September 7, 1907

G.R. No. L-3489

VICENTE NAVALES, plaintiff-appellee,

vs.

EULOGIA RIAS, ET AL., defendants-appellants.

Pantaleon E. del Rosario for appellants.

F. Sevilla y Macam for appellee.

Torres, J.:

On the 18th of November, 1904, Vicente Navales filed a complaint with the Court of First Instance of Cebu against Eulogia Rias and

Maximo Requiroso, claiming that the latter should be sentenced to pay him the sum of 1,200 pesos, Philippine currency, as

damages, together with costs and such other expenses as the court might consider just and equitable. To this end he alleged that

the said defendants, without due cause, ordered the pulling down and destruction of his house erected in Daanbuangan, town of

Naga, Island of Cebu, which was 6 meters in height with an area of 8.70 square meters, built of wood with a nipa roof, and worth

1,000 pesos, which amount he expended in its construction. He further alleged that the destruction took place in the month of April,

1904, and that, notwithstanding his efforts, he had not obtained any reimbursement from the defendants, and that by reason of

their refusal he had been prejudiced to the extent of 200 pesos, Philippine currency.

The defendant, in answer to the foregoing complaint, denied all and each one of the allegations therein contained, and asked that

judgment be entered dismissing the complaint with costs against the plaintiff.

After considering the proofs submitted by both parties and the proceedings upon the trial, the judge, on the 17th of January, 1906,

rendered judgment declaring that the decision entered by the justice of the peace of Naga, and the order given by virtue thereof

were illegal, as well as the action of the deputy sheriff Luciano Bacayo, that the defendant were thereby liable for the damages

caused to the plaintiff, which amounted to 500 pesos, and that the defendants were sentenced to pay the said sum to the plaintiff,

with costs. The defendant upon being informed of this decision, asked that it be set aside, and also moved for a new trial on the

ground that the decision was not in accordance with the weight of the evidence. The motion was denied, to which exception was

taken, and at the request of the interested party, the corresponding bill of exceptions was limited.

The aim of this litigation, therefore, is to obtain payment through a judicial decision, of the damages said to have been caused by the

execution of a judgment rendered by the justice of the peace, in an action for ejectment.

It is undeniable that, in order to remove from the land of Eulogia Rias, situated within the jurisdiction of the town of Naga, the house

which Vicente Navales had constructed thereon, by virtue of the decision of the justice in the action instituted by the said Eulogia

Rias against the owner of the house , Vicente Navales, the deputy sheriff who carried the judgment into execution was obliged to

destroy the said house and removed it from the land, according to the usual procedure in the action for ejectment.

In the order of execution issued to the deputy sheriff, the directive portion of the judgment of the justice of the peace was inserted,

and it contained the essential statement that the said judgment, by reason of its not having been appealed from, had become final,

and from the contents of the same may be inferred that there had been an action for ejectment between the above-named parties,

and that there was no reason why it should not be enforced when it had already become final and acquired the nature of res

adjudicata.

Section 72 of the Code of Civil Procedure reads:

Execution. — If no appeal from a judgment of a justice of the peace shall be perfected as herein provided, the justice of the peace

shall, at the request of the successful party, issue execution for the enforcement of the judgment, and the expiration of the time

limited by law for the perfection of an appeal.

Assuming that the order for execution of final judgment was issued in accordance with the law, and in view of the fact that it has not

been alleged nor proven that the sheriff when complying with the same had committed trespass or exceeded his functions, it must

be presumed according to section 334 (14) of the said Code of Procedure, that the official duty was regularly performed. Therefore,

it is not possible to impute liability to the plaintiff who obtained the judgment and the execution thereof, when the same was not

disputed nor alleged to be null or illegal, and much less to compel the payment of damages to the person who was defeated in the

action and sentenced to be ejected from the land which he improperly occupied with his house.

No proof has been submitted that a contract had been entered into between the plaintiff and the defendants, or that the latter had

committed illegal acts or omissions or incurred in any kind of fault or negligence, from any of which an obligation might have arisen

on the part of the defendants to indemnify the plaintiff. For this reason, the claim for indemnity, on account of acts performed by

the sheriff while enforcing a judgment, can not under any consideration be sustained. (Art. 1089, Civil Code.)

The illegality of the judgment of the justice of the peace, that of the writ of execution thereunder, or of the acts performed by the

sheriff for the enforcement of the judgment, has not been shown. Therefore, for the reasons hereinbefore set forth, the judgment

appealed from is hereby reversed, and the complaint for damages filed by Vicente Navales against Eulogia Rias and Maximo

Requiroso is dismissed without special ruling as to costs. So ordered.

Arellano, C.J., Johnson, Willard, and Tracey, JJ., concur..

Republic of the Philippines

SUPREME COURT

SECOND DIVISION

G.R. No. 140847 September 23, 2005

HOSPICIO DE SAN JOSE DE BARILI, CEBU CITY, Petitioners,

vs.

DEPARTMENT OF AGRARIAN REFORM, Respondent.

D E C I S I O N

Tinga, J.:

At the core of this case is an obscure old special law. The issue is whether a provision in the law prohibiting the sale of the properties

donated to the charitable organization that was incorporated by the same law bars the implementation of agrarian reform laws as

regards said properties.

Petitioner Hospicio de San Jose de Barili ("Hospicio") is a charitable organization created as a body corporate in 1925 by Act No.

3239. The law was enacted in order to formally accept the offer made by Pedro Cui and Benigna Cui to establish a home for the care

and support, free of charge, of indigent invalids and incapacitated and helpless persons.1 The Hospicio was to be maintained with

the revenues of the personal and real properties to be endowed by the Cuis and other donors.2

Section 4 of Act No. 3239 provides that "[t]he personal and real property donated to the [Hospicio] by its founders or by other

persons shall not be sold under any consideration."3

On 10 October 1987, the Department of Agrarian Reform Regional Office (DARRO) Region VII issued an order ordaining that two

parcels of land owned by the Hospicio be placed under Operation Land Transfer in favor of twenty-two (22) tillers thereof as

beneficiaries. Presidential Decree (P.D.) No. 27, a land reform law, was cited as legal basis for the order. The Hospicio filed a motion

for the reconsideration of the order with the Department of Agrarian Reform (DAR) Secretary, citing the aforementioned Section 4

of Act No. 3239. It argued that Act No. 3239 is a special law, which could not have been repealed by P.D. No. 27, a general law, or by

the latter’s general repealing clause.

The DAR Secretary rejected the motion for reconsideration in an Order dated 30 March 1997. Therein, the DAR Secretary held that

P.D. No. 27 was a special law, as it applied only to particular individuals in the State, specifically the tenants of rice and corn lands.

Moreover, P.D. No. 27, which covered all rice and corn lands, provides no exemptions based on the manner of acquisition of the land

by the landowner.4

The Order of the DAR Secretary was assailed in a Petition for Certiorari filed with the Court of Appeals. In a Decision5 dated 9 July

1999, the Court of Appeals Special Eleventh Division affirmed the DAR Secretary’s issuance. It sustained the position of the Office of

the Solicitor General (OSG) position that Section 4 of Act No. 3239 was expressly repealed not only by P.D. No. 27, but also by

Republic Act No. 6657, otherwise known as the Comprehensive Agrarian Reform Law of 1988, both laws being explicit in mandating

the distribution of agricultural lands to qualified beneficiaries. The Court of Appeals further noted that the subject lands did not fall

among the exemptions provided under Section 10 of Rep. Act No. 6657. Finally, the appellate court brought into play the aims of

land reform, affirming as it did "the need to distribute and create an economic equilibrium among the inhabitants of this land, most

especially those with less privilege in life, our peasant farmer."6

Unsatisfied with the Court of Appeals’ Decision, the Hospicio lodged the present Petition for Review. The Hospicio alleges that P.D.

No. 27, the CARL, and Executive Order No. 4077 all violate Section 10, Article III of the Constitution, which provides that "no law

impairing the obligation of contracts shall be passed." More sedately, the Hospicio also argues that Act No. 3239 was not repealed

either by P.D. No. 27 or Rep. Act No. 6657 and that the forced disposition of the Hospicio’s landholdings would incapacitate the

discharge of its charitable functions, which equally promote social justice and the upliftment of the lives of the less fortunate.

On the other hand, the OSG, representing respondent DAR, bluntly replies that Act No. 3239 was repealed by P.D. No. 27 and Rep.

Act No. 6657, which do not exempt lands owned by eleemosynary or charitable institutions from the coverage of those agrarian

reform laws.

A brief recapitulation of the relevant laws is in order.

P.D. No. 27, "Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them Ownership of the Land they

Till, and Providing the Instrument and Mechanism Therefor," has once been touted as perhaps "a radical solution in its pristine

sense, one that goes at the root [of the problem of land tenancy]."8 Its constitutionality was upheld in De Chavez v. Zobel.

9 The law

generally "ordains the emancipation of tenants and confers on them ownership of the lands they till."10

The following provisions of

P.D. No. 27 have concretized this policy:

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution

as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081, dated September 21,

1972, and General Order No. 1 dated September 22, 1972, as amended do hereby decree and order the emancipation of all tenant

farmers as of this day, October 21, 1972;

This shall apply to tenant farmers of private agricultural lands[11

] primarily devoted to rice and corn under a system of sharecrop or

lease-tenancy, whether classified as landed estate or not;

The tenant farmer, whether in land classified as landed estate or not, shall be deemed owner of a portion constituting a family-size

farm of five (5) hectares if not irrigated and three (3) hectares if irrigated;

In all cases, the landowner may retain an area of not more than seven (7) hectares if such landowner is cultivating such area or will

now cultivate it;

The CARL was not yet in effect when the DARRO and the DAR issued their respective orders. Said law vests P.D. No. 27 with

suppletory effect insofar as the earlier law does not run inconsistent with the later law.12

Under Section 4 of the CARL, placed under

coverage are all public and private agricultural lands regardless of tenurial arrangement and commodity produced, subject to the

exempted lands listed in Section 10 thereof.

