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EN BANC
G.R. No. L-12611

August 7, 1918

FELIPE AGONCILLO, and his wife, MARCELA MARIO, plaintiff-appellees,

vs.
CRISANTO JAVIER, administrator of the estate of the late Anastasio Alano.
FLORENCIO ALANO and JOSE ALANO, defendants-appellants.
Basilio Aromin for appellants.
Felipe Agoncillo for appellees.

(Sgd.) JOSE ALANO.

(Sgd.) ANASTASIO ALANO.
(Sgd.) FLORENCIO ALANO.

No part of the interest or of the principal due upon this undertaking has been paid,
except the sum of P200 paid in the year 1908 by the late Anastasio Alano.

FISHER, J.:
On the twenty-seventh day of February, 1904, Anastasio Alano, Jose Alano, and
Florencio Alano executed in favor of the plaintiff, Da. Marcela Mario, a document of
the following tenor:
We, the undersigned, Jose Alano and Florencio Alano (on our own behalf),
and Anastasio Alano (on behalf of his children Leonila, Anastasio and
Leocadio), the former and the latter testamentary heirs of the Rev. Anastasio
C. Cruz, deceased, hereby solemnly promise under oath:
1. We will pay to Da. Marcela Mario within one year from this date together
with interest thereon at the rate of 12 per cent per annum, the sum of
P2,730.50, Philippine currency, this being the present amount of
indebtedness incurred in favor of that lady on the 20th of April 1897, by our
testator, the Rev. Anastasio C. Cruz;
2. To secure the payment of this debt we mortgage to the said Da. Marcela
Mario the house and lot bequeathed to us by the deceased, situated in this
town, on calle Evangelista, formerly Asturias, recorded in the register of
deeds on the twenty-second of April, 1895, under number 730;
3. In case of insolvency on our part, we cede by virtue of these presents the
said house and lot to Da. Marcela Mario, transferring to her all our rights to
the ownership and possession of the lot; and if the said property upon
appraisal at the time of the maturity of this obligation should not be of
sufficient value to cover the total amount of this indebtedness, I, Anastasio
Alano, also mortgage to the said lady my four parcels of land situated in the
barrio of San Isidro, to secure the balance, if any; the title deeds of said
property, as well as the title deeds of the said house and lot are this day
delivered to Sr. Vicente Ilustre, general attorney-in-fact of Da. Marcela
Mario.
In witness whereof we have signed these presents in Batangas, this twentyseventh day of February, 1904.

In 1912, Anastasio Alano died intestate. At the instance of one of his creditors,
proceedings upon the administration of his estate were had in the Court of First
Instance of Batangas. By order dated August 8, 1914, the court appointed an
administrator and a committee to hear claims. Notices were published, as required, in
a newspaper of general circulation, to inform the creditors of the time and place at
which they might appear to present their claims against the estate of the deceased
(Exhibit No. 1). The time designated in the notice for the presentation of claims
expired on March 24, 1915. It appears that no claims whatever were presented to the
committee, and it having been shown to the court, by the statement of the
administrator, that the claim of the creditor at whose instance the administration
proceeding was commenced, had been settled by the heirs, the administrator was
discharged and the proceeding terminated by order dated November 8, 1915.
On April 27, 1916, at the instance of the plaintiff, Da. Marcela Mario, and upon the
statement, made on her behalf, that she was a creditor of the deceased and that her
claim was secured by mortgage upon real estate belonging to the said deceased, the
court reopened the intestate proceeding, and appointed one Javier to be
administrator of the estate. No request was made for a renewal of the commission of
the committee on claims. The appellants Jose and Florencio Alano objected to the
appointment of Javier, but their objection was overruled by the court.
On March 17, 1916, the plaintiffs filed the complaint in this action against Javier, as
administrator of the estate of Anastasio Alano and against Florencio Alano and Jose
Alano personally. The action is based upon the execution of the document of February
27, 1904, above set forth, which is transcribed literally in the complaint. It is averred
that defendants have paid no part of the indebtedness therein acknowledged, with
the exception of the P200 paid on account in 1908. It is further averred that on April
22, 1910, the debtors promised in writing that they would pay the debt in 1911, but
that they had failed to do so. The prayer of the complaint is that, unless defendants
pay the debt for the recovery of which the action was brought, they be required to
convey to plaintiffs the house and lot described in paragraph two of the said
document; that this property be appraised; and that if its value is found to be less
than the amount of the debt, with the accrued interest at the stipulated rate,
judgment be rendered in favor of the plaintiffs for the balance. No relief is requested
with respect to the undertaking of Anastasio Alano expressed in the third paragraph
of the document in suit, as guarantor for the payment of the difference, if any,
between the value of the said house and lot and the total amount of the
indebtedness.

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The defendants answered denying generally the facts alleged in the complaint, and
setting up, as special defenses that (1) any cause of action which plaintiff might have
had against the estate of Anastasio Alano has been barred by failure of the plaintiff to
present her claim to the committee on claims for allowance; (2) that the document
upon which plaintiff relies does not constitute a valid mortgage; and (3) that as to all
of the defendants, the action is barred by the general statute of limitations.
The findings of the trial court upon the evidence were substantially as follows:
1. That the document set forth in paragraph two of plaintiffs' complaint was executed
by the deceased, Anastasio Alano, and by the defendants Javier and Jose Alano, as
alleged;
2. That one year after the execution of the document, plaintiffs made a demand upon
Anastasio Alano, deceased, and the other two defendants herein, to comply with the
terms of the agreement by the execution of the conveyance of the house and lot, but
that they requested an extension of time for the payment of the debt, which was
granted them;
3. That on March 27, 1908, the defendants paid P200 on account of the debt.
Upon these findings the court below gave judgment for plaintiffs, and from that
judgment the defendants have appealed to his court upon the law and the facts.
The question raised by the appellants require us to analyze the document upon which
this action is based, and to determine its legal effect. Appellants contend that the
contract evidenced by that instrument is merely a loan coupled with an ineffectual
attempt to create a mortgage to effect the payment of debt. The court below
regarded it as a conveyance of the house and lot described in the contract, which
took effect upon the failure of the debtors to pay the debt.
The principal undertaking evidenced by the document is, obviously, the payment of
money. The attempt to create a mortgage upon the house and lot described in the
second clause of the contract is, of course, invalid, as it is admitted that the so-called
mortgage was never recorded. Equally inefficacious, and for the same reasons, is the
purported mortgage by Anastasio Alano of his land in the barrio of San Isidro
described in the third paragraph of the document. (Compaia General de
Tabacos vs. Jeanjaquet, 12 Phil. Rep., 195.)
The agreement to convey the house and lot at an appraised valuation in the event of
failure to pay the debt in money a t its maturity is, however, in our opinion, perfectly
valid. It is simply an undertaking that if the debt is not paid in money, it will be paid in
another way. As we read the contract, the agreement is not open to the objection that
the stipulation is a pacto comisorio. It is not an attempt to permit the creditor to
declare a forfeiture of the security upon the failure of the debtor to pay the debt at
maturity. It is simply provided that if the debt is not paid in money it shall be paid in
another specific was by the transfer of property at a valuation. Of course, such an
agreement, unrecorded, creates no right in rem; but as between the parties it is
perfectly valid, and specific performance of its terms may be enforced, unless
prevented by the creation of superior rights in favor of third persons.

The contract now under consideration is not susceptible of the interpretation that the
title to the house and lot in question was to be transferred to the creditor ipso facto
upon the mere failure of the debtors to pay the debt at its maturity. The obligations
assumed by the debtors were alternative, and they had the right to elect which they
would perform (Civil Code, art. 1132). The conduct of the parties (Civil Code, art.
1782) shows that it was not their understanding that the right to discharge the
obligation by the payment of money was lost to the debtors by their failure to pay the
debt at its maturity. The plaintiff accepted a partial payment from Anastasio Alano in
1908, several years after the debt matured. The prayer of the complaint is that the
defendants be required to execute a conveyance of the house and lot, after its
appraisal, "unless the defendants pay the plaintiff the debt which is the subject of
this action."
It is quite clear, therefore, that under the terms of the contract, as we read it, and as
the parties themselves have interpreted it, the liability of the defendants as to the
conveyance of the house and lot is subsidiary and conditional, being dependent upon
their failure to pay the debt in money. It must follow, therefore, that if the action to
recover the debt has prescribed, the action to compel a conveyance of the house and
lot is likewise barred, as the agreement to make such conveyance was not an
independent principal undertaking, but merely a subsidiary alternative pact relating
to the method by which the debt might be paid.
The undertaking to pay the debt, acknowledged by the contract in suit, is
indisputably conjoint (mancomunada). The concurrence of two or more debtors does
not in itself create a solidary liability. Obligations in solido arise only when it is
expressly stipulated that they shall have this character (Civil Code, art. 1137). That
being so, the debt must be regarded as divided into as many equal parts as there are
debtors, each part constituting a debt distinct from the others. (Civil Code, art. 1138.)
The result of this principle is that the extinction of the debt of one of the various
debtors does not necessarily affect the debts of the others.
It is contended on behalf of the administrator of the estate of Anastasio Alano that
the failure of the plaintiff to present her claim for allowance to the committee on
claims is a bar to her action so far as this defendant is concerned. We are of the
opinion that this objection is well-taken. Section 695 of the Code of Civil Procedure
expressly requires that a claim of this kind be presented for allowance to the
committee, and declares that the failure to do so operates to extinguish the claim.
The operation of this statute and the absolute nature of the bar which it interposes
against the subsequent assertion of claims not presented in accordance with its
requirements have frequently been considered by this court, and the doctrines
announced need not be here repeated. (Estate of De Dios, 24 Phil. Rep., 573;
Santos vs. Manarang, 27 Phil. Rep., 209). While it is true that under certain
circumstances and within the statutory limits (sec. 690 of the Code of Civil Procedure)
the probate court may renew the commission of the committee on claims, and permit
the presentation of belated demands, in no case may a claim proper to be allowed by
the committee, such as is the one now under consideration, be enforced by an
original action against the executor or administrator of the state. Our opinion is,
therefore, that the objection to the action interposed on behalf of the administrator of
the estate of Anastasio Alano was well-taken and that the court erred in rejecting it.
This conclusion makes it unnecessary to consider the effect of the payment made by
Anastasio Alano in 1908 as regards the interruption of the period of prescription with
respect to him. In this connection, however, we feel constrained to remark that a
careful reading of the document makes it extremely doubtful whether Anastasio
Alano was ever personally bound by its terms. It will be noted that he purports to

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have signed it only as the representative of his children, Leonina, Anastasio, and
Leocadio, who are not parties to this suit.
With respect to the defendants Florencio and Jose Alano, their original liability admits
of no dispute and the only question open for consideration is that presented by their
plea of prescription. The debt matured February 27, 1905, and as the complaint was
not filed within ten years from that date (Code of Civil Procedure, sec. 43), it is
obvious that the plea of prescription is well-taken, unless the running of the statute
was interrupted.
While it appears that some verbal and written demands for payment were made upon
these defendants, it has been recently decided, upon mature consideration, that an
extrajudicial demand is not sufficient, under the law as it now stands, to stop the
running of the statute. (Pelaez vs. Abreu, 26 Phil. Rep., 415). There must be either (1)
a partial payment, (2) a written acknowledgment or (3) a written promise to pay the
debt. It is not contended that there has been any written acknowledgment or promise
on the part of the defendants Jose and Florencio Alano, or either of them plaintiff
relies solely upon the payment made in 1908 by Anastasio Alano. But there is not the
slightest foundation in the evidence for the belief that the payment made by
Anastasio was for the benefit of Jose or Florencio or that it was authorized by either of
them. Bearing in mind the express declaration of article 1138 of the Civil Code that
joint (mancomunada) obligations are, as regard each of the debtors, to be reputed
as separate debts with respect to each of the debtors, it follows of necessity that a
payment or acknowledgment by one of such joint debtors will not stop the running of
the period of prescription as to the others. That such is the law may be demonstrated
by ample authority.
In his commentaries on article 1138 and 1139 of the Civil Code, Manresa says that
one of the effects of the rule established by the code that the debt is to be regarded
as "divided into as many parts . . . as there are debtors" is that "the interruption of
prescription by the claim of a creditor addressed to a single debtor or by an
acknowledgment made by one of the debtors in favor of one or more of the creditors
is not to be understood as prejudicial to or in favor of the other debtors or creditors."
(Manresa, Commentaries on the Civil Code, vol. 8, p. 182.)
The same doctrine is recognized in the Italian Civil Law, as stated by Giorgi in his
work on Obligations as follows:
The obligation appears to be one, when as a matter of fact it is an aggregate
of as many separate and independent obligations as there are creditors and
debtors. Each creditor cannot demand more than his part; each debtor
cannot be required to pay more than his share. Prescription, novation,
merger, and any other cause of modification or extinction does not
extinguish or modify the obligation except with respect to the creditor or
debtor affected, without extending its operation to any other part of the debt
or of the credit. The obligation is, in a word, pro rata, or in partes viriles.
(Giorgi on Obligations, vol. 1, p. 83, Spanish translation.)
The same view is taken by the French law writers. In the article on obligations in
Dalloz' Encyclopedia (Jurisprudence Generale) vol. 33, p. 297, the author says:
The conjoint (pro rata) obligation is divided by operation of law among the
non-solidary co-debtors. It is as though there were many debts as there are

persons bound. Hence it follows that if one of the debtors is insolvent the
loss falls upon the creditor and not upon the other debtors, and that if
prescription is interrupted with respect to one of the debtors, it is not
interrupted with respect to the others.
In the State of Louisiana, whose Civil Code, like ours, is largely taken from the Code of
Napoleon, the Supreme Court has established the same doctrine on the subject of the
interruption of prescription.
In the case of Buard vs. Lemee, Syndic (12 Robinson's Reports, 243), the Supreme
Court of Louisiana said:
It results . . . that when the acknowledgment of a debt is made by a joint
debtor, such acknowledgment does not interrupt the prescription with regard
to the others. Each is bound for his virile share of the debt; and, therefore,
each is at liberty to act for himself, and the effect of his acts cannot be
extended to the benefit or prejudice of his co-debtors; so true is this that the
law has never intended that a suit brought against one of the several
debtors should interrupt prescription with regard to all, unless they be
debtors in solido.
This doctrine was recognized and applied by the Supreme Court of Louisiana in the
subsequent cases of Succession of Cornelius Voorhies (21 La. Ann., 659) and
Smith vs. Coon (22 La. Ann., 445).
There is no presumption that one conjoint ( pro-rata) debtor is authorized to perform
any act having the effect of stopping the running of the statute of limitations as to
the others. When the act relied upon is performed by some person other than the
debtor, the burden rests upon the plaintiff to show that it was expressly authorized.
(17 R.C.L., 911 and the cases there cited.) In this case there is no such evidence. The
statement in the letter of Da. Maria Lontok, to whom the P200 payment was made, is
that it was a payment made on account of "the debt of Anastasio Alano." (Plaintiffs'
Exhibit D.) Da. Maria Lontok in her testimony does not attempt to say that the
payment was made for the account of any one but Anastasio Alano, from whom she
received it. The statement that Florencio Alano was with Anastasio at the time is not
in itself sufficient to constitute proof that the payment was made for his benefit.
(Lichauco vs. Limjuco and Gonzalo, 19 Phil. Rep., 12.)
Plaintiff argues that the undertaking to convey the house and lot constitutes an
indivisible obligation, and that even where the promise is not in solidum, the
concurrence of two or more debtors in an obligation whose performance is indivisible
creates such a relation between them that the interruption of prescription as to one of
necessity interrupts it as to all. The distinction is one which is well-established,
although the authorities cited do not fully support plaintiffs' contentions, but in this
particular case the question is academic, for the undertaking is in the alternative to
pay a sum of money an essentially divisible obligation or to convey the house.
As the alternative indivisible obligation is imposed only in the event that the debtors
fail to pay the money, it is subject to a suspensive condition, and the prescription of
the obligation whose non-performance constitutes the condition effectively prevents
the condition from taking place.
We are, therefore, constrained to hold with defendants and to reverse the decision of
the lower court. We do this most regretfully, as the evidence in this case shows that

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plaintiff has been extremely lenient with defendants and has refrained from pressing
her claim against them when it fell due, and for a long period of years thereafter,
purely out of consideration for them. The defense of prescription interposed,
particularly as regards Jose and Florencio Alano, is an indefensible from the
standpoint of fair dealing and honesty as it is unassailable from the standpoint of
legal technicality. However, the law, as we see it, is clear and it is our duty to enforce
it.
The judgment of the lower court is reversed and the action is dismissed as to all the
defendants. No costs will be allowed. So ordered.
Torres, Johnson, Street and Avancea, JJ., concur.
Malcolm, J., dissents.

RESOLUTION

September 20, 1918.

