeal" (paragraph(e)) or want of
specific assignment of errors or of page references to the record in appellant's brief, merely confers a power,
not a duty, upon the mandatory, upon the said court to exercise its power to dismiss an appeal and dismissal
has been ordered sparingly and only in extreme cases warranting dismissal;
Withal, this Court may dismiss an appeal even on grounds not specifically mentioned in Rule 50, section 1,
as where the wanton or inexcusable conduct of appellant in not complying with the rules warrants such
dismissal. 9 But the Rules certainly do not authorize dismissal of a duly perfected appeal within the original 60day period, such failure not being wanton or inexcusable. Yet such failure to file the printed record on appeal
within the 60-day period (which was filed late by 24 days and had already been admitted) was the only ground
stated by the appellate court for its peremptory dismissal of the appeal;
Thus, the appellate court did not sustain respondent's contention that petitioners through counsel had
deceived it through knowing use of the false registry receipts, since it exonerated counsel of any complicity.
One gets the impression that the unnamed person had perhaps induced Malindog to issue the false receipts to
cover up some neglect or fault on Quiachon's part in not having timely mailed counsel's extension motion, but
neither the appellate court nor the fiscal made any such Quiachon was responsible for the deception, it does
not seem fair to penalize petitioners with dismissal of their appeal;
The appellate court thus disregarded the harmless error rule as provided in Rule 51, section 5 that "no error
or defect in any ruling or order ... [such as its first order admitting the printed record on appeal in the belief that
petitioners' motion for extension had been timely filed] .... is ground.... for setting aside, modifying or otherwise
disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent
withsubstantial justice. The court at every stage of the proceeding must disregard any error or defect which
does notaffect the substantial rights of the parties;" 10
Since the enactment as of September 9, 1968 of Republic Act 5440 providing that in most cases as
specified therein, 11 review by this Court of final judgments and decrees of inferior courts shall be by

petition for writ of certiorari and no longer by record on appeal some parties-appellants aggrieved by
adverse to submit their appeals to this Court by means of records on appeal as approved by the lower

court, contrary to the act's mandate that they should by presented by means of "petition .... filed and
served in the form required for petitions for review by certiorari of decisions of the Court of Appeals." 12
Strictly speaking, such an error although abetted by the trial court's act of approving a record on appeal
that is not required by the Act, could be considered fatal to the appeal. But following paramount
considerations of substantial justice in preference to transgressions of form, as stressed in Sonora vs.
Tongoy, 13 "the Court has been liberal in the implementation of Republic Act 5440 and instead of
dismissing appeals coming up to Us by record on appeal, We have allowed the appellants to file the
corresponding petition(for review by certiorari) provided the appeal by record on appeal had been duly
perfected within the reglementary period. 14
This is to stress that even though the provision of Republic Act 5440 that such appeals shall be only on
petitions for review by petitions by certiorari and no longer as a matter of right by record on appeal is of a
mandatory character, this Court has nevertheless adopted a liberal construction and chosen to apply the
principle of substantial justice in favor of one whose appeal was actually perfected on time rather than to
sacrifice substance to form. In the language of Sonora, vis a vis the case at bar, "it is less than fair for
respondents to attempt to cut off (petitioners') right to appeal by invoking the literal meaning of the language of
the rules, disregarding their wise and practical construction already laid down by the Supreme Court." 15
In sensu contrario, applying the same principles of substantial justice the Court has in many cases seeking
mandamus or reinstatement of disallowed appeals (although timely made) looked at the "substantive merits" of
the proposed appeal and where "there is hardly any prospect of its being ultimately sucessful," denied
mandamus, ruling as in Espiritu vs. CFI of Cavite 16 that" this Court has already ruled on several occasions,

