G.R. No.

L-55138 September 28, 1984

ERNESTO V. RONQUILLO, petitioner,

vs.
HONORABLE COURT OF APPEALS AND ANTONIO P. SO, respondents.

Gloria A. Fortun for petitioner.

Roselino Reyes Isler for respondents.

CUEVAS, J.:

This is a petition to review the Resolution dated June 30, 1980 of the then Court of Appeals (now the
Intermediate Appellate Court) in CA-G.R. No. SP-10573, entitled "Ernesto V. Ronquillo versus the
Hon. Florellana Castro-Bartolome, etc." and the Order of said court dated August 20, 1980, denying
petitioner's motion for reconsideration of the above resolution.

PETITIONER Ernesto V. Ronquillo was one of four (4) defendants in Civil Case No. 33958 of the
then Court of First Instance of Rizal (now the Regional Trial Court), Branch XV filed by PRIVATE
RESPONDENT ANTONIO P. SO, on July 23, 1979, for the collection of the sum of P117,498.98
plus attorney's fees and costs. The other defendants were Offshore Catertrade Inc., Johnny Tan and
Pilar Tan. The amount of P117,498.98 sought to be collected represents the value of the checks
issued by said defendants in payment for foodstuffs delivered to and received by them. The said
checks were dishonored by the drawee bank.

On December 13, 1979, the lower court rendered its Decision 1 based on the compromise
agreement submitted by the parties, the pertinent portion of which reads as follows:

1. Plaintiff agrees to reduce its total claim of P117,498-95 to only P110,000 .00 and
defendants agree to acknowledge the validity of such claim and further bind
themselves to initially pay out of the total indebtedness of P110,000.00 the amount of
P55,000.00 on or before December 24, 1979, the balance of P55,000.00,
defendants individually and jointly agree to pay within a period of six months
from January 1980, or before June 30, 1980; (Emphasis supplied)

xxx xxx xxx

4. That both parties agree that failure on the part of either party to comply with the
foregoing terms and conditions, the innocent party will be entitled to an execution of
the decision based on this compromise agreement and the defaulting party agrees
and hold themselves to reimburse the innocent party for attorney's fees, execution
fees and other fees related with the execution.

xxx xxx xxx

On December 26, 1979, herein private respondent (then plaintiff filed a Motion for Execution on
the ground that defendants failed to make the initial payment of P55,000.00 on or before
December 24, 1979 as provided in the Decision. Said motion for execution was opposed by herein
petitioner (as one of the defendants) contending that his inability to make the payment was due to
private respondent's own act of making himself scarce and inaccessible on December 24,
1979. Petitioner then prayed that private respondent be ordered to accept his payment in the amount
of P13,750.00. 2

During the hearing of the Motion for Execution and the Opposition thereto on January 16, 1980,
petitioner, as one of the four defendants, tendered the amount of P13,750.00, as his prorata
share in the P55,000.00 initial payment. Another defendant, Pilar P. Tan, offered to pay the same
amount. Because private respondent refused to accept their payments, demanding from them the
full initial installment of P 55,000.00, petitioner and Pilar Tan instead deposited the said amount with
the Clerk of Court. The amount deposited was subsequently withdrawn by private respondent. 3

On the same day, January 16, 1980, the lower court ordered the issuance of a writ of execution
for the balance of the initial amount payable, against the other two defendants, Offshore Catertrade
Inc. and Johnny Tan 4 who did not pay their shares.

On January 22, 1980, private respondent moved for the reconsideration and/or modification of the
aforesaid Order of execution and prayed instead for the "execution of the decision in its entirety
against all defendants, jointly and severally." 5 Petitioner opposed the said motion arguing that
under the decision of the lower court being executed which has already become final, the liability of
the four (4) defendants was not expressly declared to be solidary, consequently each defendant
is obliged to pay only his own pro-rata or 1/4 of the amount due and payable.

On March 17, 1980, the lower court issued an Order reading as follows:

ORDER

Regardless of whatever the compromise agreement has intended the payment

whether jointly or individually, or jointly and severally, the fact is that only P27,500.00
has been paid. There appears to be a non-payment in accordance with the
compromise agreement of the amount of P27,500.00 on or before December 24,
1979. The parties are reminded that the payment is condition sine qua non to the
lifting of the preliminary attachment and the execution of an affidavit of desistance.

WHEREFORE, let writ of execution issue as prayed for

On March 17, 1980, petitioner moved for the reconsideration of the above order, and the same was
set for hearing on March 25,1980.

Meanwhile, or more specifically on March 19, 1980, a writ of execution was issued for the
satisfaction of the sum of P82,500.00 as against the properties of the defendants (including
petitioner), "singly or jointly liable." 6

On March 20, 1980, Special Sheriff Eulogio C. Juanson of Rizal, issued a notice of sheriff's sale, for
the sale of certain furnitures and appliances found in petitioner's residence to satisfy the sum of
P82,500.00. The public sale was scheduled for April 2, 1980 at 10:00 a.m. 7

Petitioner's motion for reconsideration of the Order of Execution dated March 17, 1980 which was
set for hearing on March 25, 1980, was upon motion of private respondent reset to April 2, 1980 at
8:30 a.m. Realizing the actual threat to property rights poised by the re-setting of the hearing of s
motion for reconsideration for April 2, 1980 at 8:30 a.m. such that if his motion for reconsideration
would be denied he would have no more time to obtain a writ from the appellate court to stop the
scheduled public sale of his personal properties at 10:00 a.m. of the same day, April 2, 1980,
petitioner filed on March 26, 1980 a petition for certiorari and prohibition with the then Court of
Appeals (CA-G.R. No. SP-10573), praying at the same time for the issuance of a restraining order to
stop the public sale. He raised the question of the validity of the order of execution, the writ of
execution and the notice of public sale of his properties to satisfy fully the entire unpaid obligation
payable by all of the four (4) defendants, when the lower court's decision based on the
compromise agreement did not specifically state the liability of the four (4) defendants to be
solidary.

On April 2, 1980, the lower court denied petitioner's motion for reconsideration but the
scheduled public sale in that same day did not proceed in view of the pendency of a certiorari
proceeding before the then Court of Appeals.

On June 30, 1980, the said court issued a Resolution, the pertinent portion of which reads as
follows:

This Court, however, finds the present petition to have been filed prematurely. The
rule is that before a petition for certiorari can be brought against an order of a lower
court, all remedies available in that court must first be exhausted. In the case at bar,
herein petitioner filed a petition without waiting for a resolution of the Court on the
motion for reconsideration, which could have been favorable to the petitioner. The
fact that the hearing of the motion for reconsideration had been reset on the same
day the public sale was to take place is of no moment since the motion for
reconsideration of the Order of March 17, 1980 having been seasonably filed, the
scheduled public sale should be suspended. Moreover, when the defendants,
including herein petitioner, defaulted in their obligation based on the compromise
agreement, private respondent had become entitled to move for an execution of the
decision based on the said agreement.

WHEREFORE, the instant petition for certiorari and prohibition with preliminary
injunction is hereby denied due course. The restraining order issued in our resolution
dated April 9, 1980 is hereby lifted without pronouncement as to costs.

SO ORDERED.

Petitioner moved to reconsider the aforesaid Resolution alleging that on April 2, 1980, the lower
court had already denied the motion referred to and consequently, the legal issues being raised in
the petition were already "ripe" for determination. 8 The said motion was however denied by the
Court of Appeals in its Resolution dated August 20, 1980.

Hence, this petition for review, petitioner contending that the Court of Appeals erred in

(a) declaring as premature, and in denying due course to the petition to restrain implementation of a
writ of execution issued at variance with the final decision of the lower court filed barely four (4) days
before the scheduled public sale of the attached movable properties;

(b) denying reconsideration of the Resolution of June 30, 1980, which declared as premature the
filing of the petition, although there is proof on record that as of April 2, 1980, the motion referred to
was already denied by the lower court and there was no more motion pending therein;

(c) failing to resolve the legal issues raised in the petition and in not declaring the liabilities of the
defendants, under the final decision of the lower court, to be only joint;
(d) not holding the lower court's order of execution dated March 17, 1980, the writ of execution and
the notice of sheriff's sale, executing the lower court's decision against "all defendants, singly and
jointly", to be at variance with the lower court's final decision which did not provide for solidary
obligation; and

(e) not declaring as invalid and unlawful the threatened execution, as against the properties of
petitioner who had paid his pro-rata share of the adjudged obligation, of the total unpaid amount
payable by his joint co-defendants.

The foregoing assigned errors maybe synthesized into the more important issues of

1. Was the filing of a petition for certiorari before the then Court of Appeals against the Order of
Execution issued by the lower court, dated March 17, 1980, proper, despite the pendency of a
motion for reconsideration of the same questioned Order?

2. What is the nature of the liability of the defendants (including petitioner), was it merely
joint, or was it several or solidary?

Anent the first issue raised, suffice it to state that while as a general rule, a motion for
reconsideration should precede recourse to certiorari in order to give the trial court an opportunity to
correct the error that it may have committed, the said rule is not absolutes 9 and may be dispensed
with in instances where the filing of a motion for reconsideration would serve no useful purpose,
such as when the motion for reconsideration would raise the same point stated in the motion 10 or
where the error is patent for the order is void 11 or where the relief is extremely urgent, as in cases
where execution had already been ordered 12 where the issue raised is one purely of law. 13

In the case at bar, the records show that not only was a writ of execution issued but petitioner's
properties were already scheduled to be sold at public auction on April 2, 1980 at 10:00 a.m. The
records likewise show that petitioner's motion for reconsideration of the questioned Order of
Execution was filed on March 17, 1980 and was set for hearing on March 25, 1980 at 8:30 a.m., but
upon motion of private respondent, the hearing was reset to April 2, 1980 at 8:30 a.m., the very
same clay when petitioner's properties were to be sold at public auction. Needless to state that
under the circumstances, petitioner was faced with imminent danger of his properties being
immediately sold the moment his motion for reconsideration is denied. Plainly, urgency prompted
recourse to the Court of Appeals and the adequate and speedy remedy for petitioner under the
situation was to file a petition for certiorari with prayer for restraining order to stop the sale. For him
to wait until after the hearing of the motion for reconsideration on April 2, 1980 before taking
recourse to the appellate court may already be too late since without a restraining order, the public
sale can proceed at 10:00 that morning. In fact, the said motion was already denied by the lower
court in its order dated April 2, 1980 and were it not for the pendency of the petition with the Court of
Appeals and the restraining order issued thereafter, the public sale scheduled that very same
morning could have proceeded.

