Makati Stock Exchange v. Campos Chico-Nazario, J.: Leigh Taritz C. Ganancial Facts

Makati Stock Exchange v.
Campos
G.R. No. 138814 April 16, 2009
CHICO-NAZARIO, J.:
Leigh Taritz C. Ganancial
Facts
On 10 February 1994, respondent Miguel V. Campos filed with the Securities,
Investigation and Clearing Department (SICD) of the Securities and Exchange Commission
(SEC), a petition against herein petitioners Makati Stock Exchange, Inc. (MKSE) and MKSE
directors seeking: (1) the nullification of the Resolution of the MKSE Board of Directors, which
allegedly deprived him of his right to participate equally in the allocation of Initial Public
Offerings (IPO) of corporations registered with MKSE; (2) the delivery of the IPO shares he
was allegedly deprived of, for which he would pay IPO prices; and (3) the payment of ₱2
million as moral damages, ₱1 million as exemplary damages, and ₱500,000.00 as attorney’s
fees and litigation expenses. SICD granted respondent’s prayer. Petitioners assailed the SICD
Order before the SEC en banc. Consequently, SEC en banc nullified the SIDC Order and ordered
the dismissal of the case.
Respondent assailed the SEC en banc Orders before the Court of Appeals. Appellate
court granted the petition. Petitioners filed a Motion for Reconsideration but was denied by
the Court of Appeals. Hence the petition.
Issue
Whether or not the Court of Appeals erred in holding that SEC en banc committed
grave abuse of discretion in ruling in favor of herein respondent
Ruling
Yes. The decision of the Court of Appeals was reversed and the SEC en banc orders
were reinstated. A right is a claim or title to an interest in anything whatsoever that is
enforceable by law. An obligation is defined in the Civil Code as a juridical necessity to give, to
do or not to do. For every right enjoyed by any person, there is a corresponding obligation on
the part of another person to respect such right. Art. 1157. Obligations arise from: (1) Law; (2)
Contracts; (3) Quasi-contracts; (4) Acts or omissions punished by law; and (5) Quasi-delicts.
Therefore, an obligation imposed on a person, and the corresponding right granted to
another, must be rooted in at least one of these five sources. There is no question that the
original petition asserts a right of herein respondent and stipulates the correlative obligation
of petitioners to respect respondent’s right. However, the petition failed to lay down its
source or basis. In the absence of the source granting the right to participate equally in the
allocation of Initial Public Offerings (IPO) of corporations registered with MKSE, the Court
cannot grant respondent’s petition which allegedly resulted from the MKSE Board Resolution.
In the main, the SEC en banc did correctly dismiss the petition for its failure to state the basis
for respondent’s alleged right.
Petition granted.
Manzanilla v. Court of Appeals
G.R. No. L-75342 March 15, 1990
MEDIALDEA, J.:
Facts
In 1963, spouses Manzanilla sold on installment an undivided one-half portion of their
residential house and lot located at Casiana St., Santol, Quezon City while mortgaged to the
Government Service Insurance System (GSIS), which fact was known to the vendees, spouses
Campo. The vendees took possession of the premises upon payment of the first installment.
The property was foreclosed and was sold at public auction where GSIS was the highest
bidder. Despite, Manzanilla spouses executed a Deed of Absolute Sale of the property in favor
of the Campo spouses. Manzanilla recovered the property thus; an Absolute Deed of Sale was
executed by GSIS in favor of the Manzanilla spouses. On 1973, petitioner Ines Carpio
purchased the property from the Manzanilla spouses and agreed to assume the mortgage in
favor of Biñan Rural Bank. On 1973, private respondent Justina Campo registered with the
Register of Deeds. On 1977, petitioner Ines Carpio filed an ejectment case against Justina
Campo. A complaint for quieting of title against the Manzanilla spouses and Ines Carpio was
filed. Decision rendered in favor of Campo. Court of Appeals affirmed the trial court’s decision.
Petitioners' Motion for Reconsideration was likewise denied. Hence, this petition
Issue
Whether or not petitioners Manzanillas are under any legal duty to reconvey the
undivided one-half portion of the property to private respondent Justina Campo
Ruling
No. There may be a moral duty on the part of petitioners to convey the one-half portion
of the property previously sold to private respondents. However, they are under no legal
obligation to do so. The failure of either the Manzanilla spouses or the Campo spouses to
redeem the property from GSIS, title to the property was consolidated in the name of GSIS.
The new title cancelled the old title in the name of the Manzanilla spouses. GSIS at this point
had a clean title free from any lien in favor of any person including that of the Campo spouses.
Thus, as regards to the rights of Carpio, she is a buyer in good faith and for value. Hence, the
action to quiet title filed by private respondent must fail. Justice is done according to law. As
a rule, equity follows the law. There may be a moral obligation, often regarded as an equitable
consideration, but if there is no enforceable legal duty, the action must fail although the
disadvantaged party deserves commiseration or sympathy.
Petition granted.
Rural Bank of Parañaque, Inc. v. Remolado
G.R. No. L-62051 March 18, 1985
AQUINO, J.:
Facts
Isidra Remolado, owned a 308 square meters lot located at 41 Molave Street, United
Parañaque, Rizal, which was leased to Beatriz Cabagnot. On April 17, 1971 she mortgaged it
again to the bank. She eventually secured loans in total of ₱18,000 which later become
overdue. The bank foreclosed the mortgage and bought the property. The one-year period of
redemption was to expire on August 21, 1973. No redemption was made. The bank
consolidated its ownership over the property. Title was cancelled. On September 24, 1973, the
bank gave her up to 10 am of October 31, within which to repurchase. Contrary to her promise,
she did not repurchase the property on October 31, or on November 5, she and her daughter
delivered P33,000 rash to the bank's assistant manager as repurchase price. The amount was
returned to them the next day. November 6, Remolado filed an action to compel the bank to
reconvey the property to her. The repurchase price was not consigned. On November 15, the
bank sold the property to Pilar Aysip for P50,000. A new title was issued to Aysip with an
annotation of lis pendens. The trial court ordered the bank to return the property to
Remolado. The Appellate Court affirmed the judgment. The bank appealed to this Court
contending that Remolado had no more right of redemption and, therefore, no cause of
action against the bank.
Issue
Whether or not the trial court and the Appellate Court erred in ordering the
reconveyance of the property
Ruling
Yes. The Appellate Court's judgment is reversed and set aside. The complaint and
counterclaim are dismissed. The notice of lis pendens is cancelled. Justice is done according
to law. As a rule, equity follows the law. There may be a moral obligation, often regarded as
an equitable consideration, but if there is no enforceable legal duty, the action must fail
although the disadvantaged party deserves commiseration or sympathy. The bank acted
within its legal rights when it refused to give Remolado any extension to repurchase after
October 31, 1973. It had given her about two years to liquidate her obligation. She failed to do
so. Moreover, there was no binding agreement for its repurchase. Even on the assumption
that the bank should be bound by its commitment to allow repurchase on or before October
31, 1973, still Remolado had no cause of action because she did not repurchase the property
on that date.
Petition granted.
Development Bank of the Philippines v. Adil
G.R. No. L-48889 May 11, 1989
GANCAYCO, J.:
Facts
On February 10, 1940 spouses Villafuerte obtained an agricultural loan from the
Development of the Philippines (DBP), in the sum of ₱2,000.00 as evidenced by a promissory
note of said date whereby they bound themselves jointly and severally to pay the account in
ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even
after the lapse of the aforesaid ten-year period, Confesor, who was by then a member of the
Congress of the Philippines, executed a second promissory note on April 11, 1961 expressly
acknowledging said loan and promising to pay the same on or before June 15, 1961. Said
spouses not having paid the obligation on the specified date, the DBP filed a complaint.
The decision ordered the spouses to pay DBP. On appeal, decision was reversed. A motion for
reconsideration was denied thereafter. Hence this petition wherein petitioner alleges that the
decision of respondent judge is contrary to law and runs counter to decisions of this Court
when respondent judge (a) refused to recognize the law that the right to prescription may be
renounced or waived; and (b) that in signing the second promissory note respondent Patricio
Confesor can bind the conjugal partnership; or otherwise said respondent became liable in his
personal capacity.
Issue
Whether or not a promissory note which was executed in consideration of a previous
promissory note the enforcement of which had been barred by prescription is valid
Ruling
Yes. The decision to pay DBP was reinstated. The right to prescription may be waived
or renounced. Article 1112 of Civil Code provides: Persons with capacity to alienate property
may renounce prescription already obtained, but not the right to prescribe in the future.
Prescription is deemed to have been tacitly renounced when the renunciation results from
acts which imply the abandonment of the right acquired. There is no doubt that prescription
has set in as to the first promissory note of February 10, 1940. However, when respondent
Confesor executed the second promissory note on April 11, 1961 whereby he promised to pay
the amount covered by the previous promissory note on or before June 15, 1961, and upon
failure to do so, agreed to the foreclosure of the mortgage, said respondent thereby
effectively and expressly renounced and waived his right to the prescription of the action
covering the first promissory note. This Court had ruled in a similar case that when a debt is
already barred by prescription, it cannot be enforced by the creditor. But a new contract
recognizing and assuming the prescribed debt would be valid and enforceable. Thus, it has
been held —Where, therefore, a party acknowledges the correctness of a debt and promises
to pay it after the same has prescribed and with full knowledge of the prescription he thereby
waives the benefit of prescription.
Petition granted.
Asuncion v. Court of Appeals
G.R. No. 109125 December 2, 1994
VITUG, J.:
Facts
Ang Yu Asuncion and Keh Tiong, et al. are lessees of residential and commercial spaces
owned by against spouses Cu Unjieng and Jose Tan. Before October 9, 1986, defendants
informed that they are offering to sell the premises and are giving them priority to acquire the
same. Lesses asked that they specify the terms and conditions of the offer to sell, however,
no reply. Since defendants failed to specify the terms and conditions of the offer to sell and
because of information received that defendants were about to sell the property, they filed
the complaint to compel defendants to sell the property to them. Lower court decision was
in favor of the defendants and ruled that should the defendants subsequently offer their
property for sale at a price of ₱11-million or below, plaintiffs will have the right of first refusal.
On appeal, Court affirmed with modification holding that there was no meeting of the minds
between the parties concerning the sale of the property. Absent such requirement, the claim
for specific performance will not lie. While case was pending consideration by this Court, the
Unjieng spouses executed a Deed of Sale transferring the property to Buen Realty and
Development Corporation. As the new owner of the property, demand lessees to vacate. In
reply to petitioner states that they brought the property subject to the notice of lis pendens.
The lessees filed a Motion for Execution. Consequently, granted. The appellate court, on
appeal to it by private respondent, set aside the orders. Hence, the petition contending that
Buen Realty can be held bound by the writ of execution by virtue of the notice of lis pendens.
Issue
Whether or not the Buen Realty can be held bound by the writ of execution by virtue
of the notice of lis pendens
Ruling
No. The Supreme Court affirmed the setting aside of the writ of execution. Art. 1156,
Civil Code: An obligation is a juridical necessity to give, to do or not to do. The essential
elements of obligation are: (a) The vinculum juris or juridical tie which is the efficient cause
established by the various sources of obligations (b) the object which is the prestation or
conduct required to be observed; and (c) the subject-persons who, viewed from the
demandability of the obligation, are the active (obligee) and the passive (obligor) subjects.
Among the sources of an obligation is a contract which is a meeting of minds between two
persons whereby one binds himself to give something or to render some service. Observe,
however, that the option is not the contract of sale itself. The optionee has the right, but not
the obligation, to buy. Once the option is exercised timely, the offer is accepted before a
breach of the option, a bilateral promise to sell and to buy ensues and both parties are then
reciprocally bound to comply with their respective undertakings.