since as early as De la Cruz vs. Blanco, 73 Phil. 596 that mandamus to compel approval and certification
of an appeal, even if otherwise well grounded, procedurally speaking, has to be appeal itself, and 'it would
serve no useful purpose to reinstate' the same." Lucas vs. Mariano 17 was to the same effect with the
Court sustaining therein petitioner's submittal "that from the point of view of the time of the taking of the
appeal, petitioners, We are sufficiently convinced that their claim of title has no chance of being sustained
even if other and further proceedings were to be held in the court below;" and
Finally, adherence to a liberal construction of the procedural rules in order to attain their objective of
substantial justice and of avoiding possible denials of substantial justice due to procedural technicalities does
not mean non-enforcement of the Rules of Court which are universally recognized to be necessary to the
orderly and speedy discharge of judicial business with the least delay. Compliance with the rules, which are not
of mandatory character (such as the period for perfecting appeals, failure to observe which results in the
automatic penalty of loss of the right to appeal) but of directory character to provide time tables and prevent
needless delay in readying a duly perfected appeal for consideration and decision (such as the 60-day period
for submittal of the printed record on appeal involved here, periods for filling of briefs and transcripts, through
the imposition of appropriate disciplinary admonition or offending counsel, ranging from an contempt to even
more drastic measures of administrative proceedings for disbarment against him, depending upon the gravity of
the offense.
Footnotes
1 L-16970, January 30, 1962, 4 SCRA 135, 138.
2 L-14551, July 31, 1961, 2 SCRA 873, 878.
3 Navarro vs. Sugar Producers Corp. Marketing Association, Inc., L-12888, April 29, 1961, 1
SCRA 1180, 1187.

BARREDO, concurring:
1 L-34709, prom. June 15, 1973.
2 Paz vs. Guzman, 43 SCRA 384 (Feb. 29, 1972), citing Corliss vs. MRR Co., 27 SCRA 674,
678 (1969).
3 103 Phil. 1016, 1022 (1958); emphasis supplied.
5 Rule 6, section 15.
6 As required in Rule 46, sections 4 and 5.
7 Cf. Shioji vs. Harvey, 43 Phil. 333; Alvero vs. de la Rosa, 76 Phil. 478; Altavas vs. CA, 106
Phil. 940 (1960).
8 47 SCRA 305 (1972), per Barredo, J., emphasis supplied.
9 See Kiene Co. Ltd. vs. Republic of the Phil., 21 SCRA 605 (1967) where this Court
considered the Solicitor General's almost 4 months' delay in filing the printed record on appeal
as inexcusable. The Court rejected the proffered explanation of the notice to file printed record
on appeal having been misplaced by a receiving clerk as "a habitual subterfuge employed by
litigants who fail to observe the procedural requirements prescribed in the Rules of Court" and
ordered dismissal of the State's appeal.
10 Notes in bracket and emphasis supplied.
11 Excepting only criminal cases where the penalty imposed is death or life imprisonment,
naturalization and denaturalization petitions and decisions of the Auditor-General if appellant
is a private person or entity, which continue to be reviewable on appeal. (Sec. 17 of the
Judiciary Act, as amended by R.A. 5440).
12 R.A. 5440, Section 3.
13 44 SCRA 411, 415-416 (April 19, 1972) per Barredo, J,: notes in emphasis supplied.
14 The Court added that "in the interest of uniformity of procedure, considering that We have
been liberal in the cases that have come to Us so far, all concerned, particularly the trial
judges, are informed that in the near future the Court is going to set a deadline after which all
appeals not made in conformity with the statute must have to be dismissed;" idem, at page
416.
15 Idem, at page 417.
16 47 SCRA 355, 356 (Oct. 31, 1972) per Barredo J., emphasis supplied, citing Ranzalan vs.
Conception, 31 SCRA 611; Manila Railroad vs. Ballesteros, 16 SCRA 641; Paner vs. Yatco,
87 Phil. 271.
17 44 SCRA 501, 514, 517 (April 27, 1972), per Barredo, J.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 79518 January 13, 1989
REBECCA C. YOUNG assisted by her husband ANTONIO GO, petitioner,
vs.
COURT OF APPEALS, PH CREDIT CORP., PHIL. HOLDING, INC. FRANCISCO VILLAROMAN, FONG
YOOK LU, ELLEN YEE FONG and THE REGISTER OF DEEDS OF MANILA, respondents.
Diego O. Untalan for petitioner.
Esteban B. Bautista for respondents Fong Yook Lu and Ellen Yee Fong.
Janette Borres for respondents.

PARAS, J.:
This is a petition for review on certiorari seeking to set aside the decision of the Court of Appeals 1 in CA-G.R.

No. 1002, entitled Spouses Chui Wan and Felisa Tan Yu and Rebecca Young vs. PH Credit Corporation
et al., which affirmed the decision of the Regional Trial Court of Manila, Branch XXXII, earlier dismissing
the complaint of petitioners for Annulment of Sale, Specific Performance and Damages, against
respondents.
The facts of the case are as follows:
Defendant Philippine Holding, Inc. is the former owner of a piece of land located at Soler St., Sta. Cruz, Manila,
and a two storey building erected thereon, consisting of six units; Unit 1350 which is vacant, Unit 1352
occupied by Antonio Young, Unit 1354 by Rebecca C. Young, Unit 1356 by Chui Wan and Felisa Tan Yu, Unit
1358 by Fong Yook Lu and Ellen Yee Fong and Unit 1360 by the Guan Heng Hardware (Rollo, pp. 14-15).