FISHER, J.:
Plaintiff seeks a consideration of the decision of this court rendered herein. With
respect to plaintiff's contention concerning the action against the estate of Anastasio
Alano, we have nothing to add to what was said in the former decision. As regards the
defendants, Florencio Alano and Jose Alano, the principal argument advanced by
plaintiff is that those defendants, as testamentary heirs of the late Anastasio C. Cruz,
are liable, in solidum, for the debt in suit, which is evidenced by the document signed
by these defendants on February 27, 1904, set forth at length in our decision. Plaintiff
argues that he obligation being solidary, by reason of its hereditary origin
(Fabievs. Yulo, 24 Phil. Rep., 240) the running of the statute of limitations was
interrupted with respect to all the debtors, by the payment of P200 made by the late
Anastasio Alano in 1908. The whole argument rests upon article 1084 of the Civil
Code and the statement contained in the document of February 27, 1904, that the
Alano brothers are the "testamentary heirs" of the original debtor, and the
assumption that the latter died, and that his inheritance was accepted, before the
present Code of Civil Procedure was enacted. There is nothing in the record to
indicate, even remotely, when the Reverend Cruz died. If he died after the new Code
took effect, the acceptance of his inheritance did not impose upon his testamentary
heirs any personal obligation to respond to the payment of the debts of the deceased.
(Pavia vs. De la Rosa, 8 Phil. Rep., 70.) There having been neither allegation nor proof
with respect to the date of the death of the original debtor, we cannot presume, to
the prejudice of the defendants, that he died and that his succession was opened
under the old regime.
But even had it been proved that the late Reverend Cruz died before Act No. 190 took
effect, and that the debt, by reason of its hereditary origin, imposed upon the five

Alano brothers the solidary obligation of paying it, as the evidence does not show that
the payment made by Anastasio Alano in 1908 was authorized by any one of the
solidary debtors, it cannot have the effect of interrupting the prescription. It must be
kept in mind that Anastasio Alano was in no sense a solidary debtor of the plaintiff,
either with respect to the origin of the obligation or by his participation in the
execution of the document by which the indebtedness was acknowledged. it is
unquestionable that payment made by any one of the several solidary debtors
interrupts the running of the statute of limitations with respect to the others, and that
a third person may make a payment without the knowledge and even against the will
of the debtor, but payments so made by a stranger to the debt do not interrupt the
operation of the statute of limitations.
The general rule is that an acknowledgment or new promise to pay must, in
order to take a case out of the statute, be made by the person to be charged
or by some person legally authorized by him so to act. (17 Ruling Case Law,
p. 911.)
In the case of a part payment by a stranger, or by a person not authorized to
represent the debtor, it is obvious that there is no ground for assuming any
admission of an existing liability on his part or for inferring a new promise by
him to pay the balance of the debt. (17 Ruling Case Law, p. 935.)
Furthermore, it is to be observed that in accordance with the express terms of article
50 of the Code of Civil Procedure, payment in order to have the effect of interrupting
the running of the statute, must be made by the person to be charged.
Independently of these considerations, it is obvious that this action was not brought
as though based upon an obligation which had accrued under the provisions of the
Civil Code, formerly in force, relating to the acceptance of an estate without benefit of
inventory. The action has been brought solely and exclusively for the enforcement of
the obligation created by the execution of the document of credit of 1904. This is the
reason, no doubt, why plaintiff made no effort to prove the date of the death of
Reverend Cruz; whether his heirs accepted the inheritance with or without the benefit
of inventory; if they were all adults at the time of the death of the testator; whether
they inherited in equal parts or in some proportion. It is natural that she should have
made no effort to produce evidence upon these points, as there is nothing in the
allegations of the complaint to support its admission. If the defendants had replied
admitting the facts alleged, it is evident that it would have been necessary to decide
the case in accordance with the law in force in 1904, considering the execution of the
document in question as the act from which the obligation in suit originated, although
it appears from the document that the consideration for its execution was the debt of
a third person.
When the plaintiff deliberately adopts a certain theory with respect to the basis of his
right of action, and the case is tried and decided in the court below and in this court
upon that theory, plaintiff will not be permitted to change the theory of his action
upon a motion for rehearing. (Molina vs. Somes, 24 Phil. Rep., 49.) To do so would be
to deprive the defendant of an opportunity to defend. The defendant naturally
produces evidence relating to the evidence offered on behalf of plaintiff. If the issue
of the liability of Florencio and Jose Alano upon the theory now advanced by plaintiff
had been presented in the court below, it is possible that these defendants might
have been able to prove that their testator died after the enactment of the new code
or, if he died before, that they were minors at that time; that the inheritance was
accepted by their guardian without the intervention of the family council (Civil Code,

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art. 992), or that it was expressly accepted with benefit of inventory, and that the
value of the property inherited is less than the amount of the debt (Civil Code, art.
1023), or that the effect of the execution of the document of 1904 was a novation of
the obligation by which the latter was converted into a simple joint indebtedness. The
defendants Florencio and Jose Alano having had no opportunity to invoke any of these
defenses, which might have been available to them, it would be unjust to give
judgment against them upon the theory of their obligation now invoked by plaintiff.
The motion for a rehearing is denied.

EN BANC
G.R. No. L-22738

December 2, 1924

On April 19, 1924, the Court of First Instance of Iloilo rendered a judgment in favor of
the plaintiff, sentencing the defendant company to pay him the sum of P45,000, the
value of certain policies of fire insurance, with legal interest thereon from February
28, 1923, until payment, with the costs. The defendant company appealed from this
judgment, and now insists that the same must be modified and that it must be
permitted to rebuild the house burnt, subject to the alignment of the street where the
building was erected, and that the appellant be relieved from the payment of the sum
in which said building was insured.
A building of the plaintiff was insured against fire by the defendant in the sum of
P30,000, as well as the goods and merchandise therein contained in the sum of
P15,000. The house and merchandise insured were burnt early in the morning of
February 28, 1923, while the policies issued by the defendant in favor of the plaintiff
were in force.

ONG GUAN CAN and THE BANK OF THE PHILIPPINE ISLANDS, plaintiffsappellees,
vs.
THE CENTURY INSURANCE CO., LTD., defendant-appellant.

The appellant contends that under clause 14 of the conditions of the policies, it may
rebuild the house burnt, and although the house may be smaller, yet it would be
sufficient indemnity to the insured for the actual loss suffered by him.

The clause cites by the appellant is as follows:lawphi1.net

SYLLABUS
1. ALTERNATIVE OBLIGATIONS; CLAUSE OF INSURANCE POLICY. The policy in
question contains the following clause: "The Company may at its option reinstate or
replace the property damaged or destroyed, or any part thereof, instead of paying
the amount of the loss or damage, or may join with any other Company or insurers in
so doing, but the Company shall not be bound to reinstate exactly or completely, but
only as circumstances permit and in reasonable sufficient manner, and in no case
shall the Company be bound to expend more in reinstatement that it would have cost
to reinstate such property as it was at the time of the occurrence of such loss or
damage, nor more than the sum insured by the Company thereon." Held: That if this
clause of the policy is valid, it operates to make the obligation of the insurance
company an alternative one that is to say, that it may either pay the amount in which
the house was insured, or rebuilt it.
2. NOTICE OF ELECTION OF ALTERNATIVE PRESTATIONS. The debtor must notify the
creditor of his election, stating which prestation he is disposed to fulfill, in accordance
with article 1133 of the Civil Code.
3. EFFECT OF NOTICE. The effect of the notice is to give the creditor, that is, the
plaintiff in the instant case, opportunity to express his consent, or to impugn the
election take legal effect when consented by the creditor, or if impugned by the
latter, when declared improper by a competent court.

VILLAMOR, J.:

The Company may at its option reinstate or replace the property damaged or
destroyed, or any part thereof, instead of paying the amount of the loss of
damages, or may join with any other Company or insurers in so doing, but
the Company shall not be bound to reinstate exactly or completely, but only
as circumstances permit and in reasonable sufficient manner, and in no case
shall the Company be bound to expend more in reinstatement that it would
have cost to reinstate such property as it was at the time of the occurrence
of such loss or damage, nor more than the sum insured by the Company
thereon.
If this clause of the policies is valid, its effect is to make the obligation of the
insurance company an alternative one, that is to say, that it may either pay the
insured value of house, or rebuild it. It must be noted that in alternative obligations,
the debtor, the insurance company in this case, must notify the creditor of his
election, stating which of the two prestations he is disposed to fulfill, in accordance
with article 1133 of the Civil Code. The object of this notice is to give the creditor,
that is, the plaintiff in the instant case, opportunity to express his consent, or to
impugn the election made by the debtor, and only after said notice shall the election
take legal effect when consented by the creditor, or if impugned by the latter, when
declared proper by a competent court. In the instance case, the record shows that the
appellant company did not give a formal notice of its election to rebuild, and while
the witnesses, Cedrun and Cacho, speak of the proposed reconstruction of the house
destroyed, yet the plaintiff did not give his assent to the proposition, for the reason
that the new house would be smaller and of materials of lower kind than those
employed in the construction of the house destroyed. Upon this point the trial judge
very aptly says in his decision: "It would be an imposition unequitable, as well as
unjust, to compel the plaintiff to accept the rebuilding of a smaller house than the

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one burnt, with a lower kind of materials than those of said house, without offering
him an additional indemnity for the difference in size between the two house, which
circumstances were taken into account when the insurance applied for by the plaintiff
was accepted by the defendant." And we may add: Without tendering either the
insured value of the merchandise contained in the house destroyed, which amounts
to the sum of P15,000.itc@alf
We find in the record nothing to justify the reversal of the finding of the trial judge,
holding that the election alleged by the appellant to rebuild the house burnt instead
of paying the value of the insurance is improper. To our mind, the judgment appealed
from is in accordance with the merits of the case and the law, and must be, as is
hereby, affirmed with the cost against the appellant. So ordered.

SUPREME COURT
Manila
EN BANC
G.R. No. L-3435

April 28, 1951

CLARA TAMBUNTING DE LEGARDA, ET AL., plaintiffs-appellants,

vs.
VICTORIA DESBARATS MIAILHE, substituting WILLIAM J. B. BURKE, defendantappellee.

On June 3, 1944, plaintiffs filed a complaint against the original defendant

William J. B. Burke, alleging defendant's unjustified refusal to accept
payment in discharge of a mortgage indebtedness in his favor, and praying
that the latter be ordered (1) to receive the sum of P75,920.83 deposited by
plaintiff Clara Tambunting de Legarda, the mortgagor, on the same date with
the clerk of this court in payment of the mortgage indebtedness of said
plaintiff to defendant herein, (2) to execute the corresponding deed of
release of mortgage, and (30 to pay damages in the sum of P1,000.
The gist of defendant's answer dated the 19th of July, 1944, is that plaintiffs
have no cause of action for the reason that at the instance of plaintiff Clara
Tambunting de Legarda an agreement was had on May 26, 1944,
whereunder defendant condoned the interests due and to become due on
the mortgage indebtedness till the termination of the war, in consideration
of the undertaking of said plaintiff (with the consent of her husband Vicente
L. Legarda, the other plaintiff) to pay her obligation to defendant upon such
termination of the war; and that the war then had not yet terminated.
Upon the issues raised, after due hearing, decision was rendered by this
Court through the then Judge, Honorable Jose Gutierrez David (now
Appellate Court Justice), ordering defendant to accept the sum of P75,920.83
deposited by plaintiff Clara Tambunting de Legarda in the office of the clerk
of court; to execute forthwith a deed of release of mortgage covering the
property in question; to pay plaintiff the sum of P120.40 representing the
cost of the certification of the check deposited in the court and consignation,
together with the clerk's commission for the deposit of the money in court
and the costs of the suit.

Jose S. Sarte and M. H. de Joya for appellant Vicente L. Legarda.

Salvador Barrios for appellant Pacifica Price de Barrios.
Eduardo D. Gutierrez for appellant Augusto Tambunting.
Feliciano Jover Ledesma and Ross, Selph, Carrascoso and Janda for appellee.

Defendant, on or about January 14, 1945, presented a motion to set aside

the foregoing decision and for a new trial. Before this court could act on this
motion, liberation came.

BAUTISTA ANGELO, J.:

On October 23, 1945, petition was filed on behalf of plaintiffs for the
reconstitution of the record of this case.

This is an appeal from a judgment of the Court of First Instance of Manila rendered on
August 5, 1949, dismissing the complaint and ordering plaintiff Clara Tambunting de
Legarda to pay to the defendant the sum of P70,000, with interest thereon at the rate
of 3 per cent per annum, from January 1, 1942, up to the date of full payment
thereof, plus the sum of P2,500 as costs of suit and attorney's fees, within 120 days
from the date of notice, and ordering the sale of the property mortgaged in
accordance with law in the event of failure of said plaintiff to pay the amount of the
judgment within the period above mentioned.
The background of this case, which originated during the Japanese occupation, is
correctly stated in the judgment of the lower court, as follows:

On October 23, 1945, defendant filed a supplements al answer alleging that

the payment (by way of consignation in Japanese military notes made by
plaintiff Clara Tambunting de Legarda in satisfaction of the mortgage
obligation in question, which was originally contracted on the 17th of
February, 1926, was null and void, and did not discharge the said obligation;
and that, as plaintiffs well knew, defendant did not plead the foregoing facts
in his original answer because had he done so "he and his attorneys would
have been taken by the Japanese military police to Fort Santiago where they
would have been tortured and most probably killed. The supplemental
answer contains a counter-claim whereunder defendant sought the
foreclosure of the real estate mortgage on the property in question. Basis of
the counter-claim are the averments that the original mortgage executed by
plaintiff Clara Tambunting de Legarda with the consent of her husband,

7
plaintiff Vicente de Legarda with the consent of her husband, plaintiff
Vicente L. Legarda, was for the sum of P75,000; that said mortgage was
renewed from time to time until on March 16, 1940, at plaintiff Clara
Tambunting de Legarda's request, defendant entered into another
agreement with whereunder the latter granted said plaintiff a fourth
extension of three years for the payment of the remaining balance of
P70,000, and further reduced the interest rate from 9 per cent to 7 per cent
per annum; that in the said agreement of March 16, 1940, defendant was
granted an option to demand the payment of the principal and interests
either in Philippine currency or in English currency at the rate of two shillings
( .O2/Od.) for one peso, Philippine currency; that in May, 1944, plaintiff
Clara Tambunting de Legarda attempted to pay her obligation to defendant
in Japanese military notes; that to defendant, as plaintiffs well knew, was not
disposed and did wish to receive payment in worthless Japanese military
notes; that to prevent his being reported to the Japanese military police in
Fort Santiago, defendant agreed to condone the interests then due on the
obligation from December 1, 1941, until the termination of the war, with the
understanding that payment should not be effected until the end of the war;
that plaintiff Clara Tambunting de Legarda violated her agreement with
defendant, sought to force payment by depositing the amount in Japanese
military note in court, and thereafter filed the complaint herein; that
notwithstanding demand made on October 16, 1945, plaintiff failed to pay
the principal of P70,000, together with interests thereon at the rate of 7 per
cent per annum which defendant claims upon the allegation that plaintiff
having violated her agreement defendant was relieved from his undertaking
to condone the interest.
In the order of December 24, 1945, declaring that the record of this case
was reconstituted for all legal purposes, the then Judge presiding this court,
Honorable Jose Guttierez David, denied the admission of the foregoing
supplemental answer.
Appeal was taken by defendant from the above order of the 24th of
December 1945.
The Honorable Supreme court in its decision on appeal (Clara Tambuting de
Legarda and Vicente L. Legarda, plaintiffs-appellees vs. Antonio Carrascoso,
Jr., substituting William J. B. Burke, defendant-appellant, GRL-331) declared
that the supplemental answer heretofore adverted to should have been
allowed and consequently directed that a new trial be had. . . .
The record was returned to this court.
On March 31, 1949, a motion consisting of two parts was filed on behalf of
defendant. The first prayed for the substitution of Victoria Desbarats Miailhe
as party defendant for the reason that William J. B. Burke died in the City of
Manila on July 23, 1946, and his claim against plaintiffs was adjudicated to
the said Victoria Debarats Miailhe as heir of the said William J. B. Burke. The

second sought the admission of a amended supplemental answer. In the

main the amended supplemental answer is a reproduction of the original
supplemental answer filed on October 23, 1945, with the significant change
that instead of demanding payment from plaintiffs Clara Tambunting de
Legarda, defendant now seeks payment in pounds sterling, English currency.
By order of this court of April 2, 1949, the petition for substitution was
granted and the amended supplemental answer was admitted into the
record of this case.
The issue raised in the counterclaim in the amended supplemental answer
were met in the plaintiffs' reply dated April 4 1949, which substantially
denies the allegation that Burke was not disposed and did not wish to
receive payments in Japanese military notes and refused payment to avoid
being reported to the Japanese military police. The reply alleges that the
demand made by the new defendant Victoria Desbarats Miailhe is unavailing
because it was presented too late, that is, after the present case had long
beensubjudice and the obligation to be collected was already extinguished.
On August 5, 1949, the Court, presided over by Judge Conrado Sanchez, rendered
judgment for the defendant as stated in the early part of this decision. From this
judgment, plaintiffs appealed.
The principal question of fact which is presented for our determination in this appeal
is whether the agreement had by the plaintiffs and William J. B. Burke during the
Japanese occupation was that the rate of the annual interest of the indebtedness was
merely reduced to 3 per cent, as claimed by plaintiffs, or whether said agreement
was in the sense that the defendant condoned the interests then due and which
might hereafter become due on said obligation with the understanding that plaintiff
Clara Tambunting de Legarda would pay her obligation upon the termination of the
war.
On this point, Judge Jose Guttierez David, who originally decided this case, gave
weight and credence to the evidence presented in behalf of the plaintiffs,
disregarding entirely the evidence submitted in behalf of the defendant, and
concluded that the alleged agreement was never entered into, as evidenced by the
letters plaintiff Clara Tambunting de Legarda sent to defendant William J. B. Burke,
not only tendering the payment of her obligation, but also giving notice that she will
deposit same in court as required by law to protect her interests. The court also gave
credence to the claim of the plaintiffs that defendant Burke agreed to reduce the rate
of interest from 7 per cent to 3 1/2 per cent per annum from January 1, 1942, in the
conference they had sometime in February or March, 1942. Judge Conrado Sanchez,
who took over the court after the case was returned following the revocation by this
court of the order denying the supplemental answer of the defendant, adopted in full
said findings of fact of Judge Guttierez David.
We have carefully examined the evidence, testimonial as well as documentary,
submitted by both parties in this case with a view to an enlightened determination of
this important question of fact which may be considered as the crux of this case, and