The other issue raised refers to the nature of the liability of petitioner, as one of the defendants in
Civil Case No. 33958, that is whether or not he is liable jointly or solidarily.

In this regard, Article 1207 and 1208 of the Civil Code provides

Art. 1207. The concurrence 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 prestation. Then is a solidary
 liability only when the obligation expressly so states, or when the law or the nature of
the obligation requires solidarity.

Art. 1208. If from the law,or the nature or the wording of the obligation 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 and
debtors, the credits or debts being considered distinct from one another, subject to
the Rules of Court governing the multiplicity of quits.

The decision of the lower court based on the parties' compromise agreement, provides:

1. Plaintiff agrees to reduce its total claim of P117,498.95 to only P110,000.00 and
defendants agree to acknowledge the validity of such claim and further bind
themselves to initially pay out of the total indebtedness of P110,000.00, the amount
of P5,000.00 on or before December 24, 1979, the balance of P55,000.00,
defendants individually and jointly agree to pay within a period of six months from
January 1980 or before June 30, 1980. (Emphasis supply)

Clearly then, by the express term of the compromise agreement and the decision based upon
it, the defendants obligated themselves to pay their obligation "individually and jointly".

The term "individually" has the same meaning as "collectively", "separately", "distinctively",
respectively or "severally". An agreement to be "individually liable" undoubtedly creates a
several obligation, and a "several obligation is one by which one individual binds himself to
perform the whole obligation.

In the case of Parot vs. Gemora 16 We therein ruled that "the phrase juntos or separadamente or in
the promissory note is an express statement making each of the persons who signed it individually
liable for the payment of the fun amount of the obligation contained therein." Likewise in Un Pak
Leung vs. Negorra We held that "in the absence of a finding of facts that the defendants made
themselves individually hable for the debt incurred they are each liable only for one-half of said
amount

The obligation in the case at bar being described as "individually and jointly", the same is
therefore enforceable against one of the numerous obligors.

IN VIEW OF THE FOREGOING CONSIDERATIONS, the instant petition is hereby DISMISSED.

Cost against petitioner.

SO ORDERED.
G.R. No. L-36413 September 26, 1988

MALAYAN INSURANCE CO., INC., petitioner,

vs.
THE HON. COURT OF APPEALS (THIRD DIVISION) MARTIN C. VALLEJOS, SIO CHOY, SAN
LEON RICE MILL, INC. and PANGASINAN TRANSPORTATION CO., INC., respondents.

Freqillana Jr. for petitioner.

B.F. Estrella & Associates for respondent Martin Vallejos.

Vicente Erfe Law Office for respondent Pangasinan Transportation Co., Inc.

Nemesio Callanta for respondent Sio Choy and San Leon Rice Mill, Inc.

PADILLA, J.:

Review on certiorari of the judgment * of the respondent appellate court in CA-G.R. No. 47319-R,
dated 22 February 1973, which affirmed, with some modifications, the decision, ** dated 27 April
1970, rendered in Civil Case No. U-2021 of the Court of First Instance of Pangasinan.

The antecedent facts of the case are as follows:

On 29 March 1967, herein PETITIONER, Malayan Insurance Co., Inc., issued in favor of private
RESPONDENT Sio Choy Private Car Comprehensive Policy No. MRO/PV-15753, effective from
18 April 1967 to 18 April 1968, covering a Willys jeep with Motor No. ET-03023 Serial No. 351672,
and Plate No. J-21536, Quezon City, 1967. The insurance coverage was for "own damage" not to
exceed P600.00 and "third-party liability" in the amount of P20,000.00.

During the effectivity of said insurance policy, and more particularly on 19 December 1967, at about
3:30 o'clock in the afternoon, the insured jeep, while being driven by one Juan P. Campollo an
employee of the respondent San Leon Rice Mill, Inc., collided with a passenger bus belonging
to the respondent Pangasinan Transportation Co., Inc. (PANTRANCO, for short) at the national
highway in Barrio San Pedro, Rosales, Pangasinan, causing damage to the insured vehicle and
injuries to the driver, Juan P. Campollo, and the respondent Martin C. Vallejos, who was riding in
the ill-fated jeep.

As a result, Martin C. Vallejos filed an action for damages against Sio Choy, Malayan Insurance
Co., Inc. and the PANTRANCO before the Court of First Instance of Pangasinan, which was
docketed as Civil Case No. U-2021. He prayed therein that the defendants be ordered to pay him,
jointly and severally, the amount of P15,000.00, as reimbursement for medical and hospital
expenses; P6,000.00, for lost income; P51,000.00 as actual, moral and compensatory damages;
and P5,000.00, for attorney's fees.

Answering, PANTRANCO claimed that the jeep of Sio Choy was then operated at an excessive
speed and bumped the PANTRANCO bus which had moved to, and stopped at, the shoulder of the
highway in order to avoid the jeep; and that it had observed the diligence of a good father of a family
to prevent damage, especially in the selection and supervision of its employees and in the
maintenance of its motor vehicles. It prayed that it be absolved from any and all liability.
Defendant Sio Choy and the petitioner insurance company, in their answer, also denied liability
to the plaintiff, claiming that the fault in the accident was solely imputable to the PANTRANCO.

Sio Choy, however, later filed a separate answer with a cross-claim against the herein petitioner
wherein he alleged that he had actually paid the plaintiff, Martin C. Vallejos, the amount of P5,000.00
for hospitalization and other expenses, and, in his cross-claim against the herein petitioner, he
alleged that the petitioner had issued in his favor a private car comprehensive policy wherein the
insurance company obligated itself to indemnify Sio Choy, as insured, for the damage to his motor
vehicle, as well as for any liability to third persons arising out of any accident during the effectivity of
such insurance contract, which policy was in full force and effect when the vehicular accident
complained of occurred. He prayed that he be reimbursed by the insurance company for the amount
that he may be ordered to pay.

Also later, the herein petitioner sought, and was granted, leave to file a third-party complaint
against the San Leon Rice Mill, Inc. for the reason that the person driving the jeep of Sio Choy, at
the time of the accident, was an employee of the San Leon Rice Mill, Inc. performing his duties
within the scope of his assigned task, and not an employee of Sio Choy; and that, as the San
Leon Rice Mill, Inc. is the employer of the deceased driver, Juan P. Campollo, it should be
liable for the acts of its employee, pursuant to Art. 2180 of the Civil Code. The herein petitioner
prayed that judgment be rendered against the San Leon Rice Mill, Inc., making it liable for the
amounts claimed by the plaintiff and/or ordering said San Leon Rice Mill, Inc. to reimburse and
indemnify the petitioner for any sum that it may be ordered to pay the plaintiff.

After trial, judgment was rendered as follows:

WHEREFORE, in view of the foregoing findings of this Court judgment is hereby

rendered in favor of the plaintiff and against Sio Choy and Malayan Insurance
Co., Inc., and third-party defendant San Leon Rice Mill, Inc., as follows:

(a) P4,103 as actual damages;

(b) P18,000.00 representing the unearned income of plaintiff Martin C. Vallejos for
the period of three (3) years;

(c) P5,000.00 as moral damages;

(d) P2,000.00 as attomey's fees or the total of P29,103.00, plus costs.

The above-named parties against whom this judgment is rendered are hereby held
jointly and severally liable. With respect, however, to Malayan Insurance Co.,
Inc., its liability will be up to only P20,000.00.

As no satisfactory proof of cost of damage to its bus was presented by defendant

Pantranco, no award should be made in its favor. Its counter-claim for attorney's fees
is also dismissed for not being proved. 1

On appeal, the respondent Court of Appeals affirmed the judgment of the trial court that Sio
Choy, the San Leon Rice Mill, Inc. and the Malayan Insurance Co., Inc. are jointly and severally
liable for the damages awarded to the plaintiff Martin C. Vallejos. It ruled, however, that the San
Leon Rice Mill, Inc. has no obligation to indemnify or reimburse the petitioner insurance
company for whatever amount it has been ordered to pay on its policy, since the San Leon Rice
Mill, Inc. is not a privy to the contract of insurance between Sio Choy and the insurance
company. 2

Hence, the present recourse by petitioner insurance company.

The petitioner prays for the reversal of the appellate court's judgment, or, in the alternative, to order
the San Leon Rice Mill, Inc. to reimburse petitioner any amount, in excess of one-half (1/2) of the
entire amount of damages, petitioner may be ordered to pay jointly and severally with Sio Choy.

The Court, acting upon the petition, gave due course to the same, but "only insofar as it concerns
the alleged liability of respondent San Leon Rice Mill, Inc. to petitioner, it being understood that no
other aspect of the decision of the Court of Appeals shall be reviewed, hence, execution may
already issue in favor of respondent Martin C. Vallejos against the respondents, without prejudice to
the determination of whether or not petitioner shall be entitled to reimbursement by respondent San
Leon Rice Mill, Inc. for the whole or part of whatever the former may pay on the P20,000.00 it has
been adjudged to pay respondent Vallejos." 3

However, in order to determine the alleged liability of respondent San Leon Rice Mill, Inc. to
petitioner, it is important to determine first the nature or basis of the liability of petitioner to
respondent Vallejos, as compared to that of respondents Sio Choy and San Leon Rice Mill,
Inc.

Therefore, the two (2) principal issues to be resolved are (1) whether the trial court, as upheld by
the Court of Appeals, was correct in holding petitioner and respondents Sio Choy and San Leon
Rice Mill, Inc. "solidarily liable" to respondent Vallejos; and (2) whether petitioner is entitled to be
reimbursed by respondent San Leon Rice Mill, Inc. for whatever amount petitioner has been
adjudged to pay respondent Vallejos on its insurance policy.