Petition denied.
Ocampo III v. People
G.R. No. 156547 (543 S 487) February 4, 2008
AZCUNA, J.:
Facts
The Department of Budget and Management released National Aid for Local
Government Units (NALGU) funds in the amount of ₱100 Million to the Province of Tarlac to
assist local governments in their various projects and services. Ocampo, governor of Tarlac
from February 22, 1988 up to June 30, 1992, loaned out ₱56.6 million to the Lingkod Tarlac
Foundation, Inc. (LTFI) for the implementation of various livelihood projects. The loan was
made pursuant to a Memorandum of Agreement (MOA) entered into by the Province of
Tarlac, represented by Ocampo, and LTFI, represented by petitioner Flores, on August 8, 1988.
It turned out that Ocampo resigned as chairperson and trustee of the LTFI prior to August 8,
1988, the date when petitioner Ocampo and LTFI entered into the MOA. Thus, the loan
becomes the subject of 25 criminal cases but was reduced into 2 against Ocampo.
The Sandiganbayan convicted Ocampo and Flores of the crime of malversation of

public funds. Hence the petition contending that the loan was private in character since it was
a loan contracted with the Lingkod Tarlac Foundation, Inc., thus cannot be subject of
malversation of public funds.
Issue
Whether the amount loaned out was private in nature
Ruling
Yes. Based on the foregoing, it is clear that the funds released by the Province of Tarlac,
including the money allegedly malversed by petitioners were in the nature of a loan to LTFI.
Art. 1953 of the Civil Code provides that " a person who receives a loan of money or any other
fungible thing acquires the ownership thereof, and is bound to pay to the creditor an equal
amount of the same kind and quality." Hence, petitioner Ocampo correctly argued that the
NALGU funds shed their public character when they were lent to LTFI as it acquired ownership
of the funds with an obligation to repay the Province of Tarlac the amount borrowed. The
relationship between the Province of Tarlac and the LTFI is that of a creditor and debtor.
Failure to pay the indebtedness would give rise to a collection suit. The fact that the petitioner-
Governor contracted the loan, the public fund changed its nature to private character, thus it
is not malversation which is the subject of this case, instead it must be a simple collection of
money suit against the petitioner in case of non-payment. Therefore, the petitioner is
acquitted for the crime of malversation.
Petition granted.
Metropolitan Bank & Trust Company v. Ana Grace Rosales and Yo Yuk To
G.R. No. 183204 January 13, 2014
DEL CASTILLO, J.:
Facts
In 2000, respondent Ana Grace Rosales and Yo Yuk To opened a Joint Peso Account
with Petitioner Metropolitan Bank and Trust Company. In May 2002, Rosales accompanied
and acted as interpreter to her client Liu Chiu Fang, a Taiwanese National applying for a
retiree’s visa from the Philippine Leisure and Retirement Authority (PLRA), to petitioner to
open a savings account. Respondents opened with petitioner a Joint Dollar Account. On July
31, 2003, petitioner issued a "Hold Out" order against respondents’ accounts. Petitioner filed
a criminal case for Estafa through False Pretences, Misrepresentation, Deceit, and Use of
Falsified Documents against respondent Rosales unauthorized and fraudulent withdrawal of
US$75,000.00 from Liu Chiu Fang’s dollar account. The Office of the City Prosecutor dismissed
the criminal case for lack of probable cause. Respondents filed before the Regional Trial Court
a Complaint for Breach of Obligation and Contract with Damages against petitioner alleging
that they attempted several times to withdraw their deposits but were unable to because
petitioner had placed their accounts under "Hold Out" status but without explanation. While
the case for breach of contract was being tried, the City Prosecutor reversed the dismissal of
the charge of estafa. The lower court held the petitioner liable for breach of contract.
Reconsideration were denied, hence, the petition.
Issue
Whether or not petitioner breached its contract with respondents
Ruling
Yes. Petitioner’s reliance on the "Hold Out" clause is misplaced. The clause applies only
if there is a valid and existing obligation arising from any of the sources of obligation
enumerated in Article 115779 of the Civil Code, to wit: law, contracts, quasi-contracts, delict,
and quasi-delict. In this case, petitioner failed to show that respondents have an obligation to
it under any law, contract, quasi-contract, delict, or quasi-delict. And although a criminal case
was filed by petitioner against respondent Rosales, this is not enough reason for petitioner to
issue a "Hold Out" order as the case is still pending and no final judgment of conviction has
been rendered against respondent Rosales. In fact, it is significant to note that at the time
petitioner issued the "Hold Out" order, the criminal complaint had not yet been filed. Thus,
considering that respondent Rosales is not liable under any of the five sources of obligation,
there was no legal basis for petitioner to issue the "Hold Out" order. Accordingly, we agree
with the findings of the RTC and the CA that the "Hold Out" clause does not apply in the
instant case. Therefore, we find that petitioner is guilty of breach of contract when it
unjustifiably refused to release respondents’ deposit despite demand.
Petition denied.
Leung Ben v. O'Brien
G.R. No. L-13602 (38 Phil 182) April 6, 1918
STREET, J.:
Facts
On December 12, 1917 an action was instituted in the Court of the First Instance by
O’Brien to recover from Leung Ben the sum of ₱15, 000.00 alleged to have been lost by the
plaintiff to the defendant in a series of gambling, banking and percentage games conducted
during the two or three months prior to the institution of the suit. In his verified complaint
the plaintiff asked for an attachment, under sections 424 and 412 (1) of the Code of Civil
Procedure against the property of the defendant on the ground that the latter was about to
depart from the Philippine Island with intent to defraud his creditors. The attachment was
issued and acting on the authority thereof, the sheriff attached the sum of ₱15, 000.00 which
had been deposited by the defendant with the International Banking Corporation.
The defendant moved to quash the attachment stating that the provision of law under
which this attachment was issued requires that there should be a cause of action arising upon
contract, express or implied; the court however, dismissed said motion. Petitioner Leung Ben
filed his petition for writ of certiorari. The contention of the petitioner is that the statutory
action to recover money lost at gaming is that the statutory action to recover money lost at
gaming is no such an action as is contemplated in this provision, and he therefore insists that
the original complaint shows on its face that the remedy of attachment is not available in aid
thereof.
Issue
Whether or not the statutory obligation to restore money won at gaming an obligation
arising from contract, express or implied
Ruling
Yes. In the common law the duty to return money won in this way is an implied
contract, or quasi-contract. The duty of the defendant to refund the money which he won
from the plaintiff at gaming is a duty imposed by statute. It therefore arises ex lege.
Furthermore, it is a duty to return a certain sum which had passed from the plaintiff to the
defendant. By all the criteria which the common law supplies, this a duty in the nature of debt
and is properly classified as an implied contract. It is well- settled by the English authorities
that money lost in gambling or by lottery, if recoverable at all, can be recovered by the loser
in an action of indebitatus assumpsit for money had and received. Hence, the cause of action
stated in the complaints in the court is based on a contract, express or implied and is therefore
of such nature that the court had authority to issue writ of attachment.
Petition denied.
Pelayo v. Lauron
G.R. No. L-4089 (12 Phil 453) January 12, 1909
TORRES, J.:
Facts
On October 13, 1906, the plaintiff Arturo Pelayo was called to the house of defendants
Marcelo Lauron and Juana Abella and was requested by them to render medical assistance to
their daughter-in-law who was about to give birth to a child. The plaintiff found it necessary
to remove the fetus by means of an operation. On demand for fee, the defendants refused to
pay services rendered by the plaintiff at ₱500.00. Thus, the plaintiff filed a complaint against
the defendants. In answer, the defendants denied and alleged that their daughter-in-law died
as a consequence of the said childbirth, and when she was still alive, she lived with her
husband independently and in a separate house and without any relation with them, and she
gave birth she in the house of the defendants and her stay there due to fortuitous
circumstances. Thus, the defendants prayed that they be absolved.
The lower court rendered judgment in favor of the defendants absolving them from
the complaint. Hence the petition.
Issue
Whether or not the parents-in-law are under any obligation to pay the fees claimed by
the plaintiff
Ruling
No. The defendants were not, nor are they now, under any obligation by virtue of any
legal provision, to pay the fees claimed, nor in consequence of any contract entered into
between them and the plaintiff from which such obligation might have arisen. The rendering
of medical assistance in case of illness is comprised among the mutual obligations to which
spouses are bound by way of mutual support. When either of them by reason of illness should
be in need of medical assistance, the other is under the unavoidable obligation to furnish the
necessary services of a physician in order that the health may be restored; the party bound to
furnish such support is therefore, liable for all the expenses, including the fees of the medical
expert for his professional services. The liability arises from the obligation, which the law has
expressly established, between married couples. It is therefore the husband of the patient
who is bound to pay for the services of the plaintiff. The fact that it was not the husband who
called the plaintiff and requested the medical assistance for his wife is no bar to his fulfillment
of such obligation, as the defendants, in view of the imminent danger to which the life of the
patient was at that moment exposed, considered that the medical assistance was urgently
needed. Therefore, plaintiff should direct his action against the husband of the patient, and
not against her parents-in-law.
Petition denied.
Hotel Nikko v. Reyes
G.R. No. 154259 February 28, 2005
CHICO-NAZARIO, J.:
Facts
Roberto Reyes, with the screen name “Amay Bisaya,” alleged that while he was having
coffee at the lobby of Hotel Nikko, he was spotted by his friend Dr. Filart and invited him to
join her in a party at the hotel’s penthouse in celebration of the natal day of the hotel’s
manager, Mr. Masakazu Tsuruoka. At the buffet dinner Mr. Reyes lined-up but, to his great
shock, shame and embarrassment, he was stopped by Ruby Lim, the Executive Secretary of
Hotel Nikko. Reyes alleged that Ruby Lim, in a loud voice and within the presence and hearing
of the other guests told him to leave the party because he was not invited. Mr. Reyes tried to
explain that he was invited by Dr. Filart but the latter completely ignored him thus adding to
his shame and humiliation. Mr. Reyes filed before the court asking for damages under Articles
19 and 21 of the Civil Code. Petitioners Lim and Hotel Nikko contend that pursuant to the
doctrine of volenti non fit injuria, they cannot be made liable for damages as respondent
Reyes assumed the risk as he was a “gate-crasher.” Trial Court ruled in favor of herein
petitioner. Court of Appeals reversed and ordered to pay for damages hence, this petition.
Issue
Whether or not Hotel Nikko and Ruby Lim are jointly and severally liable with Dr. Filart
for damages under Articles 19 and 21 of the Civil Code.
Ruling
No. The Supreme Court agreed with the lower court’s ruling that Ms. Lim did not abuse
her right to ask Mr. Reyes to leave the party as she talked to him politely and discreetly.
Damages may be granted under Art. 19. Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give everyone his due, and observe honesty
and good faith and Art. 21. Any person who willfully causes loss or injury to another in a
manner that is contrary to morals, good customs or public policy shall compensate the latter
for the damage. However, considering the closeness of defendant Lim to plaintiff when the
request for the latter to leave the party was made such that they nearly kissed each other, the
request was meant to be heard by him only and there could have been no intention on her
part to cause embarrassment to him. Thereby, Ms. Lim, not having abused her right to ask Mr.
Reyes to leave the party to which he was not invited, cannot be made liable to pay for
damages under Articles 19 and 21 of the Civil Code. Necessarily, neither can her employer,
Hotel Nikko, be held liable as its liability springs from that of its employee. Had respondent
simply left the party as requested, there was no need for the police to take him out.
Petition granted.