The owner Philippine Holding, Inc. secured an order from the City Engineer of Manila to demolish the building.
Antonio Young, then a tenant of said Unit 1352, filed an action to annul the City Engineer's demolition Order
(Civil Case No. 123883) entitled Antonio S. Young vs. Philippine Holding, Inc. before the then Court of First
Instance of Manila, Branch XXX. As an incident in said case, the parties submitted a Compromise Agreement
to the Court on September 24, 1981. Paragraph 3 of said agreement provides that plaintiff (Antonio S. Young)
and Rebecca Young and all persons claiming rights under them bind themselves to voluntarily and peacefully
vacate the premises which they were occupying as lessees (Units 1352 and 1354, respectively) which are the
subject of the condemnation and demolition order and to surrender possession thereof to the defendant
Philippine Holding, Inc. within sixty (60) days from written notice, subject to the proviso that should defendant
decided to sell the subject property or portion thereof, "plaintiff and Rebecca C. Young have the right of first
refusal thereof." (Rollo, p. 49).
On September 17, 1981, Philippine Holding, Inc. had previously sold the above said property described in the
compromise agreement by way of dacion in payment to PH Credit Corporation (Rollo, p. 49).
On November 9, 1982, the property was subdivided into two parcels, one 244.09 sq.m. in area covering Units
1350, 1352 and 1354 (TCT No. 152439) and the other 241.71 sq.m. in area covering Units 1356, 1358 and
1360 (TCT No. 152440) and both titles were placed in the name of PH Credit Corporation.
On December 8, 1982, PH Credit Corporation sold the property covered by TCT 152439 to the Blessed Land
Development Corporation represented by its President Antonio T. S. Young; and on September 16, 1983, PH
Credit Corporation sold the property covered by TCT 152440 embracing Units 1356, 1358 and 1360 to spouses
Fong Yook Lu and Ellen Yee Fong (Rollo, p. 15).
Thereafter, petitioner Rebecca C. Young and her co-plaintiffs, the spouses Chui Wan and Felisa Tan Yu filed in
the Regional Trial Court of Manila, Civil Case No. 84-22676 for the annulment of the sale in favor of herein
respondent spouses, Fong Yook Lu and Ellen Yee Fong and for specific performance and damages against the
PH Credit Corporation and Philippine Holding, Incorporated.
Plaintiff spouses Chui Wan and Felisa Tan Yu alleged that defendant corporation and Francisco Villaroman,
sold the property without affording them (the plaintiffs-spouses) the right of first refusal to purchase that portion
of the property which they are renting.
Plaintiff Rebecca C. Young, now petitioner, also claimed the right of first refusal purportedly granted to her
under the aforestated proviso of the abovesaid compromise agreement and prayed that the sale be annulled
and that they be allowed to exercise her right of first refusal to purchase subject property (Rollo, p. 50).
The lower court decided in favor of the defendants and against the plaintiffs, thus dismissing the complaint
together with defendants' counterclaims (Rollo, p. 15)
On the other hand, the claim of Rebecca C. Young was similarly rejected by the trial court on the following
grounds: (1) that she was not a party in the Civil Case No. 123883, wherein subject compromise agreement
was submitted and approved by the trial court apart from the fact that she did not even affix her signature to the
said compromise agreement; (2) that Rebecca Young had failed to present any evidence to show that she had
demanded from the defendants-owners, observance of her right of first refusal before the said owners sold
units 1356, 1358 and 1360; (3) that even assuming that her supposed right of first refusal is a stipulation for the
benefit of a third person, she did not inform the obligor of her acceptance as required by the second paragraph
of Article 1311 of the Civil Code.