As to the first issue, it is noted that the trial court found, as affirmed by the appellate court, that
petitioner and respondents Sio Choy and San Leon Rice Mill, Inc. are jointly and severally liable to
respondent Vallejos.

We do not agree with the aforesaid ruling. We hold instead that it is only respondents Sio Choy
and San Leon Rice Mill, Inc, (to the exclusion of the petitioner) that are solidarily liable to
respondent Vallejos for the damages awarded to Vallejos.

It must be observed that respondent Sio Choy is made liable to said plaintiff as owner of the ill-
fated Willys jeep, pursuant to Article 2184 of the Civil Code which provides:

Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver,
if the former, who was in the vehicle, could have, by the use of due diligence,
prevented the misfortune it is disputably presumed that a driver was negligent, if he
had been found guilty of reckless driving or violating traffic regulations at least twice
within the next preceding two months.

If the owner was not in the motor vehicle, the provisions of article 2180 are
applicable.

On the other hand, it is noted that the basis of liability of respondent San Leon Rice Mill, Inc. to
plaintiff Vallejos, the former being the employer of the driver of the Willys jeep at the time of the
motor vehicle mishap, is Article 2180 of the Civil Code which reads:
 Art. 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged ill any business or industry.

xxx xxx xxx

The responsibility treated in this article shall cease when the persons herein
mentioned proved that they observed all the diligence of a good father of a family to
prevent damage.

It thus appears that respondents Sio Choy and San Leon Rice Mill, Inc. are the principal
tortfeasors who are primarily liable to respondent Vallejos. The law states that the responsibility of
two or more persons who are liable for a quasi-delict is solidarily.4

On the other hand, the basis of petitioner's liability is its insurance contract with respondent Sio
Choy. If petitioner is adjudged to pay respondent Vallejos in the amount of not more than
P20,000.00, this is on account of its being the insurer of respondent Sio Choy under the third
party liability clause included in the private car comprehensive policy existing between petitioner and
respondent Sio Choy at the time of the complained vehicular accident.

In Guingon vs. Del Monte, 5 a passenger of a jeepney had just alighted therefrom, when he was
bumped by another passenger jeepney. He died as a result thereof. In the damage suit filed by the
heirs of said passenger against the driver and owner of the jeepney at fault as well as against the
insurance company which insured the latter jeepney against third party liability, the trial court,
affirmed by this Court, adjudged the owner and the driver of the jeepney at fault jointly and severally
liable to the heirs of the victim in the total amount of P9,572.95 as damages and attorney's fees;
while the insurance company was sentenced to pay the heirs the amount of P5,500.00 which was to
be applied as partial satisfaction of the judgment rendered against said owner and driver of the
jeepney. Thus, in said Guingon case, it was only the owner and the driver of the jeepney at fault, not
including the insurance company, who were held solidarily liable to the heirs of the victim.

While it is true that where the insurance contract provides for indemnity against liability to third
persons, such third persons can directly sue the insurer, 6 however, the direct liability of the
insurer under indemnity contracts against third party liability does not mean that the insurer can
be held solidarily liable with the insured and/or the other parties found at fault. The liability of
the insurer is based on contract; that of the insured is based on tort.

In the case at bar, petitioner as insurer of Sio Choy, is liable to respondent Vallejos, but it
cannot, as incorrectly held by the trial court, be made "solidarily" liable with the two principal
tortfeasors namely respondents Sio Choy and San Leon Rice Mill, Inc. For if petitioner-insurer
were solidarily liable with said two (2) respondents by reason of the indemnity contract against third
party liability-under which an insurer can be directly sued by a third party this will result in a
violation of the principles underlying solidary obligation and insurance contracts.

In solidary obligation, the creditor may enforce the entire obligation against one of the solidary
debtors. 7 On the other hand, insurance is defined as "a contract whereby one undertakes for a
consideration to indemnify another against loss, damage, or liability arising from an unknown or
contingent event." 8

In the case at bar, the trial court held petitioner together with respondents Sio Choy and San Leon
Rice Mills Inc. solidarily liable to respondent Vallejos for a total amount of P29,103.00, with the
qualification that petitioner's liability is only up to P20,000.00. In the context of a solidary obligation,
petitioner may be compelled by respondent Vallejos to pay the entire obligation of P29,013.00,
notwithstanding the qualification made by the trial court. But, how can petitioner be obliged to pay
the entire obligation when the amount stated in its insurance policy with respondent Sio Choy for
indemnity against third party liability is only P20,000.00? Moreover, the qualification made in the
decision of the trial court to the effect that petitioner is sentenced to pay up to P20,000.00 only when
the obligation to pay P29,103.00 is made solidary, is an evident breach of the concept of a solidary
obligation. Thus, We hold that the trial court, as upheld by the Court of Appeals, erred in holding
petitioner, solidarily liable with respondents Sio Choy and San Leon Rice Mill, Inc. to respondent
Vallejos.

As to the second issue, the Court of Appeals, in affirming the decision of the trial court, ruled that
petitioner is not entitled to be reimbursed by respondent San Leon Rice Mill, Inc. on the ground that
said respondent is not privy to the contract of insurance existing between petitioner and respondent
Sio Choy. We disagree.

The appellate court overlooked the principle of subrogation in insurance contracts. Thus

... Subrogation is a normal incident of indemnity insurance (Aetna L. Ins. Co. vs.
Moses, 287 U.S. 530, 77 L. ed. 477). Upon payment of the loss, the insurer is
entitled to be subrogated pro tanto to any right of action which the insured may have
against the third person whose negligence or wrongful act caused the loss (44 Am.
Jur. 2nd 745, citing Standard Marine Ins. Co. vs. Scottish Metropolitan Assurance
Co., 283 U.S. 284, 75 L. ed. 1037).

The right of subrogation is of the highest equity. The loss in the first instance is that
of the insured but after reimbursement or compensation, it becomes the loss of the
insurer (44 Am. Jur. 2d, 746, note 16, citing Newcomb vs. Cincinnati Ins. Co., 22
Ohio St. 382).

Although many policies including policies in the standard form, now provide for
subrogation, and thus determine the rights of the insurer in this respect, the equitable
right of subrogation as the legal effect of payment inures to the insurer without any
formal assignment or any express stipulation to that effect in the policy" (44 Am. Jur.
2nd 746). Stated otherwise, when the insurance company pays for the loss, such
payment operates as an equitable assignment to the insurer of the property and all
remedies which the insured may have for the recovery thereof. That right is not
dependent upon , nor does it grow out of any privity of contract (emphasis supplied)
or upon written assignment of claim, and payment to the insured makes the insurer
assignee in equity (Shambley v. Jobe-Blackley Plumbing and Heating Co., 264 N.C.
456, 142 SE 2d 18). 9

It follows, therefore, that petitioner, upon paying respondent Vallejos the amount of riot exceeding
P20,000.00, shall become the subrogee of the insured, the respondent Sio Choy; as such, it is
subrogated to whatever rights the latter has against respondent San Leon Rice Mill, Inc. Article 1217
of the Civil Code gives to a solidary debtor who has paid the entire obligation the right to be
reimbursed by his co-debtors for the share which corresponds to each.
 Art. 1217. Payment made by one of the solidary debtors extinguishes the obligation.
If two or more solidary debtors offer to pay, the creditor may choose which offer to
accept.

He who made the payment may claim from his co-debtors only the share which
corresponds to each, with the interest for the payment already made. If the payment
is made before the debt is due, no interest for the intervening period may be
demanded.

xxx xxx xxx

In accordance with Article 1217, petitioner, upon payment to respondent Vallejos and thereby
becoming the subrogee of solidary debtor Sio Choy, is entitled to reimbursement from respondent
San Leon Rice Mill, Inc.

To recapitulate then: We hold that only respondents Sio Choy and San Leon Rice Mill, Inc. are
solidarily liable to the respondent Martin C. Vallejos for the amount of P29,103.00. Vallejos may
enforce the entire obligation on only one of said solidary debtors. If Sio Choy as solidary debtor is
made to pay for the entire obligation (P29,103.00) and petitioner, as insurer of Sio Choy, is
compelled to pay P20,000.00 of said entire obligation, petitioner would be entitled, as subrogee of
Sio Choy as against San Leon Rice Mills, Inc., to be reimbursed by the latter in the amount of
P14,551.50 (which is 1/2 of P29,103.00 )

WHEREFORE, the petition is GRANTED. The decision of the trial court, as affirmed by the Court of
Appeals, is hereby AFFIRMED, with the modification above-mentioned. Without pronouncement as
to costs.

SO ORDERED.
G.R. No. L-28046 May 16, 1983

PHILIPPINE NATIONAL BANK, plaintiff-appellant,

vs.
INDEPENDENT PLANTERS ASSOCIATION, INC., ANTONIO DIMAYUGA, DELFIN FAJARDO,
CEFERINO VALENCIA, MOISES CARANDANG, LUCIANO CASTILLO, AURELIO VALENCIA,
LAURO LEVISTE, GAVINO GONZALES, LOPE GEVANA and BONIFACIO
LAUREANA, defendants-appellees.

Basa, Ilao, del Rosario Diaz for plaintiff-appellant.

Laurel Law Office for Dimayuga.

Tomas Yumol for Fajardo, defendant-appellee.

PLANA, J.:

Appeal by the Philippine National Bank (PNB) from the Order of the defunct Court of First Instance
of Manila (Branch XX) in its Civil Case No. 46741 dismissing PNB's complaint against several
solidary debtors for the collection of a sum of money on the ground that one of the defendants
(Ceferino Valencia) died during the pendency of the case (i.e., after the plaintiff had presented its
evidence) and therefore the complaint, being a money claim based on contract, should be
prosecuted in the testate or intestate proceeding for the settlement of the estate of the deceased
defendant pursuant to Section 6 of Rule 86 of the Rules of Court which reads:

SEC. 6. Solidary obligation of decedent. the obligation of the decedent is solidary

with another debtor, the claim shall be filed against the decedent as if he were the
only debtor, without prejudice to the right of the estate to recover contribution from
the other debtor. In a joint obligation of the decedent, the claim shall be confined to
the portion belonging to him.