St. Mary’s Academy v. Carpitanos
G.R. No. 143363 February 6, 2002
PARDO, J.:
Facts
from 13 to 20 February 1995, defendant-appellant St. Mary’s Academy of Dipolog City
conducted an enrollment drive for the school year 1995-1996. A facet of the enrollment
campaign was the visitation of schools from where prospective enrollees were studying. As a
student of St. Mary’s Academy, Sherwin Carpitanos was part of the campaigning group.
Accordingly, on the fateful day, Sherwin, along with other high school students were riding in
a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to Larayan Elementary
School, Larayan, Dapitan City. The jeep was driven by James Daniel II then 15 years old and a
student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a
result the jeep turned turtle. Sherwin Carpitanos died as a result of the injuries he sustained
from the accident. Trial court granted the recovery for damages; Court of Appeals affirmed
under Articles 218 and 219 of the Family Code, pointing out that petitioner was negligent in
allowing a minor to drive and in not having a teacher accompany the minor students in the
jeep. Motion for reconsideration was denied. Hence, this appeal.
Issue
Whether or not the petitioner is liable for damages for the death of Sherwin
Ruling
No. Under Article 219 of the Family Code, if the person under custody is a minor, those
exercising special parental authority are principally and solidarily liable for damages caused by
the acts or omissions of the unemancipated minor while under their supervision, instruction,
or custody. However, in this case, the respondents failed to show that the negligence of
petitioner was the proximate cause of the death of the victim. Respondents Daniel spouses
and Villanueva admitted that the immediate cause of the accident was not the negligence of
petitioner or the reckless driving of James Daniel II, but the detachment of the steering wheel
guide of the jeep. Hence, liability for the accident, whether caused by the negligence of the
minor driver or mechanical detachment of the steering wheel guide of the jeep, must be
pinned on the minor’s parents primarily. The negligence of petitioner St. Mary’s Academy was
only a remote cause of the accident. Between the remote cause and the injury, there
intervened the negligence of the minor’s parents or the detachment of the steering wheel
guide of the jeep. Hence, with the overwhelming evidence presented by petitioner and the
respondent Daniel spouses that the accident occurred because of the detachment of the
steering wheel guide of the jeep, it is not the school, but the registered owner of the vehicle
who shall be held responsible for damages for the death of Sherwin Carpitanos.
Petition granted.
Guanio v. Makati Shangri-la Hotel
G.R. No. 190601 February 7, 2011
CARPIO MORALES, J.:
Facts
Petitioner spouses Luigi M. Guanio and Anna Hernandez-Guanio booked at the
Shangri-la Hotel Makati. The parties eventually agreed on a final price ₱1,150 per person. On
July 27, 2001, the parties finalized and signed their contract. During the reception,
respondent’s representatives, Catering Director Bea Marquez and Sales Manager Tessa
Alvarez, did not show up despite their assurance that they would; their guests complained of
the delay in the service of the dinner; certain items listed in the published menu were
unavailable; the hotel’s waiters were rude and unapologetic when confronted about the
delay; and despite Alvarez’s promise that there would be no charge for the extension of the
reception beyond 12:00 midnight, they were billed and paid P8,000 per hour for the three-
hour extension of the event up to 4:00 A.M. the next day. They further claim that they brought
wine and liquor in accordance with their open bar arrangement, but these were not served to
the guests who were forced to pay for their drinks. Thus, a letter-complaint to the Makati
Shangri-la Hotel and Resort, Inc. and received an apologetic reply from Krister Svensson, the
hotel’s Executive Assistant Manager in charge of Food and Beverage. On the complaint for
breach of contract and damages trial court rendered a decision in favor of the plaintiffs and
was reversed by the CA, upon appeal, the latter holding that the proximate cause of
petitioners’ injury was an unexpected increase in their guests. Hence, this appeal.
Issue
Whether or not the CA correctly held that the proximate cause of petitioners’ injury
was an unexpected increase in their guests
Ruling
No. The Court finds that since petitioners’ complaint arose from a contract, the
doctrine of proximate cause finds no application to it, the latter applicable only to actions for
quasi-delicts, not in actions involving breach of contract. Breach of contract is defined as the
failure without legal reason or excuse to comply with the terms of a contract, whole or part.
The appellate court, and even the trial court, observed that petitioners were remiss in their
obligation to inform respondent of the change in the expected number of guests. The
observation is reflected in the records of the case. Petitioners’ failure to discharge such
obligation thus excused respondent from liability for “any damage or inconvenience”
occasioned thereby. However, under considerations of equity, the Court deems it just to
award nominal damages.
Petition partly granted.
TSPI, Inc. v. TSPOC Employees Union
G.R. No. 163419 (545 SCRA 215) February 13, 2008
VELASCO, JR., J.:
Facts
TSPI Corporation entered into a Collective Bargaining Agreement with the corporation
Union for the increase of salary for the latter’s members of 10%,12% and 11% for the year 2000,
2001 and 2002, respectively. On October 6, 2000 Wage Order No. NCR-08 was issued
increasing salaries from P 223.50 to P 250.00 starting November 1, 2000. Conformably, the
wages of the 17 probationary employees were increased to P250.00 and became regular
employees therefore receiving another 10% increase in salary. In January 2001, TSPIC
implemented the new wage rates as mandated by the CBA. As a result, the 9 employees who
were senior to the 17 recently regularized employees, received less wages. On January 19,
2001, TSPIC’s HRD notified the 24 employees who are private respondents, that due to an
error in the automated payroll system, they were overpaid and the overpayment would be
deducted from their salaries starting February 2001. The Union on the other hand, asserted
that there was no error and the deduction of the alleged overpayment constituted diminution
of pay. It was brought to grievance machinery however TSPIC and the Union failed to reach
an agreement. In the arbitration, decision ruled in favor of the union and that TSPIC violated
the Labor Code. Appeal and Motion for Reconsideration were denied. Hence, this appeal.
Issue
Whether or not the TSPIC’s decision to deduct the alleged overpayment from the
salaries of the affected members of the Union constitute diminution of benefits
Ruling
Yes. It is considered that Collective Bargaining Agreement entered into by unions and
their employers are binding upon the parties and be acted in strict compliance therewith.
Thus, the CBA in this case is the law between the employers and their employees. The court
ruled any amount given to the employees in excess of what they were entitled to may be
legally deducted by TSPIC. TSPIC, in turn, must refund to individual respondents any amount
deducted from their salaries which was in excess of what TSPIC is legally allowed to deduct
from the salaries based on the computations. As correctly pointed out by TSPIC, the
overpayment of its employees was a result of an error. This error was immediately rectified
by TSPIC upon its discovery. We have ruled before that an erroneously granted benefit may
be withdrawn without violating the prohibition against non-diminution of benefits. Therefore,
there was no overpayment when there was an increase of salary for the members of the union
simultaneous with the increasing of minimum wage for workers. The CBA should be followed
thus, the senior employees who were first promoted as regular employees shall be entitled
for the increase in their salaries and the same with lower rank workers.
Regino v. Pangasinan College
G.R. No. 156109 November 18, 2004
PANGANIBAN, J.:
Facts
Petitioner Khristine Rea M. Regino, a first-year computer science student of
Pangasinan Colleges of Science and Technology (PCST), went to college through the financial
support of her relatives. She enrolled Logic and Statistics subjects under Rachelle Gamurot
and Elissa Baladad, respectively as teachers. In February 2002, PCST held a fund-raising
campaign dubbed “The Rave Party and Dance Revolution”. Each student was required to pay
for two tickets at the price of P100.00 each. The project was allegedly implemented by
recompensing students who purchased tickets with additional points in their test scores;
those who refused to pay were denied the opportunity to take the final examinations.
Financially strapped and prohibited by her religion from attending dance parties and
celebration, Regino refused to pay tickets. On March 14 and 15, 2002, the scheduled dates of
examinations in Logics and Statistics, the teachers allegedly disallowed her from taking the
tests. Petitioner then filed as pauper litigant, a complaint for damages against PCST. The
Regional Trial Court dismissed the complaint for lack of merit. It ruled that Commission on
Higher Education, not the court, has jurisdiction over the controversy.
Issue
Whether or not there was a breach of contract
Ruling
Yes. The Court characterized the relationship between the school and the student as a
contract, in which a student, once admitted by the school is considered enrolled for one
semester. The school-student relationship is also reciprocal. Thus, it has consequences
appurtenant to and inherent in all contracts of such kind -- it gives rise to bilateral or reciprocal
rights and obligations. The school undertakes to provide students with education sufficient
to enable them to pursue higher education or a profession. On the other hand, the students
agree to abide by the academic requirements of the school and to observe its rules and
regulations. In the present case, PCST imposed the assailed revenue-raising measure
belatedly, in the middle of the semester. It exacted the dance party fee as a condition for the
students' taking the final examinations, and ultimately for its recognition of their ability to
finish a course. The fee, however, was not part of the school-student contract entered into at
the start of the school year. Hence, it could not be unilaterally imposed to the prejudice of the
enrollees.
Petition granted.
Ayala Corp v. Rosa Diana Realty
G.R. No. 134284 (346 SCRA 663) December 1, 2000
DE LEON, J.:
Facts
On April 20, 1976, Ayala Corporation sold their registered parcel of land to Manuel Sy
married and Sy Ka Kieng with Special Conditions of Sale and Deed Restrictions. Manuel Sy and
Sy Ka Kieng failed to construct the building in violation of the Special Conditions of Sale,
however, were able to sell the lot to Rosa-Diana Realty and Development Corporation. An
undertaking was executed promising to abide by said Special Condition of Sale executed
between Ayala and the original vendees, for the release of certificate of title. Consequently,
upon presentation of the building plan, Ayala released title, thereby enabling Rosa-Diana to
register the Deed of Sale on its favor and obtain certificate of Title in its name.
However, Rosa-Diana submitted another set of building plan which was different to
the previous to the building official of Makati. During the construction, Ayala filed for specific
performance seeking to compel the latter to comply with the Deed of Restriction annotated.
In the alternative, Ayala prayed for rescission of the sale of the subject lot to Rosa-Diana
Realty. The lower court denied. Ayala tried to cause the annotation a notice of lis pendens on
Rosa-Diana’s title but the Register of Deed of Makati refused registration holding that the
case pending before the trial court is an action in personam which does not involve the title,
use or possession of the property. The Land Registration Authority reversed the ruling of the
Register of Deeds, however, Court of Appeals reversed again.
Issue
Whether or not respondent Rosa-Diana has the obligation to enforce the Deed of
Restrictions contained in the contract it entered with Ayala.
Ruling
Yes, respondent has the obligation to enforce the Deed of Restrictions contained in
the contract it entered with Ayala. Contractual obligations between parties have the force of
law between them and absent any allegation that the same are contrary to law, morals, good
customs, public order or public policy, they must be complied with in good faith. Article 1159
of the New Civil Code provides obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith. Respondent
freely consented to be bound by the deed restrictions when it entered into a contract of sale
with spouses. While respondent claims that Ayala was no longer enforcing the deed
restrictions, the Undertaking it executed belies this same claim. Respondent agreed to
construct and complete the construction of the house on said lot as required under the special
condition of sale and likewise bound itself to abide and comply with the condition of the
rescission of the scale by Ayala Land, Inc. on the grounds therein stated.
Petition granted.
Padcom Condominium Corporation v. Ortigas Center Association, Inc.
G.R.No. 146807 May 9, 2002
DAVIDE, JR., C.J.:
Facts
Petitioner Padcom Condominium Corporation owns and manages the Padilla Office
Condominium Building. The land on which the building stands was originally acquired from
the Ortigas & Company, Limited Partnership by Tierra Development Corporation (TDC).