8
we have not been able to see eye to eye on this matter with the two Judges who
decided this case in the lower court. As a rule, the determination of a question of fact
depends largely on the credibility of witnesses unless some documentary evidence is
available, which clearly substantiates the issue and whose genuineness and probative
value is not disputed. In this case, most of the evidence presented is testimonial, with
only some corroborating letters, and on the basis of this evidence the preponderance
in our opinion militates in favor of the defendant. And we say so because, on one
hand, only Vicente Legarda testified for the plaintiffs, whereas Antonio Carrascoso
and William J. B. Burke testified for the defendant. True, their testimony is
contradictory, but in our opinion the testimony of witnesses Carrascoso and Burke
deserve more weight and credence. Of course these three witnesses are well known
in our community and their character for probity has never been assailed, But we are
more inclined to accept the view of Carrascoso and Burke because it is more
consonant with fairness and the history of the transaction. It appears that the
indebtedness in question was granted to Clara Tambunting de Legarda as far back as
February 1926, with the obligation to pay it within five (5) years but which period has
been extended from time to time with the gradual reduction of the rate of interest up
to January 1942, when, as intimated by the plaintiff, a further reduction of the interest
to 3 1/2 per cent per annum was granted by the defendant. During this long period of
time the plaintiffs enjoyed the use of the money, with a continued reduction of the
rate of interest, and defendant had lavished upon her his unusual liberality when he
extended to her his help and relief whenever she so requested as the exigencies of
her financial situation warranted. The life of this indebtedness would not have been
so prolonged as to be overtaken by war were it not for the desire of the defendant to
help the mortgagor in her hour of need, Yet Vicente Legarda went out of his way to
propose that his wife Clara Tambunting be exempted from paying all the interests due
from January 1, 1942, up to the termination of the war, which caused the defendant
to utter some unkind words and to be resentful. Nevertheless, through the mediation
of Attorney Carrascoso, plaintiffs at last became reasonable and agreed not to pay
the obligation until the termination of the war provided that all interests due and
which might become due be condoned. It is not strange nor unnatural that should
happen, considering the background of the loan. And there is nothing incredible in it
considering the letter written by Burke to Clara Tambunting wherein the same
understanding was reiterated (Exhibit "B"). Doctor Burke would not have stated in his
letter that there was such an understanding if it was not true, considering the fact
that he was so sick then and had practically one leg in the grave. We find no reason
to discredit this statement of Burke which find full corroboration in the testimony of
Attorney Corrascoso.
Granting, however, for the sake of argument that such an agreement is not true and
was set up by the defendant as a mere defense to justify his refusal to accept
payment of the mortgage indebtedness in Japanese military notes, the next question
to be determined is whether or not the consignation made by the plaintiffs during the
Japanese time had the effect of relieving Clara Tambunting de Legarda from the
payment of her mortgage obligation in contemplation of law.
There is no dispute that on June 3, 1944, Clara Tambunting de Legarda deposited in
court the sum of P75,920.83 for the purpose of satisfying the full amount then due on
her obligation. But it is likewise true that the money deposited was in certified check,

representing Japanese Military notes, which notes defendant Burke refuse to receive
as payment a few days before the consignation.
The offer of payment or consignation to be effective must comply with some legal
requirements. On this point our Civil Code contains the following provisions:
A debt shall not be deemed paid unless there has been a complete delivery
of the thing or a performance of the undertaking which constitute the
subject-matter of the obligation. (Art. 1157, Civil Code.).
The debtor of one thing cannot oblige his creditor to receive another, even
though it should be of equal or greater value than that due.
In obligations to do, one undertaking cannot be substituted by another
against the will of the creditor. (Art. 1166, Civil Code.).
Payment of debts of money shall be made in the specie stipulated and,
should it not be possible to deliver such specie, in silver or gold coin legally
current in the Philippines. (Art. 1170, Civil Code.)
As formerly stated, in the mortgage renewal executed by plaintiffs and defendant on
March 16, 1940, defendant was given the option to demand payment of the
obligation either in Philippine currency, or in English currency. And this option has to
be exercised "al tiempo del vencimiento de esta obligacion," (Exhibit "5"), or on
February 17, 1943.
But defendant claims that on that date he could not very well refuse to accept the
worthless Japanese Military notes tendered to him, nor insist on the payment of
English currency, for he then entertained the fear that, had he done so, he would
have been reported to the Japanese authorities, taken to Fort Santiago, and killed.
But could the defendant then insist on the payment of English currency even if he
could do so without exposing himself to bodily peril under the stipulation just
mentioned?
Our answer is in the negative. As we have stated before, the option to demand
payment of the indebtedness has to be exercised upon maturity of the obligation,
which is February 17, 1943. On this date, the only currency available is the Philippine
currency, or the Japanese Military notes, because all other currencies, including the
English, were outlawed by a proclamation issued by the Japanese Imperial
Commander on January 3, 1942. This means that the right of election ceased to exist
on that date because it had become legally impossible. And this is so because in
alternative obligations there is no right to choose undertakings that are impossible or
illegal (Civil Code, art. 1132, par. 2). In other words, the obligation on the part of the
debtor to pay the mortgage indebtedness has since then ceased to be alternative.
(Articles 1134 & 1136(1) of the Civil Code.)

9
It appears, therefore, that the tender of payment made by the plaintiff in Japanese
Military notes was a valid tender because it was the only currency permissible at the
time, and the same was made in accordance with the agreement because payment in
Japanese Military notes during the occupation is tantamount to payment in the
Philippine currency. (Haw Pia vs. China Banking Corporation, 45 Off. Gaz., Supp.[9]
229; Phil. Trust vs. Araneta, 46 Off. Gaz., 4254; Allison D. Gibbs vs. Eulogio Rodriguez,
47 Off. Gaz., 186.) But the consignation of the sum of P75,920.83 in Japanese
currency made by the plaintiffs with clerk of court does not have any legal effect
because it was made in certified check, "does not meet the requirements of a legal
tender."
In her sole assigned error the plaintiff contends that the Court erred in
holding that the consignation of the check with the clerk of court was in valid
and that it did not have the effect of paying her obligation. The court
correctly held that the consignation was unvailing and that it did not
produced any legal effect because the defendant did not accept it and it was
not in the form of money or legal tender. Article 1170 of the Civil Code
provides that payment of debts of money shall be made in the specie
stipulated and, should it not be possible to deliver such specie, in silver or
gold coin legally current; and provides further, that the delivery of
promissory notes payable to order, or drafts or other commercial paper, shall
produced the effects of payment only when realized or when, by the fault of
the creditor, the privileges inherent in their negotiable character have been
lost. Under this legal provision the defendant was under a duty to accept the
check because it is known that it does not constitute legal tender, and the
consignation having been refused, it did not produce any legal effect and
could not be considered as payment made by the plaintiff of the repurchase
price. In Belisario vs. Natividad (1934, 60 Phil., 156) it was held that the
creditor is not bound to accept the check in satisfaction of his demand
because a check even if good when offered, does not meet the
requirements of a legal tender. (Villanueva vs. Santos, 39 Off. Gaz., 681682). (Emphasis supplied.)

is not under a duty to accept the check and may refuse the consignation
which cannot produce the effect of payment. (Villanueva vs.Santos, 39 Off.
Gaz., March 8, 1941, p. 681).
True that the consignation in the instant case was made by means of a
manager's check. But a manager's check is, like an ordinary check, not
legal-tender in the Philippines. Even treasury certificates are not legal-tender
except for the payment of taxes and public debts, under sec. 1626 of Act No.
2711 as amended by Act No. 3058. In the United States, "the general rule is
that an offer of a bank check for the amount due is not a good tender and
this is true even though the check is certified" (62 C. J., p. 668), except
"where no objection is made on the ground" (62 C. J., p. 668). Again it is said
that, "on the same principle a check is not good legal-tender as against an
objection duly made, whether the check is certified or not . . ." 40 Am. Jur., p.
764; Cuaycong vs. Rius, (47 Off. Gaz., 6125).
To recapitulate, we may state that, even if the claim of the plaintiff that Clara
Tambunting de Legarda did not enter into any agreement with the defendant William
J. B. Burke regarding payment of her obligation, subject to condonation of interest,
after the termination of the war, is correct, and even if the tender of payment by
Clara Tambunting of her obligation was made in Philippine currency in pursuance of
the mortgage contract, yet the consignation made in Court can not have any legal
effect for the simple reason that it was made by means of a certified check, which is
not a legal tender within the meaning of the law. It is obvious, therefore, that such
consignation did not have the effect of relieving her from her obligation to the
defendant.
As regards the other issues, we find correct the findings and conclusions reached by
the lower court on the matter.
Wherefore, the decision appealed from is hereby affirmed in toto, with costs against
the appellants.

It is not necessary, in our opinion, to examine all the questions raised by

appellant in his brief, in view of our conclusion on the question of the validity
of the consignation made in court.
G.R. No. L-6220
Under article 1127 of the Civil Code, "Consignation should not be efficacious
unless made strictly in accordance with the provision governing payment."
And Article 1170 provides that, "payment of debts of money shall be made
in the specie stipulated and, should it not be possible to deliver such specie,
in silver or gold coin which is legal-tender in the Philippines." Under this
provisions, a consignation by check is not binding upon the creditor
(Meliciano vs. Natividad, 60 Phil., 156), unless accepted by him
(Gutierrez vs.Carpio, 53 Phil., 334, 336), and in the instant case, there has
been no such acceptance. In one case it was held by this court that where a
person entitled to make a repurchase of some property, deposits with the
court, by way of consignation, a check for the re-purchase price, the vendee

May 7, 1954

MARTINA QUIZANA, plaintiff-appellee,

vs.
GAUDENCIO REDUGERIO and JOSEFA POSTRADO, defendants-appellants.
Samson and Amante for appellants.
Sabino Palomares for appellee.
LABRADOR, J.:

10
This is an appeal to this Court from a decision rendered by the Court of First Instance
of Marinduque, wherein the defendants-appellants are ordered to pay the plaintiffappellee the sum of P550, with interest from the time of the filing of the complaint,
and from an order of the same court denying a motion of the defendants-appellants
for the reconsideration of the judgment on the ground that they were deprived of
their day in court.
The action was originally instituted in the justice of the peace court of Sta. Cruz,
Marinduque, and the same is based on an actionable document attached to the
complaint, signed by the defendants-appellants on October 4, 1948, and containing
the following pertinent provisions:
Na alang-alang sa aming mahigpit na pangangailangan ay kaming
magasawa ay lumapit kay Ginang Martina Quizana, balo, at
naninirahan sa Hupi, Sta. Cruz, Marinduque, at kami ay umutang sa
kanya ng halagang Limang Daan at Limang Pung Piso (P550.00),
Salaping umiiral dito sa Filipinas na aming tinanggap na husto at
walang kulang sa kanya sa condicion na ang halagang aming
inutang ay ibabalik o babayaran namin sa kanya sa katapusan ng
buwan ng Enero, taong 1949.
Pinagkasunduan din naming magasawa sa sakaling hindi kami
makabayad sa taning na panahon ay aming ipifrenda o isasangla sa
kanya ang isa naming palagay na niogan sa lugar nang Cororocho,
barrio ng Balogo, municipio ng Santa Cruz, lalawigang Marinduque,
Kapuluang Filipinas at ito ay nalilibot ng mga kahanganang
sumusunod:
Sa Norte, Dalmacio Constantino; sa este, Catalina Reforma; sa sur,
Dionisio Ariola; at sa Oeste, Reodoro Ricamora, no natatala sa
gobierno sa ilalim ng Declaracion No. ______ na nasa pangalan ko,
Josefa Postrado.
The defendants-appellants admit the execution of the document, but claim, as special
defense, that since the 31st of January, 1949, they offered to pledge the land
specified in the agreement and transfer possession thereof to the plaintiff-appellee,
but that the latter refused said offer. Judgement having been rendered by the justice
of the peace court of Sta. Cruz, the defendants-appellants appealed to the Court of
First Instance. In that court they reiterated the defenses that they presented in the
justice of the peace court. The case was set for hearing in the Court of First Instance
on August 16, 1951. As early as July 30 counsel for the defendants-appellants
presented an "Urgent Motion for Continuance," alleging that on the day set for the
hearing (August 16, 1951), they would appear in the hearing of two criminal cases
previously set for trial before they received notice of the hearing on the aforesaid
date. The motion was submitted on August 2, and was set for hearing on August 4.
This motion was not acted upon until the day of the trial. On the date of the trial the
court denied the defendants-appellants' motion for continuance, and after hearing
the evidence for the plaintiff, in the absence of the defendants-appellants and their
counsel, rendered the decision appealed from. Defendants-appellants upon receiving
copy of the decision, filed a motion for reconsideration, praying that the decision be
set aside on the ground that sufficient time in advance was given to the court to pass
upon their motion for continuance, but that the same was not passed upon. This
motion for reconsideration was denied.

The main question raised in this appeal is the nature and effect of the actionable
document mentioned above. The trial court evidently ignored the second part of
defendants-appellants' written obligation, and enforced its last first part, which fixed
payment on January 31, 1949. The plaintiff-appellee, for his part, claims that this part
of the written obligation is not binding upon him for the reason that he did not sign
the agreement, and that even if it were so, the defendants-appellants did not execute
the document as agreed upon, but, according to their answer, demanded the plaintiffappellee to do so. This last contention of the plaintiff-appellee is due to a loose
language in the answer filed with the Court of First Instance. But upon careful
scrutiny, it will be seen that what the defendants-appellants wanted to allege is that
they themselves had offered to execute the document of mortgage and deliver the
same to the plaintiff-appellee, but that the latter refused to have it executed unless,
an additional security was furnished. Thus the answer reads:
5. That immediately after the due date of the loan Annex "A" of the
complaint, the defendants made efforts to execute the necessary
documents of mortgage and to deliver the same to the plaintiff, in
compliance with the terms and conditions thereof, but the plaintiff
refused to execute the proper documents and insisted on another
portion of defendants' as additional security for the said loan;
(emphasis ours.)
In our opinion it is not true that defendants-appellants had not offered to execute the
deed of mortgage.
The other reasons adduced by the plaintiff-appellee for claiming that the agreement
was not binding upon him also deserves scant consideration. When plaintiff-appellee
received the document, without any objection on his part to the paragraph thereof in
which the obligors offered to deliver a mortgage on a property of theirs in case they
failed to pay the debt on the day stipulated, he thereby accepted the said condition
of the agreement. The acceptance by him of the written obligation without objection
and protest, and the fact that he kept it and based his action thereon, are concrete
and positive proof that he agreed and contested to all its terms, including the
paragraph on the constitution of the mortgage.
The decisive question at issue, therefore, is whether the second part of the written
obligation, in which the obligors agreed and promised to deliver a mortgage over the
parcel of land described therein, upon their failure to pay the debt on a date specified
in the proceeding paragraph, is valid and binding and effective upon the plaintiffappellee, the creditor. This second part of the obligation in question is what is known
in law as a facultative obligation, defined in article 1206 of Civil Code of the
Philippines, which provides:
ART. 1206. When only one prestation has been agreed upon, but
the obligor may render another in substitution, the obligation is
called facultative.
xxx

xxx

xxx

This is a new provision and is not found in the old Spanish Civil Code, which was the
one in force at the time of the execution of the agreement.

11
There is nothing in the agreement which would argue against its enforcement. it is
not contrary to law or public morals or public policy, and notwithstanding the absence
of any legal provision at the time it was entered into government it, as the parties
had freely and voluntarily entered into it, there is no ground or reason why it should
not be given effect. It is a new right which should be declared effective at once, in
consonance with the provisions of article 2253 of the Civil Code of the Philippines,
thus:
ART. 2253. . . . But if a right should be declared for the first time in
this Code, it shall be effective at once, even though the act or event
which gives rise thereto may have been done or may have occurred
under the prior legislation, provided said new right does not
prejudice or impair any vested or acquired right, of the same origin.

WHEREFORE, judgment is hereby rendered DISMISSING: a) CA-G.R. SP No. 23324, for

being moot and academic, and b) CA-G.R. SP No. 25714, for lack of merit. [4]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
The facts of the case are summarized by the Court of Appeals in this wise:
These two cases have been consolidated because they involve the same parties
and/or related questions of [f]act and/or law.

In view of our favorable resolution on the important question raised by the

defendants-appellants on this appeal, it becomes unnecessary to consider the other
question of procedure raised by them.

xxxxxxxxx
I. CA-G.R. SP NO. 23324

For the foregoing considerations, the judgment appealed from is hereby reversed,
and in accordance with the provisions of the written obligation, the case is hereby
remanded to the Court of First Instance, in which court the defendants-appellants
shall present a duly executed deed of mortgage over the property described in the
written obligation, with a period of payment to be agreed upon by the parties with the
approval of the court. Without costs.
Paras, C.J., Pablo, Bengzon, Montemayor, Jugo, Bautista Angelo, and Concepcion,
JJ., concur.

PH Credit Corp., filed a case against Pacific Lloyd Corp., Carlos Farrales, Thomas H.
Van Sebille and Federico C. Lim, for [a] sum of money. The case was docketed as Civil
Case No. 83-17751 before the Regional Trial Court, Branch 51, Manila. After service of
summons upon the defendants, they failed to file their answer within the
reglementary period, hence they were declared in default. PH Credit Corp., was then
allowed to present its evidence ex-parte.
On January 31, 1984, a decision was rendered, the dispositive portion of which reads
as follows:

[G.R. No. 109648. November 22, 2001]

PH CREDIT CORPORATION, petitioner, vs. COURT OF APPEALS and CARLOS
M. FARRALES, respondents.
DECISION

WHEREFORE, judgment is hereby rendered in favor of plaintiff PH Credit Corporation

and against defendants Pacific Lloyd Corporation, Thomas H. Van Sebille, Carlos M.
Farrales, and Federico C. Lim, ordering the latter to pay the former, the following:
A) The sum of P118, 814.49 with interest of 18% per annum, starting December 20,
1982 until fully paid;

PANGANIBAN, J.:
B) Surcharge of 16% per annum from December 20, 1982;
When there is a conflict between the dispositive portion or fallo of a decision
and the opinion of the court contained in the text or body of the judgment, the former
prevails over the latter. An order of execution is based on the disposition, not on the
body, of the decision.

C) Penalty Charge of 2% per month from December 20, 1982, computed on interest
and principal compounded;
D) Attorneys fees in an amount equivalent to 25% of the total sum due; and

The Case
E) Costs of suit.
Before us is a Petition for Review under Rule 45 [1] of the Rules of Court, assailing
the October 28, 1992 Decision[2] and the April 6, 1993 Resolution[3] of the Court of
Appeals (CA) in CA-GR SP Nos. 23324 and 25714. The dispositive portion of the said
Decision reads as follows:

SO ORDERED.