We agree with the Court of Appeals that neither P.D. No. 27 nor the CARL exempts the lands of the Hospicio or other charitable

institutions from the coverage of agrarian reform. Ultimately, the result arrived at in the assailed issuances should be affirmed.

Nonetheless, both the DAR Secretary and the appellate court failed to appreciate what to this Court is indeed the decisive legal

dimension of the case.

Section 4 of Act No. 3239 prohibits the sale "under any consideration" of the lands donated to the Hospicio. But the land transfers

mandated under P.D. No. 27 cannot be considered a conventional sale under our civil laws.

Generally, sale arises out of a contractual obligation. Thus, it must meet the first essential requisite of every contract that is the

presence of consent.13

Consent implies an act of volition in entering into the agreement.14

The absence or vitiation of consent

renders the sale either void or voidable.

In this case, the deprivation of the Hospicio’s property did not arise as a consequence of the Hospicio’s consent to the transfer.

There was no meeting of minds between the Hospicio, on one hand, and the DAR or the tenants, on the other, on the properties and

the cause which are to constitute the contract15

that is to serve ultimately as the basis for the transfer of ownership of the subject

lands.16

Instead, the obligation to transfer arises by compulsion of law, particularly P.D. No. 27.17

Agrarian reform is justified under the State’s inherent power of eminent domain that enables it to forcibly acquire private lands

intended for public use upon payment of just compensation to the owner.18

It has even been characterized as beyond the traditional

exercise of eminent domain, but a revolutionary kind of expropriation. As expounded in the landmark case of Association of Small

Landowners in the Philippines, Inc. v. Secretary of Agrarian Reform, thus:

. . . . However, we do not deal here with the traditional exercise of the power of eminent domain. This is not an ordinary

expropriation where only a specific property of relatively limited area is sought to be taken by the State from its owner for a

specific and perhaps local purpose. What we deal with here is a revolutionary kind of expropriation.

The expropriation before us affects all private agricultural lands whenever found and of whatever kind as long as they are in

excess of the maximum retention limits allowed their owners. This kind of expropriation is intended for the benefit not only of a

particular community or of a small segment of the population but of the entire Filipino nation, from all levels of our society, from the

impoverished farmer to the land-glutted owner. Its purpose does not cover only the whole territory of this country but goes beyond

in time to the foreseeable future, which it hopes to secure and edify with the vision and the sacrifice of the present generation of

Filipinos. Generations yet to come are as involved in this program as we are today, although hopefully only as beneficiaries of a

richer and more fulfilling life we will guarantee to them tomorrow through our thoughtfulness today. And, finally, let it not be

forgotten that it is no less than the Constitution itself that has ordained this revolution in the farms, calling for "a just distribution"

among the farmers of lands that have heretofore been the prison of their dreams but can now become the key at least to their

deliverance.19

This characterization is warranted whether the expropriation is operative under the CARL or P.D. No. 27, as both laws are keyed into

the same governmental objective. Moreover, under both laws, the landowner is entitled to just compensation for the properties

taken.

The twin process of expropriation of lands under agrarian reform and the payment of just compensation is akin to a forced sale,

which has been aptly described in common law jurisdictions as "sale made under the process of the court, and in the mode

prescribed by law," and "which is not the voluntary act of the owner, such as to satisfy a debt, whether of a mortgage, judgment, tax

lien, etc."20

The term has not been precisely defined in this jurisdiction, but reference to the phrase itself is made in Articles 223,

232, 237 and 243 of the Civil Code, which uniformly exempt the family home "from execution, forced sale, or attachment."21

Yet a

forced sale is clearly different from the sales described under Book V of the Civil Code which are conventional sales, as it does not

arise from the consensual agreement of the vendor and vendee, but by compulsion of law. Still, since law is recognized as one of the

sources of obligation, there can be no dispute on the efficacy of a forced sale, so long as it is authorized by law.

The crucial question now arises, whether the sale prohibited under Section 4 of Act No. 3239 includes even a forced sale. Of course

an overly literal reading of the provision would justify such inclusion, but appropriately a more sophisticated approach to statutory

construction is warranted.

No séance is required to discern the intent of Section 4. It ensures that the properties received by the Hospicio are not alienated for

profit by the officers or administrators, in contravention of the charitable purpose for which the Hospicio was created. To an extent,

it makes possible the perpetual operation of the Hospicio, which was empowered by law to operate for an indefinite period, by

assuring the existence of the property on which the Hospicio could operate. We also do not doubt that whatever fruits of the

forcibly retained property would also serve a source of funding for the operations of the Hospicio.

The salutariness of these objectives is beyond doubt. The interests they seek to protect are present whether the prohibition

encompasses only conventional sales, or even forced sales. Yet to insist that Section 4 likewise prohibits sales or dispositions by

operation of law would necessarily imply that the Hospicio is also beyond the reach of any form of judicial execution. The charitable

nature of the Hospicio does not shield it from susceptibility to civil liability, and an absolute prohibition on sales, whether forced or

conventional, deprives whatever judgment creditors of the Hospicio from any effective means of enforcing relief.

Was it the intent of the framers of Act No. 3239 to exempt the Hospicio from all judicial processes, even those arising from civil

transactions? We do not think so. The contemporaneous construction of Section 4 indicates that the prohibition intended by the

crafters of the law pertained only to conventional sales, and not forced sales. The law was promulgated in 1925, or when the

Spanish Civil Code of 1889 was in effect. The provisions in the Civil Code referring to "forced sales" were not derived from the

Spanish Civil Code. On the other hand, the consensual nature of the contract of sale, and of

contracts in general, is recognized under the Spanish Civil Code. Under Article 1261 of the Spanish Civil Code, there is no contract

unless the consent of the contracting parties exists.22

Evidently, the word "sale," as contemplated by the framers of the law in 1925, pertains to its concept in civil law, with the requisite

of consent being present. It cannot refer to sales or dispositions that arise by operation of law, such as through judicial execution, or,

as in this case, expropriation.

Thus, we can hardly characterize the acquisition of the subject properties from the Hospicio for the benefit of the tenants as a sale,

within the contemplation of Section 4 of Act No. 3239. The transfer arises from compulsion of law, and not the desire of any parties.

Even if the Hospicio had voluntarily offered to surrender its properties to agrarian reform, the resulting transaction would not be

considered as a conventional sale, since the obligation is created not out of the mandate of the parties, but the will of the law.

The DARRO Order did note that Section 4 of Act No. 3239 is not applicable in this case, since the transfer is compulsory on the part

of the landowner, unlike in

ordinary sale.23

Regrettably, the DAR Secretary and the Court of Appeals failed to apply that sound principle, preferring to rely

instead on the conclusion that Section 4 was repealed by P.D. No. 27 and the CARL.

Nonetheless, even assuming for the nonce that Section 4 contemplates even forced sales such as those through expropriation, we

would agree with the DAR Secretary and the Court of Appeals that Section 4 is deemed repealed by P.D. No. 27 and the CARL.

The scope of lands subjected to agrarian reform under these two laws is overwhelming. P.D. No. 27 applies to all private agricultural

lands primarily devoted to rice and corn with tenant farmers under a system of sharecrop or lease-tenancy,24

while the CARL is even

broader in scope, generally covering all public and private agricultural lands regardless of tenurial arrangement and commodity

produced. Under Section 10 of the CARL, the only exempted lands are:

Lands actually, directly and exclusively used and found to be necessary for parks, wildlife, forest reserves, reforestation, fish

sanctuaries and breeding grounds, watersheds, and mangroves, national defense, school sites and campuses including experimental

farm stations operated by public or private schools for educational purposes, seeds and seedlings research and pilot production

centers, church sites and convents appurtenant thereto, mosque sites and Islamic centers appurtenant thereto, communal burial

grounds and cemeteries, penal colonies and penal farms actually worked by the inmates, government and private research and

quarantine centers and all lands with eighteen percent (18%) slope and over, except those already developed . . . .

Arguing against "too literal an interpretation" of Section 10, the Hospicio claims that "a serious reading" of the provision is

revelatory of the spirit and intent of the exemptions. It argues that there are three categories of exemption as: "(1) those needed by

the nation, such as parks, wildlife and forest reserves, fishponds and for national defense, etc.; (2) those for educational purposes

such as school sites; and (3) for religious and charitable purposes like church sites, etc."25

The Hospicio then claims it falls under the

third category of "religious and charitable purposes."26

To begin with, the terms "charitable purposes" and "charitable organizations" do not appear in Section 10 of the CARL. For its part,

Hospicio unduly assumes that charity is integrally wedded to religiosity, despite the fact that there are charitable institutions that

are avowedly secular in orientation. We disagree that there is a clear intent or spirit to include properties held by charitable

institutions, even those directly utilized for charitable purposes, in the list of exempted properties under the CARL. Section 10 does

not include properties which are generally used for charitable purposes, such as orphanages, from the exemption. Not even all

properties owned by religious institutions are exempt, save for those places of worship and the convents/Islamic centers

appurtenant thereto. Even assuming that the Hospicio were actually owned and operated by the Catholic Church, it still would not

be exempted from the CARL.