Among the terms and conditions in the deed of sale was the requirement that the transferee
and its successor-in-interest must become members of an association for realty owners and
long-term lessees in the area later known as the Ortigas Center. Respondent Ortigas Center
Association, Inc. was organized to advance the interests and promote the general welfare of
the real estate owners and long-term lessees of lots in the Ortigas Center. The association
sought the collection of membership dues of P2,724.40 per month. Due to PADCOM’s failure
and refusal to pay its arrears in monthly dues, including interests and penalties thereon, the
Association filed a complaint for collection of sum of money. The Association averred that
purchasers of lands within the Ortigas Center complex from OCLP are obligated under their
contracts of sale to become members of the Association. This obligation was allegedly passed
on to PADCOM when it bought the lot from TDC, its predecessor-in-interest. The trial court
dismissed the complaint but was reversed by the Court of Appeals. Hence, this petition for
review.
Issue
Whether or not PADCOM is obliged to pay it dues incidental thereto as automatic
members of the association
Ruling
Yes. PADCOM is deemed to be a regular member upon the acquisition of the lot
pursuant to the automatic membership clause annotated in the Certificate of Title of the
property and the Deed of Transfer. PADCOM voluntarily agreed to be bound by and respect
the condition, and thus to join the Association. Having ruled that PADCOM is a member of the
Association, it is obligated to pay its dues incidental thereto as mandated by Article 1159 of
the Civil Code which states that “obligations arising from contracts have the force of law
between the contracting parties and should be complied with in good faith”. Assuming in
gratis argumenti that PADCOM is not a member of the Association, it cannot evade payment
without violating the equitable principles underlying quasi-contracts. Article 2142 of the Civil
Code provides that “certain lawful, voluntary and unilateral acts give rise to the juridical
relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the
expense of another”.
Petition denied.
Southern Philippines Power Corp. v. Commissioner of Internal Revenue
G.R.No. 179632, October 19, 2011
ABAD, J.:
Facts
Petitioner Southern Philippines Power Corporation (SPP), a power company that
generates and sells electricity to the National Power Corporation (NPC), applied with the
Bureau of Internal Revenue (BIR) for zero-rating of its transactions under Section 108(B)(3) of
the National Internal Revenue Code (NIRC). The BIR approved the application for taxable
years 1999 and 2000. SPP filed a claim with Commissioner of Internal Revenue (CIR) for a
₱5,083,371.57 tax credit or refund for 1999 and ₱6,221,078.44 in tax credit or refund for 2000.
Before the lapse of the two-year prescriptive period for such actions, SPP filed with the Court
of Tax Appeals (CTA) Second Division a petition for review covering its claims for refund or
tax credit. The petition claimed only the aggregate amount of ₱8,636,126.75 which covered
the last two quarters of 1999 and the four quarters in 2000. The Second Division denied SPP’s
claims for refund. On appeal, the CTA En Banc affirmed the Second Division’s decision dated
July 31, 2007. The CTA En Banc denied SPP’s motion for reconsideration. Hence, this petition.
Issue
Whether or not the CTA En Banc correctly ruled that SPP was not entitled to a tax
refund or credit.
Ruling
No. A claim for tax credit or refund, arising out of zero-rated transactions, is essentially
based on excess payment. In zero-rating a transaction, the purpose is not to benefit the
person legally liable to pay the tax, like SPP, but to relieve exempt entities like NPC which
supplies electricity to factories, offices, and homes, from having to shoulder the tax burden
that ultimately would be passed to the public. The principle of solutio indebiti should govern
this case since the BIR received something that it was not entitled to. Thus, it has to return
the same. The government should not use technicalities to hold on to money that does not
belong to it. Only a preponderance of evidence is needed to grant a claim for tax refund based
on excess payment. Notably, SPP does no other business except sell the power it produces to
NPC, a fact that the CIR did not contest in the parties’ joint stipulation of facts.8 Consequently,
the likelihood that SPP would claim input taxes paid on purchases attributed to sales that are
not zero-rated is close to nil.
Petition granted.
Commissioner of Internal Revenue v. Aichi Forging Company of Asia, Inc.
G.R. No. 184823, October 6, 2010
DEL CASTILLO, J.:
Facts
Respondent Aichi Forging Company of Asia, Inc., a corporation duly organized and
existing under the laws of the Republic of the Philippines, is engaged in the manufacturing,
producing, and processing of steel and its by-products. It is registered with the Bureau of
Internal Revenue (BIR) as a Value-Added Tax (VAT) entity and its products, "close impression
die steel forgings" and "tool and dies," are registered with the Board of Investments (BOI) as
a pioneer status. On September 30, 2004, respondent filed a claim for refund/credit of input
VAT for the period July 1, 2002 to September 30, 2002 in the total amount of ₱3,891,123.82
with the petitioner Commissioner of Internal Revenue (CIR), through the Department of
Finance (DOF) One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center.
Respondent filed a Petition for Review with the CTA for the refund/credit of the same input
VAT. The Second Division of the CTA rendered a Decision partially granting respondent’s claim
for refund/credit. Motion for reconsideration was denied, thus, petitioner elevated the matter
to the CTA En Banc via a Petition for Review. CTA En Banc affirmed the Second Division’s
Decision allowing the partial tax refund/credit in favor of respondent. Hence, this petition.
Issue
Whether or nor respondent’s judicial and administrative claims for tax refund/credit
were filed within the two-year prescriptive period, thus is entitled to it
Ruling
No. A taxpayer is entitled to a refund either by authority of a statute expressly granting
such right, privilege, or incentive in his favor, or under the principle of solutio indebiti requiring
the return of taxes erroneously or illegally collected. In both cases, a taxpayer must prove not
only his entitlement to a refund but also his compliance with the procedural due process as
non-observance of the prescriptive periods within which to file the administrative and the
judicial claims would result in the denial of his claim. Section 112 (A) of the NIRC provides in no
uncertain terms that unutilized input VAT payments not otherwise used for any internal
revenue tax due the taxpayer must be claimed within two years reckoned from the close of
the taxable quarter when the relevant sales were made pertaining to the input VAT regardless
of whether said tax was paid or not. Prescriptive period commences from the close of the
taxable quarter when the sales were made and not from the time the input VAT was paid nor
from the time the official receipt was issued. Thus, when a zero-rated VAT taxpayer pays its
input VAT a year after the pertinent transaction, said taxpayer only has a year to file a claim
for refund or tax credit of the unutilized creditable input VAT. Consequently, claim for refund
or tax credit filed had already prescribed.
Petition granted.
Moreño-Lentfer v. Wolff
G.R. No. 152317 November 10, 2004
QUISUMBING, J.:
Facts
On March 6, 1992, Petitioners with respondent, engaged the notarial services of Atty.
Rodrigo C. Dimayacyac for: (1) the sale of a beach house owned by petitioner Cross in Sabang,
Puerto Galera, Oriental Mindoro, and (2) the assignment of Cross' contract of lease on the
land where the house stood. The sale of the beach house and the assignment of the lease
right would be in the name of petitioner Victoria Moreño-Lentfer, but the total consideration
of 220,000 Deutschmarks (DM) would be paid by respondent Hans Jurgen Wolff. A
promissory note was executed by said respondent in favor of petitioner Cross. According to
respondent, the Lentfer spouses were his confidants who held in trust for him, a time deposit
account in the amount of DM 200,000 at Solid Bank Corporation. Apprised of his interest to
own a house along a beach, the Lentfer urged him to buy petitioner Cross' beach house and
lease rights in Puerto Galera. Respondent agreed and through a bank-to-bank transaction, he
paid Cross the amount of DM 221,700 as total consideration for the sale and assignment of the
lease rights. However, Cross, Moreño-Lentfer and Atty. Dimayacyac surreptitiously executed
a deed of sale whereby the beach house was made to appear as sold to Moreño-Lentfer for
only P100,000. Upon learning of this, respondent filed a Complaint for annulment of sale and
reconveyance of property with damages and prayer for a writ of attachment. Trial court
dismissed the complaint for failure to establish a cause of action. On appeal, the appellate
court reversed the decision of the trial court. Hence, this petition.
Issue
Whether or not the principle of solutio indebiti, the principle of justice and equity,
apply in the case at bar
Ruling
Yes. The quasi-contract of solutio indebiti harks back to the ancient principle that no
one shall enrich himself unjustly at the expense of another. It applies where (1) a payment is
made when there exists no binding relation between the payor, who has no duty to pay, and
the person who received the payment, and (2) the payment is made through mistake, and not
through liberality or some other cause. In the instant case, the payment was clearly a mistake.
Since Moreño-Lentfer received something when there was no right to demand it, she had an
obligation to return it. We are convinced petitioner had been unjustly enriched at the expense
of respondent. She acquired the properties through deceit, fraud and abuse of confidence.
The principle of justice and equity does not work in her favor but in favor of respondent Wolff.
Whatever she may have received by mistake from and at the expense of respondent should
thus be returned to the latter, if the demands of justice are to be served.
Petition denied.
Genova v. De Castro
G.R. No. 132076 July 22, 2003
YNARES-SANTIAGO, J.:
Facts
Petitioner, ventured into the business of movie production, was the owner of a parcel
of land. In order to finance his film project, he obtained a loan from respondent Levita de
Castro for P1,000,000.00 with interest of 5% per annum. By way of security and as required,
petitioner turned over his owner’s duplicate certificate of title and signed blank sheets of
paper with the understanding that their Deed of Mortgage will be printed thereon.
Meanwhile, petitioner remained in possession of the property. It appears that previously,
petitioner had obtained a loan from the United Coconut Planters Bank secured by a real estate
mortgage over the subject property. He defaulted in the payment of his obligations,
whereupon the bank caused the extrajudicial foreclosure of the mortgage and purchased the
property as the highest bidder at the sale at public auction. Subsequently, respondent
redeemed the property from UCPB. It turned out that instead of printing a Deed of Mortgage
on the blank sheets of paper which petitioner had earlier signed, respondent caused to be
printed thereon an "Absolute Deed of Sale of a Registered Land" in her favor.
Metropolitan Trial Court ruled in favor of the respondent. Regional Trial Court reversed
which was reversed again by the Court of Appeals. Hence, the instant petition arguing that
the payments he has made to respondent must be returned based on the principle of solutio
indebiti under Article 2154 of the Civil Code.
Issue
Whether or not payments he has made to respondent must be returned based on the
principle of solutio indebiti under Article 2154 of the Civil Code
Ruling
No. There is solutio indebiti where: (1) payment is made when there exists no binding
relation between the payor, who has no duty to pay, and the person who received the
payment; and (2) the payment is made through mistake, and not through liberality or some
other cause. Article 2154 of the Civil Code provides: If something is received when there is no
right to demand it, and it was unduly delivered through mistake, the obligation to return it
arises. The first element of quasi-contract solutio indebiti is lacking. There can be no mistaken
payment in this case because petitioner made payments pursuant to an agreement to
repurchase the property. Hence, the principle of solutio indebiti finds no application in this
case. This notwithstanding, petitioner is entitled to a refund of what he had paid based on
equitable grounds. We find it iniquitous for the respondent to forfeit both petitioner’s land
and hard-earned money.
Titan-Ikeda Construction & Development Corporation v. Primetown
Property Group, Inc.
G.R. No. 158768 February 12, 2008
CORONA, J.:
Facts
The respondent Primetown Property Corporation entered into contract with the
petitioner Titan-Ikeda Construction Corporation for the structural works of a 32-storey prime
tower. After the construction of the tower, respondent again awarded to the petitioner the
amount of P 130,000,000.00 for the tower’s architectural design and structure. However, in
1994, the respondent entered into a contract of sale of the tower in favor of the petitioner in
a manner called full-swapping. Since the respondent had allegedly constructed almost one
third of the project as well as selling some units to third persons unknown to the petitioner.