The appellant assails the order of dismissal, invoking its right of recourse against one, some or all of
its solidary debtors under Article 1216 of the Civil Code

ART. 1216. The creditor may proceed against any one of the solidary debtors or
some or all of them simultaneously. The demand made against one of them shall not
be an obstacle to those which may subsequently be directed against the others, so
long as the debt has not been fully collected.

The sole issue thus raised is whether in an action for collection of a sum of money based on contract
against all the solidary debtors, the death of one defendant deprives the court of jurisdiction to
proceed with the case against the surviving defendants.

It is now settled that the quoted Article 1216 grants the creditor the substantive right to seek
satisfaction of his credit from one, some or all of his solidary debtors, as he deems fit or convenient
for the protection of his interests; and if, after instituting a collection suit based on contract against
some or all of them and, during its pendency, one of the defendants dies, the court retains
jurisdiction to continue the proceedings and decide the case in respect of the surviving defendants.
Thus in Manila Surety & Fidelity Co., Inc. vs. Villarama et al., 107 Phil. 891 at 897, this Court ruled:
 Construing Section 698 of the Code of Civil Procedure from whence the aforequoted
provision (Sec. 6, Rule 86) was taken, this Court held that where two persons are
bound in solidum for the same debt and one of them dies, the whole indebtedness
can be proved against the estate of the latter, the decedent's liability being absolute
and primary; and if the claim is not presented within the time provided by the rules,
the same will be barred as against the estate. It is evident from the foregoing that
Section 6 of Rule 87 (now Rule 86) provides the procedure should the creditor desire
to go against the deceased debtor, but there is certainly nothing in the said provision
making compliance with such procedure a condition precedent before an ordinary
action against the surviving solidary debtors, should the creditor choose to demand
payment from the latter, could be entertained to the extent that failure to observe the
same would deprive the court jurisdiction to take cognizance of the action against the
surviving debtors. Upon the other hand, the Civil Code expressly allows the creditor
to proceed against any one of the solidary debtors or some or all of them
simultaneously. There is, therefore, nothing improper in the creditor's filing of an
action against the surviving solidary debtors alone, instead of instituting a proceeding
for the settlement of the estate of the deceased debtor wherein his claim could be
filed.

Similarly, in PNB vs. Asuncion, 80 SCRA 321 at 323-324, this Court, speaking thru Mr. Justice
Makasiar, reiterated the doctrine.

A cursory perusal of Section 6, Rule 86 of the Revised Rules of Court

reveals that nothing therein prevents a creditor from proceeding
against the surviving solidary debtors. Said provision merely sets up
the procedure in enforcing collection in case a creditor chooses to
pursue his claim against the estate of the deceased solidary, debtor.

It is crystal clear that Article 1216 of the New Civil Code is the
applicable provision in this matter. Said provision gives the creditor
the right to 'proceed against anyone of the solidary debtors or some
or all of them simultaneously.' The choice is undoubtedly left to the
solidary, creditor to determine against whom he will enforce
collection. In case of the death of one of the solidary debtors, he (the
creditor) may, if he so chooses, proceed against the surviving
solidary debtors without necessity of filing a claim in the estate of the
deceased debtors. It is not mandatory for him to have the case
dismissed against the surviving debtors and file its claim in the estate
of the deceased solidary debtor . . .

As correctly argued by petitioner, if Section 6, Rule 86 of the Revised

Rules of Court were applied literally, Article 1216 of the New Civil
Code would, in effect, be repealed since under the Rules of Court,
petitioner has no choice but to proceed against the estate of Manuel
Barredo only. Obviously, this provision diminishes the Bank's right
under the New Civil, Code to proceed against any one, some or all of
the solidary debtors. Such a construction is not sanctioned by the
principle, which is too well settled to require citation, that a
substantive law cannot be amended by a procedural rule. Otherwise
stared, Section 6, Rule 86 of the Revised Rules of Court cannot be
made to prevail over Article 1216 of the New Civil Code, the former
being merely procedural, while the latter, substantive.
WHEREFORE the appealed order of dismissal of the court a quo in its Civil Case No. 46741 is
hereby set aside in respect of the surviving defendants; and the case is remanded to the
corresponding Regional Trial Court for proceedings. proceedings. No costs.

SO ORDERED.
G.R. No. 190696 August 3, 2010

ROLITO CALANG and PHILTRANCO SERVICE ENTERPRISES, INC., Petitioners,

vs.
PEOPLE OF THE PHILIPPINES, Respondent.

RESOLUTION

BRION, J.:

We resolve the motion for reconsideration filed by the petitioners, Philtranco Service Enterprises,
Inc. (Philtranco) and Rolito Calang, to challenge our Resolution of February 17, 2010. Our assailed
Resolution denied the petition for review on certiorari for failure to show any reversible error
sufficient to warrant the exercise of this Courts discretionary appellate jurisdiction.

Antecedent Facts

At around 2:00 p.m. of April 22, 1989, Rolito Calang was driving Philtranco Bus No. 7001, owned by
Philtranco along Daang Maharlika Highway in Barangay Lambao, Sta. Margarita, Samar when its
rear left side hit the front left portion of a Sarao jeep coming from the opposite direction. As a result
of the collision, Cresencio Pinohermoso, the jeeps driver, lost control of the vehicle, and bumped
and killed Jose Mabansag, a bystander who was standing along the highways shoulder. The jeep
turned turtle three (3) times before finally stopping at about 25 meters from the point of impact. Two
of the jeeps passengers, Armando Nablo and an unidentified woman, were instantly killed, while the
other passengers sustained serious physical injuries.

The prosecution charged Calang with multiple homicide, multiple serious physical injuries and
damage to property thru reckless imprudence before the Regional Trial Court (RTC), Branch 31,
Calbayog City. The RTC, in its decision dated May 21, 2001, found Calang guilty beyond reasonable
doubt of reckless imprudence resulting to multiple homicide, multiple physical injuries and damage to
property, and sentenced him to suffer an indeterminate penalty of thirty days of arresto menor, as
minimum, to four years and two months of prision correccional, as maximum. The RTC ordered
Calang and Philtranco, jointly and severally, to pay 50,000.00 as death indemnity to the heirs of
Armando; 50,000.00 as death indemnity to the heirs of Mabansag; and 90,083.93 as actual
damages to the private complainants.

The petitioners appealed the RTC decision to the Court of Appeals (CA), docketed as CA-G.R. CR
No. 25522. The CA, in its decision dated November 20, 2009, affirmed the RTC decision in toto. The
CA ruled that petitioner Calang failed to exercise due care and precaution in driving the Philtranco
bus. According to the CA, various eyewitnesses testified that the bus was traveling fast and
encroached into the opposite lane when it evaded a pushcart that was on the side of the road. In
addition, he failed to slacken his speed, despite admitting that he had already seen the jeep coming
from the opposite direction when it was still half a kilometer away. The CA further ruled that Calang
demonstrated a reckless attitude when he drove the bus, despite knowing that it was suffering from
loose compression, hence, not roadworthy.

The CA added that the RTC correctly held Philtranco jointly and severally liable with petitioner
Calang, for failing to prove that it had exercised the diligence of a good father of the family to prevent
the accident.
The petitioners filed with this Court a petition for review on certiorari. In our Resolution dated
February 17, 2010, we denied the petition for failure to sufficiently show any reversible error in the
assailed decision to warrant the exercise of this Courts discretionary appellate jurisdiction.

The Motion for Reconsideration

In the present motion for reconsideration, the petitioners claim that there was no basis to hold
Philtranco jointly and severally liable with Calang because the former was not a party in the criminal
case (for multiple homicide with multiple serious physical injuries and damage to property thru
reckless imprudence) before the RTC.

The petitioners likewise maintain that the courts below overlooked several relevant facts, supported
by documentary exhibits, which, if considered, would have shown that Calang was not negligent,
such as the affidavit and testimony of witness Celestina Cabriga; the testimony of witness Rodrigo
Bocaycay; the traffic accident sketch and report; and the jeepneys registration receipt. The
petitioners also insist that the jeeps driver had the last clear chance to avoid the collision.

We partly grant the motion.

Liability of Calang

We see no reason to overturn the lower courts finding on Calangs culpability. The finding of
negligence on his part by the trial court, affirmed by the CA, is a question of fact that we cannot pass
upon without going into factual matters touching on the finding of negligence. In petitions for review
on certiorari under Rule 45 of the Revised Rules of Court, this Court is limited to reviewing only
errors of law, not of fact, unless the factual findings complained of are devoid of support by the
evidence on record, or the assailed judgment is based on a misapprehension of facts.

Liability of Philtranco

We, however, hold that the RTC and the CA both erred in holding Philtranco jointly and severally
liable with Calang. We emphasize that Calang was charged criminally before the RTC. Undisputedly,
Philtranco was not a direct party in this case. Since the cause of action against Calang was based
on delict, both the RTC and the CA erred in holding Philtranco jointly and severally liable with
Calang, based on quasi-delict under Articles 21761 and 21802 of the Civil Code. Articles 2176 and
2180 of the Civil Code pertain to the vicarious liability of an employer for quasi-delicts that an
employee has committed. Such provision of law does not apply to civil liability arising from delict.

If at all, Philtrancos liability may only be subsidiary. Article 102 of the Revised Penal Code states the
subsidiary civil liabilities of innkeepers, tavernkeepers and proprietors of establishments, as follows:

In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or
corporations shall be civilly liable for crimes committed in their establishments, in all cases where a
violation of municipal ordinances or some general or special police regulations shall have been
committed by them or their employees. 1avvphil

Innkeepers are also subsidiary liable for the restitution of goods taken by robbery or theft within their
houses from guests lodging therein, or for the payment of the value thereof, provided that such
guests shall have notified in advance the innkeeper himself, or the person representing him, of the
deposit of such goods within the inn; and shall furthermore have followed the directions which such
innkeeper or his representative may have given them with respect to the care of and vigilance over
such goods. No liability shall attach in case of robbery with violence against or intimidation of
persons unless committed by the innkeepers employees.