Chui Wan and Felisa Tan Yu and Rebecca C. Young, assisted by her husband, appealed to the Court of
Appeals which dismissed the same on August 7, 1987, for lack of merit.
Hence this petition, which was brought to this Court only by Rebecca Young, assisted by her husband Antonio
Go.
On October 2, 1987, respondents Fong Yook Lu, moved to strike out or dismiss outright the instant petition
(Rollo, p. 35). In the resolution of November 4, 1987, the Second Division of this Court required the petitioner to
comment on said motion (Rollo, p. 37), which comment was filed on December 17, 1987 (Rollo, p. 38).
Thereafter, in the resolution of January 20, 1988, respondents were required to file a reply thereto (Rollo, p. 42)
which was filed on January 11, 1988 (Rollo, p. 43). On March 24, 1988, petitioner filed a rejoinder to reply
(Rollo, p. 46) in compliance with the resolution of February 29, 1988 (Rollo, p.45).
In the resolution of May 11, 1988, the petition was given due course and the parties were required to submit
simultaneously their respective memoranda (Rollo, p. 47). Respondents filed their memorandum on June 29,
1988 (Rollo, p. 48), while petitioner's memorandum was filed on July 14, 1988 (Rollo, p. 64).
Petitioner raised the following assignments of error:
1. The lower court erred in holding that Rebecca C. Young cannot enforce the stipulation in
her favor in the compromise agreement as she is not party therein.
2. The lower court erred in holding that even if par. 3 of the compromise agreement is
construed as a stipulation pour autrui Rebecca Young cannot enforce it because she did not
communicate her acceptance thereof to the obligor. (Rollo, p. 7)
The petition is devoid of merit.
The main issue in this case is whether or not petitioner can enforce a compromise agreement to which she was
not a party. This issue has already been squarely settled by this Court in the negative in J.M. Tuason & Co.,
Inc. v. Cadampog (7 SCRA 808 [1963])where it was ruled that appellant is not entitled to enforce a compromise
agreement to which he was not a party and that as to its effect and scope, it has been determined in the sense
that its effectivity if at all, is limited to the parties thereto and those mentioned in the exhibits (J.M. Tuason &
Co., Inc. v. Aguirre, 7 SCRA 112 [1963]). It was reiterated later that a compromise agreement cannot bind
persons who are not parties thereto (Guerrero v. C.A., 29 SCRA 791 [1969]).
The pertinent portion of the Compromise Agreement reads:
Plaintiff Antonio T.S. Young and the Defendant HOLDING hereby agree to implead in this
action as necessary party- plaintiff, plaintiff's daughter Rebecca C. Young who is the
recognized lawful lessee of the premises known and identified as 1354 Soller St., Sta. Cruz,
Manila and whose written conformity appears hereunder. (Rollo, p. 18)
From the terms of this agreement, the conditions are very clear, such as: (1) that Rebecca C. Young shall be
impleaded in the action and (2) that she shall signify her written conformity thereto.
For unknown reasons, the above conditions were not complied with. The parties did not make any move to
implead Rebecca as necessary party in the case. Neither did her written conformity appear in said agreement.
While there is the printed name of Rebecca C. Young appearing at the end of the joint motion for approval of

the Compromise Agreement, she did not affix her signature above her printed name, nor on the left margin of
each and every page thereof.
In fact, on cross-examination, she admitted that she was not a party to the case and that she did not sign the
aforesaid joint motion because it was not presented to her (Rollo, p. 18).
More than that, by the aforesaid actuations of the parties and petitioner's apparent lack of interest, the intention
is evident, not to include the latter either in the onerous, or in the beneficient provisions of said agreement.
Petitioner further argued that the stipulation giving her the right of first refusal is a stipulation pour autrui or a
stipulation in favor of a third person under Article 1311 of the Civil Code.
The requisites of a stipulation pour autrui or a stipulation in favor of a third person are the following:
(1) there must be a stipulation in favor of a third person.
(2) the stipulation must be a part, not the whole of the contract.
(3) the contracting parties must have clearly and deliberately conferred a favor upon a third
person, not a mere incidental benefit or interest.
(4) the third person must have communicated his acceptance to the obligor before its
revocation.
(5) neither of the contracting parties bears the legal representation or authorization of the third
party. (Florentino v. Encarnacion, Sr., 79 SCRA 193 [1977]).
Assuming that petitioner is correct in claiming that this is a stipulation pour autrui it is unrebutted that she did
not communicate her acceptance whether expressly or impliedly. She insists however, that the stipulation has
not yet been revoked, so that her present claim or demand is still timely.
As correctly observed by the Court of Appeals, the above argument is pointless, considering that the sale of
subject property to some other person or entity constitutes in effect a revocation of the grant of the right of first
refusal to Rebecca C. Young.
PREMISES CONSIDERED, the petition is DENIED for lack of merit, and the decision of the Court of Appeals is
AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Footnotes
1 Penned by CA Justices Loma S. Lombos-De la Fuente (ponente), Ricardo J. Francisco and
Alfredo L. Benipayo.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
G.R. No. 74521 November 11, 1986
BANK OF AMERICA NT & SA, petitioner,
vs.
THE HON. FIRST CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT and AIR CARGO AND
TRAVEL CORPORATION, respondents.
Agcaoili & Associates for petitioner.