Integrated Inc. took over the project, thus the petitioner is demanding for the return of its
advanced payment in the amount of P2, 000,000.00 as well as the keys of the unit.
Respondent filed a complaint for collection of sum of money against petitioner. Regional Trial
Court ruled in favor of herein petitioners and ordered the payment of damages. Court of
Appeals reversed the lower court decision. Petitioner moved for reconsideration but it was
denied. Hence, this petition.
Issue
Whether or not the petitioner is entitled to damages
Ruling
No. A contract is a meeting of the minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service. Since, in a
contract it is necessarily that there is a meeting of the minds of the parties in which this will
be the binding law upon them. Thus, in a reciprocal obligation, both parties are obliged to
perform their obligation simultaneously and in good faith. In this case, petitioner, Titan-Ikeda
Construction cannot recover damages because it was found out there was no solutio indebiti
or mistake in payment in this case since the latter is just entitled to the actual services it
rendered to the respondent and thus it is ordered to return the condominium units to the
respondent.
Petition granted.
Traders Royal Bank Employees Union-Independent v. NLRC
G.R. No. 120592 March 14, 1997
REGALADO, J.:
Facts
Petitioner Traders Royal Bank Employees Union and private respondent Atty.
Emmanuel Noel A. Cruz, entered into a retainer agreement on February 26, 1987 whereby the
former obligated itself to pay the latter a monthly retainer fee of P3,000.00 in consideration
of the law firm's undertaking to render the services enumerated in their contract. During the
existence of that agreement, petitioner union referred to private respondent the claims of its
members for holiday, mid-year and year-end bonuses against their employer, Traders Royal
Bank (TRB). A complaint was filed by private respondent before the National Labor Relations
Commission (NLRC). The NLRC ruled in favor of the employees. Pending the hearing of the
application for the writ of execution, TRB challenged the decision of the NLRC before the
Supreme Court. The decision deleted the mid- and end-year bonuses. Upon receipt of the
decision, private respondent filed a motion before Labor Arbiter Lorenzo for the
determination of his attorney's fees, praying that ten percent (10%) of the total award for
holiday pay differential computed by TRB at P175,794.32, or the amount of P17,579.43, be
declared as his attorney's fees, and that petitioner union be ordered to pay and remit said
amount to him. Consequently, the union is ordered to pay the attorney’s fees. NLRC affirmed
the decision. Motion for reconsideration was denied. Hence, this petition.
Issue
Whether or not the petitioner is obliged to pay for attorney’s fees
Ruling
Yes. The fact that petitioner and private respondent failed to reach a meeting of the
minds with regard to the payment of professional fees for special services will not absolve the
former of civil liability for the corresponding remuneration therefor in favor of the latter.
Obligations do not emanate only from contracts. 31 One of the sources of extra-contractual
obligations found in our Civil Code is the quasi-contract premised on the Roman maxim that
nemo cum alterius detrimento locupletari protest. As embodied in our law, 32 certain lawful,
voluntary and unilateral acts give rise to the juridical relation of quasi-contract to the end that
no one shall be unjustly enriched or benefited at the expense of another. A quasi-contract
between the parties in the case at bar arose from private respondent's lawful, voluntary and
unilateral prosecution of petitioner's cause without awaiting the latter's consent and
approval. Petitioner cannot deny that it did benefit from private respondent's efforts as the
law firm was able to obtain an award of holiday pay differential in favor of the union. It cannot
even hide behind the cloak of the monthly retainer of P3,000.00 paid to private respondent
because, as demonstrated earlier, private respondent's actual rendition of legal services is not
compensable merely by said amount.
Petition denied.
Philippine National Bank v. Court of Appeals
G.R. No. 97995 January 21, 1993
ROMERO, J.:
Facts
Private Respondent B.P. Mata & Co. Inc., acted as a manning agent for several foreign
firms, one of which is Star Kist Foods, Inc. As part of their agreement, Mata makes advances
for the crew's medical expenses, National Seaman's Board fees, Seaman's Welfare fund, and
standby fees and for the crew's basic personal needs. Subsequently, Mata sends monthly
billings to its foreign principal Star Kist, which in turn reimburses Mata by sending a
telegraphic transfer through banks for credit to the latter's account. Security Pacific National
Bank (SEPAC) of Los Angeles transmitted a cable message to the International Department
of PNB to pay the amount of US$14,000 to Mata by crediting the latter's account with the
Insular Bank of Asia and America (IBAA), per order of Star Kist. Six years later, PNB requested
Mata for refund of US$14,000 (P97,878.60) after it discovered it error in effecting the
payment. PNB filed a civil case for collection and refund of US$14,000 against Mata arguing
that based on a constructive trust under Article 1456 of the Civil Code, it has a right to recover
the said amount it erroneously credited to respondent Mata. The Regional Trial Court
dismissed the complaint ruling squarely under Article 2154 on solutio indebiti and not under
Article 1456 on constructive trust. Appellate Court affirmed. Consequently, recipient is duty
bound to return the amount paid by mistake. But the appellate court concluded that
petitioner's demand for the return of US$14,000 cannot prosper because its cause of action
had already prescribed. Hence, this appeal.
Issue
Whether or not petitioner may still claim the US$14,000 it erroneously paid private
respondent under a constructive trust
Ruling
No. The case fulfills the requisites of solutio indebiti as under Article 2154 that
something (in this case money) has been received when there was no right to demand it and
(2) the same was unduly delivered through mistake. There is a presumption that there was a
mistake in the payment "if something which had never been due or had already been paid was
delivered; but he from whom the return is claimed may prove that the delivery was made out
of liberality or for any other just cause." However, while petitioner may avail of an action to
enforce a constructive trust or the quasi-contract of solutio indebiti, it has been deprived of a
choice, for prescription has effectively blocked quasi-contract as an alternative, leaving only
constructive trust as the feasible option. But petitioner's claim cannot prosper since it is
already barred by laches. It is a well-settled rule now that an action to enforce an implied trust,
whether resulting or constructive, may be barred not only by prescription but also by laches.
Petition denied.
Commissioner of Internal Revenue v. Acesite (Philippines) Hotel
Corporation
G.R. No. 147295 February 16, 2007
VELASCO, JR., J.:
Facts
Acesite is the owner and operator of the Holiday Inn Manila Pavilion Hotel. It leases
6,768.53 square meters of the hotel’s premises to the Philippine Amusement and Gaming
Corporation for casino operations. For the period January 96 to April 1997, Acesite incurred
VAT amounting to P30,152,892.02 from its rental income and sale of food and beverages to
PAGCOR. Acesite tried to shift the said taxes to PAGCOR by incorporating it in the amount
assessed to PAGCOR but the latter refused to pay the taxes on account of its tax-exempt
status. Thus, PAGCOR paid the amount due to Acesite minus the P30,152,892.02 VAT while the
latter paid the VAT to the Commissioner of Internal Revenue as it feared the legal
consequences of non-payment of the tax. However, Acesite belatedly arrived at the
conclusion that its transaction with PAGCOR was subject to zero rate as it was rendered to a
tax-exempt entity. Acesite filed an administrative claim for refund with the CIR but the latter
failed to resolve the same. Thus, Acesite filed a petition with the Court of Tax Appeals which
granted the refund. On appeal, decision was affirmed. Hence, this petition.
Issue
Whether or not the Court of Appeals erred in granting the refund
Ruling
No. Tax refunds are based on the principle of quasi-contract or solutio indebiti and the
pertinent laws governing this principle are found in Arts. 2142 and 2154 of the Civil Code, which
provide, thus: Art. 2142. Certain lawful, voluntary, and unilateral acts give rise to the juridical
relation of quasi-contract to the end that no one shall be unjustly enriched or benefited at the
expense of another. Art. 2154. If something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to return it arises. When money
is paid to another under the influence of a mistake of fact, that is to say, on the mistaken
supposition of the existence of a specific fact, where it would not have been known that the
fact was otherwise, it may be recovered. The ground upon which the right of recovery rests
is that money paid through misapprehension of facts belongs in equity and in good conscience
to the person who paid it. Enshrined in the basic legal principles is the time-honored doctrine
that no person shall unjustly enrich himself at the expense of another. It goes without saying
that the Government is not exempted from the application of this doctrine.
Petition denied.
Locsin v. Mekeni
G.R. No. 192105 December 9, 2013
DEL CASTILLO, J.:
Facts
In February 2004, respondent Mekeni Food Corporation offered petitioner Antonio
Locsin II the position of Regional Sales Manager to oversee Mekeni’s National Capital Region
Supermarket/Food Service and South Luzon operations. His employment includes a car plan
where 50% be paid by the company and 50% be deducted monthly to his salary at amount of
₱5,000.00. Consistently, Mekeni furnished petitioner with a used Honda Civic car valued at
₱280,000.00. On his resignation, a total of ₱112,500.00 had been deducted from his monthly
salary and applied as part of the employee’s share in the car plan. Petitioner made an offer to
purchase his service vehicle by paying the outstanding balance thereon. But they did not
agree, thus, petitioner had to returned the vehicle to Mekeni. Petitioner filed against Mekeni
a Complaint for the recovery of monetary claims consisting of unpaid salaries, commissions,
sick/vacation leave benefits, and recovery of monthly salary deductions which were
earmarked for his cost-sharing in the car plan. Labor Arbiter direct respondents to turn-over
to complainant the subject vehicle upon the said complainant’s payment to them of the sum
of ₱100,435.84.The NLRC reversed and held that petitioner’s amortization payments on his
service vehicle amounting to ₱112,500.00 should be reimbursed; if not, unjust enrichment
would result, as the vehicle remained in the possession and ownership of Mekeni. Court of
appeals reversed the grant of reimbursement of the share ₱112,500.00. Hence, this appeal.
Issue
Whether or not reimbursement is proper
Ruling
Yes. It is unfair to deny petitioner a refund of all his contributions to the car plan. There
is unjust enrichment ''when a person unjustly retains a benefit to the loss of another, or when
a person retains money or property of another against the fundamental principles of justice,
equity and good conscience." The principle of unjust enrichment requires two conditions: (1)
that a person is benefited without a valid basis or justification, and (2) that such benefit is
derived at the expense of another. Conversely, petitioner cannot recover the monetary value
of Mekeni’s counterpart contribution to the cost of the vehicle; that is not property or money
that belongs to him, nor was it intended to be given to him in lieu of the car plan. In other
words, Mekeni’s share of the vehicle’s cost was not part of petitioner’s compensation
package. To start with, the vehicle is an asset that belonged to Mekeni. Just as Mekeni is
unjustly enriched by failing to refund petitioner’s payments, so should petitioner not be
awarded the value of Mekeni’s counterpart contribution to the car plan, as this would unjustly
enrich him at Mekeni’s expense.
Petition partly granted
Flores v. Lindo
G.R. No. 183984 April 13, 2011
CARPIO, J.:
Facts
On 31 October 1995, Edna Lindo obtained a loan from Arturo Flores amounting to
₱400,000 payable on 1 December 1995 with 3% compounded monthly interest and 3%
surcharge in case of late payment. To secure the loan, Edna executed a Deed of Real Estate
Mortgage covering a property in her name and her husband Enrico Jr. Edna also signed a
Promissory Note and the Deed for herself and for Enrico as his attorney-in-fact. Edna issued
three checks as partial payments for the loan. All checks were dishonored for insufficiency of
funds, prompting petitioner to file a Complaint for Foreclosure of Mortgage with Damages
against respondents. The trial court ruled that petitioner was not entitled to judicial
foreclosure of the mortgage. Petitioner filed a Complaint for Sum of Money with Damages
against respondents. Respondents, in their Answer, admitted the loan but stated that it only
amounted to ₱340,000 and that Enrico was not a party to the loan because it was contracted
by Edna without Enrico’s signature. Motion to dismiss was denied. On appeal, the Court of
Appeals set aside the decision denying the motion to dismiss. Court of Appeals dismissed the
complaint for collection of sum of money on the ground of multiplicity of suits. Petitioner filed
a motion for reconsideration but was denied. Hence, this petition.