It is axiomatic that where a general rule is established by a statute with exceptions, the Court will not curtail nor add to the latter by

implication, and it is a rule that an express exception excludes all others.27

We cannot simply impute into a statute an exception

which the Congress did not incorporate. Moreover, general welfare legislation such as land reform laws is to be construed in favor of

the promotion of social justice to ensure the well-being and economic security of the people.28

Since a broad construction of the

provision listing the properties exempted under the CARL would tend to denigrate the aims of agrarian reform, a strict application of

these exceptions is in order.

The crafters of P.D. No. 27 and the CARL were presumably aware of the radical scale of the intended legislation, and the massive

effects on property relations nationwide. Considering the magnitude of the changes ordained in these laws, it would be foolhardy to

require or expect the legislature to denominate each and every law that would be consequently or logically amended or repealed by

the new laws. Hence, the viability of general repealing clauses, which are existent in both P.D. No. 2729

and the CARL,30

as a means of

repealing all previous enactments inconsistent with revolutionary new laws. The presence of such general repealing clause in a later

statute clearly indicates the legislative intent to repeal all prior inconsistent laws on the subject matter, whether the prior law is a

general law or a special law, or as in this case, a special private law. Without such clause, a later general law will ordinarily not repeal

a prior special law on the same subject. But with such clause contained in the subsequent general law, the prior special law will be

deemed repealed, as the clause is a clear legislative intent to bring about that result.31

Should we construe Section 4 of Act No. 3239 as barring forced sales through expropriation of the properties of the Hospicio, such

prohibition would irreconcilably countermand both P.D. No. 27 and the CARL and their mandate to subject the properties to agrarian

reform. The general repealing clauses of the two later laws would then sufficiently repeal Section 4 of Act No. 3239, to the extent

that it may prohibit expropriation of agricultural lands for agrarian reform.

Still, in light of our earlier determinative pronouncement that Section 4 of Act No. 3239 does not contemplate forced sales as part of

the prohibition therein, there ultimately is no need to make an abject declaration that Section 4 has indeed been repealed. Indeed,

the Court considers the prohibition on Section 4 as still effectual, but only insofar as it relates to conventional sales under the Civil

Code.

The other arguments raised by the Hospicio are similarly bereft of merit. It wants us to hold that P.D. No. 27 and the CARL, both

enacted to implement the urgently needed policy of agrarian reform, violate the non-impairment of contracts clause under the Bill

of Rights. Yet the broad sweep of this argument ignores the nuances adopted by this Court in interpreting Section 10 of Article III.

We have held that the State’s exercise of police powers may prevail over obligations imposed by private contracts.32

Especially in

point is Kabiling v. NHA,33

wherein a law authorizing the expropriation of properties in favor of qualified squatter families was

challenged on the basis of the non-impairment clause. The Court held:

The stated objective of the decree, namely, to resolve the land tenure problem in the Agno-Leveriza area to allow the

implementation of the comprehensive development plans for this depressed community, provides the justification for the exercise

of the police power of the State. The police power of the State has been described as "the most essential, insistent and illimitable of

powers." It is a power inherent in the State, plenary, "suitably vague and far from precisely defined, rooted in the conception that

man in organizing the state and imposing upon the government limitations to safeguard constitutional rights did not intend thereby

to enable individual citizens or group of citizens to obstruct unreasonably the enactment of such salutary measure to ensure

communal peace, safety, good order and welfare.

The objection raised by petitioners that P.D. No. 1808 impairs the obligations of contract is without merit. The constitutional

guaranty of non-impairment of obligations of contract is limited by and subject to the exercise of the police power of the State in the

interest of public health, safety, morals and general welfare.34

More pertinently, what the Hospicio alleges would be impaired is not actually a contract, but a legislative act, Act No. 3239. The

Hospicio admits just as much in its petition, "[Act No. 3239] is not merely an ordinary contract but a contract enacted into law . . .

Act No. 3239 is thus a contract within the purview of the impairment clause of the Constitution."35

The inanity of this argument is palpable. The non-impairment clause reads: "No law impairing the obligation of contracts shall be

passed." If, as the Hospicio argues, the constitutional provision applies as well to the impairment of obligations created by law, then

Section 10, Article III operates to bar the legislature from amending or repealing its own enactments. This is of course not the case,

as the provision was intended to shield the impairment of obligations created by private agreements, and not by legislative fiat.

Certainly, Congress can at any time expressly amend or repeal any and all sections of Act No. 3239 without fear of violating the non-

impairment clause of the Constitution. In fine, Section 1036

of Act 3239 provides that the privileges granted by the Act to the

Hospicio are subject to the conditions on the grant of franchises as provided in the Jones Law. Section 28 of the Jones Law in turn

provides in part, thus:

No franchise or right shall be granted to any individual, firm, or corporation except under the conditions that it shall be subject to

amendment, alteration, or repeal by the Congress of the United States, and that lands or right of use and occupation of lands thus

granted shall revert to the government by which they were respectively granted upon the termination of the franchises and rights

under which they were granted or upon their revocation or repeal. (Emphasis supplied.)

Finally, the Hospicio alludes to its functions as a charitable institution, which equally promote social justice and the upliftment of

lives of the less fortunate. It notes that these purposes are no less noble than giving land to the landless, whom they, with perhaps a

touch of contempt, suggest are "perfectly healthy to care for themselves."37

The rationale for holding that the properties of the Hospicio are covered by P.D. No. 27 and Rep. Act No. 6657 is so well-grounded in

law that it obviates any resort to the sordid game of choosing which of the two competing aspirations is nobler. The body which

would have unquestionable discretion in assigning hierarchical values on the modalities by which social justice may be implemented

is the legislature. Land reform affords the opportunity for the landless to break away from the vicious cycle of having to perpetually

rely on the kindness of others. By refusing to exempt properties owned by charitable institutions or maintained for charitable

purposes from agrarian reform, the legislature has indicated a policy choice which the Court is bound to implement.

WHEREFORE, the Petition is DENIED. No pronouncement as to costs.

SO ORDERED.

Republic of the Philippines

SUPREME COURT

Manila

FIRST DIVISION

G.R. No. L-46179 January 31, 1978

CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON VIRATA, ARACELY VIRATA, ZENAIDA

VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and EVANGELINA VIRATA, petitioners,

vs.

VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th JUDICIAL DISTRICT, BRANCH V,

stationed at BACOOR, CAVITE, respondents.

Remulla, Estrella & Associates for petitioners

Exequil C. Masangkay for respondents.

FERNANDEZ, J.:

This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in Civil Case No. B-134 granting the

motion of the defendants to dismiss the complaint on the ground that there is another action pending between the same parties for

the same cause. 1

The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been bumped while walking along Taft

Avenue, Pasay City by a passenger jeepney driven by Maximo Borilla and registered in the name Of Victoria Ochoa; that Borilla is the

employer of Ochoa; that for the death of Arsenio Virata, a action for homicide through reckless imprudence was instituted on

September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City, docketed as C Case No. 3162-P of said

court; that at the hearing of the said criminal case on December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a

reservation to file a separate civil action for damages against the driver on his criminal liability; that on February 19, 1976 Atty. Julio

Francisco filed a motion in said c case to withdraw the reservation to file a separate civil action; that thereafter, the private

prosecutor actively participated in the trial and presented evidence on the damages; that on June 29, 1976 the heirs of Arsenio

Virata again reserved their right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata, petitioners

herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor, Branch V, for damages based on quasi-delict

against the driver Maximo Borilla and the registered owner of the jeepney, Victorio Ochoa; that on August 13, 1976 the defendants,

private respondents filed a motion to dismiss on the ground that there is another action, Criminal Case No. 3162-P, pending

between the same parties for the same cause; that on September 8, 1976 the Court of First Instance of Rizal at Pasay City a decision

in Criminal Case No. 3612-P acquitting the accused Maximo Borilla on the ground that he caused an injury by name accident; and

that on January 31, 1977, the Court of First Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134 for damages. 2

The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the damages based on quasi-delict against

Maximo Borilla and Victoria Ochoa, driver and owner, respectively on the passenger jeepney that bumped Arsenio Virata.

It is settled that in negligence cases the aggrieved parties may choose between an action under the Revised Penal Code or of quasi-

delict under Article 2176 of the Civil Code of the Philippines. What is prohibited by Article 2177 of the Civil Code of the Philippines is

to recover twice for the same negligent act.