Marcelo P. Villanuea for respondents.

MELENCIO-HERRERA, J.:
As the Petition and the Comment submitted by private respondent Air Cargo and Travel Corporation (ACTC)
have sufficiently argued the legal question involved in this case, the Court has resolved to give due course to
the Petition, with private respondent's Comment being its Answer, and to consider this case submitted for
decision.
The basic relevant facts have been stated by respondent Appellate Court as follows:
Shorn of non-essentials, the facts are: Plaintiff Air Cargo and Travel Corporation is the owner
of Account Number 19842-01-2 with defendant Bank of America. Defendant Toshiyuki Minami,
President of plaintiff corporation in Japan, is the owner of Account Number 24506-01-7 with
defendant Bank.
On March 10, 1981, the Bank received a tested telex advise from Kyowa Bank of Japan
stating,
ADVISE PAY USDLS 23,595. TO YOUR A/C NBR 24506-01-7 OF A. C. TRAVEL
CORPORATION MR. TOSHIYUKO MINAMI.
and the Bank Credited the amount of US$23,595.00 to Account Number 24506-07-1 (should
be 24506-01-7) owned, as aforesaid, by Minami.
On March 12, 1981, Minami withdrew the sum of P180,000.00 the equivalent in Philippine
Pesos of the sum of US$23,595.00 from the Bank on his Account Number 24506-07-1 (should
be 24506-01-7)
It may be explained that the "tested" telex advice is a message signed in "code". Evidently, there was a
previous contractual agreement between Kyowa Bank of Japan (KYOWA) and Petitioner (BANKAMERICA)
that, from time to time, KYOWA can ask BANKAMERICA to pay amounts to a third party (beneficiary) with
BANKAMERICA afterwards billing KYOWA the indicated amount given to the beneficiary. To assure itself that
an Order received from KYOWA really comes from KYOWA, it is usually agreed that KYOWA's signature will be
in accordance with a confidential code.
According to ACTC in its Comment, in the early part of 1981, it was Tokyo Tourist Corporation in Japan which
applied with Kyowa Bank, Ltd. also based in Tokyo, Japan, for telegraphic transfer of the sum of US$23,595.00
payable to ACTC's account with BANKAMERICA, Manila.
When the tested telex was received on May 10, 1981, employees of BANKAMERICA noted its patent
ambiguity. Notwithstanding, on the following day, BANKAMERICA credited the amount of US$23,595.00 to the
account of Minami. ACTC claimed that the amount should have been credited to its account and demanded
restitution, but BANKAMERICA refused.
On February 18, 1982, ACTC filed suit for damages against BANKAMERICA and Minami before the Trial Court
in Pasig for the failure of BANKAMERICA to restitute. Minami was declared in default. Thereafter, judgment
was rendered with the following dispositive part:

IN VIEW OF THE FOREGOING CONSIDERATIONS, the Court upon a judicious and fair
assessment of the testimonial and documentary evidences submitted by the parties is of the
opinion and so holds that defendant Bank and defendant Minami must pay plaintiff, jointly and
severally the following.
1. The sum of US$23,595.00 or in Philippine Currency at the current guiding rate of exchange
which is P14.00 to the dollar, as and by way of actual damages with interest at the rate of
twelve (12%) per cent per annum from the filing of the complaint until fully paid;
2. The sum of P50,000.00 as temperate and exemplary damages;
3. The sum of P10,000.00 as attorney's fees;;
4. The costs of this suit.
SO ORDERED.
Upon appeal taken by BANKAMERICA, Respondent Court "affirmed in toto, " except that the dollar-peso rate
of ex-change would be that "at the time of payment." Said respondent Court:
We must say that the Bank personnel were in fact confused or in doubts as to the real payee.
The Senior Clerk who initially received the tested telex had called up Mr. Colegado, Mr.
Ichiban, Miss Mayagama and Atty. Villanueva, all of plaintiff-appellee, but he received "no
answer."(Exh. 3; pp. 9-10, t.s.n., Dec. 2, 1982).
Thereupon, the processor checked the alphabetical listings and he saw that the payee,
Account Number 24506-01-7, matched the name appearing in the tested telex advise (p. 10,
t.s.n., Dec. 2, 1981).
The gross negligence then of appellant Bank may be sum (sic) up as follows; The words "A.C.
TRAVEL CORPORATION MR. TOSHIYUKO MINAMI" engendered or cast doubt
on the part of the Senior Clerk as to the real payee despite the "A.C. NBR
24506-01-7" and
should have consulted higher officials of plaintiff before giving the advise to the processor who
sent the same to the computer center for ultimate processing (p. 11, Appellant's Brief).
The processor verified that Account Number 24506-01-7 belonged to TOSHIYUKO MINAMI'
only and not to "A.C. TRAVEL CORPORATION MR. TOSHIYUKO MINAMI" and this
circumstance should have moved the processor to be more prudent and to consult higher
officials instead of sending the advise to the computer center for processing or crediting the
remittance to the account of Toshiyuko Minami, (Emphasis supplied)
We are constrained to reverse.
It is our considered opinion that, in the tested telex, considered either as a patent ambiguity or as a latent
ambiguity, the beneficiary is Minami. The mention of Account No. 24506-01-7, as well as the name of Minami,
has to be given more weight than the mention of the name of ACTC. BANKAMERICA could not have very well