Issue
Whether or not the Court of Appeals committed a reversible error in dismissing the
complaint for collection of sum of money on the ground of multiplicity of suits.
Ruling
Yes. There is unjust enrichment "when a person unjustly retains a benefit to the loss of
another, or when a person retains money or property of another against the fundamental
principles of justice, equity and good conscience." The principle of unjust enrichment requires
two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that
such benefit is derived at the expense of another. The main objective of the principle against
unjust enrichment is to prevent one from enriching himself at the expense of another without
just cause or consideration. The principle is applicable in this case considering that Edna
admitted obtaining a loan from petitioners, and the same has not been fully paid without just
cause. Considering the circumstances of this case, the principle against unjust enrichment,
being a substantive law, should prevail over the procedural rule on multiplicity of suits. The
Court of Appeals, in the assailed decision, found that Edna admitted the loan, except that she
claimed it only amounted to ₱340,000. Edna should not be allowed to unjustly enrich herself
because of the erroneous decisions of the two trial courts when she questioned the validity
of the Deed.
Petition granted.
Cruz v. J. M. Tuason & Company, Inc.
G.R. No. L-23749 April 29, 1977
BARREDO, J.:
Facts
Plaintiff, Faustino Cruz, filed a complaint contains two (2) causes of action — the first
being an action for sum of money in the amount of P7,781.74 representing actual expenses
and P38,400.00 as reasonable compensation for services in improving the 50 quinones now
in the possession of defendants. The second cause of action deals with the 3,000 sq. ms.
which defendants have agreed to transfer into Plaintiff for services rendered in effecting the
compromise between the Deudors and defendants. Thereby, alleging appellees are being
benefited by said improvements, he is entitled to reimbursement. The Court of First instance
dismissed the complaint of appellant Cruz for the recovery of improvements he has made on
appellees' land and to compel appellees to convey to him 3,000 square meters of land on
three grounds: (1) failure of the complaint to state a cause of action; (2) the cause of action of
plaintiff is unenforceable under the Statute of Frauds; and (3) the action of the plaintiff has
already prescribed. Hence, this appeal.
Issue
Whether or not the defendants should reimburse the plaintiff
Ruling
Yes. Article 2142. Certain lawful voluntary and unilateral acts give rise to the juridical
relation of quasi-contract to the end that no one shill be unjustly enriched or benefited at the
expense of another. Article 2142 deals with quasi-contracts or situations where there is no
contract between the parties to the action. Further, as we can readily see from the title
thereof, that the same bears the designation 'extra contractual obligations' or obligations
which do not arise from contracts. While it is true that there was no agreement between
plaintiff and defendants herein for the improvement of the 50 quinones since the latter are
presently enjoying and utilizing the benefits brought about through plaintiff's labor and
expenses, defendants should pay and reimburse him therefor under the principle that 'no one
may enrich himself at the expense of another.' in this posture, the complaint states a cause of
action against the defendants.
Petition granted.
People v. Bayotas
G.R. No. 102007 September 2, 1994
ROMERO, J.:
Facts
Rogelio Bayotas was charged with rape and eventually convicted. Pending appeal of
his conviction, Bayotas died. Consequently, the Supreme Court dismissed the criminal aspect
of the appeal. The Solicitor General, in its comment, expressed his view that the death of the
accused did not extinguish his civil liability as a result of his commission of the offense
charged. The Solicitor General insists that the appeal should still be resolved for the purpose
of reviewing his conviction by the lower court on which the civil liability is based. Counsel of
the accused, on the other hand, opposed the view of the Solicitor General arguing that the
death of the accused while pending appeal extinguishes both his criminal and civil penalties.
In support of his position, said counsel invoked the ruling of the Court of Appeals in People v.
Castillo and Ocfemia which held that the criminal liability in a criminal case takes root in the
criminal liability; and therefore, civil liability is extinguished if accused should die before final
judgment is rendered.
Issue
Whether or not the death of the accused pending appeal of his conviction extinguish
his civil liability
Ruling
Yes. The Court resolved this issue stating Article 89 of the Revised Penal Code which
states that criminal liability is totally extinguished by the death of the convict. As to the
personal penalties and as to the pecuniary penalties, liability therefore is extinguished only
when the death of the offender occurs before final judgment. Since the death of the accused
occurred while his appeal is pending, the decision has not yet become final and executory;
thus, his civil liability together with his criminal liability is extinguished. However, if the civil
obligation arises from other sources of obligation other than the crime complained of, the
civil liability of the accused survived in spite of his death pending his appeal. A preponderance
of evidence is sufficient to prove his civil liability.
Petition denied.
People v. Go
G.R. No. 168539 March 25, 2014
PERALTA, J.:
Facts
Ma. Cecilia L. Pesayco filed a complaint with the Office of the Ombudsman against
several individuals for alleged violation of R.A. 3019. Among those charged was herein
respondent, who was then the Chairman and President of PIATCO, for having supposedly
conspired with then DOTC Secretary Arturo Enrile (Secretary Enrile) in entering into a contract
which is grossly and manifestly disadvantageous to the government. The Office of the Deputy
Ombudsman for Luzon found probable cause to indict herein respondent for violation of
Section 3(g) of R.A. 3019. While there was likewise a finding of probable cause against
Secretary Enrile, he was no longer indicted because he died prior to the issuance of the
resolution finding probable cause. Acting on the Motion to Quash filed by accused Go and that
the lone accused is a private person and his alleged co-conspirator-public official was already
deceased long before this case was filed in court, for lack of jurisdiction over the person of
the accused, the Court grants the Motion to Quash and the Information filed in this case is
hereby ordered quashed and dismissed. Hence, the instant petition
Issue
Whether or not the Court of Appeals erred in quashing and dismissing the complaint
Ruling
Yes. It is true that by reason of Secretary Enrile's death, there is no longer any public
officer with whom respondent can be charged for violation of R.A. 3019. It does not mean,
however, that the allegation of conspiracy between them can no longer be proved or that
their alleged conspiracy is already expunged. The only thing extinguished by the death of
Secretary Enrile is his criminal liability. His death did not extinguish the crime nor did it remove
the basis of the charge of conspiracy between him and private respondent. As a
recapitulation, it would not be amiss to point out that the instant case involves a contract
entered into by public officers representing the government. The SB is a special criminal court
which has exclusive original jurisdiction in all cases involving violations of R.A. 3019 committed
by person enumerated therein. This includes private individuals who are charged as co-
principals, accomplices or accessories with the said public officers. In the instant case,
respondent is being charged for violation of Section 3(g) of R.A. 3019, in conspiracy with then
Secretary Enrile. Ideally, under the law, both respondent and Secretary Enrile should have
been charged before and tried jointly by the Sandiganbayan. However, by reason of the death
of the latter, this can no longer be done. Nonetheless, for reasons already discussed, it does
not follow that the SB is already divested of its jurisdiction over the person of and the case
involving herein respondent.
Petition granted
L.G. Foods Corporation v. Pagapong-Agraviador
G.R. No. 158995 September 26, 2006
GARCIA, J.:
Facts
On February 26, 1996, Charles Vallereja, a 7-year old son of the spouses Vallejera, was
hit by a Ford Fiera van owned by the petitioners and driven at the time by their employee,
Vincent Norman Yeneza y Ferrer. Charles died as a result of the accident. An Information for
Reckless Imprudence Resulting to Homicide was filed against the driver. Unfortunately,
before the trial could be concluded, the accused driver committed suicide. On account, Trial
court dismissed the case. Spouses Vallejera filed a complaint for damages against the
petitioners as employers of the deceased driver, basically alleging that as such employers,
they failed to exercise due diligence in the selection and supervision of their employees.
Petitioners denied liability, claiming that they had exercised the required due diligence in the
selection and supervision of their employees, including the deceased driver. The trial court
denied the motion to dismiss and motion for reconsideration. On appeal, the Court of Appeals
denied the petition and upheld the trial court. Hence, the petitioners' present recourse citing
Maniago v. CA as defense that it should have been dismissed for failure of the respondent
spouses to make a reservation to institute a separate civil action for damages when the
criminal case against the driver was filed.
Issue
Whether or not the Civil action for damages will prosper
Ruling
Yes. Under Article 2180 of the Civil Code, the liability of the employer is direct or
immediate. It is not conditioned upon prior recourse against the negligent employee and a
prior showing of insolvency of such employee. Petitioners' reliance on Maniago is obviously
misplaced. There, the civil case was filed while the criminal case against the employee was still
pending. Here, the criminal case against the employee driver was prematurely terminated due
to his death. Precisely, Civil Case was filed by the respondent spouses because no remedy can
be obtained by them against the petitioners with the dismissal of the criminal case against
their driver during the pendency thereof. The circumstance that no reservation to institute a
separate civil action for damages was made when the criminal case was filed is of no moment
for the simple reason that the criminal case was dismissed without any pronouncement
having been made therein. In reality, therefor, it is as if there was no criminal case to speak of
in the first place. And for the petitioners to insist for the conviction of their driver as a
condition sine qua non to hold them liable for damages is to ask for the impossible.
Petition denied.
People v. Nurfrashir Hashim
G.R. No. 194255 June 13, 2012
SERENO, J.:
Facts
Bernadette Pansacala and Nurfrasir Hashim y Saraban, without having previously
obtained from the Philippine Overseas Employment Administration, license or authority to
engage in the recruitment and deployment of overseas workers, did then and there willfully,
unlawfully and feloniously, illegally recruit for a promised employment in Brunei and Malaysia,
thus causing and prompting the persons of BBB and AAA to apply which employment
however did not materialize because in truth and in fact, the promised employment is non-
existent, in flagrant violation of the above-mentioned law and causing damage and prejudice
to said complainants. Subsequently, BBB, AAA, CCC, went abroad but become sex workers or
prostitutes. Consequently, Pansacala and Nurfrasir Hashim were arrested, charged and
convicted by the Trial Court of the crime of illegal recruitment. Payment of damages were
likewise ordered. On appeal, the CA affirmed the findings of trial court however, reduced the
award of damages.
Issue
Whether or not the accused were liable for damages
Ruling
Yes. Art. 2219, New Civil Code provides: Moral damages may be recovered in the
following and analogous cases: (1) A criminal offense resulting in physical injuries; (2) Quasi-
delicts causing physical injuries; (3) Seduction, abduction, rape, or other lascivious acts; (4)
Adultery or concubinage; (5) Illegal or arbitrary detention or arrest; (6) Illegal search; (7) Libel,
slander or any other form of defamation; (8) Malicious prosecution; (9) Acts mentioned in
Article 309; (10) Acts and actions referred to in Articles 21, 26, 27, 28, 29, 30, 32, 34, and 35. The
criminal case of Trafficking in Persons as a Prostitute is an analogous case to the crimes of
seduction, abduction, rape, or other lascivious acts. In fact, it is worse. To be trafficked as a
prostitute without one’s consent and to be sexually violated four to five times a day by
different strangers is horrendous and atrocious. There is no doubt that Lolita experienced
physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded
feelings, moral shock, and social humiliation when she was trafficked as a prostitute in
Malaysia. Since the crime of Trafficking in Persons was aggravated, being committed by a
syndicate, the award of exemplary damages is likewise justified.
Petition granted.