12
After the aforesaid decision has become final and executory, a Writ of Execution was
issued and consequently implemented by the assigned Deputy Sheriff. Personal and
real properties of defendant Carlos M. Farrales were levied and sold at public auction
wherein PH Credit Corp. was the highest bidder. The personal properties were sold on
August 2, 1984 at P18,900.00 while the real properties were sold on June 21, 1989
for P1,294,726.00.
On July 27, 1990, a motion for the issuance of a writ of possession was filed and on
October 12, 1990, the same was granted. The writ of possession itself was issued on
October 26, 1990. Said order and writ of possession are now the subject of this
petition.
Petitioner claims that she, as a third-party claimant with the court below, filed an
Urgent Motion for Reconsideration and/or to Suspend the Order dated October 12,
1990, but without acting there[on], respondent Judge issued the writ of possession on
October 26, 1990. She claims that the actuations of respondent Judge was tainted
with grave abuse of discretion.

respondent Judge allegedly abused his discretion in setting aside the auction sale
after the redemption period had expired.
3. Respondent Judge erred in applying the presumption of a joint obligation in the
face of the conclusion of fact and law contained in the decision showing that the
obligation is solidary.[5] (Citations omitted)
Ruling of the Court of Appeals
The Court of Appeals affirmed the trial courts ruling declaring null and void (a)
the auction sale of Respondent Ferrales real property and (b) the Writ of Possession
issued in consequence thereof. It held that, pursuant to the January 31, 1984 Decision
of the trial court, the liability of Farrales was merely joint and not
solidary. Consequently, there was no legal basis for levying and selling Farrales real
and personal properties in order to satisfy the whole obligation.
Hence, this Petition.[6]

We deem it unnecessary to pass upon the issue raised in view of the supervening
event which had rendered the same moot and academic.
It appears that on January 31, 1991, respondent Judge issued an order considering
the assailed Order dated October 12, 1990 as well as the writ of possession issued on
October 26, 1990 as of no force and effect.

The Issues
In its Memorandum,[7] petitioner
consideration:

submits

the

following

issues

for

our

I
The purpose of the petition is precisely to have the aforesaid order and writ of
possession declared null and void, but the same had already been declared of no
force and effect by the respondent Judge. It is a well-settled rule that courts will not
determine a moot question or abstract proposition nor express an opinion in a case in
which no practical relief can be granted.
II. CA-G.R. SP NO. 25714
Petitioner claims that the respondent Judges Order dated January 31, 1991 was
tainted with grave abuse of discretion based on the following grounds:
1. Respondent Judge refused to consider as waived private respondents objection that
his obligation in the January 31, 1984 decision was merely joint and not solidary with
the defendants therein. According to petitioner, private respondent assailed the levy
on execution twice in 1984 and once in 1985 but not once did the latter even mention
therein that his obligation was joint for failure of the dispositive portion of the
decision to indicate that it was solidary. Thus, private respondent must be deemed to
have waived that objection, petitioner concludes.
2. The redemption period after the auction sale of the properties had long lapsed so
much [so] that the purchaser therein became the absolute owner thereof. Thus,

Whether or not the Court of Appeals disregarded the basic policy of avoiding
multiplicity of motions.
II
Whether or not the Court of Appeals erred when it disregarded the body of the
decision and concluded that the obligation was merely a joint obligation due to
the failure of the dispositive portion of the decision dated 31 January 1984 to
state that the obligation was joint and solidary.
III
Whether or not the Court of Appeals disregarded the policy of upholding executions. [8]
The Courts Ruling
The Petition is devoid of merit.
First Issue: Omnibus Motion Rule

13
Petitioner contends that because private respondent did not question the joint
and solidary nature of his liability in his (a) Motion to Quash Levy Execution [9] dated
August 23, 1984, (b) Urgent Motion to Order Sheriff to Suspend Sale on
Execution[10]dated December 3, 1984, and (c) Motion to Declare Certificate of Sale
Null and Void[11]dated January 9, 1985, he cannot now raise it as an
objection. Petitioner argues that the Omnibus Motion Rule bars private respondents
belated objection. We do not agree.
The Omnibus Motion Rule is found in Section 8 of Rule 15 of the Rules of Court,
which we quote:
Subject to the provisions of section 1 of Rule 9, a motion attacking a pleading, order,
judgment, or proceeding shall include all objections then available, and all objections
not so included shall be deemed waived. (8a)
As an aid to the proper understanding of this case, we should at the outset point
out that the objections of private respondent contained in his Omnibus
Motion[12]dated November 5, 1990 were directed at the proceedings and the orders
issued after the auction sale of his real property covered by TCT No. 82531. In his
Omnibus Motion, he asked for the recall and quashal of the Writ of Possession issued
on October 26, 1990; the annulment of the June 21, 1989 auction sale of the said real
property and the recomputation of his liability to petitioner.
However, the three (3) Motions that petitioner referred to above were clearly
directed against the execution of private respondents personal properties. A perusal
of these Motions will show that at the time, his objections were directed at the acts of
execution against his personal properties.
In his Motion to Quash Levy Execution,[13] private respondent pointed to the
properties of herein moving defendant x x x located at his residence at No. 17,
Bunker Hill St., New Manila, Quezon City, per the Notice of Levy and Sale, [14] and
asked for the quashal and setting aside of such Notice. He was thus referring to the
levy on his personal properties. By the same token, in his Urgent Motion to Order
Sheriff to Suspend Sale on Execution, [15] he referred to a copy of a sheriffs notice of
sale dated November 22, 1984,[16] which in turn alluded to the sale of his levied
personal properties. Similarly, in his Motion to Declare Certificate of Sale Null and
Void,[17] he once again assailed the sale at public auction of his personal properties. It
is thus clear that up to that point, he was questioning the levy and sale of his
personal properties. He could not have known at the time that he would be made to
answer for the entire liability, which he and his co-respondents were adjudged to pay
petitioner by reason of the trial courts judgment of January 31, 1984.
After private respondent realized that he was being made to answer on the
entire liability as a solidary debtor, he filed his Omnibus Motion questioning the Writ
of Possession and all incident orders and proceedings relevant thereto. This
realization dawned on him, because his real property was levied and sold despite the
previous sale of his personal property. Only at this point was he in a position to assert

his objections to the auction sale of his real property and to put up the defense of
joint liability among all the respondents.
The Rules of Court requires that all available objections to a judgment or
proceeding must be set up in an Omnibus Motion assailing it; otherwise, they are
deemed waived. In the case at bar, the objection of private respondent to
his solidary liability became available to him, only after his real property was sold at
public auction. At the time his personal properties were levied and sold, it was not
evident to him that he was being held solely liable for the monetary judgment
rendered against him and his co-respondents. That was why his objections then did
not include those he asserted when his solidary liability became evident.
Prior to his Omnibus Motion, he was not yet being made to pay for
the entire obligation. Thus, his objection to his being made solidarily liable with the
other respondents was not yet available to him at the time he filed the Motions
referred to by petitioner. Not being available, these objections could not have been
deemed waived when he filed his three earlier Motions, which pertained to matters
different from those covered by his Omnibus Motion.
True, the Omnibus Motion Rule requires the movant to raise all available
exceptions in a single opportunity to avoid multiple piecemeal objections. [18] But to
apply that statutory norm, the objections must have been available to the party at
the time the Motion was filed.
Second Issue: Basis of Private Respondents Liability
Petitioner argues that the CA erred in disregarding the text of the January 31,
1984 Decision of the trial court. In concluding that the obligation was merely joint,
the CA was allegedly mistaken in relying on the failure of the dispositive portion of
the Decision to state that the obligation was solidary.
We are not impressed. A solidary obligation is one in which each of the debtors
is liable for the entire obligation, and each of the creditors is entitled to demand the
satisfaction of the whole obligation from any or all of the debtors. On the other hand,
a joint obligation is one in which each debtors is liable only for a proportionate part of
the debt, and the creditor is entitled to demand only a proportionate part of the credit
from each debtor.[19] The well-entrenched rule is that solidary obligations cannot be
inferred lightly. They must be positively and clearly expressed. [20] A liability is solidary
only when the obligation expressly so states, when the law so provides or when the
nature of the obligation so requires.[21] Article 1207 of the Civil Code explains the
nature of solidary obligations in this wise:
Art. 1207. The concurrence of two or more creditors or of two or more debtors in one
and the same obligation does not imply that each one of the former has a right to
demand, or that each one of the latter is bound to render, entire compliance with the
prestations. There is a solidary liability only when the obligation expressly so states,
or when the law or the nature of the obligation requires solidarity.

14
In the dispositive portion of the January 31, 1984 Decision of the trial court, the
word solidary neither appears nor can it be inferred therefrom. The fallo merely
stated that the following respondents were liable: Pacific Lloyd Corporation, Thomas
H. Van Sebille, Carlos M. Farrales and Federico C. Lim. Under the circumstances, the
liability is joint, as provided by the Civil Code, which we quote:
Art. 1208. If from the law, or the nature or the wording of the obligations to which the
preceding article refers[,] the contrary does not appear, the credit or debt shall be
presumed to be divided into as many equal shares as there are creditors or debtors x
x x.[22]
We should stress that respondents obligation is based on the judgment rendered
by the trial court. The dispositive portion or the fallo is its decisive resolution and is
thus the subject of execution. The other parts of the decision may be resorted to in
order to determine the ratio decidendi for the disposition. Where there is a conflict
between the dispositive part and the opinion of the court contained in the text or
body of the decision, the former must prevail over the latter on the theory that the
dispositive portion is the final order, while the opinion is merely a statement ordering
nothing.[23] Hence the execution must conform with that which is ordained or decreed
in the dispositive portion of the decision.
Petitioner maintains that the Court of Appeals improperly and incorrectly
disregarded the body of the trial courts Decision, which clearly stated as follows:
To support the Promissory Note, a Continuing Suretyship Agreement was executed by
the defendants, Federico C. Lim, Carlos M. Farrales and Thomas H. Van Sebille, in
favor of the plaintiff corporation, to the effect that if Pacific Lloyd Corporation cannot
pay the amount loaned by plaintiff to said corporation, then Federico C. Lim, Carlos M.
Farrales and Thomas H. Van Sebille will hold themselves jointly and severally together
with defendant Pacific Lloyd Corporation to answer for the payment of said obligation.
[24]

As early as 1934 in Oriental Commercial Co. v. Abeto and Mabanag, [25] this Court
has already answered such argument in this wise:
It is of no consequence that, under the written contract of suretyship executed by the
parties, the obligation contracted by the sureties was joint and several in
character. The final judgment, which superseded the action brought for the
enforcement of said contract, declared the obligation to be merely joint, and the
same cannot be executed otherwise.[26]
The same reasoning was recently adopted by this Court in Industrial
Management International Development Corp. v. NLRC, [27] promulgated on May 11,
2000.

Doctrinally, the basis of execution is the January 31, 1984 Decision rendered by
the trial court, not the written contract of suretyship executed by the parties. As
correctly observed by the trial judge:
x x x [W]hat was stated in the body of the decision of January 31, 1984 [was] only
part of the narration of facts made by the Judge[,] and the dispositive portion is to
prevail.[28]
The only exception when the body of a decision prevails over the fallo is when
the inevitable conclusion from the former is that there was a glaring error in the
latter, in which case the body of the decision will prevail. [29] In this instance, there was
no clear declaration in the body of the January 31, 1984 Decision to warrant a
conclusion that there was an error in the fallo. Nowhere in the former can we find a
definite declaration of the trial court that, indeed, respondents liability was solidary. If
petitioner had doubted this point, it should have filed a motion for reconsideration
before the finality of the Decision of the trial court.
Third Issue: The Policy of Upholding Executions
Petitioner argues that the issue of whether or not the judgment debt should be
construed as joint or solidary can only affect the determination of the existence or
absence of an excess in the proceeds of the sale. [30] He further maintains that private
respondents interests are protected anyway even if all his properties are sold,
because any excess in the proceeds of the sale over the judgment and accruing costs
must be delivered to the judgment debtor.[31]
We cannot accept these arguments. What can be sold on execution is limited by
the Rules of Court, as follows:
When there is more property of the judgment obligor than is sufficient to satisfy the
judgment and lawful fees, he (sheriff) must sell only so much of the personal or real
property as is sufficient to satisfy the judgment and lawful fees. [32]
A writ of execution is void when issued for a sum greater than that which is
warranted by the judgment or for the original amount it states despite partial
payment thereof. The exact amount due cannot be left to the determination of the
sheriff.[33]
Petitioner finally insists that it is futile for private respondent to contest the sale
in execution conducted in the case at bar because of the general policy of the law to
sustain execution sales.[34]
Simple logic dictates that a general policy to sustain execution sales does not
guarantee that they will be upheld at every instance. Petitioner itself quotes grounds
for setting aside such sales: a resulting injury or prejudice, fraud, mistake or
irregularity.[35]

15
Being made to pay for an obligation in its entirety when ones liability is merely
for a portion is a sufficient ground to contest an execution sale. It would be the height
of inequity if we allow judgment obligors to shoulder entire monetary judgments
when their legal liabilities are limited only to their proportionate shares in the entire
obligation.
WHEREFORE,
the
Petition
is
hereby DENIED and
Decision AFFIRMED. No pronouncement as to costs.

the

assailed

SO ORDERED.

SECOND DIVISION
[G.R. No. 101723. May 11, 2000]
INDUSTRIAL MANAGEMENT INTERNATIONAL DEVELOPMENT CORP.
(INIMACO), petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION,
(Fourth Division) Cebu City, and ENRIQUE SULIT, SOCORRO MAHINAY,
ESMERALDO PEGARIDO, TITA BACUSMO, GINO NIERE, VIRGINIA BACUS,
ROBERTO NEMENZO, DARIO GO, and ROBERTO ALEGARBES, respondents.
DECISION
BUENA, J.:
This is a petition for certiorari assailing the Resolution dated September 4, 1991
issued by the National Labor Relations Commission in RAB-VII-0711-84 on the alleged
ground that it committed a grave abuse of discretion amounting to lack of jurisdiction
in upholding the Alias Writ of Execution issued by the Labor Arbiter which deviated
from the dispositive portion of the Decision dated March 10, 1987, thereby holding
that the liability of the six respondents in the case below is solidary despite the
absence of the word "solidary" in the dispositive portion of the Decision, when their
liability should merely be joint. S-jcj
The factual antecedents are undisputed: Supr-eme
In September 1984, private respondent Enrique Sulit, Socorro Mahinay, Esmeraldo
Pegarido, Tita Bacusmo, Gino Niere, Virginia Bacus, Roberto Nemenzo, Dariogo, and
Roberto Alegarbes filed a complaint with the Department of Labor and Employment,
Regional Arbitration Branch No. VII in Cebu City against Filipinas Carbon Mining
Corporation, Gerardo Sicat, Antonio Gonzales, Chiu Chin Gin, Lo Kuan Chin, and
petitioner Industrial Management Development Corporation (INIMACO), for payment
of separation pay and unpaid wages. Sc-jj
In a Decision dated March 10, 1987, Labor Arbiter Bonifacio B. Tumamak held that:

"RESPONSIVE, to all the foregoing, judgment is hereby entered,

ordering respondents Filipinas Carbon and Mining Corp. Gerardo
Sicat, Antonio Gonzales/Industrial Management Development Corp.
(INIMACO), Chiu Chin Gin and Lo Kuan Chin, to pay complainants
Enrique Sulit, the total award of P82,800.00; ESMERALDO
PEGARIDO the full award of P19,565.00; Roberto Nemenzo the total
sum of P29,623.60 and DARIO GO the total award of P6,599.71, or
the total aggregate award of ONE HUNDRED THIRTY-EIGHT
THOUSAND FIVE HUNDRED EIGHTY-EIGHT PESOS AND 31/100
(P138,588.31) to be deposited with this Commission within ten (10)
days from receipt of this Decision for appropriate disposition. All
other claims are hereby Dismiss (sic) for lack of merit. Jjs-c
"SO ORDERED.
"Cebu City, Philippines.
"10 March 1987."0[1]
No appeal was filed within the reglementary period thus, the above Decision became
final and executory. On June 16, 1987, the Labor Arbiter issued a writ of execution but
it was returned unsatisfied. On August 26, 1987, the Labor Arbiter issued an Alias Writ
of Execution which ordered thus: Ed-pm-is
"NOW THEREFORE, by virtue of the powers vested in me by law,
you are hereby commanded to proceed to the premises of
respondents Antonio Gonzales/Industrial Management Development
Corporation (INIMACO) situated at Barangay Lahug, Cebu City, in
front of La Curacha Restaurant, and/or to Filipinas Carbon and
Mining corporation and Gerardo Sicat at 4th Floor Universal REBldg. 106 Paseo de Roxas, Legaspi Village, Makati Metro Manila and
at Philippine National Bank, Escolta, Manila respectively, and collect
the aggregate award of ONE HUNDRED THIRTY-EIGHT THOUSAND
FIVE HUNDRED EIGHTY-EIGHT PESOS AND THIRTY ONE CENTAVOS
(P138,588.31) and thereafter turn over said amount to
complainants ENRIQUE SULIT, ESMERALDO PEGARIDO, ROBERTO
NEMENZO AND DARIO GO or to this Office for appropriate
disposition. Should you fail to collect the said sum in cash, you are
hereby authorized to cause the satisfaction of the same on the
movable or immovable property(s) of respondents not exempt from
execution. You are to return this writ sixty (6) (sic) days from your
receipt hereof, together with your corresponding report.
"You may collect your legal expenses from the respondents as
provided for by law.
"SO ORDERED."[2]

16
On September 3, 1987, petitioner filed a "Motion to Quash Alias Writ of Execution and
Set Aside Decision,"[3] alleging among others that the alias writ of execution altered
and changed the tenor of the decision by changing the liability of therein respondents
from joint to solidary, by the insertion of the words "AND/OR" between "Antonio
Gonzales/Industrial Management Development Corporation and Filipinas Carbon and
Mining Corporation, et al." However, in an order dated September 14, 1987, the Labor
Arbiter denied the motion. Mis-oedp
On October 2, 1987, petitioner appealed [4] the Labor Arbiters Order dated September
14, 1987 to the respondent NLRC. Mis-edp
The respondent NLRC dismissed the appeal in a Decision [5] dated August 31, 1988,
the pertinent portions of which read:
"In matters affecting labor rights and labor justice, we have always
adopted the liberal approach which favors the exercise of labor
rights and which is beneficial to labor as a means to give full
meaning and import to the constitutional mandate to afford
protection to labor. Considering the factual circumstances in this
case, there is no doubt in our mind that the respondents herein are
called upon to pay, jointly and severally, the claims of the
complainants as was the latters prayers. Inasmuch as respondents
herein never controverted the claims of the complainants below,
there is no reason why complainants prayer should not be granted.
Further, in line with the powers granted to the Commission under
Article 218 (c) of the Labor code, to waive any error, defect or
irregularity whether in substance or in form in a proceeding before
Us, We hold that the Writ of Execution be given due course in all
respects." Ed-p
On July 31, 1989, petitioner filed a "Motion To Compel Sheriff To Accept Payment Of
P23,198.05 Representing One Sixth Pro Rata Share of Respondent INIMACO As Full
and Final Satisfaction of Judgment As to Said Respondent." [6] The private respondents
opposed the motion. In an Order[7] dated August 15, 1989, the Labor Arbiter denied
the motion ruling thus:
"WHEREFORE, responsive to the foregoing respondent INIMACOs
Motions are hereby DENIED. The Sheriff of this Office is order (sic)
to accept INIMACOs tender payment (sic) of the sum of P23,198.05,
as partial satisfaction of the judgment and to proceed with the
enforcement of the Alias Writ of Execution of the levied properties,
now issued by this Office, for the full and final satisfaction of the
monetary award granted in the instant case.