The Supreme Court has held that:

According to the Code Commission: 'The foregoing provision (Article 2177) though at first sight startling, is not so

novel or extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation

of the criminal law, while the latter is a 'culpa aquiliana' or quasi-delict, of ancient origin, having always had its own

foundation and individuality, separate from criminal negligence. Such distinction between criminal negligence and

'culpa extra-contractual' or quasi-delito has been sustained by decision of the Supreme Court of Spain and

maintained as clear, sound and perfectly tenable by Maura, an outstanding Spanish jurist. Therefore, under the

proposed Article 2177, acquittal from an accusation of criminal negligence, whether on reasonable doubt or not,

shall not be a bar to a subsequent civil action, not for civil liability arising from criminal negligence, but for

damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery. (Report of the Code

Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of

Justice Bocobo about construction that upholds 'the spirit that given life' rather than that which is literal that

killeth the intent of the lawmaker should be observed in applying the same. And considering that the preliminary

chapter on human relations of the new Civil Code definitely establishes the separability and independence of

liability in a civil action for acts criminal in character (under Articles 29 to 32) from the civil responsibility arising

from crime fixed by Article 100 of the Penal Code, and, in a sense, the Rules of Court, under Sections 2 and 3(c),

Rule 111, contemplate also the same separability, it is 'more congruent' with the spirit of law, equity and justice,

and more in harmony with modern progress', to borrow the felicitous language in Rakes vs. Atlantic Gulf and

Pacific Co., 7 Phil. to 359, to hod as We do hold, that Article 2176, where it refers to 'fault covers not only acts 'not

punishable by law' but also criminal in character, whether intentional and voluntary or consequently, a separate

civil action lies against the in a criminal act, whether or not he is criminally prosecuted and found guilty and

acquitted, provided that the offended party is not allowed, if he is actually charged also criminally, to recover

damages on both scores, and would be entitled in such eventuality only to the bigger award of the, two assuming

the awards made in the two cases vary. In other words the extinction of civil liability refereed to in Par. (c) of

Section 13, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas

the civil liability for the same act considered as a quasi-delict only and not as a crime is not extinguished even by a

declaration in the criminal case that the criminal act charged has not happened or has not been committed by the

accused. Brief stated, We hold, in reitration of Garcia, that culpa aquilina includes voluntary and negligent acts

which may be punishable by law. 3

The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case No. 3162-P was decided, they

manifested in said criminal case that they were filing a separate civil action for damages against the owner and driver of the

passenger jeepney based on quasi-delict. The acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-

P is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict The source of the obligation sought to be

enforced in Civil Case No. B-134 is quasi-delict, not an act or omission punishable by law. Under Article 1157 of the Civil Code of the

Philippines, quasi-delict and an act or omission punishable by law are two different sources of obligation.

Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have only to establish their cause of

action by preponderance of the evidence.

WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is reinstated and remanded to the

lower court for further proceedings, with costs against the private respondents.

SO ORDERED.

FIRST DIVISION

G.R. No. 186382 April 5, 2010

PEOPLE OF THE PHILIPPINES, Plaintiff-Appellee,

vs.

DOMINGO PANITERCE, Accused-Appellant.

R E S O L U T I O N

LEONARDO-DE CASTRO, J.:

Before Us is an appeal filed by Domingo Paniterce y Martinez (Paniterce) assailing the Decision1 dated August 22, 2008 of the Court

of Appeals in CA-G.R. CR-H.C. No. 01001, entitled People of the Philippines v. Domingo Paniterce," which affirmed with modification

the Decision dated March 2, 2005 of the Regional Trial Court (RTC) of Iriga City, Branch 37, in Criminal Case Nos. 6076, 6077, 6078,

6079, 6080 and 6081.2 The RTC found Paniterce guilty beyond reasonable doubt of the crimes of Rape and Acts of Lasciviousness.

In four Informations, all dated February 11, 2002, 4th Assistant Provincial Prosecutor Hedy S. Aganan charged Paniterce with four

counts of rape of his daughter AAA. Except for the dates3 of the commission of the rapes, the four Informations identically read:

Criminal Case Nos. 6076, 6077, 6078 and 6079

That sometime in the year 1997 in x x x Philippines and within the jurisdiction of this Honorable Court, the above-named accused,

with grave abuse of confidence being the father of the offended party with lewd designs by means of force and intimidation, did

then and there willfully, unlawfully and feloniously succeed in having carnal knowledge with his daughter AAA, a 10 year-old minor,

against her will and without her consent, to her damage and prejudice in such amount as may be awarded by the Honorable Court.4

In two Amended Informations, both dated December 3, 2002, Assistant Provincial Prosecutor Daniel M. Salvadora charged Paniterce

with two counts of rape of his other daughter BBB. Aside from the dates5 of the commission of the rapes, the Informations similarly

state:

Criminal Case Nos. 6080 and 6081

That on or about 6:00 o’clock in the morning of August 26, 2000 x x x Philippines, and within the jurisdiction of this Honorable Court,

the above-named accused, with grave abuse of confidence being the father of the offended party with lewd designs by means of

force and intimidation, did then and there willfully, unlawfully and feloniously committed RAPE upon his 12- year old daughter BBB

by then and there, caressing and inserting his finger inside her vagina against her will and without her consent, to her damage and

prejudice in such amount as may be awarded by the Honorable Court.6

When arraigned, Paniterce pleaded not guilty to all the charges.

After trial on the merits, the RTC rendered a Decision on March 2, 2005, with the following dispositive portion:

WHEREFORE, in view of all the foregoing, the prosecution having proved the guilt of accused Domingo Paniterce of the crimes of

Rape as charged in the aforementioned Informations, he is hereby sentenced to suffer the penalties of imprisonment, to wit:

In Criminal Case No. 6076, he is hereby sentenced to suffer the penalty of imprisonment ranging from FOUR (4) MONTHS and ONE

(1) DAY of arresto mayor as minimum to FOUR (4) YEARS, TWO (2) MONTHS AND ONE (1) DAY of prision correccional as maximum

for Acts of Lasciviousness under Article 336 of the Revised Penal Code as the alleged molestation took place in April 1997 and RA

8353 took effect only on October 22, 1997;

In Criminal Cases Nos. 6077, 6078, 6080 and 6081, he is hereby sentenced to suffer in each every case the penalty of imprisonment

ranging from FOUR (4) YEARS, TWO (2) MONTHS and ONE (1) DAY of prision correccional as minimum to EIGHT (8) YEARS and ONE

(1) DAY of prision mayor as maximum and to pay AAA and BBB Fifty Thousand Pesos (P50,000.00) each as moral damages and Fifty

Thousand Pesos (P50,000.00) as exemplary damages;

In Criminal Case No. 6079, he is hereby sentenced to suffer the penalty of DEATH and to pay AAA the amount of Fifty Thousand

Pesos (P50,000.00) as moral damages and Fifty Thousand Pesos (P50,000.00) as exemplary damages.7

On June 4, 2005, Paniterce was committed to the Bureau of Corrections in Muntinlupa City.

Paniterce filed an appeal with the Court of Appeals, which was docketed as CA-G.R. CR-H.C. No. 01001. The appellate court rendered

a Decision on August 22, 2008 affirming the RTC judgment with modifications, to wit:

WHEREFORE, the Decision of the trial court convicting DOMINGO PANITERCE is hereby AFFIRMED with the following modifications:

1. For Acts of Lasciviousness, in Criminal Cases Nos. 6077, 6078, 6080 and 6081, appellant is hereby sentenced to suffer in

each [and] every case an indeterminate prison term of six (6) months of arresto mayor, as minimum, to six (6) years of

prision correccional, as maximum and to pay AAA and BBB Fifty Thousand Pesos (P50,000.00) each as moral damages and

Fifty Thousand Pesos (P50,000.00) as exemplary damages; and

2. For Rape, in Criminal Case No. 6079, appellant is hereby sentenced to suffer the penalty of Reclusion Perpetua and to pay

AAA the amount of Fifty Thousand Pesos (P50,000.00) as moral damages and Fifty Thousand Pesos (P50,000.00) as

exemplary damages.

The decision of the trial court finding appellant guilty for Acts of Lasciviousness in Criminal Case No. 6076 is AFFIRMED without any

modification.8

On 16 September 2008, Paniterce, through counsel, filed a Notice of Appeal with the Court of Appeals conveying his intention to

appeal to us the aforementioned Decision dated August 22, 2008 of the appellate court. The Court of Appeals gave due course to

Paniterce’s Notice of Appeal on September 23, 2008,9 and directed its Judicial Records Division to elevate to us the original records

in CA-G.R. CR-H.C. No. 01001.

On 15 April 2009, we required10

the parties to file their supplemental briefs, and the Director of the Bureau of Corrections to confirm

the commitment of Paniterce at the Bureau of Corrections and submit his report thereon within 10 days from notice.

Paniterce filed his Supplemental Brief11

on June 16, 2009, while the Office of the Solicitor General filed a Manifestation12

on June 18,

2009 stating that it would no longer file a supplemental brief considering that Paniterce did not raise any new issue in his appeal. On

July 22, 2009, we submitted G.R. No. 186382 for resolution.

However, in a letter dated October 12, 2009, Julio A. Arciaga, the Assistant Director for Prisons and Security of the Bureau of

Corrections, informed us that Paniterce had died on August 22, 2009 at the New Bilibid Prison Hospital. Paniterce’s Death Certificate

was attached to said letter.

Given Paniterce’s death, we are now faced with the question of the effect of such death on the present appeal.

Paniterce’s death on August 22, 2009, during the pendency of his appeal, extinguished not only his criminal liabilities for the rape

and acts of lasciviousness committed against his daughters, but also his civil liabilities solely arising from or based on said

crimes.1awphi1

According to Article 89(1) of the Revised Penal Code, criminal liability is totally extinguished:

1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties, liability therefor is extinguished only when

the death of the offender occurs before final judgment.

Applying the foregoing provision, we laid down the following guidelines in People v. Bayotas13

:

1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based

solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates

his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil

liability ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be

predicated on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of

obligation from which the civil liability may arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

x x x x

e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery therefor may be pursued but

only by way of filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as

amended. This separate civil action may be enforced either against the executor/administrator or the estate of the accused,

depending on the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in

cases where during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted

together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during

the pendency of the criminal case, conformably with the provisions of Article 1155 of the Civil Code that should thereby

avoid any apprehension on a possible privation of right by prescription.14

Clearly, it is unnecessary for the Court to rule on Paniterce’s appeal. Whether or not he was guilty of the crimes charged has become

irrelevant since, following Article 89(1) of the Revised Penal Code and our disquisition in Bayotas, even assuming Paniterce had

incurred criminal liabilities, they were totally extinguished by his death. Moreover, because Paniterce’s appeal was still pending and

no final judgment of conviction had been rendered against him when he died, his civil liabilities arising from the crimes, being civil

liabilities ex delicto, were likewise extinguished by his death.