Abellana v. People
G.R. No. 174654 August 17, 2011
Ponente
Facts
In 1985, petitioner Felixberto A. Abellana extended a loan to private respondents
spouses Alonto, secured by a Deed of Real Estate Mortgage. Subsequently, or in 1987,
petitioner prepared a Deed of Absolute Sale conveying said lots to him. The Deed of
Absolute Sale was signed by spouses Alonto in Manila. However, it was notarized in Cebu
City allegedly without the spouses Alonto appearing before the notary public. Thereafter,
petitioner caused the transfer of the titles to his name and sold the lots to third persons.
Respondent spouses filed a complaint charging petitioner with Estafa through Falsification
of Public Document.
The Regional Trial Court convicted the petitioner of Falsication of Public Document.
On appeal, the appellate court held that petitioner who was charged with and arraigned for
estafa through falsification of public document under Article 171(1) of the RPC could not be
convicted of Falsification of Public Document by a Private Individual under Article 172(1) in
relation to Article 171(2). Thus, the Court of appeals reversed the conviction. Nonetheless,
the civil liability was affirmed.
Issue
Whether or not petitioner could still be held civilly liable notwithstanding his acquittal.
Ruling
No. In criminal procedure a judgment of acquittal shall state whether the evidence of
the prosecution absolutely failed to prove the guilt of the accused or merely failed to prove
his guilt beyond reasonable doubt. The "extinction of the penal action does not carry with it
the extinction of civil liability unless the extinction proceeds from a declaration in a final
judgment that the fact from which the civil liability might arise did not exist." Civil liability
arises when one, by reason of his own act or omission, done intentionally or negligently,
causes damage to another. Hence, for petitioner to be civilly liable, it must be proven that the
acts he committed had caused damage to the spouses. Based on the records of the case, we
find that the acts allegedly committed by the petitioner did not cause any damage. Even
assuming that the spouses Alonto did not personally appear before the notary public, the
same does not necessarily nullify or render void ab initio the parties' transaction. Since the
defective notarization does not ipso facto invalidate the Deed of Absolute Sale, the transfer
of said properties from spouses Alonto to petitioner remains valid. Hence, when on the basis
of said Deed of Absolute Sale, petitioner caused the cancellation of spouses Alonto's title and
the issuance of new ones under his name, and thereafter sold the same to third persons, no
damage resulted to the spouses Alonto.
Petition granted.
Andamo v. Intermediate Appellate Court
G.R. No. 74761 (191 SCRA 195) November 6, 1990
FERNAN, C.J.:
Facts
Petitioner spouses Andamo are the owners of a parcel of land which is adjacent to that
of private respondent, Missionaries of Our Lady of La Salette, Inc., a religious corporation.
Within the land of respondent corporation, water paths and contrivances, including an
artificial lake, were constructed, which allegedly inundated and eroded petitioners' land,
caused a young man to drown, damaged petitioners' crops and plants, washed away costly
fences, endangered the lives of petitioners and their laborers during rainy and stormy
seasons, and exposed plants and other improvements to destruction. Petitioners instituted a
criminal action against officers and directors of herein respondent corporation, for
destruction by means of inundation under Article 324 of the Revised Penal Code and another
action for damages. Resolving respondent corporation's motion to dismiss, the trial court
dismissed Civil Case for lack of jurisdiction, as the criminal case which was instituted ahead of
the civil case was still unresolved. Respondent Appellate Court, First Civil Cases Division,
promulgated a decision affirming the questioned order of the trial court. A motion for
reconsideration filed by petitioners was denied by the Appellate Court. Hence, this appeal.
Issue
Whether or not a corporation, which has built through its agents, water paths, water
conductors and contrivances within its land, thereby causing inundation and damage to an
adjacent land, can be held civilly liable for damages under Articles 2176 and 2177 of the Civil
Code on quasi-delicts such that the resulting civil case can proceed independently of the
criminal case
Ruling
Yes. All the elements of a quasi-delict are present, to wit: (a) damages suffered by the
plaintiff, (b) fault or negligence of the defendant, or some other person for whose acts he
must respond; and (c) the connection of cause and effect between the fault or negligence of
the defendant and the damages incurred by the plaintiff. Clearly, the water paths and
contrivances are alleged to have inundated the land of petitioners. There is therefore, an
assertion of a causal connection between the act of building these water paths and the
damage sustained by petitioners. While the property involved belonged to the public domain
and the property is privately owned, the fact remains that petitioners' complaint sufficiently
alleges that petitioners have sustained and will continue to sustain damage due to the water
paths and contrivances built. Indeed, the recitals of the complaint, the alleged presence of
damage to the petitioners, the act or omission of respondent corporation supposedly
constituting fault or negligence, and the causal connection between the act and the damage,
with no pre-existing contractual obligation between the parties make a clear case of a quasi-
delict or culpa aquiliana.
Petition granted.
Barredo v. Garcia
G.R. No. L-48006 (73 Phil 607) July 8, 1942
BOCOBO, J.:
Facts
May 3, 1936, there was a head-on collision between a taxi of the Malate Taxicab driven
by Pedro Fontanilla and a carretela guided by Pedro Dimapilis. The carretela was overturned,
and one of its passengers, 16-year-old Faustino Garcia, suffered injuries from which he died
two days later. Fontanilla was convicted. A separate civil action was reserved. Severino Garcia
and Timotea Almario, parents of the deceased, brought the action against Fausto Barredo as
the sole proprietor of the Malate Taxicab and employer of Pedro Fontanilla. The Court of First
Instance of Manila awarded damages in favor of the plaintiffs. On appeal, the main theory of
the defense is that the liability of Fausto Barredo is governed by the Revised Penal Code;
hence, his liability is only subsidiary, as there has been no civil action against Pedro Fontanilla,
the person criminally liable, Barredo cannot be held responsible in this case. The Court of
Appeals expressed that the liability sought to be imposed against Fausto Barredo is not a civil
obligation arising from a felony or a misdemeanor, but an obligation imposed in Article 1903
of the Civil Code by reason of his negligence in the selection or supervision of his servant or
employee.
Issue
Whether or not the plaintiffs may bring this separate civil action against Fausto
Barredo, thus making him primary and directly responsible under Article 1903 of the Civil Code
as the employer of Pedro Fontanilla.
Ruling
Yes. A quasi-delict or culpa aquiliana is a separate and distinct legal institution under
the Civil Code with substantivity of its own, and individuality that is entirely apart and
independent from a delict or crime. Upon this principle, the primary and direct responsibility
of employers may be safely anchored. To hold that there is only one way to make the
employer’s liability effective, and that is, to sue the driver and exhaust his properties is
tantamount to compelling the plaintiff to follow a devious and cumbersome method of
obtaining relief. True, there is such a remedy under our laws, but there is also an expeditious
way, which is based on the primary and direct responsibility of the employer under Article
1903 of the Civil Code. At this juncture, it should be said that the primary and direct
responsibility of employers and presumed negligence are principles calculated to protect
society. Workmen and employees should be carefully chosen and supervised in order to avoid
injury to the public. It is the masters or employers who principally reap the profits resulting
from the services of their servants. It is but right that they should guarantee the latter’s
careful conduct for the personnel and patrimonial safety of the others. Hence, the petitioner
is liable.
Petition denied.
Del Carmen, Jr. v. Geronimo Bacoy
G.R. No. 173870 April 25, 2012
DEL CASTILLO, J.:
Facts
Emilia Bacoy Monsalud, Leonardo Monsalud, Sr. and Glenda Monsalud, were on their
way home from a Christmas party they attended. On their way, they were run over by a Fuso
passenger jeep driven by Allan Maglasang. The jeep was registered in the name of petitioner
Oscar del Carmen, Jr. Allan was found guilty of Reckless Imprudence Resulting in Multiple
Homicide. During the pendency of said criminal case, Emilia’s father, Geronimo Bacoy filed an
independent civil action for damages based on culpa aquiliana against herein petitioners on
behalf of the children. Defendants refused to assume civil liability for the victims’ deaths.
Oscar Sr. averred that the Monsaluds have no cause of action against them do not own the
jeep and that they were never the employers of Allan. For his part, Oscar Jr. claimed to be a
victim himself. He alleged that Allan and his friends stole his jeep while it was parked beside
his driver’s rented house to take it for a joyride. Trial Court exculpated the spouses del Carmen
from civil liability for insufficiency of evidence. However, their son Oscar Jr. was held civilly
liable in a subsidiary capacity. Motion for reconsideration was affirmed absolving Oscar Jr. On
Geronimo’s appeal, the Court of Appeals pronounce Oscar Del Carmen, Jr. and Allan
Maglasang primarily liable, jointly and severally, to pay the plaintiffs. Hence, this petition.
Issue
Whether or not petitioner, Oscar Jr. is liable for damages
Ruling
Yes. Absent the circumstance of unauthorized use or that the subject vehicle was
stolen which are valid defenses available to a registered owner, Oscar Jr. cannot escape
liability for quasi-delict resulting from his jeep’s use. Under the doctrine of res ipsa loquitur,
"where the thing that caused the injury complained of is shown to be under the management
of the defendant or his servants; and the accident, in the ordinary course of things, would not
happen if those who had management or control used proper care, it affords reasonable
evidence – in the absence of a sufficient, reasonable and logical explanation by defendant –
that the accident arose from or was caused by the defendant’s want of care." Negligence is
presumed under the doctrine of res ipsa loquitur. The doctrine is based partly on "the theory
that the defendant in charge of the instrumentality which causes the injury either knows the
cause of the accident or has the best opportunity of ascertaining it while the plaintiff has no
such knowledge, and is therefore compelled to allege negligence in general terms." Oscar Jr.
hence, being negligent is liable.
Petition denied.
Philippine Hawk Corporation v. Lee
G.R. No. 166869 February 16, 2010
PERALTA, J.:
Facts
A vehicular accident resulted to the death Silvino Tan, and physical injuries to Vivian
Tan Lee. The accident involved a motorcycle, a passenger jeep, and a bus with Body No. 119.
The bus was owned by petitioner Philippine Hawk Corporation, and was then being driven by
Margarito Avila. Respondent sought in a petition filed payment of indemnity for the death of
Silvino Tan and other damages. Petitioner denied liability for the vehicular accident, alleging
that the immediate and proximate cause of the accident was the recklessness or lack of
caution of Silvino Tan. Petitioner asserted that it exercised the diligence of a good father of
the family in the selection and supervision of its employees, including Margarito Avila.
The trial court rendered judgment against petitioner and defendant Margarito Avila,
wherein it adjudged guilty of simple negligence. It further held petitioner bus company liable
for failing to exercise the diligence of a good father of the family in the selection and
supervision of Avila, having failed to sufficiently inculcate in him discipline and correct
behavior on the road. The CA affirmed the decision of the trial court.
Issue
Whether or not petitioner is liable to respondent for damages
Ruling
Yes. The Court upholds the finding of the trial court and the Court of Appeals that
petitioner is liable to respondent, since it failed to exercise the diligence of a good father of
the family in the selection and supervision of its bus driver, Margarito Avila, for having failed
to sufficiently inculcate in him discipline and correct behavior on the road. Whenever an
employee’s negligence causes damage or injury to another, there instantly arises a
presumption that the employer failed to exercise the due diligence of a good father of the
family in the selection or supervision of its employees. To avoid liability for a quasi-delict
committed by his employee, an employer must overcome the presumption by presenting
convincing proof that he exercised the care and diligence of a good father of a family in the
selection and supervision of his employee. Indeed, petitioner's tests were concentrated on
the ability to drive and physical fitness to do so. It also did not know that Avila had been
previously involved in sideswiping incidents. Hence, is liable to respondent for damages.
Petition denied.