Petitioner appealed the above Order of the Labor Arbiter but this was again dismissed
by the respondent NLRC in its Resolution[8] dated September 4, 1991 which held that:
"The arguments of respondent on the finality of the dispositive
portion of the decision in this case is beside the point. What is
important is that the Commission has ruled that the Writ of
Execution issued by the Labor Arbiter in this case is proper. It is not
really correct to say that said Writ of Execution varied the terms of
the judgment. At most, considering the nature of labor proceedings
there was, an ambiguity in said dispositive portion which was
subsequently clarified by the Labor Arbiter and the Commission in
the incidents which were initiated by INIMACO itself. By sheer
technicality and unfounded assertions, INIMACO would now reopen
the issue which was already resolved against it. It is not in keeping
with the established rules of practice and procedure to allow this
attempt of INIMACO to delay the final disposition of this case.
"WHEREFORE, in view of all the foregoing, this appeal is DISMISSED
and the Order appealed from is hereby AFFIRMED. Sce-dp
"With double costs against appellant."
Dissatisfied with the foregoing, petitioner filed the instant case, alleging that the
respondent NLRC committed grave abuse of discretion in affirming the Order of the
Labor Arbiter dated August 15, 1989, which declared the liability of petitioner to be
solidary.
The only issue in this petition is whether petitioners liability pursuant to the Decision
of the Labor Arbiter dated March 10, 1987, is solidary or not. Calrs-pped
Upon careful examination of the pleadings filed by the parties, the Court finds that
petitioner INIMACOs liability is not solidary but merely joint and that the respondent
NLRC acted with grave abuse of discretion in upholding the Labor Arbiters Alias Writ
of Execution and subsequent Orders to the effect that petitioners liability is solidary.
A solidary or joint and several obligation is one in which each debtor is liable for the
entire obligation, and each creditor is entitled to demand the whole obligation. [9] In a
joint obligation each obligor answers only for a part of the whole liability and to each
obligee belongs only a part of the correlative rights.[10]
Well-entrenched is the rule that solidary obligation cannot lightly be inferred. [11] There
is a solidary liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires. [12]

"SO ORDERED." Ed-psc

In the dispositive portion of the Labor Arbiter, the word "solidary" does not appear.
The said fallo expressly states the following respondents therein as liable, namely:
Filipinas Carbon and Mining Corporation, Gerardo Sicat, Antonio Gonzales, Industrial

17
Management Development Corporation (petitioner INIMACO), Chiu Chin Gin, and Lo
Kuan Chin. Nor can it be inferred therefrom that the liability of the six (6) respondents
in the case below is solidary, thus their liability should merely be joint.

liability, without prejudice to the enforcement of the award, against the other five (5)
respondents in the said case. Sppedsc
SO ORDERED.

Moreover, it is already a well-settled doctrine in this jurisdiction that, when it is not

provided in a judgment that the defendants are liable to pay jointly and severally a
certain sum of money, none of them may be compelled to satisfy in full said
judgment. In Oriental Commercial Co. vs. Abeto and Mabanag[13] this Court
held:
"It is of no consequence that, under the contract of suretyship
executed by the parties, the obligation contracted by the sureties
was joint and several in character. The final judgment, which
superseded the action for the enforcement of said contract,
declared the obligation to be merely joint, and the same cannot be
executed otherwise."[14]
Granting that the Labor Arbiter has committed a mistake in failing to indicate in the
dispositive portion that the liability of respondents therein is solidary, the correction -which is substantial -- can no longer be allowed in this case because the judgment
has already become final and executory. Scc-alr
It is an elementary principle of procedure that the resolution of the court in a given
issue as embodied in the dispositive part of a decision or order is the controlling
factor as to settlement of rights of the parties. [15] Once a decision or order becomes
final and executory, it is removed from the power or jurisdiction of the court which
rendered it to further alter or amend it.[16] It thereby becomes immutable and
unalterable and any amendment or alteration which substantially affects a final and
executory judgment is null and void for lack of jurisdiction, including the entire
proceedings held for that purpose.[17] An order of execution which varies the tenor of
the judgment or exceeds the terms thereof is a nullity. [18]
None of the parties in the case before the Labor Arbiter appealed the Decision dated
March 10, 1987, hence the same became final and executory. It was, therefore,
removed from the jurisdiction of the Labor Arbiter or the NLRC to further alter or
amend it. Thus, the proceedings held for the purpose of amending or altering the
dispositive portion of the said decision are null and void for lack of jurisdiction. Also,
the Alias Writ of Execution is null and void because it varied the tenor of the
judgment in that it sought to enforce the final judgment against "Antonio
Gonzales/Industrial Management Development Corp. (INIMACO) and/or Filipinas
Carbon and Mining Corp. and Gerardo Sicat," which makes the liability solidary. Calrsc
WHEREFORE, the petition is hereby GRANTED. The Resolution dated September 4,
1991 of the respondent National Labor Relations is hereby declared NULL and VOID.
The liability of the respondents in RAB-VII-0711-84 pursuant to the Decision of the
Labor Arbiter dated March 10, 1987 should be, as it is hereby, considered joint and
petitioners payment which has been accepted considered as full satisfaction of its

[G.R. No. 96405. June 26, 1996]

BALDOMERO INCIONG, JR., petitioner, vs. COURT OF APPEALS
PHILIPPINE BANK OF COMMUNICATIONS, respondents.

and

SYLLABUS
1. REMEDIAL LAW; EVIDENCE; PAROL EVIDENCE RULE; DOES NOT SPECIFY
THAT THE WRITTEN AGREEMENT BE A PUBLIC INSTRUMENT.- Clearly, the
rule does not specify that the written agreement be a public document. What is
required is that the agreement be in writing as the rule is in fact founded on
"long experience that written evidence is so much more certain and accurate
than that which rests in fleeting memory only, that it would be unsafe, when
parties have expressed the terms of their contract in writing, to admit weaker
evidence to control and vary the stronger and to show that the parties intended
a different contract from that expressed in the writing signed by them"
[FRANCISCO, THE RULES OF COURT OF THE PHILIPPINES, Vol. VII, Part I, 1990
ed., p. 179] Thus, for the parol evidence rule to apply, a written contract need
not be in any particular form, or be signed by both parties. As a general rule,
bills, notes and other instruments of a similar nature are not subject to be varied
or contradicted by parol or extrinsic evidence.

18
2. CIVIL LAW; OBLIGATIONS; SOLIDARY OR JOINT AND SEVERAL OBLIGATION,
DEFINED.- A solidary or joint and several obligation is one in which each debtor
is liable for the entire obligation, and each creditor is entitled to demand the
whole obligation. [TOLENTINO, CIVIL CODE OF THE PHILIPPINES, Vol. IV, 1991
ed., p. 217] Section 4, Chapter 3, Title 1, Book IV of the Civil Code states the law
on joint and several obligations. Under Art. 1207 thereof, when there are two or
more debtors in one and the same obligation, the presumption is that the
obligation is joint so that each of the debtors is liable only for the proportionate
part of the debt. There is a solidary liability only when the obligation expressly
so states, when the law so provides or when the nature of the obligation so
requires. [Sesbreo v. Court of Appeals, G.R. No. 89252, May 24, 1993, 222 SCRA
466, 481.]
3.

ID.; GUARANTY; GUARANTOR AS DISTINGUISHED FROM SOLIDARY

DEBTOR.- While a guarantor may bind himself solidarily with the principal
debtor, the liability of a guarantor is different from that of a solidary
debtor. Thus, Tolentino explains: "A guarantor who binds himself in solidum with
the principal debtor under the provisions of the second paragraph does not
become a solidary co-debtor to all intents and purposes. There is a difference
between a solidary co-debtor, and a fiador in solidum (surety). The latter,
outside of the liability he assumes to pay the debt before the property of the
principal debtor has been exhausted, retains all the other rights, actions and
benefits which pertain to him by reason of the fiansa;while a solidary co-debtor
has no other rights than those bestowed upon him in Section 4, Chapter 3, Title
1, Book IV of the Civil Code." [Tolentino, Civil Code of the Philippines, Vol. V,
1992 ed., p. 502]
APPEARANCES OF COUNSEL

10% of the total amount due for expenses of litigation and attorney's fees; and to pay
the costs.
The counterclaim, as well as the cross claim, are dismissed for lack of merit.
SO ORDERED."
Petitioner's liability resulted from the promissory note in the amount of
P50,000.00 which he signed with Rene C. Naybe and Gregorio D. Pantanosas on
February 3, 1983, holding themselves jointly and severally liable to private
respondent Philippine Bank of Communications, Cagayan de Oro City branch. The
promissory note was due on May 5, 1983.
Said due date expired without the promissors having paid their
obligation. Consequently, on November 14, 1983 and on June 8, 1984, private
respondent sent petitioner telegrams demanding payment thereof. [2] On December
11, 1984 private respondent also sent by registered mail a final letter of demand to
Rene C. Naybe. Since both obligors did not respond to the demands made, private
respondent filed on January 24, 1986 a complaint for collection of the sum of
P50,000.00 against the three obligors.
On November 25, 1986, the complaint was dismissed for failure of the plaintiff
to prosecute the case. However, on January 9, 1987, the lower court reconsidered the
dismissal order and required the sheriff to serve the summonses. On January 27,
1987, the lower court dismissed the case against defendant Pantanosas as prayed for
by the private respondent herein.Meanwhile, only the summons addressed to
petitioner was served as the sheriff learned that defendant Naybe had gone to Saudi
Arabia.

Emilio G. Abrogena for petitioner.

Teogenes X. Velez for private respondent.
DECISION
ROMERO, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals
affirming that of the Regional Trial Court of Misamis Oriental, Branch 18, [1] which
disposed of Civil Case No. 10507 for collection of a sum of money and damages, as
follows:
"WHEREFORE, defendant BALDOMERO L. INCIONG, JR. is adjudged solidarily liable and
ordered to pay to the plaintiff Philippine Bank of Communications, Cagayan de Oro
City, the amount of FIFTY THOUSAND PESOS (P50,000.00),with interest thereon from
May 5, 1983 at 16% per annum until fully paid; and 6% per annum on the total
amount due, as liquidated damages or penalty from May 5, 1983 until fully paid; plus

In his answer, petitioner alleged that sometime in January 1983, he was

approached by his friend, Rudy Campos, who told him that he was a partner of Pio
Tio, the branch manager of private respondent in Cagayan de Oro City, in the falcata
logs operation business. Campos also intimated to him that Rene C. Naybe was
interested in the business and would contribute a chainsaw to the venture. He added
that, although Naybe had no money to buy the equipment Pio Tio had assured Naybe
of the approval of a loan he would make with private respondent.Campos then
persuaded petitioner to act as a "co-maker" in the said loan. Petitioner allegedly
acceded but with the understanding that he would only be a co-maker for the loan of
P5,000.00.
Petitioner alleged further that five (5) copies of a blank promissory note were
brought to him by Campos at his office. He affixed his signature thereto but in one
copy, he indicated that he bound himself only for the amount of P5,000.00. Thus, it
was by trickery, fraud and misrepresentation that he was made liable for the amount
of P50,000.00.

19
In the aforementioned decision of the lower court, it noted that the typewritten
figure "P50,000-" clearly appears directly below the admitted signature of the
petitioner in the promissory note.[3] Hence, the latter's uncorroborated testimony on
his limited liability cannot prevail over the presumed regularity and fairness of the
transaction, under Sec. 5 (q) of Rule 131. The lower court added that it was "rather
odd" for petitioner to have indicated in a copy and not in the original, of the
promissory note, his supposed obligation in the amount of P5,000.00 only.Finally, the
lower court held that even granting that said limited amount had actually been
agreed upon, the same would have been merely collateral between him and Naybe
and, therefore, not binding upon the private respondent as creditor-bank.
The lower court also noted that petitioner was a holder of a Bachelor of Laws
degree and a labor consultant who was supposed to take due care of his concerns,
and that, on the witness stand, Pio Tio denied having participated in the alleged
business venture although he knew for a fact that the falcata logs operation was
encouraged by the bank for its export potential.
Petitioner appealed the said decision to the Court of Appeals which, in its
decision of August 31, 1990, affirmed that of the lower court. His motion for
reconsideration of the said decision having been denied, he filed the instant petition
for review on certiorari.
On February 6,1991, the Court denied the petition for failure of petitioner to
comply with the Rules of Court and paragraph 2 of Circular No. 1-88, and to
sufficiently show that respondent court had committed any reversible error in its
questioned decision.[4] His motion for the reconsideration of the denial of his petition
was likewise denied with finality in the Resolution of April 24, 1991. [5] Thereafter,
petitioner filed a motion for leave to file a second motion for reconsideration which, in
the Resolution of May 27, 1991, the Court denied. In the same Resolution, the Court
ordered the entry of judgment in this case.[6]
Unfazed, petitioner filed a motion for leave to file a motion for clarification. In
the latter motion, he asserted that he had attached Registry Receipt No. 3268 to
page 14 of the petition in compliance with Circular No. 1-88. Thus, on August 7,1991,
the Court granted his prayer that his petition be given due course and reinstated the
same.[7]
Nonetheless, we find the petition unmeritorious.
Annexed to the petition is a copy of an affidavit executed on May 3, 1988, or
after the rendition of the decision of the lower court, by Gregorio Pantanosas, Jr., an
MTCC judge and petitioner's co-maker in the promissory note. It supports petitioner's
allegation that they were induced to sign the promissory note on the belief that it was
only for P5,000.00, adding that it was Campos who caused the amount of the loan to
be increased to P50,000.00.