The foregoing subsidiary liability applies to employers, according to Article 103 of the Revised Penal
Code, which reads:

The subsidiary liability established in the next preceding article shall also apply to employers,
teachers, persons, and corporations engaged in any kind of industry for felonies committed by their
servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

The provisions of the Revised Penal Code on subsidiary liability Articles 102 and 103 are
deemed written into the judgments in cases to which they are applicable. Thus, in the dispositive
portion of its decision, the trial court need not expressly pronounce the subsidiary liability of the
employer.3 Nonetheless, before the employers subsidiary liability is enforced, adequate evidence
must exist establishing that (1) they are indeed the employers of the convicted employees; (2) they
are engaged in some kind of industry; (3) the crime was committed by the employees in the
discharge of their duties; and (4) the execution against the latter has not been satisfied due to
insolvency. The determination of these conditions may be done in the same criminal action in which
the employees liability, criminal and civil, has been pronounced, in a hearing set for that precise
purpose, with due notice to the employer, as part of the proceedings for the execution of the
judgment.4

WHEREFORE, we PARTLY GRANT the present motion. The Court of Appeals decision that
affirmed in toto the RTC decision, finding Rolito Calang guilty beyond reasonable doubt of reckless
imprudence resulting in multiple homicide, multiple serious physical injuries and damage to property,
is AFFIRMED, with the MODIFICATION that Philtrancos liability should only be subsidiary. No costs.

SO ORDERED.
G.R. No. 204866 January 21, 2015

RUKS KONSULT AND CONSTRUCTION, Petitioner,

vs.
ADWORLD SIGN AND ADVERTISING CORPORATION* and TRANSWORLD MEDIA ADS,
INC., Respondents.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on certiorari1 are the Decision2 dated November 16, 2011 and the
Resolution3dated December 10, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 94693 which
affirmed the Decision4dated August 25, 2009 of the Regional Trial Court of Makati City, Branch 142
(RTC) in Civil Case No. 03-1452 holding, inter alia, petitioner Ruks Konsult and Construction (Ruks)
and respondent Transworld Media Ads, Inc. (Transworld) jointly and severally liable to respondent
Adworld Sign and Advertising Corporation (Adworld) for damages.

The Facts

The instant case arose from a complaint for damages filed by Adworld against Transworld and
Comark International Corporation (Comark) before the RTC.5 In the complaint, Adworld alleged that
it is the owner of a 75 ft. x 60 ft. billboard structure located at EDSA Tulay, Guadalupe, Barangka
Mandaluyong, which was misaligned and its foundation impaired when, on August 11, 2003, the
adjacent billboard structure owned by Transworld and used by Comark collapsed and crashed
against it. Resultantly, on August 19, 2003, Adworld sent Transworld and Comark a letter
demanding payment for the repairs of its billboard as well asloss of rental income. On August 29,
2003, Transworld sent its reply, admitting the damage caused by its billboard structure on Adworlds
billboard, but nevertheless, refused and failed to pay the amounts demanded by Adworld. As
Adworlds final demand letter also went unheeded, it was constrained to file the instant complaint,
praying for damages in the aggregate amount of 474,204.00, comprised of 281,204.00 for
materials, 72,000.00 for labor, and 121,000.00 for indemnity for loss of income.6

In its Answer with Counterclaim, Transworld averred that the collapse of its billboard structure was
due to extraordinarily strong winds that occurred instantly and unexpectedly, and maintained that the
damage caused to Adworlds billboard structure was hardly noticeable. Transworld likewise filed a
Third-Party Complaint against Ruks, the company which built the collapsed billboard structure in the
formers favor. It was alleged therein that the structure constructed by Ruks had a weak and poor
1w phi1

foundation not suited for billboards, thus, prone to collapse, and as such, Ruks should ultimately be
held liable for the damages caused to Adworlds billboard structure.7

For its part, Comark denied liability for the damages caused to Adworlds billboard structure,
maintaining that it does not have any interest on Transworlds collapsed billboard structure as it only
contracted the use of the same. In this relation, Comark prayed for exemplary damages from
Transworld for unreasonably includingit as a party-defendant in the complaint.8

Lastly, Ruks admitted that it entered into a contract with Transworld for the construction of the
latters billboard structure, but denied liability for the damages caused by its collapse. It contended
that when Transworld hired its services, there was already an existing foundation for the billboard
and that it merely finished the structure according to the terms and conditions of its contract with the
latter.9
 The RTC Ruling

In a Decision10 dated August 25, 2009, the RTC ultimately ruled in Adworlds favor, and accordingly,
declared, inter alia, Transworld and Ruks jointly and severally liable to Adworld in the amount of
474,204.00 as actual damages, with legal interest from the date of the filing of the complaint until
full payment thereof, plus attorneys fees in the amount of 50,000.00.11 The RTC found both
Transworld and Ruks negligent in the construction of the collapsed billboard as they knew that the
foundation supporting the same was weak and would pose danger to the safety of the motorists and
the other adjacent properties, such as Adworlds billboard, and yet, they did not do anything to
remedy the situation.12 In particular, the RTC explained that Transworld was made aware by Ruks
that the initial construction of the lower structure of its billboard did not have the proper foundation
and would require additional columns and pedestals to support the structure. Notwithstanding,
however, Ruks proceeded with the construction of the billboards upper structure and merely
assumed that Transworld would reinforce its lower structure.13 The RTC then concluded that these
negligent acts were the direct and proximate cause of the damages suffered by Adworlds billboard.14

Aggrieved, both Transworld and Ruks appealed to the CA. In a Resolution dated February 3, 2011,
the CA dismissed Transworlds appeal for its failure to file an appellants brief on time.15 Transworld
elevated its case before the Court, docketed as G.R. No. 197601.16 However, in a Resolution17 dated
November 23, 2011, the Court declared the case closed and terminated for failure of Transworld to
file the intended petition for review on certiorariwithin the extended reglementary period.
Subsequently, the Court issued an Entry of Judgment18 dated February 22, 2012 in G.R. No. 197601
declaring the Courts November 23, 2011 Resolution final and executory.

The CA Ruling

In a Decision19 dated November 16, 2011, the CA denied Rukss appeal and affirmed the ruling of the
RTC. It adhered to the RTCs finding of negligence on the part of Transworld and Ruks which
brought about the damage to Adworlds billboard. It found that Transworld failed to ensure that Ruks
will comply with the approved plans and specifications of the structure, and that Ruks continued to
install and finish the billboard structure despite the knowledge that there were no adequate columns
to support the same.20

Dissatisfied, Ruks moved for reconsideration,21 which was, however, denied in a Resolution22 dated
December 10, 2012,hence, this petition.

On the other hand, Transworld filed another appeal before the Court, docketed as G.R. No.
205120.23 However, the Court denied outright Transworlds petition in a Resolution24 dated April 15,
2013, holding that the same was already bound by the dismissal of its petition filed in G.R. No.
197601.

The Issue Before the Court

The primordial issue for the Courts resolution is whether or not the CA correctly affirmed the ruling
of the RTC declaring Ruks jointly and severally liable with Transworld for damages sustained by
Adworld.

The Courts Ruling

The petition is without merit.

At the outset, it must be stressed that factual findings of the RTC, when affirmed by the CA, are
entitled to great weight by the Court and are deemed final and conclusive when supported by the
evidence on record.25 Absent any exceptions to this rule such as when it is established that the trial
court ignored, overlooked, misconstrued, or misinterpreted cogent facts and circumstances that, if
considered, would change the outcome of the case26 such findings must stand.

After a judicious perusal of the records, the Court sees no cogent reason to deviate from the findings
of the RTC and the CA and their uniform conclusion that both Transworld and Ruks committed acts
resulting in the collapse of the formers billboard, which in turn, caused damage to the adjacent
billboard of Adworld.

Jurisprudence defines negligence as the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would not do.27 It is the failure to observe
for the protection of the interest of another person that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such other person suffers injury.28

In this case, the CA correctly affirmed the RTCs finding that Transworlds initial construction of its
billboards lower structure without the proper foundation, and that of Rukss finishing its upper
structure and just merely assuming that Transworld would reinforce the weak foundation are the two
(2) successive acts which were the direct and proximate cause of the damages sustained by
Adworld. Worse, both Transworld and Ruks were fully aware that the foundation for the formers
billboard was weak; yet, neither of them took any positive step to reinforce the same. They merely
relied on each others word that repairs would be done to such foundation, but none was done at all.
Clearly, the foregoing circumstances show that both Transworld and Ruks are guilty of negligence in
the construction of the formers billboard, and perforce, should be held liable for its collapse and the
resulting damage to Adworlds billboard structure. As joint tortfeasors, therefore, they are solidarily
liable to Adworld. Verily, "[j]oint tortfeasors are those who command, instigate, promote, encourage,
advise, countenance, cooperate in, aid or abet the commission of a tort, or approve of it after it is
done, if done for their benefit. They are also referred to as those who act together in committing
wrong or whose acts, if independent of each other, unite in causing a single injury. Under Article
219429 of the Civil Code, joint tortfeasors are solidarily liable for the resulting damage. In other words,
joint tortfeasors are each liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves."30 The Courts pronouncement in People v. Velasco31 is
instructive on this matter, to wit:32

Where several causes producing an injury are concurrent and each is an efficient cause without
which the injury would not have happened, the injury may be attributed to all or any of the causes
and recovery may be had against any or all of the responsible persons although under the
circumstances of the case, it may appear that one of them was more culpable, and that the duty
owed by them to the injured person was not same. No actor's negligence ceases to be a proximate
cause merely because it does not exceed the negligence of other actors. Each wrongdoer is
responsible for the entire result and is liable as though his acts were the sole cause of the injury.

There is no contribution between joint [tortfeasors] whose liability is solidary since both of them are
liable for the total damage. Where the concurrent or successive negligent acts or omissions of two
1wphi1

or more persons, although acting independently, are in combination the direct and proximate cause
of a single injury to a third person, it is impossible to determine in what proportion each contributed
to the injury and either of them is responsible for the whole injury. x x x. (Emphases and
underscoring supplied)
In conclusion, the CA correctly affirmed the ruling of the RTC declaring Ruks jointly and severally
liable with Transworld for damages sustained by Adworld.