Consequently, the appealed Decision dated August 22, 2008 of the Court of Appeals – finding Paniterce guilty of rape and acts of

lasciviousness, sentencing him to imprisonment, and ordering him to indemnify his victims – had become ineffectual.

WHEREFORE, in view of the death of accused-appellant Domingo Paniterce y Martinez, the Decision dated August 22, 2008 of the

Court of Appeals in CA-G.R. CR-H.C. No. 01001 is SET ASIDE and Criminal Case Nos. 6076, 6077, 6078, 6079, 6080, and 6081 before

the Regional Trial Court of Iriga City are DISMISSED. Costs de oficio.

SO ORDERED.

G.R. No. L-30511 February 14, 1980

MANUEL M. SERRANO, petitioner,

vs.

CENTRAL BANK OF THE PHILIPPINES; OVERSEAS BANK OF MANILA; EMERITO M. RAMOS, SUSANA B. RAMOS, EMERITO B. RAMOS,

JR., JOSEFA RAMOS DELA RAMA, HORACIO DELA RAMA, ANTONIO B. RAMOS, FILOMENA RAMOS LEDESMA, RODOLFO LEDESMA,

VICTORIA RAMOS TANJUATCO, and TEOFILO TANJUATCO, respondents.

Rene Diokno for petitioner.

F.E. Evangelista & Glecerio T. Orsolino for respondent Central Bank of the Philippines.

Feliciano C. Tumale, Pacifico T. Torres and Antonio B. Periquet for respondent Overseas Bank of Manila.

Josefina G. Salonga for all other respondents.

CONCEPCION, JR., J.:

Petition for mandamus and prohibition, with preliminary injunction, that seeks the establishment of joint and solidary liability to the

amount of Three Hundred Fifty Thousand Pesos, with interest, against respondent Central Bank of the Philippines and Overseas

Bank of Manila and its stockholders, on the alleged failure of the Overseas Bank of Manila to return the time deposits made by

petitioner and assigned to him, on the ground that respondent Central Bank failed in its duty to exercise strict supervision over

respondent Overseas Bank of Manila to protect depositors and the general public. 1

Petitioner also prays that both respondent banks

be ordered to execute the proper and necessary documents to constitute all properties fisted in Annex "7" of the Answer of

respondent Central Bank of the Philippines in G.R. No. L-29352, entitled "Emerita M. Ramos, et al vs. Central Bank of the

Philippines," into a trust fund in favor of petitioner and all other depositors of respondent Overseas Bank of Manila. It is also prayed

that the respondents be prohibited permanently from honoring, implementing, or doing any act predicated upon the validity or

efficacy of the deeds of mortgage, assignment. and/or conveyance or transfer of whatever nature of the properties listed in Annex

"7" of the Answer of respondent Central Bank in G.R. No. 29352. 2

A sought for ex-parte preliminary injunction against both respondent banks was not given by this Court.

Undisputed pertinent facts are:

On October 13, 1966 and December 12, 1966, petitioner made a time deposit, for one year with 6% interest, of One Hundred Fifty

Thousand Pesos (P150,000.00) with the respondent Overseas Bank of Manila. 3 Concepcion Maneja also made a time deposit, for

one year with 6-½% interest, on March 6, 1967, of Two Hundred Thousand Pesos (P200,000.00) with the same respondent Overseas

Bank of Manila. 4

On August 31, 1968, Concepcion Maneja, married to Felixberto M. Serrano, assigned and conveyed to petitioner Manuel M. Serrano,

her time deposit of P200,000.00 with respondent Overseas Bank of Manila. 5

Notwithstanding series of demands for encashment of the aforementioned time deposits from the respondent Overseas Bank of

Manila, dating from December 6, 1967 up to March 4, 1968, not a single one of the time deposit certificates was honored by

respondent Overseas Bank of Manila. 6

Respondent Central Bank admits that it is charged with the duty of administering the banking system of the Republic and it exercises

supervision over all doing business in the Philippines, but denies the petitioner's allegation that the Central Bank has the duty to

exercise a most rigid and stringent supervision of banks, implying that respondent Central Bank has to watch every move or activity

of all banks, including respondent Overseas Bank of Manila. Respondent Central Bank claims that as of March 12, 1965, the Overseas

Bank of Manila, while operating, was only on a limited degree of banking operations since the Monetary Board decided in its

Resolution No. 322, dated March 12, 1965, to prohibit the Overseas Bank of Manila from making new loans and investments in view

of its chronic reserve deficiencies against its deposit liabilities. This limited operation of respondent Overseas Bank of Manila

continued up to 1968. 7

Respondent Central Bank also denied that it is guarantor of the permanent solvency of any banking institution as claimed by

petitioner. It claims that neither the law nor sound banking supervision requires respondent Central Bank to advertise or represent

to the public any remedial measures it may impose upon chronic delinquent banks as such action may inevitably result to panic or

bank "runs". In the years 1966-1967, there were no findings to declare the respondent Overseas Bank of Manila as insolvent. 8

Respondent Central Bank likewise denied that a constructive trust was created in favor of petitioner and his predecessor in interest

Concepcion Maneja when their time deposits were made in 1966 and 1967 with the respondent Overseas Bank of Manila as during

that time the latter was not an insolvent bank and its operation as a banking institution was being salvaged by the respondent

Central Bank. 9

Respondent Central Bank avers no knowledge of petitioner's claim that the properties given by respondent Overseas Bank of Manila

as additional collaterals to respondent Central Bank of the Philippines for the former's overdrafts and emergency loans were

acquired through the use of depositors' money, including that of the petitioner and Concepcion Maneja. 10

In G.R. No. L-29362, entitled "Emerita M. Ramos, et al. vs. Central Bank of the Philippines," a case was filed by the petitioner Ramos,

wherein respondent Overseas Bank of Manila sought to prevent respondent Central Bank from closing, declaring the former

insolvent, and liquidating its assets. Petitioner Manuel Serrano in this case, filed on September 6, 1968, a motion to intervene in G.R.

No. L-29352, on the ground that Serrano had a real and legal interest as depositor of the Overseas Bank of Manila in the matter in

litigation in that case. Respondent Central Bank in G.R. No. L-29352 opposed petitioner Manuel Serrano's motion to intervene in that

case, on the ground that his claim as depositor of the Overseas Bank of Manila should properly be ventilated in the Court of First

Instance, and if this Court were to allow Serrano to intervene as depositor in G.R. No. L-29352, thousands of other depositors would

follow and thus cause an avalanche of cases in this Court. In the resolution dated October 4, 1968, this Court denied Serrano's,

motion to intervene. The contents of said motion to intervene are substantially the same as those of the present petition. 11

This Court rendered decision in G.R. No. L-29352 on October 4, 1971, which became final and executory on March 3, 1972, favorable

to the respondent Overseas Bank of Manila, with the dispositive portion to wit:

WHEREFORE, the writs prayed for in the petition are hereby granted and respondent Central Bank's resolution

Nos. 1263, 1290 and 1333 (that prohibit the Overseas Bank of Manila to participate in clearing, direct the

suspension of its operation, and ordering the liquidation of said bank) are hereby annulled and set aside; and said

respondent Central Bank of the Philippines is directed to comply with its obligations under the Voting Trust

Agreement, and to desist from taking action in violation therefor. Costs against respondent Central Bank of the

Philippines. 12

Because of the above decision, petitioner in this case filed a motion for judgment in this case, praying for a decision on the merits,

adjudging respondent Central Bank jointly and severally liable with respondent Overseas Bank of Manila to the petitioner for the

P350,000 time deposit made with the latter bank, with all interests due therein; and declaring all assets assigned or mortgaged by

the respondents Overseas Bank of Manila and the Ramos groups in favor of the Central Bank as trust funds for the benefit of

petitioner and other depositors. 13

By the very nature of the claims and causes of action against respondents, they in reality are recovery of time deposits plus interest

from respondent Overseas Bank of Manila, and recovery of damages against respondent Central Bank for its alleged failure to strictly

supervise the acts of the other respondent Bank and protect the interests of its depositors by virtue of the constructive trust created

when respondent Central Bank required the other respondent to increase its collaterals for its overdrafts said emergency loans, said

collaterals allegedly acquired through the use of depositors money. These claims shoud be ventilated in the Court of First Instance of

proper jurisdiction as We already pointed out when this Court denied petitioner's motion to intervene in G.R. No. L-29352. Claims of

these nature are not proper in actions for mandamus and prohibition as there is no shown clear abuse of discretion by the Central

Bank in its exercise of supervision over the other respondent Overseas Bank of Manila, and if there was, petitioner here is not the

proper party to raise that question, but rather the Overseas Bank of Manila, as it did in G.R. No. L-29352. Neither is there anything to

prohibit in this case, since the questioned acts of the respondent Central Bank (the acts of dissolving and liquidating the Overseas

Bank of Manila), which petitioner here intends to use as his basis for claims of damages against respondent Central Bank, had been

accomplished a long time ago.

Furthermore, both parties overlooked one fundamental principle in the nature of bank deposits when the petitioner claimed that

there should be created a constructive trust in his favor when the respondent Overseas Bank of Manila increased its collaterals in

favor of respondent Central Bank for the former's overdrafts and emergency loans, since these collaterals were acquired by the use

of depositors' money.