disregarded that account number. It could also be that the mention of ACTC's name was a further identification
of Minami, to prevent payment to a possible another "Toshiyuko Minami" who may not be connected with
ACTC. On the other hand, it should be difficult to concede that, in the tested telex, Account No. 24506-01-7
was erroneously written and should be substituted by Account No. 19842-01-2 in the name of ACTC.
In Vargas Plow Factory, Inc. vs. Central Bank, it was held that "the opening of a letter of credit in favor of the
exporter becomes ultimately but the result of a stipulation pour autrui" (27 SCRA 84 [1969]). Similarly, when
KYOWA asked BANK-AMERICA to pay an amount to a beneficiary (either ACTC or Minami), the contract was
between KYOWA and BANK-AMERICA and it had a stipulation pour autrui.
It should be recalled that the tested telex originated from KYOWA at the behest of Tokyo Tourist Corporation
with whom ACTC had business dealings. Minami, on the other hand, was the liaison officer of ACTC in Japan.
As the entity responsible for the tested telex was Tokyo Tourist Corporation, it can reasonably be concluded
that if it had intended that the US$23,595.00 should be credited to ACTC, upon learning that the amount was
credited to Minami, it should have gone, together with the representatives of ACTC, in protest to KYOWA and
lodged a protest. Since that was not done, it could well be that Tokyo Tourist Corporation had really intended its
remittance to be credited to Minami. The identity of the beneficiary should be in accordance with the
identification made by KYOWA, and ACTC cannot question that identification as it is not a party to the
arrangement between KYOWA and BANKAMERICA (see Manila Railroad Co. vs. Compaia Trasatlantica, 38
Phil. 875 [1918]).
WHEREFORE, the Decision of Respondent Court, in its case AC-G.R. CV No. 03985, is hereby reversed in so
far as Bank of America, NT & SA is concerned.
Without pronouncement as to costs.
SO ORDERED.
Yap (Chairman), Narvasa, Cruz and Paras, * JJ., concur.

Footnotes

* Justice Edgardo L. Paras was designated to sit in the First Division pursuant to Special
Order No. 42 dated October 28, 1986 vice Justice Florentino P. Feliciano, who is on leave.

Republic of the Philippines

SUPREME COURT
Manila
SECOND DIVISION
G.R. No. L-50911 August 21, 1987
MIGUEL PEREZ RUBIO, petitioner,
vs.
COURT OF APPEALS, ROBERTO O. PHILLIPS & SONS, INC., MAGDALENA YSMAEL PHILLIPS,
MANUFACTURERS BANK & TRUST CO., INC., HACIENDA BENITO, INC., ET AL., respondents.
Daniel M. Malabonga for petitioner.
Argel-Guevarra & Associates for respondent Hacienda Benito, Inc.
Meer, Meer & Meer Law Office for respondent Victoria Valley.
Magtanggol C. Gunigundo for respondents Robert O. Phillips & Sons, Inc., Magdalena Ysmael Phillips and
Heirs of Robert Phillips.
Ambrosia Padilla, Mempin & Reyes Law Office for respondent Manufacturers Bank & Trust Co Inc.