WHEREFORE, the petition is DENIED. The Decision dated November 16, 2011 and the Resolution
dated December 10, 2012 of the Court of Appeals in CA-G.R. CV No. 94693 are hereby AFFIRMED.

SO ORDERED.
WITH PENAL CLAUSE
G.R. No. L-28497 November 6, 1928

THE BACHRACH MOTOR CO., INC., plaintiff-appellee,

vs.
FAUSTINO ESPIRITU, defendant-appellant.

------------------------------

G.R. No. L-28498 November 6, 1928

THE BACHRACH MOTOR CO., INC., plaintiff-appellee,

vs.
FAUSTINO ESPIRITU, defendant-appellant, and
ROSARIO ESPIRITU, intervenor-appellant.

Ernesto Zaragoza and Simeon Ramos for defendant-appellant.

Benito Soliven and Jose Varela Calderon for intervenor-appellant.
B. Francisco for appellee.

AVANCEA, C. J.:

These two cases, Nos. 28497 and 28948, were tried together.

It appears, in connection with case 28497; that on July 28, 1925 the defendant Faustino Espiritu
purchased of the plaintiff corporation a two-ton White truck for P11,983.50, paying P1,000 down to
apply on account of this price, and obligating himself to pay the remaining P10,983.50 within the
periods agreed upon. To secure the payment of this sum, the defendants mortgaged the said truck
purchased and, besides, three others, two of which are numbered 77197 and 92744 respectively,
and all of the White make (Exhibit A). These two trucks had been purchased from the same plaintiff
and were fully paid for by the defendant and his brother Rosario Espiritu. The defendant failed to pay
P10,477.82 of the price secured by this mortgage.

In connection with case 28498, it appears that on February 18, 1925 the defendant bought a one-
ton White truck of the plaintiff corporation for the sum of P7,136.50, and after having deducted the
P500 cash payment and the 12 per cent annual interest on the unpaid principal, obligated himself to
make payment of this sum within the periods agreed upon. To secure this payment the defendant
mortgaged to the plaintiff corporation the said truck purchased and two others, numbered 77197 and
92744, respectively, the same that were mortgaged in the purchase of the other truck referred to in
the other case. The defendant failed to pay P4,208.28 of this sum.

In both sales it was agreed that 12 per cent interest would be paid upon the unpaid portion of the
price at the executon of the contracts, and in case of non-payment of the total debt upon its maturity,
25 per cent thereon, as penalty.

In addition to the mortagage deeds referred to, which the defendant executed in favor of the plaintiff,
the defendant at the same time also signed a promissory note solidarily with his brother Rosario
Espiritu for the several sums secured by the two mortgages (Exhibits B and D).
Rosario Espiritu appeared in these two cases as intervenor, alleging to be the exclusive owner of the
two White trucks Nos. 77197 and 92744, which appear to have been mortgaged by the defendants
to the plaintiff.
lawphi1.net

While these two cases were pending in the lower court the mortgaged trucks were sold by virtue of
the mortgage, all of them together bringing in, after deducting the sheriff's fees and transportation
charges to Manila, the net sum of P3,269.58.

The judgment appealed from ordered the defendants and the intervenor to pay plaintiff in case
28497 the sum of P7,732.09 with interest at the rate of 12 per cent per annum from May 1, 1926
until fully paid, and 25 per cent thereof in addition as penalty. In case 28498, the trial court ordered
the defendant and the intervenor to pay plaintiff the sum of P4,208.28 with interest at 12 per cent per
annum from December 1, 1925 until fully paid, and 25 per cent thereon as penalty.

The appellants contend that trucks 77197 and 92744 were not mortgaged, because, when the
defendant signed the mortgage deeds these trucks were not included in those documents, and were
only put in later, without defendant's knowledge. But there is positive proof that they were included at
the time the defendant signed these documents. Besides, there were presented two of defendant's
letters to Hidalgo, an employee of the plaintiff's written a few days before the transaction,
acquiescing in the inclusion of all his White trucks already paid for, in the mortgage (Exhibit H-I).

Appellants also alleged that on February 4, 1925, the defendant sold his rights in said trucks Nos.
77197 and 92744 to the intervenor, and that as the latter did not sign the mortgage deeds, such
trucks cannot be considered as mortgaged. But the evidence shows that while the intervenor
Rosario Espiritu did not sign the two mortgage deeds (Exhibits A and C), yet, together with the
defendants Faustino Espiritu, he signed the two promissory notes (Exhibits B and D) secured by
these two mortgages. All these instruments were executed at the same time, and when the trucks
77197 and 92744 were included in the mortgages, the intervenor Rosario Espiritu was aware of it
and consented to such inclusion. These facts are supported by the testimony of Bachrach, manager
of the plaintiff corporation, of Agustin Ramirez, who witnessed the execution of all these documents,
and of Angel Hidalgo, who witnessed the execution of Exhibits B and D.

We do not find the statement of the intervenor Rosario Espiritu that he did not sign promissory notes
Exhibits B and C to be sufficient to overthrow this evidence. A comparison of his genuine signature
on Exhibit AA with those appearing on promissory notes B and C, convinces us that the latter are his
signatures. And such is our conclusion, notwithstanding the evidence presented to establish that on
the date when Exhibits B appears to have been signed, that is July 25, 1925, the intervenor was in
Batac, Ilocos Norte, many miles away from Manila. And the fact that on the 24th of said month of
July, the plaintiff sent some truck accessory parts by rail to Ilocos for the intervenor does not
necessarily prove that the latter could not have been in Manila on the 25th of that month.

In view of his conclusion that the intervenor signed the promissory notes secured by trucks 77197
and 92744 and consented to the mortgage of the same, it is immaterial whether he was or was not
the exclusive owner thereof.

It is finally contended that the 25 per cent penalty upon the debt, in addition to the interest of 12 per
cent per annum, makes the contract usurious. Such a contention is not well founded. Article 1152 of
the Civil Code permits the agreement upon a penalty apart from the interest. Should there be such
an agreemnet, the penalty, as was held in the case of Lopez vs. Hernaez (32 Phil., 631), does not
include the interest, and which may be demamded separetely. According to this, the penalty is not to
be added to the interest for the determination of whether the interest exceeds the rate fixed by the
law, since said rate was fixed only for the interest. But considering that the obligation was partly
performed, and making use of the power given to the court by article 1154 of the Civil Code, this
penalty is reduced to 10 per cent of the unpaid debt.

With the sole modification that instead of 25 per cent upon the sum owed, the defendants need pay
only 10 per cent thereon as penalty, the judgment appealed from is affired in all other respects
without special pronouncement as to costs. So ordered.
G.R. No. L-41093 October 30, 1978

ROBES-FRANCISCO REALTY & DEVELOPMENT CORPORATION, petitioner,

vs.
COURT OF FIRST INSTANCE OF RIZAL (BRANCH XXXIV), and LOLITA MILLAN, respondents.

Purugganan & Bersamin for petitioner.

Salvador N. Beltran for respondent.

MUOZ PALMA, J.:

This is a direct appeal on questions of law from a decision of the Court of First Instance of Rizal,
Branch XXXIV, presided by the Honorable Bernardo P. Pardo, the dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered commanding the defendant to register

the deed of absolute sale it had executed in favor of plaintiff with the Register of
Deeds of Caloocan City and secure the corresponding title in the name of plaintiff
within ten (10) days after finality of this decision; if, for any reason, this not possible,
defendant is hereby sentenced to pay plaintiff the sum of P5,193.63 with interest at
4% per annum from June 22, 1972 until fully paid.

In either case, defendant is sentenced to pay plaintiff nominal damages in the

amount of P20,000.00 plus attorney's fee in the amount of P5,000.00 and costs.

SO ORDERED.

Caloocan City, February 11, 1975. (rollo, p. 21)

Petitioner corporation questions the award for nominal damages of P20,000.00 and attorney's fee of
P5,000.00 which are allegedly excessive and unjustified.

In the Court's resolution of October 20, 1975, We gave due course to the Petition only as regards the
portion of the decision awarding nominal damages. 1

The following incidents are not in dispute:

In May 1962 Robes-Francisco Realty & Development Corporation, now petitioner, agreed to sell to
private respondent Lolita Millan for and in consideration of the sum of P3,864.00, payable in
installments, a parcel of land containing an area of approximately 276 square meters, situated in
Barrio Camarin, Caloocan City, known as Lot No. 20, Block No. 11 of its Franville Subdivision. 2

Millan complied with her obligation under the contract and paid the installments stipulated therein,
the final payment having been made on December 22, 1971. The vendee made a total payment of
P5,193.63 including interests and expenses for registration of title.3

Thereafter, Lolita Millan made repeated demands upon the corporation for the execution of the final
deed of sale and the issuance to her of the transfer certificate of title over the lot. On March 2, 1973,
the parties executed a deed of absolute sale of the aforementioned parcel of land. The deed of
absolute sale contained, among others, this particular provision:

That the VENDOR further warrants that the transfer certificate of title of the above-
described parcel of land shall be transferred in the name of the VENDEE within the
period of six (6) months from the date of full payment and in case the VENDOR fails
to issue said transfer certificate of title, it shall bear the obligation to refund to the
VENDEE the total amount already paid for, plus an interest at the rate of 4% per
annum. (record on appeal, p. 9)

Notwithstanding the lapse of the above-mentioned stipulated period of six (6) months, the
corporation failed to cause the issuance of the corresponding transfer certificate of title over the lot
sold to Millan, hence, the latter filed on August 14, 1974 a complaint for specific performance and
damages against Robes-Francisco Realty & Development Corporation in the Court of First Instance
of Rizal, Branch XXXIV, Caloocan City, docketed therein as Civil Case No. C-3268. 4

The complaint prayed for judgment (1) ordering the reformation of the deed of absolute sale; (2)
ordering the defendant to deliver to plaintiff the certificate of title over the lot free from any lien or
encumbrance; or, should this be not possible, to pay plaintiff the value of the lot which should not be
less than P27,600.00 (allegedly the present estimated value of the lot); and (3) ordering the
defendant to pay plaintiff damages, corrective and actual in the sum of P15 000.00. 5

The corporation in its answer prayed that the complaint be dismissed alleging that the deed of
absolute sale was voluntarily executed between the parties and the interest of the plaintiff was amply
protected by the provision in said contract for payment of interest at 4% per annum of the total
amount paid, for the delay in the issuance of the title. 6

At the pretrial conference the parties agreed to submit the case for decision on the pleadings after
defendant further made certain admissions of facts not contained in its answer. 7

Finding that the realty corporation failed to cause the issuance of the corresponding transfer
certificate of title because the parcel of land conveyed to Millan was included among other properties
of the corporation mortgaged to the GSIS to secure an obligation of P10 million and that the owner's
duplicate certificate of title of the subdivision was in the possession of the Government Service
Insurance System (GSIS), the trial court, on February 11, 1975, rendered judgment the dispositive
portion of which is quoted in pages 1 and 2 of this Decision. We hold that the trial court did not err in
awarding nominal damages; however, the circumstances of the case warrant a reduction of the
amount of P20,000.00 granted to private respondent Millan.