Bank deposits are in the nature of irregular deposits. They are really loans because they earn interest. All kinds of bank deposits,

whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans. 14

Current and savings

deposit are loans to a bank because it can use the same. The petitioner here in making time deposits that earn interests with

respondent Overseas Bank of Manila was in reality a creditor of the respondent Bank and not a depositor. The respondent Bank was

in turn a debtor of petitioner. Failure of he respondent Bank to honor the time deposit is failure to pay s obligation as a debtor and

not a breach of trust arising from depositary's failure to return the subject matter of the deposit

WHEREFORE, the petition is dismissed for lack of merit, with costs against petitioner.

SO ORDERED.

THIRD DIVISION

G.R. No. 177056 September 18, 2009

THE OFFICE OF THE SOLICITOR GENERAL, Petitioner,

vs.

AYALA LAND INCORPORATED, ROBINSON'S LAND CORPORATION, SHANGRI-LA PLAZA CORPORATION and SM PRIME HOLDINGS,

INC., Respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari,1 under Rule 45 of the Revised Rules of Court, filed by petitioner Office of the

Solicitor General (OSG), seeking the reversal and setting aside of the Decision2 dated 25 January 2007 of the Court of Appeals in CA-

G.R. CV No. 76298, which affirmed in toto the Joint Decision3 dated 29 May 2002 of the Regional Trial Court (RTC) of Makati City,

Branch 138, in Civil Cases No. 00-1208 and No. 00-1210; and (2) the Resolution4 dated 14 March 2007 of the appellate court in the

same case which denied the Motion for Reconsideration of the OSG. The RTC adjudged that respondents Ayala Land Incorporated

(Ayala Land), Robinsons Land Corporation (Robinsons), Shangri-la Plaza Corporation (Shangri-la), and SM Prime Holdings, Inc. (SM

Prime) could not be obliged to provide free parking spaces in their malls to their patrons and the general public.

Respondents Ayala Land, Robinsons, and Shangri-la maintain and operate shopping malls in various locations in Metro Manila.

Respondent SM Prime constructs, operates, and leases out commercial buildings and other structures, among which, are SM City,

Manila; SM Centerpoint, Sta. Mesa, Manila; SM City, North Avenue, Quezon City; and SM Southmall, Las Piñas.

The shopping malls operated or leased out by respondents have parking facilities for all kinds of motor vehicles, either by way of

parking spaces inside the mall buildings or in separate buildings and/or adjacent lots that are solely devoted for use as parking

spaces. Respondents Ayala Land, Robinsons, and SM Prime spent for the construction of their own parking facilities. Respondent

Shangri-la is renting its parking facilities, consisting of land and building specifically used as parking spaces, which were constructed

for the lessor’s account.

Respondents expend for the maintenance and administration of their respective parking facilities. They provide security personnel

to protect the vehicles parked in their parking facilities and maintain order within the area. In turn, they collect the following parking

fees from the persons making use of their parking facilities, regardless of whether said persons are mall patrons or not:

Respondent Parking Fees

Ayala Land On weekdays, P25.00 for the first four hours and P10.00 for

every succeeding hour; on weekends, flat rate of P25.00 per

day

Robinsons P20.00 for the first three hours and P10.00 for every

succeeding hour

Shangri-la Flat rate of P30.00 per day

SM Prime P10.00 to P20.00 (depending on whether the parking space is

outdoors or indoors) for the first three hours and 59 minutes,

and P10.00 for every succeeding hour or fraction thereof

The parking tickets or cards issued by respondents to vehicle owners contain the stipulation that respondents shall not be

responsible for any loss or damage to the vehicles parked in respondents’ parking facilities.

In 1999, the Senate Committees on Trade and Commerce and on Justice and Human Rights conducted a joint investigation for the

following purposes: (1) to inquire into the legality of the prevalent practice of shopping malls of charging parking fees; (2) assuming

arguendo that the collection of parking fees was legally authorized, to find out the basis and reasonableness of the parking rates

charged by shopping malls; and (3) to determine the legality of the policy of shopping malls of denying liability in cases of theft,

robbery, or carnapping, by invoking the waiver clause at the back of the parking tickets. Said Senate Committees invited the top

executives of respondents, who operate the major malls in the country; the officials from the Department of Trade and Industry

(DTI), Department of Public Works and Highways (DPWH), Metro Manila Development Authority (MMDA), and other local

government officials; and the Philippine Motorists Association (PMA) as representative of the consumers’ group.

After three public hearings held on 30 September, 3 November, and 1 December 1999, the afore-mentioned Senate Committees

jointly issued Senate Committee Report No. 2255 on 2 May 2000, in which they concluded:

In view of the foregoing, the Committees find that the collection of parking fees by shopping malls is contrary to the National

Building Code and is therefor [sic] illegal. While it is true that the Code merely requires malls to provide parking spaces, without

specifying whether it is free or not, both Committees believe that the reasonable and logical interpretation of the Code is that the

parking spaces are for free. This interpretation is not only reasonable and logical but finds support in the actual practice in other

countries like the United States of America where parking spaces owned and operated by mall owners are free of charge.

Figuratively speaking, the Code has "expropriated" the land for parking – something similar to the subdivision law which require

developers to devote so much of the land area for parks.

Moreover, Article II of R.A. No. 9734 (Consumer Act of the Philippines) provides that "it is the policy of the State to protect the

interest of the consumers, promote the general welfare and establish standards of conduct for business and industry." Obviously, a

contrary interpretation (i.e., justifying the collection of parking fees) would be going against the declared policy of R.A. 7394.

Section 201 of the National Building Code gives the responsibility for the administration and enforcement of the provisions of the

Code, including the imposition of penalties for administrative violations thereof to the Secretary of Public Works. This set up,

however, is not being carried out in reality.

In the position paper submitted by the Metropolitan Manila Development Authority (MMDA), its chairman, Jejomar C. Binay,

accurately pointed out that the Secretary of the DPWH is responsible for the implementation/enforcement of the National Building

Code. After the enactment of the Local Government Code of 1991, the local government units (LGU’s) were tasked to discharge the

regulatory powers of the DPWH. Hence, in the local level, the Building Officials enforce all rules/ regulations formulated by the

DPWH relative to all building plans, specifications and designs including parking space requirements. There is, however, no single

national department or agency directly tasked to supervise the enforcement of the provisions of the Code on parking,

notwithstanding the national character of the law.6

Senate Committee Report No. 225, thus, contained the following recommendations:

In light of the foregoing, the Committees on Trade and Commerce and Justice and Human Rights hereby recommend the following:

1. The Office of the Solicitor General should institute the necessary action to enjoin the collection of parking fees as well as

to enforce the penal sanction provisions of the National Building Code. The Office of the Solicitor General should likewise

study how refund can be exacted from mall owners who continue to collect parking fees.

2. The Department of Trade and Industry pursuant to the provisions of R.A. No. 7394, otherwise known as the Consumer Act

of the Philippines should enforce the provisions of the Code relative to parking. Towards this end, the DTI should formulate

the necessary implementing rules and regulations on parking in shopping malls, with prior consultations with the local

government units where these are located. Furthermore, the DTI, in coordination with the DPWH, should be empowered to

regulate and supervise the construction and maintenance of parking establishments.

3. Finally, Congress should amend and update the National Building Code to expressly prohibit shopping malls from

collecting parking fees by at the same time, prohibit them from invoking the waiver of liability.7

Respondent SM Prime thereafter received information that, pursuant to Senate Committee Report No. 225, the DPWH Secretary

and the local building officials of Manila, Quezon City, and Las Piñas intended to institute, through the OSG, an action to enjoin

respondent SM Prime and similar establishments from collecting parking fees, and to impose upon said establishments penal

sanctions under Presidential Decree No. 1096, otherwise known as the National Building Code of the Philippines (National Building

Code), and its Implementing Rules and Regulations (IRR). With the threatened action against it, respondent SM Prime filed, on 3

October 2000, a Petition for Declaratory Relief8 under Rule 63 of the Revised Rules of Court, against the DPWH Secretary and local

building officials of Manila, Quezon City, and Las Piñas. Said Petition was docketed as Civil Case No. 00-1208 and assigned to the RTC

of Makati City, Branch 138, presided over by Judge Sixto Marella, Jr. (Judge Marella). In its Petition, respondent SM Prime prayed for

judgment:

a) Declaring Rule XIX of the Implementing Rules and Regulations of the National Building Code as ultra vires, hence,

unconstitutional and void;

b) Declaring *herein respondent SM Prime+’s clear legal right to lease parking spaces appurtenant to its department stores,

malls, shopping centers and other commercial establishments; and

c) Declaring the National Building Code of the Philippines Implementing Rules and Regulations as ineffective, not having

been published once a week for three (3) consecutive weeks in a newspaper of general circulation, as prescribed by Section

211 of Presidential Decree No. 1096.

[Respondent SM Prime] further prays for such other reliefs as may be deemed just and equitable under the premises.9

The very next day, 4 October 2000, the OSG filed a Petition for Declaratory Relief and Injunction (with Prayer for Temporary

Restraining Order and Writ of Preliminary Injunction)10

against respondents. This Petition was docketed as Civil Case No. 00-1210

and raffled to the RTC of Makati, Branch 135, presided over by Judge Francisco B. Ibay (Judge Ibay). Petitioner prayed that the RTC:

1. After summary hearing, a temporary restraining order and a writ of preliminary injunction be issued restraining

respondents from collecting parking fees from their customers; and

2. After hearing, judgment be rendered declaring that the practice of respondents in charging parking fees is

violative of the National Building Code and its Implementing Rules and Regulations and is therefore invalid, and

making permanent any injunctive writ issued in this case.