Dy Teban v. Ching
G.R. No. 161803 (543 SCRA 560) February 4, 2008
Ponente
Facts
On July 3, 1995, the prime mover with trailer suffered a tire blowout. The driver,
Cresilito Limbaga, under the LIBERTY FOREST, INC., parked the prime mover askew occupying
a substantial portion of the national highway. The prime mover was not equipped with
triangular, collapsible reflectorized plates, the early warning device required under Letter of
Instruction No. 229. As substitute was banana trunk with leaves on the front and the rear
portion of the prime mover to warn incoming motorists. At around 4:45 a.m. the next day,
Rogelio Ortiz, with helper Romeo Catamora, was driving a Nissan van owned by petitioner Dy
Teban Trading, Inc. To avoid hitting the parked prime mover occupying its lane, the incoming
Joana Paula bus swerved to the right, onto the lane of the approaching Nissan van. Ortiz saw
two bright and glaring headlights and the approaching passenger bus. He pumped his break
slowly, swerved to the left to avoid the oncoming bus but the van hit the front of the
stationary prime mover. The passenger bus hit the rear of the prime mover. Consequently,
was an information for damages. RTC rendered a decision in favor of petitioner Dy Teban
Trading, Inc. but was reversed by the appellate court. Hence, the appeal.
Issue
Whether or not there was negligence on the respondent and thus liable for damages
Ruling
Yes. The CA erred in absolving private respondents from liability for the vehicular
collision. Article 2176 of the Civil Code provides that whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation between the parties,
is called a quasi-delict. To sustain a claim based on quasi-delict, the following requisites must
concur: (a) damage suffered by plaintiff; (b) fault or negligence of defendant; and (c)
connection of cause and effect between the fault or negligence of defendant and the damage
incurred by plaintiff. All the elements of quasi delict have been proven by clear and convincing
evidence. There was negligence on the part of the respondent when the latter failed to put
and used an early warning device because it was found out that there was no early warning
device being prescribed by law that was used by the driver in order to warn incoming vehicle.
Furthermore, the proximate cause of the accident was due to the position of the trailer where
it covered a cemented part of the road, thus confused and made trick way for other vehicles
to pass by. Thus, the respondent is declared liable due to violation of road rules and
regulations.
Petition granted.
Safeguard Security v. Tangco
G.R. No. 165732 (511 SCRA 67) December 14, 2006
AUSTRIA-MARTINEZ, J.:
Facts
On November 3, 1997, Evangeline Tangco went to Ecology Bank to renew her time
deposit per advice of the bank's cashier as she would sign a specimen card. Evangeline, a duly
licensed firearm holder with corresponding permit to carry the same outside her residence,
approached security guard Pajarillo, who was stationed outside the bank, and pulled out her
firearm from her bag to deposit the same for safekeeping. Suddenly, Pajarillo shot Evangeline
with his service shotgun hitting her in the abdomen instantly causing her death. The heirs of
the victim filed a criminal case against security guard and an action against Safeguard Security
for failure to observe diligence of a goof father implied upon the act of its agent. The RTC
found respondents to be entitled to damages. The Court of Appeals affirmed that Safeguard
as employer of Pajarillo to be jointly and severally liable with Pajarillo. Hence, this appeal.
Issue
Whether Safeguard Security can be held liable for the acts of its agent.
Ruling
Yes. The law presumes that any injury committed either by fault or omission of an
employee reflects the negligence of the employer. In quasi-delicts cases, in order to overcome
this presumption, the employer must prove that there was no negligence on his part in the
supervision of his employees. It was declared that in the selection of employees and agents,
employers are required to examine them as to their qualifications, experience and service
records. Thus, due diligence on the supervision and operation of employees includes the
formulation of suitable rules and regulations for the guidance of employees and the issuance
of proper instructions intended for the protection of the public and persons with whom the
employer has relations through his employees. Thus, in this case, Safeguard Security
committed negligence in identifying the qualifications and ability of its agents. Hence, liable
for damages.
Petition denied.
Villanueva v. Domingo
G.R. No. 144274 (438 SCRA 485) September 20, 2004
CORONA, J.:
Facts
In 22 October 1991, a collision was made by a green Mitsubishi lancer registered under
the name of Nostradamus Villanueva as owner but was driven by Renato dela Cruz Ocfemia
against a silver Mitsubishi lancer driven by Leandro Domingo and owned by petitioner Priscilla
Domingo. The incident caused the car of Domingo bumped another two parked vehicles. A
charged was filed against Ocfemia and the registered owner Villanueva. Villanueva claimed
that he must not be held liable for the incident because he is no longer the owner of the car,
that it was already swapped to another car. The trial court ordered the petitioner to pay the
damages incurred by the silver Mitsubishi lancer car. The Court of Appeals upheld the trial
court’s decision.
Issue
Whether or not the registered owner of a motor vehicle be held liable for damages
arising from a vehicular accident involving his motor vehicle while being operated by the
employee of its buyer without the latter’s consent and knowledge
Ruling
Yes. We have consistently ruled that the registered owner of any vehicle is directly and
primarily responsible to the public and third persons while it is being operated. Whether the
driver is authorized or not by the actual owner is irrelevant to determining the liability of the
registered owner who the law holds primarily and directly responsible for any accident, injury
or death caused by the operation of the vehicle in the streets and highways. To require the
driver of the vehicle to be authorized by the actual owner before the registered owner can be
held accountable is to defeat the very purpose why motor vehicle legislations are enacted in
the first place. Under the Motor Vehicle law, it was declared that the registered owner of any
vehicle is primary land directly liable for any injury it incurs while it is being operated. Thus,
even the petitioner claimed that he was no longer the present owner of the car, still the
registry was under his name, thus it is presumed that he still possesses the car and that the
damages caused by the car be charge against him being the registered owner. The primary
function of Motor vehicle registration is to identify the owner so that if any accident happens,
or that any damage or injury is caused by the vehicle, responsibility therefore can be fixed on
a definite individual, the registered owner. Thus, being the registered owner, the petitioner is
liable for damages.
Petition denied.
Calalas v. CA
G.R. No. 122039 May 31, 2000
MENDOZA, J.:
Facts
Eliza Sunga was a passenger of a jeepney owned and operated by the petitioner
Calalas. Private respondent Sunga sat in the rear portion of the jeepney where the conductor
gave Sunga an extension seat. When the jeep stopped, Sunga gave way to a passenger going
outside the jeep. However, an Isuzu Truck driven by Verene and owned by Salva, accidentally
hit Sunga causing the latter to suffer physical injuries where the attending physician ordered
three months of rest. Sunga filed an action for damages against the petitioner for breach of
contract of common carriage. On the other hand, the petitioner Calalas filed an action against
Salva, being the owner of the truck. The lower court rendered judgment against Salva as third-
party defendant and absolved Calalas of liability. Court of Appeals reversed the decision ruling
that the cause is base on contract of carriage, not quasi-delict.
Issue
Whether the petitioner is liable based on breach of contract of common carriage
Ruling
Yes. Quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its
source the negligence of the tortfeasor. Breach of contract or culpa contractual, is premised
upon the negligence in the performance of a contractual obligation. In the case at bar, upon
the happening of the accident, the presumption of negligence at once arose, and it became
the duty of petitioner to prove that he had to observe extraordinary diligence in the care of
his passengers pursuant to the contract of carriage. Thus, is a case on Culpa Contractual where
there were pre-existing obligations and that the fault is incidental to the performance of the
obligation. Thus, it was clearly observed that the petitioner has negligence in the conduct of
his duty when he allowed Sunga to seat in the rear portion of the jeep which is prone to
accident. Therefore, petitioner is liable.
Petition denied.
Picart v. Smith
G.R. No. L-12219 (37 Phil 813) March 15, 1918
STREET, J.:
Facts
The plaintiff Picart, riding on his pony was half way across the Carlatan bridge when
the defendant Smith approached from the opposite direction in an automobile. As the
defendant neared the bridge, he saw a horseman on it and blew his horn to give warning of
his approach. The plaintiff saw the automobile coming and heard the warning signals.
However, thinking that he has no sufficient time to go to the other side of the road, he pulled
the pony closely up against the railing on the right side of the bridge instead of going to the
left. The defendant, instead of veering to the right while yet some distance away or slowing
down, continued to approach directly toward the horse. When he had gotten quite near,
there being then no possibility of the horse getting across to the other side, the defendant
quickly turned his car sufficiently to the right to escape hitting the horse alongside of the
railing where it as then standing; but in so doing the automobile passed in such close proximity
to the animal that it became frightened and turned its body across the bridge with its head
toward the railing. In so doing, it was struck on the hock of the left hind leg by the flange of
the car and the limb was broken. The horse fell and its rider was thrown off with some
violence. As a result of its injuries the horse died. The plaintiff received contusions which
caused temporary unconsciousness and required medical attention for several days. The
lower court absolved the defendant. Hence, the appeal.
Issue
Whether or not the defendant is liable of the crime.
Ruling
Yes. The plaintiff himself was not free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of the road. But the defendant was also
negligent; and in such case the problem always is to discover which agent is immediately and
directly responsible. It will be noted that the negligent acts of the two parties were not
contemporaneous, since the negligence of the defendant succeeded the negligence of the
plaintiff by an appreciable interval. Under these circumstances the law is that the person who
has the last fair chance to avoid the impending harm and fails to do so is chargeable with the
consequences, without reference to the prior negligence of the other party. When a traveler
has reached a point where he cannot extricate himself and vigilance on his part will not avert
the injury, his negligence in reaching that position becomes the condition and not the
proximate cause of the injury and will not preclude a recovery. Hence, defendant being
negligent is liable for damages.
Petition granted.
De Leon v. Soriano
G.R. No. L-2724 August 24 1950
TUASON, J.:
Facts
Jose de Leon, Cecilio de Leon and Albina de Leon, petitioners, were natural children of
Felix de Leon, deceased, while Asuncion Soriano, respondent, is his widow. In the
administration and settlement of the decedent's estate then pending in the Court of First
Instance, the said widow, on the one hand, and the natural children, on the other, reached on
an agreement, approved by the probate court, whereby the natural children obligated
themselves to deliver certain amount of palay to the respondent. The petitioners made
deliveries to in total of 3,400 cavanes short of the 5,700 cavanes which should have been
delivered. Defendants averred that their failure to pay the exact quantities of palay promised
was due to "the Huk troubles in Central Luzon which rendered impossible full compliance with
the terms of the agreement;" and it was contended that "inasmuch as the obligations of the
defendants to deliver the full amount of the palay is depending upon the produce as this is in
the nature of an annuity, . . . the obligations of the defendants have been fully fulfilled by
delivering in good faith all that could be possible under the circumstances." The court gave
judgment for the plaintiff for 3,400 cavanes of palay or its equivalent in cash, which was found
to be 24,900, and legal interest. The judgment was affirmed by the appellate court.
Issue
Whether or not the petitioners are still obliged to fulfill the obligation
Ruling
Yes. The alleged Huk troubles in Central Luzon does not excuse them from complying
with the obligation. Article 1182 of the Civil Code which was in force at the time agreement in
question was entered into, provide that "Any obligation which consists in the delivery of a
determinate thing shall be extinguished if such thing should be lost or destroyed without fault
on the part of the debtor and before he is in default. Inversely, the obligation is not
extinguished if the thing that perishes is indeterminate. Except as to quality and quantity, the
first of which is itself generic, the contract sets no bounds or limits to the palay to be paid, nor
was there even any stipulation that the cereal was to be the produce of any particular land.
Any palay of the quality stipulated regardless of origin on however acquired lawfully would
be obligatory on the part of the obligee to receive and would discharge the obligation. It
seems therefore plain that the alleged failure of crops through alleged fortuitous cause did
not excuse performance.
Petition denied.

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