The affidavit is clearly intended to buttress petitioner's contention in the instant

petition that the Court of Appeals should have declared the promissory note null and
void on the following grounds: (a) the promissory note was signed in the office of
Judge Pantanosas, outside the premises of the bank; (b) the loan was incurred for the
purpose of buying a second-hand chainsaw which cost only P5,000.00; (c) even a new
chainsaw would cost only P27,500.00; (d) the loan was not approved by the board or
credit committee which was the practice, at it exceeded P5,000.00; (e) the loan had
no collateral; (f) petitioner and Judge Pantanosas were not present at the time the
loan was released in contravention of the bank practice, and (g) notices of default are
sent simultaneously and separately but no notice was validly sent to him. [8] Finally,
petitioner contends that in signing the promissory note, his consent was vitiated by
fraud as, contrary to their agreement that the loan was only for the amount of
P5,000. 00, the promissory note stated the amount of P50,000.00.
The above-stated points are clearly factual. Petitioner is to be reminded of the
basic rule that this Court is not a trier of facts. Having lost the chance to fully
ventilate his factual claims below, petitioner may no longer be accorded the same
opportunity in the absence of grave abuse of discretion on the part of the court
below. Had he presented Judge Pantanosas' affidavit before the lower court, it would
have strengthened his claim that the promissory note did not reflect the correct
amount of the loan.
Nor is there merit in petitioner's assertion that since the promissory note "is not
a public deed with the formalities prescribed by law but x x x a mere commercial
paper which does not bear the signature of x x x attesting witnesses," parol evidence
may "overcome" the contents of the promissory note. [9] The first paragraph of the
parol evidence rule[10] states:
"When the terms of an agreement have been reduced to writing, it is considered as
containing all the terms agreed upon and there can be, between the parties and their
successors-in-interest, no evidence of such terms other than the contents of the
written agreement."
Clearly, the rule does not specify that the written agreement be a public
document.
What is required is that agreement be in writing as the rule is in fact founded on
"long experience that written evidence is so much more certain and accurate than
that which rests in fleeting memory only, that it would be unsafe, when parties have
expressed the terms of their contract in writing, to admit weaker evidence to control
and vary the stronger and to show that the parties intended a different contract from
that expressed in the writing signed by them." [11] Thus, for the parol evidence rule to
apply, a written contract need not be in any particular form, or be signed by both
parties.[12] As a general rule, bills, notes and other instruments of a similar nature are
not subject to be varied or contradicted by parol or extrinsic evidence. [13]
By alleging fraud in his answer,[14] petitioner was actually in the right direction
towards proving that he and his co-makers agreed to a loan of P5,000.00 only

20
considering that, where a parol contemporaneous agreement was the inducing and
moving cause of the written contract, it may be shown by parol evidence. [15] However,
fraud must be established by clear and convincing evidence, mere preponderance of
evidence, not even being adequate. [16] Petitioner's attempt to prove fraud must,
therefore, fail as it was evidenced only by his own uncorroborated and, expectedly,
self-serving testimony.
Petitioner also argues that the dismissal of the complaint against Naybe, the
principal debtor, and against Pantanosas, his co-maker, constituted a release of his
obligation, especially because the dismissal of the case against Pantanosas was upon
the motion of private respondent itself. He cites as basis for his argument, Article
2080 of the Civil Code which provides that:
"The guarantors, even though they be solidary, are released from their obligation
whenever by some act of the creditor, they cannot be subrogated to the rights,
mortgages, and preferences of the latter."
It is to be noted, however, that petitioner signed the promissory note as a
solidary co-maker and not as a guarantor. This is patent even from the first sentence
of the promissory note which states as follows:
"Ninety one (91) days after date, for value received, I/we, JOINTLY and SEVERALLY
promise to pay to the PHILIPPINE BANK OF COMMUNICATIONS at its office in the City
of Cagayan de Oro, Philippines the sum of FIFTY THOUSAND ONLY (P50,000. 00)
Pesos, Philippine Currency, together with interest x x x at the rate of SIXTEEN (16) per
cent per annum until fully paid."
A solidary or joint and several obligation is one in which each debtor is liable for
the entire obligation, and each creditor is entitled to demand the whole obligation.
[17]
On the other hand, Article 2047 of the Civil Code states:
"By guaranty a person, called the guarantor, binds himself to the creditor to fulfill the
obligation of the principal debtor in case the latter should fail to do so.
If a person binds himself solidarily with the principal debtor, the provisions of Section
4, Chapter 3, Title I of this Book shall be observed, In such a case the contract is
called a suretyship." (Italics supplied.)
While a guarantor may bind himself solidarily with the principal debtor, the liability of
a guarantor is different from that of a solidary debtor. Thus, Tolentino explains:
"A guarantor who binds himself in solidum with the principal debtor under the
provisions of the second paragraph does not become a solidary co-debtor to all
intents and purposes. There is a difference between a solidary co-debtor, and a fiador
in solidum (surety). The later, outside of the liability he assumes to pay the debt
before the property of the principal debtor has been exhausted, retains all the other
rights, actions and benefits which pertain to him by reason of the fiansa; while a

solidary co-debtor has no other rights than those bestowed upon him in Section 4,
Chapter 3, title I, Book IV of the Civil Code."[18]
Section 4, Chapter 3, Title I, Book IV of the Civil Code states the law on joint and
several obligations. Under Art. 1207 thereof, when there are two or more debtors in
one and the same obligation, the presumption is that the obligation is joint so that
each of the debtors is liable only for a proportionate part of the debt. There is a
solidarity liability only when the obligation expressly so states, when the law so
provides or when the nature of the obligation so requires. [19]
Because the promissory note involved in this case expressly states that the
three signatories therein are jointly and severally liable, any one, some or all of them
may be proceeded against for the entire obligation. [20] The choice is left to the
solidary creditor to determine against whom he will enforce collection.
[21]
Consequently, the dismissal of the case against Judge Pontanosas may not be
deemed as having discharged petitioner from liability as well. As regards Naybe,
suffice it to say that the court never acquired jurisdiction over him. Petitioner,
therefore, may only have recourse against his co-makers, as provided by law.
WHEREFORE, the instant petition for review on certiorari is hereby DENIED and
the questioned decision of the Court of Appeals is AFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 150402

November 28, 2006

EPARWA SECURITY AND JANITORIAL SERVICES, INC., Petitioner,

vs.
LICEO DE CAGAYAN UNIVERSITY, Respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for certiorari1 of the Decision2 dated 20 April 2001 and the
Resolution dated 21 September 2001 of the Court of Appeals ("appellate court") in
CA-G.R. SP No. 59120, Liceo de Cagayan University v. The Hon. National Labor
Relations Commission, Fifth Division, Eparwa Security and Janitorial Services, Inc., et
al. The appellate court reinstated the 18 August 1999 decision 3 of the Labor Arbiter
and remanded the case to the Regional Arbitration Board, Branch No. 10 of Cagayan
de Oro City to compute what is due to Liceo de Cagayan University (LDCU) from
Eparwa Security and Janitorial Services, Inc. ("Eparwa").

21
The Facts

1. Ordering respondents [LDCU] and [Eparwa] solidarily liable to pay [the

security guards] for underpayment, holiday and rest day, as follows:

On 1 December 1997, Eparwa and LDCU, through their representatives, entered into
a Contract for Security Services. The pertinent portion of the contract provides that:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.

5. For and in consideration of this security, protective and safety services, [LDCU]
agrees to pay [Eparwa] FIVE THOUSAND PESOS ONLY (P5,000.00), Philippine Currency
per guard a month payable within fifteen (15) days after [Eparwa] presents its service
invoice. [Eparwa] shall furnish [LDCU] a monthly copy of SSS contribution of guards
and monthly payroll of each guard assigned at [LDCUs] premises on a monthly
basis[.]4
Eparwa allocated the contracted amount of P5,000 per security guard per month in
the following manner:
Basic Pay (P104.50 x 391.5/12)
Night Diff. Pay
13th mo. Pay
5 day incentive leave
Uniform allowance
Employers SSS, Medicare, ECC contribution
Agency share
VAT

P3,409.31
113.64
284.10
43.54
50.00
224.80
420.53
454.59

CONTRACT RATE

P5,000.50

(rounded off to P5,000.00)5

On 21 December 1998, 11 security guards ("security guards") whom Eparwa assigned
to LDCU from 1 December 1997 to 30 November 1998 filed a complaint before the
National Labor Relations Commissions (NLRC) Regional Arbitration Branch No. 10 in
Cagayan de Oro City. Docketed as NLRC-RABX Case No. 10-01-00102-99, the
complaint was filed against both Eparwa and LDCU for underpayment of salary, legal
holiday pay, 13th month pay, rest day, service incentive leave, night shift differential,
overtime pay, and payment for attorneys fees.
LDCU made a cross-claim and prayed that Eparwa should reimburse LDCU for any
payment to the security guards.
The Ruling of the Labor Arbiter
In its decision dated 18 August 1999, the Labor Arbiter found that the security guards
are entitled to wage differentials and premium for holiday and rest day work. The
Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the
Labor Code. The dispositive portion of the Labor Arbiters decision reads:
WHEREFORE, judgment is rendered[:]

Casiero,
Villarino,
Lumbab,
Caballero,
Cajilla,
Paduanga,
Dungog,
Magallanes,
Dungog,
Dungog,
Bahian,

Name
Jovencio
Leonardo
Adriano
Gregorio, Jr.
Delfin, Jr.
Arnold
Achimedes
Eduardo
Luigi
Telford
Wilfredo

Amount
P 46,
46,
46,
46,
37,
20,
46,
46,
46,
46,
30,

P 463,

2. Denying the claim of unpaid 13th month pay, service incentive leave and
night shift premium pay for lack of merit;
3. Ordering respondent [Eparwa] to reimburse respondent [LDCU] for
whatever amount the latter may be required to pay [the security guards];
4. Ordering respondent [Eparwa] to pay respondent [LDCU] P20,000.00
and P5,000.00 each of the [security guards], moral and exemplary damages;
5. Ordering [Eparwa] to pay 10% of attorneys fee[s][;]
6. The rest of the claims are denied for lack of merit.
So Ordered.6
LDCU filed an appeal before the NLRC. LDCU agreed with the Labor Arbiters decision
on the security guards entitlement to salary differential but challenged the propriety
of the amount of the award. LDCU alleged that security guards not similarly situated
were granted uniform monetary awards and that the decision did not include the
basis of the computation of the amount of the award.
Eparwa also filed an appeal before the NLRC. For its part, Eparwa questioned its
liability for the security guards claims and the awarded cross-claim amounts.
The Ruling of the NLRC
The Fifth Division of the NLRC resolved Eparwa and LDCUs separate appeals in its
Resolution7 dated 19 January 2000. The NLRC found that the security guards are
entitled to wage differentials and premium for holiday and rest day work. Although

22
the NLRC held Eparwa and LDCU solidarily liable for the wage differentials and
premium for holiday and rest day work, the NLRC did not require Eparwa to reimburse
LDCU for its payments to the security guards. The NLRC also ordered the
recomputation of the monetary awards according to the dates actually worked by
each security guard. The dispositive portion of the NLRC Resolution reads thus:
WHEREFORE, the appealed decision is AFFIRMED, subject to the modification that
the portions thereof directing respondent EPARWA Security Agency and Janitorial
Services, Inc. to reimburse respondent Liceo de Cagayan University for whatever
amount the latter may have paid complainants and to pay respondent Liceo de
Cagayan University the sum [sic] [of] P20,000.00 and P5,000.00, representing moral
and exemplary damages, respectively, of each complainants [sic], are deleted for
lack of legal basis. Further the monetary awards for wage differential and premiums
for holiday and rest day works shall be recomputed by the Regional Arbitration
Branch of origin at the execution stage of the proceedings.

WHEREFORE, foregoing considered, the petition is hereby GRANTED. The decision

dated August 18, 1999 of Labor Arbiter Celenito N. Daing is REINSTATED. The case is
hereby REMANDED to the Regional Arbitration Board, Branch No. 10 of Cagayan de
Oro City to compute what is due to LDCU from EPARWA.
SO ORDERED.11
Eparwa filed a motion for reconsideration of the appellate courts decision. Eparwa
stressed that jurisprudence is consistent in ruling that the ultimate liability for the
payment of the monetary award rests with LDCU alone.
The appellate court denied Eparwas motion for reconsideration for lack of merit.
Hence, this petition.

Co[n]formably, the award of Attorneys fee[s] is equivalent to ten (10%) percent of

the aggregate monetary award as finally adjusted.

The Issue
The petition raises this sole legal issue: Is LDCU alone ultimately liable to the security
guards for the wage differentials and premium for holiday and rest day pay?

SO ORDERED.8
Eparwa and LDCU again filed separate motions for partial reconsideration of the 19
January 2000 NLRC Resolution. LDCU questioned the NLRCs deletion of LDCUs
entitlement to reimbursement by Eparwa. Eparwa, on the other hand, prayed that
LDCU be made to reimburse Eparwa for whatever amount it may pay to the security
guards.
In its Resolution dated 14 March 2000, the NLRC declared that although Eparwa and
LDCU are solidarily liable to the security guards for the monetary award, LDCU alone
is ultimately liable. The NLRC resolved the issue thus:
WHEREFORE, the assailed resolution, dated 19 January 2000, is MODIFIED in that
respondent Liceo de Cagayan University (LICEO) is ordered to reimburse respondent
Eparwa Security and Janitorial Services, Inc. (EPARWA) for whatever amount the latter
may have paid to complainants arising from this case.
SO ORDERED.9
LDCU filed a petition for certiorari10 before the appellate court assailing the NLRCs
decision. LDCU took issue with the NLRCs order that LDCU should reimburse Eparwa.
LDCU stated that this would free Eparwa from any liability for payment of the security
guards money claims.
The Ruling of the Appellate Court
In its Decision promulgated on 20 April 2001, the appellate court granted LDCUs
petition and reinstated the Labor Arbiters decision. The appellate court also allowed
LDCU to claim reimbursement from Eparwa. The appellate courts decision reads
thus:

The Ruling of the Court

The petition has merit.
Eparwa and LDCUs Solidary Liability and
LDCUs Ultimate Liability
Articles 106, 107 and 109 of the Labor Code read:
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall be paid in
accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of his
employees in accordance with this Code, the employer shall be jointly and severally
liable with his contractor or subcontractor to such employees to the extent of the
work performed under the contract, in the same manner and extent that he is liable
to employees directly employed by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit the
contracting out of labor to protect the rights of workers established under this Code.
In so prohibiting or restricting, he may make appropriate distinctions between laboronly contracting and job contracting as well as differentiations within these types of
contracting and determine who among the parties involved shall be considered the
employer for purposes of this Code, to prevent any violation or circumvention of any
provision of this Code.
There is "labor-only" contracting where the person supplying workers to an employer
does not have substantial capital or investment in the form of tools, equipment,

23
machineries, work premises, among others, and the workers recruited and placed by
such persons are performing activities which are directly related to the principal
business of the employer. In such cases, the person or intermediary shall be
considered merely as an agent of the employer who shall be responsible to the
workers in the same manner and extent as if the latter were directly employed by
him.
Article 107. Indirect employer. The provisions of the immediately preceding Article
shall likewise apply to any person, partnership, association or corporation which, not
being an employer, contracts with an independent contractor for the performance of
any work, task, job or project.
Article 109. Solidary liability. The provisions of existing laws to the contrary
notwithstanding, every employer or indirect employer shall be held responsible with
his contractor or subcontractor for any violation of any provision of this Code. For
purposes of determining the extent of their civil liability under this Chapter, they shall
be considered as direct employers.
This Courts ruling in Eagle Security Agency, Inc. v. NLRC12 squarely applies to the
present case. In Eagle, we ruled that:
This joint and several liability of the contractor and the principal is mandated by the
Labor Code to assure compliance of the provisions therein including the statutory
minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his
status as direct employer. The principal, on the other hand, is made the indirect
employer of the contractors employees for purposes of paying the employees their
wages should the contractor be unable to pay them. This joint and several liability
facilitates, if not guarantees, payment of the workers performance of any work, task,
job or project, thus giving the workers ample protection as mandated by the 1987
Constitution [See Article II Sec. 18 and Article XIII Sec. 3].
In the case at bar, it is beyond dispute that the security guards are the employees of
EAGLE [See Article VII Sec. 2 of the Contract for Security Services; G.R. No. 81447,
Rollo, p. 34]. That they were assigned to guard the premises of PTSI pursuant to the
latters contract with EAGLE and that neither of these two entities paid their wage
and allowance increases under the subject wage orders are also admitted [See Labor
Arbiters Decision, p. 2; G.R. No. 81447, Rollo, p. 75]. Thus, the application of the
aforecited provisions of the Labor Code on joint and several liability of the principal
and contractor is appropriate [See Del Rosario & Sons Logging Enterprises, Inc. v.
NLRC, G.R. No. 64204, May 31, 1985, 136 SCRA 669].
The solidary liability of PTSI and EAGLE, however, does not preclude the right of
reimbursement from his co-debtor by the one who paid [See Article 1217, Civil Code].
It is with respect to this right of reimbursement that petitioners can find support in
the aforecited contractual stipulation and Wage Order provision.
The Wage Orders are explicit that payment of the increases are "to be borne" by the
principal or client.1wphi1 "To be borne", however, does not mean that the principal,
PTSI in this case, would directly pay the security guards the wage and allowance
increases because there is no privity of contract between them. The security guards
contractual relationship is with their immediate employer, EAGLE. As an employer,
EAGLE is tasked, among others, with the payment of their wages [See Article VII Sec.

3 of the Contract for Security Services, supra and Bautista v. Inciong, G.R. No. 52824,
March 16, 1988, 158 SCRA 665].
On the other hand, there existed a contractual agreement between PTSI and EAGLE
wherein the former availed of the security services provided by the latter. In return,
the security agency collects from its client payment for its security services. This
payment covers the wages for the security guards and also expenses for their
supervision and training, the guards bonds, firearms with ammunitions, uniforms and
other equipments, accessories, tools, materials and supplies necessary for the
maintenance of a security force.
Premises considered, the security guards immediate recourse for the
payment of the increases is with their direct employer, EAGLE. However, in
order for the security agency to comply with the new wage and allowance rates it has
to pay the security guards, the Wage Orders made specific provision to amend
existing contracts for security services by allowing the adjustment of the
consideration paid by the principal to the security agency concerned. What the Wage
Orders require, therefore, is the amendment of the contract as to the consideration to
cover the service contractors payment of the increases mandated. In the end,
therefore, ultimate liability for the payment of the increases rests with the principal.
In view of the foregoing, the security guards should claim the amount of the increases
from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts
claimed, PTSI should be held solidarily liable with EAGLE [Articles 106,107 and 109].
Should EAGLE pay, it can claim an adjustment from PTSI for an increase in
consideration to cover the increases payable to the security guards.
However, in the instant case, the contract for security services had already expired
without being amended consonant with the Wage Orders. It is also apparent from a
reading of a record that EAGLE does not now demand from PTSI any adjustment in
the contract price and its main concern is freeing itself from liability. Given these
peculiar circumstances, if PTSI pays the security guards, it cannot claim
reimbursement from EAGLE. But in case it is EAGLE that pays them, the
latter can claim reimbursement from PTSI in lieu of an adjustment,
considering that the contract, [sic] had expired and had not been
renewed.13 (Emphasis added)
We repeatedly upheld our ruling in Eagle regarding reimbursement in the subsequent
cases of Spartan Security & Detective Agency, Inc. v. NLRC, 14 Development Bank of
the Philippines v. NLRC,15 Alpha Investigation and Security Agency, Inc. v.
NLRC,16 Helpmate, Inc. v. NLRC, et al.,17 and Lapanday Agricultural Development
Corporation v. Court of Appeals.18
For the security guards, the actual source of the payment of their wage differentials
and premium for holiday and rest day work does not matter as long as they are paid.
This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the
security guards, may collect from anyone of the solidary debtors. Solidary liability
does not mean that, as between themselves, two solidary debtors are liable for only
half of the payment.
LDCUs ultimate liability comes into play because of the expiration of the Contract for
Security Services. There is no privity of contract between the security guards and
LDCU, but LDCUs liability to the security guards remains because of Articles 106, 107

24
and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an
adjustment in the contract price because of the expiration of the contract, but
Eparwas liability to the security guards remains because of their employer-employee
relationship. In lieu of an adjustment in the contract price, Eparwa may claim
reimbursement from LDCU for any payment it may make to the security guards.
However, LDCU cannot claim any reimbursement from Eparwa for any payment it
may make to the security guards.
WHEREFORE, we GRANT the petition. We SET ASIDE the Decision dated 20 April
2001 and the Resolution dated 21 September 2001 of the Court of Appeals. We
REINSTATE the Resolutions dated 19 January 2000 and 14 March 2000 of the National
Labor Relations Commission.
SO ORDERED

transferred to the Regional Trial Court of Naic, Cavite. Romeo was appointed
administrator of his fathers estate.
In the course of the intestate proceedings, Romeo discovered that his parents
had executed several deeds of sale conveying a number of real properties in favor of
his sister, Natividad. One of the deeds involved six lots in Quezon City which were
allegedly sold by Maximino, Sr., with the consent of Aurea, to Natividad on January
29, 1970 for the total amount ofP47,800.00. The Deed of Absolute Sale reads as
follows:
DEED OF ABSOLUTE SALE
KNOW ALL MEN BY THESE PRESENTS:

[G.R. No. 138842. October 18, 2000]

NATIVIDAD P. NAZARENO, MAXIMINO P. NAZARENO, JR., petitioners, vs.
COURT OF APPEALS, ESTATE OF MAXIMINO A. NAZARENO, SR.,
ROMEO P. NAZARENO and ELIZA NAZARENO, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision [1] of the Court of Appeals
in CA-GR CV No. 39441 dated May 29, 1998 affirming with modifications the decision
of the Regional Trial Court, Branch 107, Quezon City, in an action for annulment of
sale and damages.
The facts are as follows:
Maximino Nazareno, Sr. and Aurea Poblete were husband and wife. Aurea died
on April 15, 1970, while Maximino, Sr. died on December 18, 1980. They had five
children, namely, Natividad, Romeo, Jose, Pacifico, and Maximino, Jr. Natividad and
Maximino, Jr. are the petitioners in this case, while the estate of Maximino, Sr.,
Romeo, and his wife Eliza Nazareno are the respondents.