Other reliefs just and equitable under the premises are likewise prayed for.11

On 23 October 2000, Judge Ibay of the RTC of Makati City, Branch 135, issued an Order consolidating Civil Case No. 00-1210 with

Civil Case No. 00-1208 pending before Judge Marella of RTC of Makati, Branch 138.

As a result of the pre-trial conference held on the morning of 8 August 2001, the RTC issued a Pre-Trial Order12

of even date which

limited the issues to be resolved in Civil Cases No. 00-1208 and No. 00-1210 to the following:

1. Capacity of the plaintiff [OSG] in Civil Case No. 00-1210 to institute the present proceedings and relative thereto

whether the controversy in the collection of parking fees by mall owners is a matter of public welfare.

2. Whether declaratory relief is proper.

3. Whether respondent Ayala Land, Robinsons, Shangri-La and SM Prime are obligated to provide parking spaces in

their malls for the use of their patrons or the public in general, free of charge.

4. Entitlement of the parties of [sic] award of damages.13

On 29 May 2002, the RTC rendered its Joint Decision in Civil Cases No. 00-1208 and No. 00-1210.

The RTC resolved the first two issues affirmatively. It ruled that the OSG can initiate Civil Case No. 00-1210 under Presidential Decree

No. 478 and the Administrative Code of 1987.14

It also found that all the requisites for an action for declaratory relief were present,

to wit:

The requisites for an action for declaratory relief are: (a) there is a justiciable controversy; (b) the controversy is between persons

whose interests are adverse; (c) the party seeking the relief has a legal interest in the controversy; and (d) the issue involved is ripe

for judicial determination.

SM, the petitioner in Civil Case No. 001-1208 [sic] is a mall operator who stands to be affected directly by the position taken by the

government officials sued namely the Secretary of Public Highways and the Building Officials of the local government units where it

operates shopping malls. The OSG on the other hand acts on a matter of public interest and has taken a position adverse to that of

the mall owners whom it sued. The construction of new and bigger malls has been announced, a matter which the Court can take

judicial notice and the unsettled issue of whether mall operators should provide parking facilities, free of charge needs to be

resolved.15

As to the third and most contentious issue, the RTC pronounced that:

The Building Code, which is the enabling law and the Implementing Rules and Regulations do not impose that parking spaces shall be

provided by the mall owners free of charge. Absent such directive[,] Ayala Land, Robinsons, Shangri-la and SM [Prime] are under no

obligation to provide them for free. Article 1158 of the Civil Code is clear:

"Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are demandable

and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the provisions of

this Book (1090).["]

x x x x

The provision on ratios of parking slots to several variables, like shopping floor area or customer area found in Rule XIX of the

Implementing Rules and Regulations cannot be construed as a directive to provide free parking spaces, because the enabling law,

the Building Code does not so provide. x x x.

To compel Ayala Land, Robinsons, Shangri-La and SM [Prime] to provide parking spaces for free can be considered as an unlawful

taking of property right without just compensation.

Parking spaces in shopping malls are privately owned and for their use, the mall operators collect fees. The legal relationship could

be either lease or deposit. In either case[,] the mall owners have the right to collect money which translates into income. Should

parking spaces be made free, this right of mall owners shall be gone. This, without just compensation. Further, loss of effective

control over their property will ensue which is frowned upon by law.

The presence of parking spaces can be viewed in another light. They can be looked at as necessary facilities to entice the public to

increase patronage of their malls because without parking spaces, going to their malls will be inconvenient. These are[,] however[,]

business considerations which mall operators will have to decide for themselves. They are not sufficient to justify a legal conclusion,

as the OSG would like the Court to adopt that it is the obligation of the mall owners to provide parking spaces for free.16

The RTC then held that there was no sufficient evidence to justify any award for damages.

The RTC finally decreed in its 29 May 2002 Joint Decision in Civil Cases No. 00-1208 and No. 00-1210 that:

FOR THE REASONS GIVEN, the Court declares that Ayala Land[,] Inc., Robinsons Land Corporation, Shangri-la Plaza Corporation and

SM Prime Holdings[,] Inc. are not obligated to provide parking spaces in their malls for the use of their patrons or public in general,

free of charge.

All counterclaims in Civil Case No. 00-1210 are dismissed.

No pronouncement as to costs.17

CA-G.R. CV No. 76298 involved the separate appeals of the OSG18

and respondent SM Prime19

filed with the Court of Appeals. The

sole assignment of error of the OSG in its Appellant’s Brief was:

THE TRIAL COURT ERRED IN HOLDING THAT THE NATIONAL BUILDING CODE DID NOT INTEND MALL PARKING SPACES TO BE FREE OF

CHARGE[;]20

while the four errors assigned by respondent SM Prime in its Appellant’s Brief were:

I

THE TRIAL COURT ERRED IN FAILING TO DECLARE RULE XIX OF THE IMPLEMENTING RULES AS HAVING BEEN ENACTED ULTRA VIRES,

HENCE, UNCONSTITUTIONAL AND VOID.

II

THE TRIAL COURT ERRED IN FAILING TO DECLARE THE IMPLEMENTING RULES INEFFECTIVE FOR NOT HAVING BEEN PUBLISHED AS

REQUIRED BY LAW.

III

THE TRIAL COURT ERRED IN FAILING TO DISMISS THE OSG’S PETITION FOR DECLARATORY RELIEF AND INJUNCTION FOR FAILURE TO

EXHAUST ADMINISTRATIVE REMEDIES.

IV

THE TRIAL COURT ERRED IN FAILING TO DECLARE THAT THE OSG HAS NO LEGAL CAPACITY TO SUE AND/OR THAT IT IS NOT A REAL

PARTY-IN-INTEREST IN THE INSTANT CASE.21

Respondent Robinsons filed a Motion to Dismiss Appeal of the OSG on the ground that the lone issue raised therein involved a pure

question of law, not reviewable by the Court of Appeals.

The Court of Appeals promulgated its Decision in CA-G.R. CV No. 76298 on 25 January 2007. The appellate court agreed with

respondent Robinsons that the appeal of the OSG should suffer the fate of dismissal, since "the issue on whether or not the National

Building Code and its implementing rules require shopping mall operators to provide parking facilities to the public for free" was

evidently a question of law. Even so, since CA-G.R. CV No. 76298 also included the appeal of respondent SM Prime, which raised

issues worthy of consideration, and in order to satisfy the demands of substantial justice, the Court of Appeals proceeded to rule on

the merits of the case.

In its Decision, the Court of Appeals affirmed the capacity of the OSG to initiate Civil Case No. 00-1210 before the RTC as the legal

representative of the government,22

and as the one deputized by the Senate of the Republic of the Philippines through Senate

Committee Report No. 225.

The Court of Appeals rejected the contention of respondent SM Prime that the OSG failed to exhaust administrative remedies. The

appellate court explained that an administrative review is not a condition precedent to judicial relief where the question in dispute is

purely a legal one, and nothing of an administrative nature is to be or can be done.

The Court of Appeals likewise refused to rule on the validity of the IRR of the National Building Code, as such issue was not among

those the parties had agreed to be resolved by the RTC during the pre-trial conference for Civil Cases No. 00-1208 and No. 00-1210.

Issues cannot be raised for the first time on appeal. Furthermore, the appellate court found that the controversy could be settled on

other grounds, without touching on the issue of the validity of the IRR. It referred to the settled rule that courts should refrain from

passing upon the constitutionality of a law or implementing rules, because of the principle that bars judicial inquiry into a

constitutional question, unless the resolution thereof is indispensable to the determination of the case.

Lastly, the Court of Appeals declared that Section 803 of the National Building Code and Rule XIX of the IRR were clear and needed

no further construction. Said provisions were only intended to control the occupancy or congestion of areas and structures. In the

absence of any express and clear provision of law, respondents could not be obliged and expected to provide parking slots free of

charge.

The fallo of the 25 January 2007 Decision of the Court of Appeals reads:

WHEREFORE, premises considered, the instant appeals are DENIED. Accordingly, appealed Decision is hereby AFFIRMED in toto.23

In its Resolution issued on 14 March 2007, the Court of Appeals denied the Motion for Reconsideration of the OSG, finding that the

grounds relied upon by the latter had already been carefully considered, evaluated, and passed upon by the appellate court, and

there was no strong and cogent reason to modify much less reverse the assailed judgment.

The OSG now comes before this Court, via the instant Petition for Review, with a single assignment of error:

THE COURT OF APPEALS SERIOUSLY ERRED IN AFFIRMING THE RULING OF THE LOWER COURT THAT RESPONDENTS ARE NOT

OBLIGED TO PROVIDE FREE PARKING SPACES TO THEIR CUSTOMERS OR THE PUBLIC.24

The OSG argues that respondents are mandated to provide free parking by Section 803 of the National Building Code and Rule XIX of

the IRR.

According to Section 803 of the National Building Code:

SECTION 803. Percentage of Site Occupancy

(a) Maximum site occupancy shall be governed by the use, type of construction, and height of the building and the

use, area, nature, and location of the site; and subject to the provisions of the local zoning requirements and in

accordance with the rules and regulations promulgated by the Secretary.