There can be no dispute in this case under the pleadings and the admitted facts that petitioner
corporation was guilty of delay, amounting to nonperformance of its obligation, in issuing the transfer
certificate of title to vendee Millan who had fully paid up her installments on the lot bought by her.
Article 170 of the Civil Code expressly provides that those who in the performance of their
obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the
tenor thereof, are liable for damages.

Petitioner contends that the deed of absolute sale executed between the parties stipulates that
should the vendor fail to issue the transfer certificate of title within six months from the date of full
payment, it shall refund to the vendee the total amount paid for with interest at the rate of 4% per
annum, hence, the vendee is bound by the terms of the provision and cannot recover more than
what is agreed upon. Presumably, petitioner in invoking Article 1226 of the Civil Code which
provides that in obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of noncompliance, if there is no stipulation to the
contrary.

The foregoing argument of petitioner is totally devoid of merit. We would agree with petitioner if the
clause in question were to be considered as a penal clause. Nevertheless, for very obvious reasons,
said clause does not convey any penalty, for even without it, pursuant to Article 2209 of the Civil
Code, the vendee would be entitled to recover the amount paid by her with legal rate of interest
which is even more than the 4% provided for in the clause. 7-A

It is therefore inconceivable that the aforecited provision in the deed of sale is a penal clause which
will preclude an award of damages to the vendee Millan. In fact the clause is so worded as to work
to the advantage of petitioner corporation.

Unfortunately, the vendee, now private respondent, submitted her case below without presenting
evidence on the actual damages suffered by her as a result of the nonperformance of petitioner's
obligation under the deed of sale. Nonetheless, the facts show that the right of the vendee to acquire
title to the lot bought by her was violated by petitioner and this entitles her at the very least to
nominal damages.

The pertinent provisions of our Civil Code follow:

Art. 2221. Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any loss suffered
by him.

Art. 2222. The court may award nominal damages in every obligation arising from
any source enumerated in article 1157, or in every case where any property right has
been invaded.

Under the foregoing provisions nominal damages are not intended for indemnification of loss
suffered but for the vindication or recognition of a right violated or invaded. They are recoverable
where some injury has been done the amount of which the evidence fails to show, the assessment
of damages being left to the discretion of the court according to the circumstances of the case. 8

It is true as petitioner claims that under American jurisprudence nominal damages by their very
nature are small sums fixed by the court without regard to the extent of the harm done to the injured
party.

It is generally held that a nominal damage is a substantial claim, if based upon the
violation of a legal right; in such case, the law presumes a damage, although actual
or compensatory damages are not proven; in truth nominal damages are damages in
name only and not in fact, and are allowed, not as an equivalent of a wrong inflicted,
but simply in recogniton of the existence of a technical injury. (Fouraker v. Kidd
Springs Boating and Fishing Club, 65 S. W. 2d 796-797, citing 17 C.J. 720, and a
number of authorities).9

In this jurisdiction, in Vda. de Medina, et al. v. Cresencia, et al. 1956, which was an action for
damages arising out of a vehicular accident, this Court had occasion to eliminate an award of
P10,000.00 imposed by way of nominal damages, the Court stating inter alia that the amount
cannot, in common sense, be demeed "nominal".10
In a subsequent case, viz: Northwest Airlines, Inc. v. Nicolas L. Cuenca, 1965, this Court, however,
through then Justice Roberto Concepcion who later became Chief Justice of this Court, sustained an
award of P20,000.00 as nominal damages in favor of respnodent Cuenca. The Court there found
special reasons for considering P20,000.00 as "nominal". Cuenca who was the holder of a first class
ticket from Manila to Tokyo was rudely compelled by an agent of petitioner Airlines to move to the
tourist class notwithstanding its knowledge that Cuenca as Commissioner of Public Highways of the
Republic of the Philippines was travelling in his official capacity as a delegate of the country to a
conference in Tokyo." 11

Actually, as explained in the Court's decision in Northwest Airlines, there is no conflict between that
case and Medina, for in the latter, the P10,000.00 award for nominal damages was eliminated
principally because the aggrieved party had already been awarded P6,000.00 as compensatory
damages, P30,000.00 as moral damages and P10,000.00 as exemplary damages, and "nominal
damages cannot coexist with compensatory damages," while in the case of Commissioner Cuenca,
no such compensatory, moral, or exemplary damages were granted to the latter. 12

At any rate, the circumstances of a particular case will determine whether or not the amount
assessed as nominal damages is within the scope or intent of the law, more particularly, Article 2221
of the Civil Code.

In the situation now before Us, We are of the view that the amount of P20,000.00 is excessive. The
admitted fact that petitioner corporation failed to convey a transfer certificate of title to respondent
Millan because the subdivision property was mortgaged to the GSIS does not in itself show that
there was bad faith or fraud. Bad faith is not to be presumed. Moreover, there was the expectation of
the vendor that arrangements were possible for the GSIS to make partial releases of the subdivision
lots from the overall real estate mortgage. It was simply unfortunate that petitioner did not succeed in
that regard.

For that reason We cannot agree with respondent Millan Chat the P20,000.00 award may be
considered in the nature of exemplary damages.

In case of breach of contract, exemplary damages may be awarded if the guilty party acted in
wanton, fraudulent, reckless, oppressive or malevolent manner. 13 Furthermore, exemplary or
corrective damages are to be imposed by way of example or correction for the public good, only if
the injured party has shown that he is entitled to recover moral, temperate or compensatory
damages."

Here, respondent Millan did not submit below any evidence to prove that she suffered actual or
compensatory damages. 14

To conclude, We hold that the sum of Ten Thousand Pesos (P10,000.00) by way of nominal
damages is fair and just under the following circumstances, viz: respondent Millan bought the lot
from petitioner in May, 1962, and paid in full her installments on December 22, 1971, but it was only
on March 2, 1973, that a deed of absolute sale was executed in her favor, and notwithstanding the
lapse of almost three years since she made her last payment, petitioner still failed to convey the
corresponding transfer certificate of title to Millan who accordingly was compelled to file the instant
complaint in August of 1974.

PREMISES CONSIDERED, We modify the decision of the trial court and reduce the nominal
damages to Ten Thousand Pesos (P10,000.00). In all other respects the aforesaid decision stands.

Without pronouncement as to costs.

G.R. No. L-26339 December 14, 1979

MARIANO C. PAMINTUAN, petitioner-appellant,

vs.
COURT OF APPEALS and YU PING KUN CO., INC., respondent-appellees.

V. E. del Rosario & Associates for appellant.

Sangco & Sangalang for private respondent.

AQUINO, J.:

This case is about the recovery compensatory, damages for breach of a contract of sale in addition
to liquidated damages.

Mariano C. Pamintuan appealed from the judgment of the Court of Appeals wherein he was ordered
to deliver to Yu Ping Kun Co., Inc. certain plastic sheetings and, if he could not do so, to pay the
latter P100,559.28 as damages with six percent interest from the date of the filing of the complaint.
The facts and the findings of the Court of Appeals are as follows:

In 1960, Pamintuan was the holder of a barter license wherein he was authorized to export to Japan
one thousand metric tons of white flint corn valued at forty-seven thousand United States dollars in
exchange for a collateral importation of plastic sheetings of an equivalent value.

By virtue of that license, he entered into an agreement to ship his corn to Tokyo Menka Kaisha, Ltd.
of Osaka, Japan in exchange for plastic sheetings. He contracted to sell the plastic sheetings to Yu
Ping Kun Co., Inc. for two hundred sixty-five thousand five hundred fifty pesos. The company
undertook to open an irrevocable domestic letter of credit for that amount in favor of Pamintuan.

It was further agreed that Pamintuan would deliver the plastic sheetings to the company at its
bodegas in Manila or suburbs directly from the piers "within one month upon arrival of" the carrying
vessels. Any violation of the contract of sale would entitle the aggreived party to collect from the
offending party liquidated damages in the sum of ten thousand pesos (Exh. A).

On July 28, 1960, the company received a copy of the letter from the Manila branch of Toyo Menka
Kaisha, Ltd. confirming the acceptance by Japanese suppliers of firm offers for the consignment to
Pamintuan of plastic sheetings valued at forty-seven thousand dollars. Acting on that information,
the company lost no time in securing in favor of Pamintuan an irrevocable letter of credit for two
hundred sixty-five thousand five hundred fifty pesos.

Pamintuan was apprised by the bank on August 1, 1960 of that letter of credit which made reference
to the delivery to Yu Ping Kun Co., Inc. on or before October 31, 1960 of 336, 360 yards of plastic
sheetings (p. 21, Record on Appeal).

On September 27 and 30 and October 4, 1960, the Japanese suppliers shipped to Pamintuan,
through Toyo Menka Kaisha, Ltd., the plastic sheetings in four shipments to wit: (1) Firm Offer No.
327 for 50,000 yards valued at $9,000; (2) Firm Offer No. 328 for 70,000 yards valued at $8,050; (3)
Firm Offers Nos. 329 and 343 for 175,000 and 18,440 yards valued at $22,445 and $2,305,
respectively, and (4) Firm Offer No. 330 for 26,000 yards valued at $5,200, or a total of 339,440
yards with an aggregate value of $47,000 (pp. 4-5 and 239-40, Record on Appeal).