I, MAXIMINO A. NAZARENO, Filipino, married to Aurea Poblete-Nazareno, of legal age

and a resident of the Mun. of Naic, Prov. of Cavite, Philippines,
-WITNESSETHThat I am the absolute registered owner of six (6) parcels of land with the
improvements thereon situated in Quezon City, Philippines, which parcels of land are
herewith described and bounded as follows, to wit:
TRANS. CERT. OF TITLE NO. 140946
A parcel of land (Lot 3-B of the subdivision plan Psd-47404, being a portion of Lot 3,
Block D-3 described on plan Bsd-10642, G.L.R.O. Record No.) situated in the Quirino
District, Quezon City. Bounded on the N., along line 1-2 by Lot 15, Block D-3 of plan
Bsd - 10642; along line 2-3 by Lot 4, Block D-3 of plan Bsd-10642; along line 3-4 by
Aurora Boulevard (Road Lot-1, Bsd-10642); and along line 4-1 by Lot 3-D of the
subdivision plan. Beginning at a point marked 1 on plan, being S.29 deg. 26E.,
1156.22 m. from B.L.L.M. 9, Quezon City,
thence N. 79 deg. 53E., 12.50 m. to point 2;
thence S. 10 deg. 07E., 40.00 m. to point 3;
thence S. 79 deg. 53W., 12.50 m. to point 4;

During their marriage, Maximino Nazareno, Sr. and Aurea Poblete acquired
properties in Quezon City and in the Province of Cavite. It is the ownership of some of
these properties that is in question in this case.
It appears that after the death of Maximino, Sr., Romeo filed an intestate case in
the Court of First Instance of Cavite, Branch XV, where the case was docketed as Sp.
Proc. No. NC-28.Upon the reorganization of the courts in 1983, the case was

thence N. 10 deg. 07W., 40.00 m. to the point

of beginning; containing an area of FIVE HUNDRED (500) SQUARE METERS. All points
referred to are indicated on the plan and are marked on the ground as follows: points
1 and 4 by P.L.S. Cyl. Conc. Mons. bearings true; date of the original survey, April 8July 15, 1920 and that of the subdivision survey, March 25, 1956.

25
TRANS. CERT. OF TITLE NO. 132019
A parcel of land (Lot 3, Block 93 of the subdivision plan Psd-57970 being a portion of
Lot 6, Pcs-4786, G.L.R.O. Rec. No. 917) situated in Quirino District Quezon
City. Bounded on the NW., along line 1-2, by Lot 1, Block 93; on the NE., along line 23, by Road Lot 101; on the SE., along line 3-4, by Road Lot 100; on the SW., along line
4-1, by Lot 4, Block 93; all of the subdivision plan. Beginning at point marked 1 on
plan, being S. 65 deg. 40 3339.92 m. from B.L.L.M. No. 1, Marikina, Rizal;
thence N. 23 deg. 28 min. E., 11.70 m. to point 2;
thence S. 66 deg. 32 min. E., 18.00 m. to point 3;
thence S. 23 deg. 28 min. W., 11.70 m. to point 4;
thence N. 66 deg. 32. min. W., 18.00 m. to the point
of beginning; containing an area of TWO HUNDRED TEN SQUARE METERS AND SIXTY
SQUARE DECIMETERS (210.60). All points referred to are indicated on the plan and
are marked on the ground by B.L. Cyl. Conc. Mons. 15 x 60 cm.; bearings true; date of
the original survey, Nov. 10, 1920 and Jan. 31-March 31, 1924 and that of the
subdivision survey, February 1 to September 30, 1954. Date approved - March 9,
1962.
TRANS. CERT. OF TITLE NO. 118885
A parcel of land (Lot No. 10, of the consolidation and subdivision plan Pcs-988, being
a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and
27-B, Psd-14901, G.L.R.O.Record No. 917), situated in the District of Cubao, Quezon
City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 11 of the consolidation and subdivision plan;
on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by
Lot No. 9 of the consolidation and subdivision plan. Beginning at a point marked 1 on
the plan, being S. 7 deg. 26W., 4269.90 m. more or less from B.L.L.M. No. 1, Mp. of
Mariquina;
thence S. 25 deg. 00E., 12.00 m. to point 2;
thence S. 64 deg. 59W., 29.99 m. to point 3;

beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360),

more or less. All points referred to are indicated on the plan and on the ground are
marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E.,
date of the original survey, April 8 to July 15, 1920, and that of the consolidation and
subdivision survey, April 24 to 26, 1941.
TRANS. CERT. OF TITLE NO. 118886
A parcel of land (Lot No. 11, of the consolidation and subdivision plan Pcs-988, being
a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and
27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon
City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 12 of the consolidation and subdivision plan;
on the SW., by Lot No. 3 of the consolidation and subdivision plan; on the NW., by Lot
No. 10 of the consolidation and subdivision plan. Beginning at a point marked 1 on
plan, being S. 79 deg. 07W., 4264.00 m. more or less from B.L.L.M. No. 1, Mp. of
Mariquina;
thence S. 64 deg. 59W., 29.99 m. to point 2;
thence N. 25 deg. 00W., 12.00 m. to point 3;
thence N. 64 deg. 59E., 29.99 m. to point 4;
thence S. 26 deg. 00E., 12.00 m. to the point of
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360),
more or less. All points referred to are indicated on the plan and on the ground, are
marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E.;
date of the original survey, April 8 to July 15, 1920, and that of the consolidation and
subdivision survey, April 24 to 26, 1941.
A parcel of land (Lot No. 13 of the consolidation and subdivision plan Pcs-988, being a
portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and
27-B, Psd-14901, G.L.R.O.Record No. 917), situated in the District of Cubao, Quezon
City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 14, of the consolidation; and subdivision plan;
on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by
Lot No. 12, of the consolidation and subdivision plan. Beginning at the point marked 1
on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of
Mariquina;

thence N. 25 deg. 00W., 12.00 m to point 4;

thence S. 64 deg. 58W., 30.00 m. to point 2;
thence N. 64 deg. 59E., 29.99 m. to the point of
thence N. 25 deg. 00W., 12.00 m. to point 3;

26
thence N. 64 deg. 59E., 29.99 m. to point 4;
thence S.25 deg. 00E., 12.00 m. to point of
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360, more
or less. All points referred to are indicated on the plan and on the ground are marked
by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E., date of the
original survey, April 8 to July 15, 1920, and that of the consolidation and subdivision
survey, April 24 to 26, 1941.
A parcel of land (Lot No. 14, of the consolidation and subdivision plan Pcs-988, being
a portion of the consolidated Lot No. 26, Block No. 6, Psd-127, and Lots Nos. 27-A and
27-B, Psd-14901, G.L.R.O. Record No. 917), situated in the District of Cubao, Quezon
City, Island of Luzon. Bounded on the NE., by Lot No. 4 of the consolidation and
subdivision plan; on the SE., by Lot No. 15, of the consolidation and subdivision plan;
on the SW., by Lot No. 3 of the consolidation and subdivision plan; and on the NW., by
Lot No. 13 of the consolidation and subdivision plan. Beginning at the point marked 1
on plan, being S.78 deg. 48W., 4258.20 m. more or less from B.L.L.M. No. 1, Mp. of
Mariquina;
thence S. 25 deg. 00E., 12.00 m. to point 2;
thence S. 65 deg. 00W., 30.00 m. to point 3;
thence S. 65 deg. 00W., 12.00 m. to point 4;
thence N.64 deg. 58E., 30.00 m. to the point of
beginning; containing an area of THREE HUNDRED SIXTY SQUARE METERS (360),
more or less. All points referred to are indicated on the plan and on the ground are
marked by P.L.S. Conc. Mons. 15 x 60 cm.; bearings true; declination 0 deg. 50E.,
date of the original survey, April 8 to July 15, 1920, and that of the consolidation and
subdivision survey, April 24 to 26, 1941.
That for and in consideration of the sum of FORTY THREE THOUSAND PESOS
(P43,000.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO,
Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite,
Philippines, the receipt whereof is acknowledged to my entire satisfaction, I do hereby
CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her
heirs, administrators and assigns, all my title, rights, interests and participations to
the abovedescribed parcels of land with the improvements thereon, with the
exception ofLOT NO. 11 COVERED BY T.C.T. NO. 118886, free of any and all liens and
encumbrances; and
That for and in consideration of the sum of FOUR THOUSAND EIGHT HUNDRED PESOS
(P4,800.00) PHILIPPINE CURRENCY, to me in hand paid by NATIVIDAD P. NAZARENO,

Filipino, single, of legal age and a resident of the Mun. of Naic, Prov. of Cavite,
Philippines, the receipt whereof is acknowledged to my entire satisfaction, I do hereby
CEDE, SELL, TRANSFER, CONVEY and ASSIGN unto the said Natividad P. Nazareno, her
heirs, administrators and assigns, all my title, rights, interests and participations in
and to Lot No. 11 covered by T.C.T. No. 118886 above-described, free of any and all
liens and encumbrances, with the understanding that the title to be issued in relation
hereto shall be separate and distinct from the title to be issued in connection with
Lots Nos. 13 and 14, although covered by the same title.
IN WITNESS WHEREOF, I have hereunto signed this deed of absolute sale in the City
of Manila, Philippines, this 29th day of January, 1970.[2]
By virtue of this deed, transfer certificates of title were issued to Natividad, to
wit: TCT No. 162738 (Lot 3-B), [3] TCT No. 162739 (Lot 3),[4] TCT No. 162735 (Lot 10),
[5]
TCT No. 162736 (Lot 11), [6] and TCT No. 162737 (Lots 13 and 14), [7] all of the
Register of Deeds of Quezon City.
Among the lots covered by the above Deed of Sale is Lot 3-B which is registered
under TCT No. 140946. This lot had been occupied by Romeo, his wife Eliza, and by
Maximino, Jr. since 1969. Unknown to Romeo, Natividad sold Lot 3-B on July 31, 1982
to Maximino, Jr.,[8] for which reason the latter was issued TCT No. 293701 by the
Register of Deeds of Quezon City.[9]
When Romeo found out about the sale to Maximino, Jr., he and his wife
Eliza locked Maximino, Jr. out of the house. On August 4, 1983, Maximino, Jr. brought
an action for recovery ofpossession and damages with prayer for writs of preliminary
injunction and mandatory injunction with the Regional Trial Court of Quezon City. On
December 12, 1986, the trial court ruled in favor of Maximino, Jr. In CA-G.R. CV No.
12932, the Court of Appeals affirmed the decision of the trial court. [10]
On June 15, 1988, Romeo in turn filed, on behalf of the estate of Maximino, Sr.,
the present case for annulment of sale with damages against Natividad and
Maximino, Jr. The case was filed in the Regional Trial Court of Quezon City, where it
was docketed as Civil Case No. 88-58. [11] Romeo sought the declaration of nullity of
the sale made on January 29, 1970 to Natividad and that made on July 31, 1982 to
Maximino, Jr. on the ground that both sales were void for lack of consideration.
On March 1, 1990, Natividad and Maximino, Jr. filed a third-party complaint
against the spouses Romeo and Eliza.[12] They alleged that Lot 3, which was included
in the Deed of Absolute Sale of January 29, 1970 to Natividad, had been
surreptitiously appropriated by Romeo by securing for himself a new title (TCT No.
277968) in his name.[13] They alleged that Lot 3 is being leased by the spouses Romeo
and Eliza to third persons. They therefore sought the annulment of the transfer to
Romeo and the cancellation of his title, the eviction of Romeo and his wife Eliza and
all persons claiming rights from Lot 3, and the payment of damages.

27
The issues having been joined, the case was set for trial. Romeo presented
evidence to show that Maximino and Aurea Nazareno never intended to sell the six
lots to Natividad and that Natividad was only to hold the said lots in trust for her
siblings. He presented the Deed of Partition and Distribution dated June 28, 1962
executed by Maximino Sr. and Aurea and duly signed by all of their children, except
Jose, who was then abroad and was represented by their mother, Aurea. By virtue of
this deed, the nine lots subject of this Deed of Partition were assigned by raffle as
follows:

Natividad said that she had the title to Lot 3 but it somehow got lost. She could
not get an original copy of the said title because the records of the Registrar of Deeds
had been destroyed by fire. She claimed she was surprised to learn that Romeo was
able to obtain a title to Lot 3 in his name.
Natividad insisted that she paid the amount stated in the Deed of Absolute Sale
dated January 29, 1970. She alleged that their parents had sold these properties to
their children instead of merely giving the same to them in order to impose on them
the value of hardwork.

1. Romeo - Lot 25-L (642 m2)

2. Natividad - Lots 23 (312 m2) and 24 (379 m2)
3. Maximino, Jr. - Lots 6 (338 m2) and 7 (338 m2)
4. Pacifico - Lots 13 (360 m2) and 14 (360 m2)
5. Jose - Lots 10 (360 m2) and 11 (360 m2)
Romeo received the title to Lot 25-L under his name, [14] while Maximino, Jr.
received Lots 6 and 7 through a Deed of Sale dated August 16, 1966 for the amount
of P9,500.00.[15]Pacifico and Joses shares were allegedly given to Natividad, who
agreed to give Lots 10 and 11 to Jose, in the event the latter came back from
abroad. Natividads share, on the other hand, was sold to third persons [16] because she
allegedly did not like the location of the two lots. But, Romeo said, the money realized
from the sale was given to Natividad.
Romeo also testified that Lot 3-B was bought for him by his father, while Lot 3
was sold to him for P7,000.00 by his parents on July 4, 1969. [17] However, he admitted
that a document was executed by his parents transferring six properties in Quezon
City, i.e., Lots 3, 3-B, 10, 11, 13, and 14, to Natividad.
Romeo further testified that, although the deeds of sale executed by his parents
in their favor stated that the sale was for a consideration, they never really paid any
amount for the supposed sale. The transfer was made in this manner in order to
avoid the payment of inheritance taxes.[18] Romeo denied stealing Lot 3 from his sister
but instead claimed that the title to said lot was given to him by Natividad in 1981
after their father died.
Natividad and Maximino, Jr. claimed that the Deed of Partition and Distribution
executed in 1962 was not really carried out. Instead, in December of 1969, their
parents offered to sell to them the six lots in Quezon City, i.e., Lots 3, 3-B, 10, 11, 13
and 14. However, it was only Natividad who bought the six properties because she
was the only one financially able to do so. Natividad said she sold Lots 13 and 14 to
Ros-Alva Marketing Corp.[19] and Lot 3-B to Maximino, Jr. for P175,000.00.[20] Natividad
admitted that Romeo and the latters wife were occupying Lot 3-B at that time and
that she did not tell the latter about the sale she had made to Maximino, Jr.

Natividad accused Romeo of filing this case to harass her after Romeo lost in the
action for recovery of possession (Civil Case No. Q-39018) which had been brought
against him by Maximino, Jr. It appears that before the case filed by Romeo could be
decided, the Court of Appeals rendered a decision in CA-GR CV No. 12932 affirming
the trial courts decision in favor of Maximino, Jr.
On August 10, 1992, the trial court rendered a decision, the dispositive portion
of which states:
WHEREFORE, judgment is hereby rendered declaring the nullity of the Deed of Sale
dated January 29, 1970. Except as to Lots 3, 3-B, 13 and 14 which had passed on to
third persons, the defendant Natividad shall hold the rest in trust for Jose Nazareno to
whom the same had been adjudicated. The Register of Deeds of Quezon City is
directed to annotate this judgment on Transfer Certificate of Titles Nos. 162735 and
162736 as a lien in the titles of Natividad P. Nazareno.
The defendants counterclaim is dismissed. Likewise, the third-party complaint is
dismissed.
The defendants are hereby directed to pay to the plaintiff jointly and severally the
sum of P30,000 as and for attorneys fees. Likewise, the third-party plaintiff is directed
to pay the third-party defendants attorneys fees of P20,000.
All other claims by one party against the other are dismissed.
SO ORDERED.[21]
Natividad and Maximino, Jr. filed a motion for reconsideration. As a result, on
October 14, 1992 the trial court modified its decision as follows:
WHEREFORE, the plaintiffs Partial Motion for Reconsideration is hereby granted. The
judgment dated August 10, 1992 is hereby amended, such that the first paragraph of
its dispositive portion is correspondingly modified to read as follows:
WHEREFORE, judgment is hereby rendered declaring the nullity of the Deeds of Sale
dated January 29, 1970 and July 31, 1982.