GUTIERREZ, JR., J.:

Before us for reconsideration are the various motions for reconsideration of the March 12, 1986 decision, the
dispositive portion of which reads:
WHEREFORE, the petition is GRANTED. The decision of the former Court of Appeals is
hereby REVERSED and SET ASIDE. The respondents Phillips and Sons and the Phillips
spouses are declared to be jointly and severally liable to the petitioner for the outstanding debt
of Phillips and Sons in the amount of FOUR MILLION TWO HUNDRED FIFTY THOUSAND
PESOS (P4,250,000.00) with interest at the rate of eight (8%) percent per annum from April
30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963.
Costs against the respondents. (p. 869, rollo)
The petitioner asks that the decision be reconsidered insofar as it makes no finding against respondent Phillips
for moral and exemplary damages as well as attorney's fees and to the extent that the same decision absolves
from joint and solidary liability respondents Manufacturers Bank and Trust Company (hereinafter called MBTC),
Hacienda Benito (hereinafter called HB, and Victoria Valley Development Corporation (hereinafter called
VVDC).
The petitioner restates his position that the respondents conspired amongst themselves to put the properties of
Hacienda Benito beyond his reach and thus make it impossible for him to collect the sum of P4,250,000.00 still
unpaid on the purchase price of his shares of stock in Hacienda Benito.
It may be recalled that on June 5, 1965, respondent Hacienda Benito, Inc., represented by Robert O. Phillips,
president and Victoria Valley Development Corporation which was in the process of incorporation and
represented by Alfonso Yuchengco with the conformity of Manufacturers Bank and Trust Company represented
by Galicano Calapatia executed a "MEMORANDUM AGREEMENT. (Exhibit "31" Miguel Perez Rubio).

The thrust of the agreement is that respondent VVDC will acquire under conditions stated therein 134.1668
hectares of land including account receivables belonging to respondent HBI Moreover, it was specifically
provided in the agreement that " ... HB warrants that the properties to be acquired by VVDC are not subject to
any other obligations, liens, encumbrances, charges or claims of whatever nature than those mentioned herein,
including real estate taxes up to the first semester of 1965." (Memorandum Agreement, supra, pp. 3-4).
Included in this 134.1668 hectares are the 78 hectares mortgaged to MBTC. These parcels of land were
mortgaged to MBTC to secure obligation and liabilities incurred by HBI and other affiliate companies owned by
the Phillips. Of the P7,419,130.19 amount due from these companies, only P1,456,276.48 was the liability of
HBI.
Under this agreement, MBTC will institute judicial foreclosure of mortgage after which all the companies would
confess judgment and enter into a compromise agreement in full satisfaction of the claim of MBTC under the
several deeds of mortgage. It was further provided that HBI will convey all the 78 hectares in favor of MBTC
after which VVDC will purchase from MBTC the same parcels of land together with the receivables. A final
proviso was to the effect that VVDC and HBI will enter into a separate agreement whereby HBI will expressly
assign in favor of VVDC its right to redeem the properties foreclosed by MBTC.
The consideration of the agreement amounted to Pl1,621,889.11 which VVDC agreed to assume in order to
settle the obligations of HBI and the other Phillips companies.
The Memorandum Agreement was executed under the following factual background: (1) Respondent ROPSI
had still to pay its outstanding P4,250.000.00 debt to the petitioner as the result of the latter's sale of his shares
of stock of HBI; (2) Negotiations had broken down between the Phillips spouses, ROPSI and Alfonso
Yuchengco as regards the sale of the shares of stock of Hacienda Benito, Inc.; and (3) Petitioner had
threatened to rescind the contract of sale of his shares of stock of Hacienda Benito.
Obviously, Hacienda Benito through Robert O. Phillips, and VVDC through Alfonso Yuchengco were fully aware
of the petitioner's still being unpaid the P4,250,000.00 balance on his shares of stocks of Hacienda Benito sold
to ROPSI. MBTC, too, because of the unrebutted evidence that its top officers are also the top officers of VVDC
is conclusively presumed to know the petitioner's predicament. These same personalities figures prominently in
the negotiations involving the shares of stock of Hacienda Benito including the unpaid P4,250,000.00
collectibles of the petitioner from the ROPSI as full payment for the sale of his shares of stock in Hacienda
Benito.
Hence, the scheme provided for in the Memorandum Agreement wherein all the properties of Hacienda Benito
will be ultimately transferred to VVDC without any mention at all and completely ignoring the petitioner's
interest in said Hacienda placed the petitioner's rightful claim to the payment of his shares of stock in clear
jeopardy.
The fact that the Memorandum Agreement was not fully implemented is immaterial. The intent to defraud the
petitioner and the damage which led to the filing of this case was present in the execution of the Memorandum
Agreement.
Therefore, an award for damages in favor of the petitioner is in order against respondents Hacienda Benito,
VVDC and MBTC.
Article 19 of the New Civil Code provides that:
Every person must, in the exercise of his rights and in the performance of his duties, act with
justice, give everyone his due, and observe honesty and good faith.
while Article 20 thereof provides that:

Every person who, contrary to law, wilfully or negligently causes damage to another shall
indemnify the latter for the same.
Parenthetically, these respondents did not observe honesty and good faith in dealing with the rightful claim of
the petitioner to the still unpaid P4,250,000.00 collectibles from ROPSI. The respondents' acts are tortious
pursuant to Articles 19 and 20 of the New Civil Code. Hence, these respondents are obliged to pay for the
damage done to the petitioner. (See Article 2176, New Civil Code).
In the case at bar, the tortious and fraudulent scheme of the private respondents made it impossible for the
petitioner to collect the P4,250,000.00 still unpaid purchase price of his shares of stock in Hacienda Benito. All
the respondents are, therefore, solidarity liable for these actual damages suffered by the petitioner. (See Article
2194 of the New Civil Code).
Consequently, we rule that Hacienda Benito, VVDC and MBTC together with ROPSI and the Phillips spouses
are solidarity liable to the petitioner for the outstanding debt of ROPSI in the amount of P14,250,000.00 with
interest at the rate of eight (8 % per cent per annum from April 30, 1964 until fully paid as provided for in the
parties' agreement dated August 13,1963.
Also, an award for moral damages in favor of the petitioner is in order against respondents Hacienda Benito,
VVDC and MBTC. The planned transfer of all the assets of Hacienda Benito to VVDC which the respondents
sought to accomplish through the Memorandum Agreement created further anguish and anxiety on the part of
the petitioner who at that time was still trying to collect the P4,250,000.00 full payment of his shares of stock in
Hacienda Benito.
Considering the circumstances under which the respondents executed the Memorandum Agreement and the
social status of the parties herein, the amount of P100,000.00 as moral damages in favor of the petitioner is
awarded.
However, we find no reasonable ground to set aside our findings in the March 12, 1986 decision that
respondents Phillips spouses are not liable for moral and exemplary damages and attorney's fees.
Juan Miguel Phillips also filed a motion to intervene in the instant case stating therein that Robert O. Phillips
had died leaving as heirs respondent Magdalena Ysmael Phillips and four legitimate children; that he is one of
the four (4) children; that as such legal heir, he has a legal interest in the subject matter of the instant case and
will be favored or prejudiced in his interest depending on the final outcome of the instant case. He cites Rule
12, Section 2, Rules of Court.
The right of the movant-intervenor proceeds only from the fact of heirship. Hence his interest to specific
portions of the property of the deceased is, if not conjectural, stin contingent and expectant. At this point, he
cannot specify any property nor segregate any as his own before the liquidation of the estate is completed. This
is in accordance with Article 657 of the Civil Code (Article 777, Civil Code) which provides that the rights to
succession of a person are transmitted from the moment of death.
Thus, the heir has the right to impugn the validity of the decedent's transaction only when he is made
answerable or when his specific right or property would be affected thereby. The instant case is a personal
action against Robert O. Phillips, filed while he was still alive. It is Robert O. Phillips and his estate which are
sought to be made liable, not the movant-intervenor or any of his legal heirs.
WHEREFORE, the petitioners motion for reconsideration is GRANTED in that respondent's Hacienda Benito,
Victoria Valley Development Corporation and Manufacturers Bank and Trust Company (now Filipinas Bank)
together with respondents Robert 0. Phillips & Sons and the Phillips spouses are declared to be jointly and
severally liable to the petitioner for the outstanding debt of Phillips and Sons in the amount of FOUR MILLION
TWO HUNDRED FIFTY THOUSAND PESOS (P4,250,000.00) with interest at the rate of eight (8%) per cent
per annum from April 30, 1964 until fully paid as provided for in the parties' agreement dated August 13, 1963;
that respondents Hacienda Benito, Inc., Victoria Valley Development Corporation and Manufacturers Bank and
Trust Company (now Filipinas Bank) are jointly and severally liable to the petitioner in the amount of ONE

HUNDRED THOUSAND PESOS (P100,000.00) as moral damages. Juan Miguel Phillips' motion for
reconsideration is DENIED for lack of merit. The motions for reconsideration filed by Robert O. Phillips and
Sons, Magdalena Ysmael Phillips and the heirs of Robert O. Phillips, Hacienda Benito, Inc., and Manufacturers
Bank and Trust Company are DENIED it appearing that no new substantial reasons have been invoked to
warrant reconsideration of the said decision as far as these parties' motions are concerned, and this DENIAL is
FINAL.
SO ORDERED.
Fernan (Chairman), Paras, Bidin and Cortes, JJ., concur.
Padilla, J., took no part.