The plastic sheetings arrived in Manila and were received by Pamintuan. Out of the shipments,
Pamintuan delivered to the company's warehouse only the following quantities of plastic sheetings:

November 11, 1960 140 cases, size 48 inches by 50 yards. November 14, 1960
258 cases out of 352 cases. November 15, 1960 11 cases out of 352 cases.
November 15, 1960 10 cases out of 100 cases. November 15, 1960 30 cases
out of 100 cases.

Pamintuan withheld delivery of (1) 50 cases of plastic sheetings containing 26,000 yards valued at
$5,200; (2) 37 cases containing 18,440 yards valued at $2,305; (3) 60 cases containing 30,000
yards valued at $5,400 and (4) 83 cases containing 40,850 yards valued at $5,236.97. While the
plastic sheetings were arriving in Manila, Pamintuan informed the president of Yu Ping Kun Co., Inc.
that he was in dire need of cash with which to pay his obligations to the Philippine National Bank.
Inasmuch as the computation of the prices of each delivery would allegedly be a long process,
Pamintuan requested that he be paid immediately.

Consequently, Pamintuan and the president of the company, Benito Y.C. Espiritu, agreed to fix the
price of the plastic sheetings at P0.782 a yard, regardless of the kind, quality or actual invoice value
thereof. The parties arrived at that figure by dividing the total price of P265,550 by 339,440 yards,
the aggregate quantity of the shipments.

After Pamintuan had delivered 224,150 yards of sheetings of interior quality valued at P163,.047.87,
he refused to deliver the remainder of the shipments with a total value of P102,502.13 which were
covered by (i) Firm Offer No. 330, containing 26,000 yards valued at P29,380; (2) Firm Offer No.
343, containing 18,440 yards valued at P13,023.25; (3) Firm Offer No. 217, containing 30,000 yards
valued at P30,510 and (4) Firm Offer No. 329 containing 40,850 yards valued at P29,588.88 (See
pp. 243-2, Record on Appeal).

As justification for his refusal, Pamintuan said that the company failed to comply with the conditions
of the contract and that it was novated with respect to the price.

On December 2, 1960, the company filed its amended complaint for damages against Pamintuan.
After trial, the lower court rendered the judgment mentioned above but including moral damages.

The unrealized profits awarded as damages in the trial court's decision were computed as follows
(pp. 248-9, Record on Appeal):

(1) 26,000 yards with a contract price of Pl.13 per yard and a selling price at the time
of delivery of Pl.75 a yard........................................................... P16,120.00

(2) 18,000 yards with a contract price of P0.7062 per yard and selling price of Pl.20
per yard at the time of delivery......................................... 9,105.67

(3) 30,000 yards with a contract price of Pl.017 per yard and a selling price of Pl.70
per yard. 20,490.00
 (4) 40,850 yards with a contract price of P0.7247 per yard and a selling price of
P1.25 a yard at the time of delivery.............................................. 21,458.50 Total
unrealized profits....................... P67,174.17

The overpayment of P12,282.26 made to Pamintuan by Yu Ping Kun Co., Inc. for the 224,150 yards,
which the trial court regarded as an item of damages suffered by the company, was computed as
follows (p. 71, Record on Appeal):

Liquidation value of 224,150 yards at P0.7822 a yard

.............................................................................. P175,330.13

Actual peso value of 224,150 yards as per firm offers or as per

contract............................................163,047.87

Overpayment................................................................ P 12,282.26

To these two items of damages (P67,174.17 as unrealized profits and P12,282.26 as overpayment),
the trial court added (a) P10,000 as stipulated liquidated damages, (b) P10,000 as moral damages,
(c) Pl,102.85 as premium paid by the company on the bond of P102,502.13 for the issuance of the
writ of preliminary attachment and (d) P10,000 as attorney's fees, or total damages of P110,559.28)
p. 250, Record on Appeal). The Court of Appeals affirmed that judgment with the modification that
the moral damages were disallowed (Resolution of June 29, 1966).

Pamintuan appealed. The Court of Appeals in its decision of March 18, 1966 found that the contract
of sale between Pamintuan and the company was partly consummated. The company fulfilled its
obligation to obtain the Japanese suppliers' confirmation of their acceptance of firm offers totalling
$47,000. Pamintuan reaped certain benefits from the contract. Hence, he is estopped to repudiate it;
otherwise, he would unjustly enrich himself at the expense of the company.

The Court of Appeals found that the writ of attachment was properly issued. It also found that
Pamintuan was guilty of fraud because (1) he was able to make the company agree to change the
manner of paying the price by falsely alleging that there was a delay in obtaining confirmation of the
suppliers' acceptance of the offer to buy; (2) he caused the plastic sheetings to be deposited in the
bonded warehouse of his brother and then required his brother to make him Pamintuan), his
attorney-in-fact so that he could control the disposal of the goods; (3) Pamintuan, as attorney-in-fact
of the warehouseman, endorsed to the customs broker the warehouse receipts covering the plastic
sheetings withheld by him and (4) he overpriced the plastic sheetings which he delivered to the
company.

The Court of Appeals described Pamintuan as a man "who, after having succeeded in getting
another to accommodate him by agreeing to liquidate his deliveries on the basis of P0.7822 per
yard, irrespective of invoice value, on the pretense that he would deliver what in the first place he
ought to deliver anyway, when he knew all the while that he had no such intention, and in the
process delivered only the poorer or cheaper kind or those which he had predetermined to deliver
and did not conceal in his brother's name and thus deceived the unwary party into overpaying him
the sum of P 1 2,282.26 for the said deliveries, and would thereafter refuse to make any further
delivery in flagrant violation of his plighted word, would now ask us to sanction his actuation" (pp. 61-
62, Rollo).

The main contention of appellant Pamintuan is that the buyer, Yu Ping Kun Co., Inc., is entitled to
recover only liquidated damages. That contention is based on the stipulation "that any violation of
the provisions of this contract (of sale) shall entitle the aggrieved party to collect from the offending
party liquidated damages in the sum of P10,000 ".

Pamintuan relies on the rule that a penalty and liquidated damages are the same (Lambert vs. Fox
26 Phil. 588); that "in obligations with a penal clause, the penalty shall substitute the indemnity for
damages and the payment of interests in case of non-compliance, if there is no stipulation to the
contrary " (1st sentence of Art. 1226, Civil Code) and, it is argued, there is no such stipulation to the
contrary in this case and that "liquidated damages are those agreed upon by the parties to a
contract, to be paid in case of breach thereof" (Art. 2226, Civil Code).

We hold that appellant's contention cannot be sustained because the second sentence of article
1226 itself provides that I nevertheless, damages shall be paid if the obligor ... is guilty of fraud in the
fulfillment of the obligation". "Responsibility arising from fraud is demandable in all obligations" (Art.
1171, Civil Code). "In case of fraud, bad faith, malice or wanton attitude, the obligor shall be
responsible for an damages which may be reasonably attributed to the non-performance of the
obligation" (Ibid, art. 2201).

The trial court and the Court of Appeals found that Pamintuan was guilty of fraud because he did not
make a complete delivery of the plastic sheetings and he overpriced the same. That factual finding is
conclusive upon this Court.

There is no justification for the Civil Code to make an apparent distinction between penalty and
liquidated damages because the settled rule is that there is no difference between penalty and
liquidated damages insofar as legal results are concerned and that either may be recovered without
the necessity of proving actual damages and both may be reduced when proper (Arts. 1229, 2216
and 2227, Civil Code. See observations of Justice J.B.L. Reyes, cited in 4 Tolentino's Civil Code, p.
251).

Castan Tobeas notes that the penal clause in an obligation has three functions: "1. Una funcion
coercitiva o de garantia, consistente en estimular al deudor al complimiento de la obligacion
principal, ante la amenaza de tener que pagar la pena. 2. Una funcion liquidadora del dao, o sea la
de evaluar por anticipado los perjuicios que habria de ocasionar al acreedor el incumplimiento o
cumplimiento inadecuado de la obligacion. 3. Una funcion estrictamente penal, consistente en
sancionar o castigar dicho incumplimiento o cumplimiento inadecuado, atribuyendole consecuencias
mas onerosas para el deudor que las que normalmente lleva aparejadas la infraccion contractual. "
(3 Derecho Civil Espanol, 9th Ed., p. 128).

The penalty clause is strictly penal or cumulative in character and does not partake of the nature of
liquidated damages (pena sustitutiva) when the parties agree "que el acreedor podra pedir, en el
supuesto incumplimiento o mero retardo de la obligacion principal, ademas de la pena, los danos y
perjuicios. Se habla en este caso de pena cumulativa, a differencia de aquellos otros ordinarios, en
que la pena es sustitutiva de la reparacion ordinaria." (Ibid, Castan Tobenas, p. 130).

After a conscientious consideration of the facts of the case, as found by Court of Appeals and the
trial court, and after reflecting on the/tenor of the stipulation for liquidated damages herein, the true
nature of which is not easy to categorize, we further hold that justice would be adequately done in
this case by allowing Yu Ping Kun Co., Inc. to recover only the actual damages proven and not to
award to it the stipulated liquidated damages of ten thousand pesos for any breach of the
contract. The proven damages supersede the stipulated liquidated damages.

This view finds support in the opinion of Manresa (whose comments were the bases of the new
matter found in article 1226, not found in article 1152 of the old Civil Code) that in case of fraud the
difference between the proven damages and the stipulated penalty may be recovered (Vol. 8, part.
1, Codigo Civil, 5th Ed., 1950, p. 483).

Hence, the damages recoverable by the firm would amount to ninety thousand five hundred fifty-nine
pesos and twenty-eight centavos (P90,559.28), with six percent interest a year from the filing of the
complaint.

With that modification the judgment of the Court of Appeals is affirmed in all respects. No costs in
this instance.

SO ORDERED.