28
Except as to Lots 3, 13 and 14 which had passed on to third person, the defendant
Natividad shall hold the rest OF THE PROPERTIES COVERED BY THE DEED OF SALE
DATED JANUARY 29, 1970 (LOTS 10 and 11) in trust for Jose Nazareno to whom the
same had been adjudicated.

2. WHETHER OR NOT THE RESPONDENT COURT GROSSLY MISAPPRECIATED

THE FACTS OF THE CASE WITH RESPECT TO THE VALIDITY OF THE SAID
DEED OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) IN THE
LIGHT OF THE FOLLOWING:

The Register of Deeds of Quezon City is directed to annotate this judgment on

Transfer Certificates of Title No. 162735 and 162736 as a lien on the titles of
Natividad P. Nazareno.

A) THE DOCUMENTARY EVIDENCE, ALL OF WHICH ARE NOTARIZED,

EXECUTED BY THE DECEASED SPOUSES DURING THEIR LIFETIME
INVOLVING SOME OF THEIR CONJUGAL PROPERTIES.

LIKEWISE, THE SAID REGISTER OF DEEDS IS DIRECTED TO CANCEL TCT NO. 293701
(formerly 162705) OVER LOT 3-B AND RESTORE TCT NO. 140946 IN THE NAME OF
MAXIMINO NAZARENO SR. AND AUREA POBLETE.[22]

B) THE EXECUTION OF AN EXTRA-JUDICIAL PARTITION WITH WAIVER OF

RIGHTS AND CONFIRMATION OF SALE DATED MAY 24, 1975 (EXH.
14A) OF THE ESTATE OF AUREA POBLETE BY THE DECEASED
MAXIMINO A. NAZARENO, SR. AND THEIR CHILDREN INVOLVING THE
ONLY REMAINING ESTATE OF AUREA POBLETE THUS IMPLIEDLY
ADMITTING THE VALIDITY OF PREVIOUS DISPOSITIONS MADE BY
SAID DECEASED SPOUSES ON THEIR CONJUGAL PROPERTIES, HALF
OF WHICH WOULD HAVE BECOME A PART OF AUREA POBLETES
ESTATE UPON HER DEMISE.

On appeal to the Court of Appeals, the decision of the trial court was modified in
the sense that titles to Lot 3 (in the name of Romeo Nazareno) and Lot 3-B (in the
name of Maximino Nazareno, Jr.), as well as to Lots 10 and 11 were cancelled and
ordered restored to the estate of Maximino Nazareno, Sr. The dispositive portion of
the decision dated May 29, 1998 reads:
WHEREFORE, the appeal is GRANTED. The decision and the order in question are
modified as follows:
1. The Deed of Absolute Sale dated 29 January 1970 and the Deed of Absolute Sale
dated 31 July 1982 are hereby declared null and void;
2. Except as to Lots 13 and 14 ownership of which has passed on to third persons, it
is hereby declared that Lots 3, 3-B, 10 and 11 shall form part of the estate of the
deceased Maximino Nazareno, Sr.;
3. The Register of Deeds of Quezon City is hereby ordered to restore TCT No. 140946
(covering Lot 3-B), TCT No. 132019 (covering Lot 3), TCT No. 118885 (covering Lot
10), and TCT No. 118886 (covering Lot 11).[23]
Petitioners filed a motion for reconsideration but it was denied in a resolution
dated May 27, 1999. Hence this petition.
Petitioners raise the following issues:
1. WHETHER OR NOT THE UNCORROBORATED TESTIMONY OF PRIVATE
RESPONDENT ROMEO P. NAZARENO CAN DESTROY THE FULL FAITH
AND CREDIT ACCORDED TO NOTARIZED DOCUMENTS LIKE THE DEED
OF ABSOLUTE SALE DATED JANUARY 29, 1970 (EXH. 1) EXECUTED BY
THE DECEASED SPOUSES MAXIMINO A. NAZARENO, SR. AND AUREA
POBLETE IN FAVOR OF PETITIONER NATIVIDAD P. NAZARENO.

C) THE ADMISSION MADE BY MAXIMINO A. NAZARENO, SR. IN HIS

TESTIMONY IN OPEN COURT ON AUGUST 13, 1980 DURING HIS
LIFETIME IN CIVIL CASE NO. NC-712 (EXH. 81, 81B) THAT HE HAD
SOLD CERTAIN PROPERTIES IN FAVOR OF NATIVIDAD P. NAZARENO
THUS BELYING THE CLAIM OF ROMEO P. NAZARENO THAT THE DEED
OF ABSOLUTE SALE DATED JANUARY 29, 1970 IS ONE AMONG THE
DOCUMENTS EXECUTED BY THE DECEASED SPOUSES TO BE
WITHOUT CONSIDERATION.
D) THE ADMISSIONS MADE BY ROMEO P. NAZARENO HIMSELF
CONTAINED IN A FINAL DECISION OF THE RESPONDENT COURT IN
CA-GR CV NO. 12932 DATED AUGUST 31, 1992 AND AN ANNEX
APPEARING IN HIS ANSWER TO THE COMPLAINT IN CIVIL CASE NO.
Q-39018 (EXH. 11-B) INVOLVING LOT 3B, ONE OF THE PROPERTIES
IN QUESTION THAT THE SAID PROPERTY IS OWNED BY PETITIONER
NATIVIDAD P. NAZARENO.
E) THE PARTIAL PROJECT OF PARTITION DATED MAY 24, 1995 WHICH
WAS APPROVED BY THE INTESTATE COURT IN SP. PROC. NO. NC-28
AND EXECUTED IN ACCORDANCE WITH THE LATTER COURTS FINAL
ORDER DATED JULY 9, 1991 DETERMINING WHICH WERE THE
REMAINING PROPERTIES OF THE ESTATE.
3. WHETHER OR NOT THE DEED OF ABSOLUTE SALE DATED JANUARY 29,
1970 EXECUTED BY THE DECEASED SPOUSES MAXIMINO A. NAZARENO,
SR. AND AUREA POBLETE DURING THEIR LIFETIME INVOLVING THEIR
CONJUGAL PROPERTIES IS AN INDIVISIBLE CONTRACT? AND IF SO
WHETHER OR NOT UPON THEIR DEATH, THE ESTATE OF MAXIMINO A.
NAZARENO, SR. ALONE CAN SEEK THE ANNULMENT OF SAID SALE?

29
4. WHETHER OR NOT THE SALE OF LOT 3 UNDER THE DEED OF ABSOLUTE
SALE DATED JANUARY 29, 1970 IN FAVOR OF PETITIONER NATIVIDAD P.
NAZARENO, IS VALID CONSIDERING THAT AS PER THE ORDER OF THE
LOWER COURT DATED NOVEMBER 21, 1990. ROMEO NAZARENO
ADMITTED THAT HE DID NOT PAY THE CONSIDERATION STATED IN THE
DEED OF ABSOLUTE SALE DATED JULY 4, 1969 EXECUTED BY THE
DECEASED SPOUSES IN HIS FAVOR (EXH. M-2).
5. WHETHER OR NOT AS A CONSEQUENCE, THE TITLE ISSUED IN THE NAME
OF ROMEO P. NAZARENO, TCT NO. 277968 (EXH. M) SHOULD BE
CANCELLED AND DECLARED NULL AND VOID AND A NEW ONE ISSUED
IN FAVOR OF NATIVIDAD P. NAZARENO PURSUANT TO THE DEED OF
ABSOLUTE SALE EXECUTED IN THE LATTERS FAVOR ON JANUARY 29,
1970 BY THE DECEASED SPOUSES.[24]
We find the petition to be without merit.
First. Petitioners argue that the lone testimony of Romeo is insufficient to
overcome the presumption of validity accorded to a notarized document.
To begin with, the findings of fact of the Court of Appeals are conclusive on the
parties and carry even more weight when these coincide with the factual findings of
the trial court. This Court will not weigh the evidence all over again unless there is a
showing that the findings of the lower court are totally devoid of support or are
clearly erroneous so as to constitute serious abuse of discretion. [25] The lone
testimony of a witness, if credible, is sufficient. In this case, the testimony of Romeo
that no consideration was ever paid for the sale of the six lots to Natividad was found
to be credible both by the trial court and by the Court of Appeals and it has not been
successfully rebutted by petitioners. We, therefore, have no reason to overturn the
findings by the two courts giving credence to his testimony.
The fact that the deed of sale was notarized is not a guarantee of the validity of
its contents. As held in Suntay v. Court of Appeals:[26]
Though the notarization of the deed of sale in question vests in its favor the
presumption of regularity, it is not the intention nor the function of the notary public
to validate and make binding an instrument never, in the first place, intended to have
any binding legal effect upon the parties thereto. The intention of the parties still and
always is the primary consideration in determining the true nature of a contract.
Second. Petitioners make capital of the fact that in C.A.-G.R. CV No. 12932,
which was declared final by this Court in G.R. No. 107684, the Court of Appeals
upheld the right of Maximino, Jr. to recover possession of Lot 3-B. In that case, the
Court of Appeals held:
As shown in the preceding disquisition, Natividad P. Nazareno acquired the property in
dispute by purchase in 1970. She was issued Transfer Certificate of Title No. 162738

of the Registry of Deeds of Quezon City. When her parents died, her mother Aurea
Poblete-Nazareno in 1970 and her father Maximino A. Nazareno, Sr. in 1980,
Natividad P. Nazareno had long been the exclusive owner of the property in
question. There was no way therefore that the aforesaid property could belong to the
estate of the spouses Maximino Nazareno, Sr. and Aurea Poblete. The mere fact that
Romeo P. Nazareno included the same property in an inventory of the properties of
the deceased Maximino A. Nazareno, Sr. will not adversely affect the ownership of the
said realty. Appellant Romeo P. Nazarenos suspicion that his parents had entrusted all
their assets under the care and in the name of Natividad P. Nazareno, their eldest
living sister who was still single, to be divided upon their demise to all the compulsory
heirs, has not progressed beyond mere speculation. His barefaced allegation on the
point not only is without any corroboration but is even belied by documentary
evidence. The deed of absolute sale (Exhibit B), being a public document (Rule 132,
Secs. 19 and 23, Revised Rules on Evidence), is entitled to great weight; to contradict
the same, there must be evidence that is clear, convincing and more than merely
preponderant (Yturralde vs. Aganon, 28 SCRA 407; Favor vs. Court of Appeals, 194
SCRA 308). Defendants-appellants own conduct disproves their claim of co-ownership
over the property in question.Being themselves the owner of a ten-unit apartment
building along Stanford St., Cubao Quezon City, defendants-appellants, in a letter of
demand to vacate addressed to their tenants (Exhibits P, P-1 and P-2) in said
apartment, admitted that the house and lot located at No. 979 Aurora Blvd., Quezon
City where they were residing did not belong to them. Also, when they applied for a
permit to repair the subject property in 1977, they stated that the property belonged
to and was registered in the name of Natividad P. Nazareno. Among the documents
submitted to support their application for a building permit was a copy of TCT No.
162738 of the Registry of Deeds of Quezon City in the name of Natividad Nazareno
(Exhibit O and submarkings; tsn March 15, 1985, pp. 4-5).[27]
To be sure, that case was for recovery of possession based on ownership of Lot
3-B. The parties in that case were Maximino, Jr., as plaintiff, and the spouses Romeo
and Eliza, as defendants. On the other hand, the parties in the present case for
annulment of sale are the estate of Maximino, Sr., as plaintiff, and Natividad and
Maximino, Jr., as defendants. Romeo and Eliza were named third-party defendants
after a third-party complaint was filed by Natividad and Maximino, Jr. As already
stated, however, this third-party complaint concerned Lot 3, and not Lot 3-B.
The estate of a deceased person is a juridical entity that has a personality of its
own.[28] Though Romeo represented at one time the estate of Maximino, Sr., the latter
has a separate and distinct personality from the former. Hence, the judgment in CAGR CV No. 12932 regarding the ownership of Maximino, Jr. over Lot 3-B binds Romeo
and Eliza only, and not the estate of Maximino, Sr., which also has a right to recover
properties which were wrongfully disposed.
Furthermore, Natividads title was clearly not an issue in the first case. In other
words, the title to the other five lots subject of the present deed of sale was not in
issue in that case. If the first case resolved anything, it was the ownership of
Maximino, Jr. over Lot 3-B alone.

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Third. Petitioners allege that, as shown by several deeds of sale executed by
Maximino, Sr. and Aurea during their lifetime, the intention to dispose of their real
properties is clear.Consequently, they argue that the Deed of Sale of January 29,
1970 should also be deemed valid.
This is a non-sequitur. The fact that other properties had allegedly been sold by
the spouses Maximino, Sr. and Aurea does not necessarily show that the Deed of Sale
made on January 29, 1970 is valid.
Romeo does not dispute that their parents had executed deeds of sale. The
question, however, is whether these sales were made for a consideration. The trial
court and the Court of Appeals found that the Nazareno spouses transferred their
properties to their children by fictitious sales in order to avoid the payment of
inheritance taxes.
Indeed, it was found both by the trial court and by the Court of Appeals that
Natividad had no means to pay for the six lots subject of the Deed of Sale.
All these convince the Court that Natividad had no means to pay for all the lots she
purportedly purchased from her parents. What is more, Romeos admission that he did
not pay for the transfer to him of lots 3 and 25-L despite the considerations stated in
the deed of sale is a declaration against interest and must ring with resounding
truth. The question is, why should Natividad be treated any differently, i.e., with
consideration for the sale to her, when she is admittedly the closest to her parents
and the one staying with them and managing their affairs? It just seems without
reason. Anyway, the Court is convinced that the questioned Deed of Sale dated
January 29, 1970 (Exh. A or 1) is simulated for lack of consideration, and therefore
ineffective and void.[29]
In affirming this ruling, the Court of Appeals said:
Facts and circumstances indicate badges of a simulated sale which make the Deed of
Absolute Sale dated 29 January 1970 void and of no effect. In the case of Suntay vs.
Court of Appeals (251 SCRA 430 [1995]), the Supreme Court held that badges of
simulation make a deed of sale null and void since parties thereto enter into a
transaction to which they did not intend to be legally bound.
It appears that it was the practice in the Nazareno family to make simulated transfers
of ownership of real properties to their children in order to avoid the payment of
inheritance taxes. Per the testimony of Romeo, he acquired Lot 25-L from his parents
through a fictitious or simulated sale wherein no consideration was paid by him. He
even truthfully admitted that the sale of Lot 3 to him on 04 July 1969 (Deed of
Absolute Sale, Records, Vol. II, p. 453) likewise had no consideration. This document
was signed by the spouses Max, Sr. and Aurea as vendors while defendant-appellant
Natividad signed as witness.[30]
Fourth. Petitioners argue further:

The Deed of Absolute Sale dated January 29, 1970 is an indivisible contract founded
on an indivisible obligation. As such, it being indivisible, it can not be annulled by only
one of them. And since this suit was filed only by the estate of Maximino A. Nazareno,
Sr. without including the estate of Aurea Poblete, the present suit must fail. The
estate of Maximino A. Nazareno, Sr. can not cause its annulment while its validity is
sustained by the estate of Aurea Poblete. [31]
An obligation is indivisible when it cannot be validly performed in parts,
whatever may be the nature of the thing which is the object thereof. The indivisibility
refers to the prestation and not to the object thereof. [32] In the present case, the Deed
of Sale of January 29, 1970 supposedly conveyed the six lots to Natividad. The
obligation is clearly indivisible because the performance of the contract cannot be
done in parts, otherwise the value of what is transferred is diminished. Petitioners are
therefore mistaken in basing the indivisibility of a contract on the number of obligors.
In any case, if petitioners only point is that the estate of Maximino, Sr. alone
cannot contest the validity of the Deed of Sale because the estate of Aurea has not
yet been settled, the argument would nonetheless be without merit. The validity of
the contract can be questioned by anyone affected by it. [33] A void contract is
inexistent from the beginning. Hence, even if the estate of Maximino, Sr. alone
contests the validity of the sale, the outcome of the suit will bind the estate of Aurea
as if no sale took place at all.
Fifth. As to the third-party complaint concerning Lot 3, we find that this has been
passed upon by the trial court and the Court of Appeals. As Romeo admitted, no
consideration was paid by him to his parents for the Deed of Sale. Therefore, the sale
was void for having been simulated. Natividad never acquired ownership over the
property because the Deed of Sale in her favor is also void for being without
consideration and title to Lot 3 cannot be issued in her name.
Nonetheless, it cannot be denied that Maximino, Sr. intended to give the six
Quezon City lots to Natividad. As Romeo testified, their parents executed the Deed of
Sale in favor of Natividad because the latter was the only female and the only
unmarried member of the family. [34] She was thus entrusted with the real properties in
behalf of her siblings. As she herself admitted, she intended to convey Lots 10 and 11
to Jose in the event the latter returned from abroad. There was thus an implied trust
constituted in her favor. Art. 1449 of the Civil Code states:
There is also an implied trust when a donation is made to a person but it appears that
although the legal estate is transmitted to the donee, he nevertheless is either to
have no beneficial interest or only a part thereof.
There being an implied trust, the lots in question are therefore subject to
collation in accordance with Art. 1061 which states:
Every compulsory heir, who succeeds with other compulsory heirs, must bring into
the mass of the estate any property or right which he may have received from the

31
decedent, during the lifetime of the latter, by way of donation, or any other
gratuitous title, in order that it may be computed in the determination of the legitime
of each heir, and in the account of the partition.

certificate of title issued therefor and the law will in no way oblige him to go behind
the certificate to determine the condition of the property. [36]
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

As held by the trial court, the sale of Lots 13 and 14 to Ros-Alva Marketing, Corp.
on April 20, 1979[35] will have to be upheld for Ros-Alva Marketing is an innocent
purchaser for value which relied on the title of Natividad. The rule is settled that
every person dealing with registered land may safely rely on the correctness of the

SO ORDERED.