In connection therewith, Rule XIX of the old IRR,25

provides:

RULE XIX – PARKING AND LOADING SPACE REQUIREMENTS

Pursuant to Section 803 of the National Building Code (PD 1096) providing for maximum site occupancy, the following provisions on

parking and loading space requirements shall be observed:

1. The parking space ratings listed below are minimum off-street requirements for specific uses/occupancies for

buildings/structures:

1.1 The size of an average automobile parking slot shall be computed as 2.4 meters by 5.00 meters for perpendicular or diagonal

parking, 2.00 meters by 6.00 meters for parallel parking. A truck or bus parking/loading slot shall be computed at a minimum of 3.60

meters by 12.00 meters. The parking slot shall be drawn to scale and the total number of which shall be indicated on the plans and

specified whether or not parking accommodations, are attendant-managed. (See Section 2 for computation of parking

requirements).

x x x x

1.7 Neighborhood shopping center – 1 slot/100 sq. m. of shopping floor area

The OSG avers that the aforequoted provisions should be read together with Section 102 of the National Building Code, which

declares:

SECTION 102. Declaration of Policy

It is hereby declared to be the policy of the State to safeguard life, health, property, and public welfare, consistent with the

principles of sound environmental management and control; and to this end, make it the purpose of this Code to provide for al l

buildings and structures, a framework of minimum standards and requirements to regulate and control their location, site, design,

quality of materials, construction, use, occupancy, and maintenance.

The requirement of free-of-charge parking, the OSG argues, greatly contributes to the aim of safeguarding "life, health, property,

and public welfare, consistent with the principles of sound environmental management and control." Adequate parking spaces

would contribute greatly to alleviating traffic congestion when complemented by quick and easy access thereto because of free-

charge parking. Moreover, the power to regulate and control the use, occupancy, and maintenance of buildings and structures

carries with it the power to impose fees and, conversely, to control -- partially or, as in this case, absolutely -- the imposition of such

fees.

The Court finds no merit in the present Petition.

The explicit directive of the afore-quoted statutory and regulatory provisions, garnered from a plain reading thereof, is that

respondents, as operators/lessors of neighborhood shopping centers, should provide parking and loading spaces, in accordance with

the minimum ratio of one slot per 100 square meters of shopping floor area. There is nothing therein pertaining to the collection (or

non-collection) of parking fees by respondents. In fact, the term "parking fees" cannot even be found at all in the entire National

Building Code and its IRR.

Statutory construction has it that if a statute is clear and unequivocal, it must be given its literal meaning and applied without any

attempt at interpretation.26

Since Section 803 of the National Building Code and Rule XIX of its IRR do not mention parking fees, then

simply, said provisions do not regulate the collection of the same. The RTC and the Court of Appeals correctly applied Article 1158 of

the New Civil Code, which states:

Art. 1158. Obligations derived from law are not presumed. Only those expressly determined in this Code or in special laws are

demandable, and shall be regulated by the precepts of the law which establishes them; and as to what has not been foreseen, by the

provisions of this Book. (Emphasis ours.)

Hence, in order to bring the matter of parking fees within the ambit of the National Building Code and its IRR, the OSG had to resort

to specious and feeble argumentation, in which the Court cannot concur.

The OSG cannot rely on Section 102 of the National Building Code to expand the coverage of Section 803 of the same Code and Rule

XIX of the IRR, so as to include the regulation of parking fees. The OSG limits its citation to the first part of Section 102 of the

National Building Code declaring the policy of the State "to safeguard life, health, property, and public welfare, consistent with the

principles of sound environmental management and control"; but totally ignores the second part of said provision, which reads,

"and to this end, make it the purpose of this Code to provide for all buildings and structures, a framework of minimum standards

and requirements to regulate and control their location, site, design, quality of materials, construction, use, occupancy, and

maintenance." While the first part of Section 102 of the National Building Code lays down the State policy, it is the second part

thereof that explains how said policy shall be carried out in the Code. Section 102 of the National Building Code is not an all-

encompassing grant of regulatory power to the DPWH Secretary and local building officials in the name of life, health, property, and

public welfare. On the contrary, it limits the regulatory power of said officials to ensuring that the minimum standards and

requirements for all buildings and structures, as set forth in the National Building Code, are complied with.

Consequently, the OSG cannot claim that in addition to fixing the minimum requirements for parking spaces for buildings, Rule XIX of

the IRR also mandates that such parking spaces be provided by building owners free of charge. If Rule XIX is not covered by the

enabling law, then it cannot be added to or included in the implementing rules. The rule-making power of administrative agencies

must be confined to details for regulating the mode or proceedings to carry into effect the law as it has been enacted, and it cannot

be extended to amend or expand the statutory requirements or to embrace matters not covered by the statute. Administrative

regulations must always be in harmony with the provisions of the law because any resulting discrepancy between the two will

always be resolved in favor of the basic law.27

From the RTC all the way to this Court, the OSG repeatedly referred to Republic v. Gonzales28

and City of Ozamis v. Lumapas29

to

support its position that the State has the power to regulate parking spaces to promote the health, safety, and welfare of the public;

and it is by virtue of said power that respondents may be required to provide free parking facilities. The OSG, though, failed to

consider the substantial differences in the factual and legal backgrounds of these two cases from those of the Petition at bar.

In Republic, the Municipality of Malabon sought to eject the occupants of two parcels of land of the public domain to give way to a

road-widening project. It was in this context that the Court pronounced:

Indiscriminate parking along F. Sevilla Boulevard and other main thoroughfares was prevalent; this, of course, caused the build up of

traffic in the surrounding area to the great discomfort and inconvenience of the public who use the streets. Traffic congestion

constitutes a threat to the health, welfare, safety and convenience of the people and it can only be substantially relieved by

widening streets and providing adequate parking areas.

The Court, in City of Ozamis, declared that the City had been clothed with full power to control and regulate its streets for the

purpose of promoting public health, safety and welfare. The City can regulate the time, place, and manner of parking in the streets

and public places; and charge minimal fees for the street parking to cover the expenses for supervision, inspection and control, to

ensure the smooth flow of traffic in the environs of the public market, and for the safety and convenience of the public.

Republic and City of Ozamis involved parking in the local streets; in contrast, the present case deals with privately owned parking

facilities available for use by the general public. In Republic and City of Ozamis, the concerned local governments regulated parking

pursuant to their power to control and regulate their streets; in the instant case, the DPWH Secretary and local building officials

regulate parking pursuant to their authority to ensure compliance with the minimum standards and requirements under the

National Building Code and its IRR. With the difference in subject matters and the bases for the regulatory powers being invoked,

Republic and City of Ozamis do not constitute precedents for this case.

Indeed, Republic and City of Ozamis both contain pronouncements that weaken the position of the OSG in the case at bar. In

Republic, the Court, instead of placing the burden on private persons to provide parking facilities to the general public, mentioned

the trend in other jurisdictions wherein the municipal governments themselves took the initiative to make more parking spaces

available so as to alleviate the traffic problems, thus:

Under the Land Transportation and Traffic Code, parking in designated areas along public streets or highways is allowed which

clearly indicates that provision for parking spaces serves a useful purpose. In other jurisdictions where traffic is at least as

voluminous as here, the provision by municipal governments of parking space is not limited to parking along public streets or

highways. There has been a marked trend to build off-street parking facilities with the view to removing parked cars from the

streets. While the provision of off-street parking facilities or carparks has been commonly undertaken by private enterprise,

municipal governments have been constrained to put up carparks in response to public necessity where private enterprise had failed

to keep up with the growing public demand. American courts have upheld the right of municipal governments to construct off-street

parking facilities as clearly redounding to the public benefit.30

In City of Ozamis, the Court authorized the collection by the City of minimal fees for the parking of vehicles along the streets: so why

then should the Court now preclude respondents from collecting from the public a fee for the use of the mall parking facilities?

Undoubtedly, respondents also incur expenses in the maintenance and operation of the mall parking facilities, such as electric

consumption, compensation for parking attendants and security, and upkeep of the physical structures.

It is not sufficient for the OSG to claim that "the power to regulate and control the use, occupancy, and maintenance of buildings

and structures carries with it the power to impose fees and, conversely, to control, partially or, as in this case, absolutely, the

imposition of such fees." Firstly, the fees within the power of regulatory agencies to impose are regulatory fees. It has been settled

law in this jurisdiction that this broad and all-compassing governmental competence to restrict rights of liberty and property carries

with it the undeniable power to collect a regulatory fee. It looks to the enactment of specific measures that govern the relations not

only as between individuals but also as between private parties and the political society.31

True, if the regulatory agencies have the

power to impose regulatory fees, then conversely, they also have the power to remove the same. Even so, it is worthy to note that

the present case does not involve the imposition by the DPWH Secretary and local building officials of regulatory fees upon

respondents; but the collection by respondents of parking fees from persons who use the mall parking facilities. Secondly, assuming

arguendo that the DPWH Secretary and local building officials do have regulatory powers over the collection of parking fees for the

use of privately owned parking facilities, they cannot allow or prohibit such collection arbitrarily or whimsically. Whether allowing or

prohibiting the collection of such parking fees, the action of the DPWH Secretary and local building officials must pass the test of

classic reasonableness and propriety of the measures or means in the promotion of the ends sought to be accomplished.32

Keeping in mind the aforementioned test of reasonableness and propriety of measures or means, the Court notes that Section 803

of the National Building Code falls under Chapter 8 on Light and Ventilation. Evidently, the Code deems it necessary to regulate site

occupancy to ensure that there is proper lighting and ventilation in every building. Pursuant thereto, Rule XIX of the IRR requires

that a building, depending on its specific use and/or floor area, should provide a minimum number of parking spaces. The Court,

however, fails to see the connection between regulating site occupancy to ensure proper light and ventilation in every building vis-à-

vis regulating the collection by building owners of fees for the use of their parking spaces. Contrary to the averment of the OSG, the

former does not necessarily include or imply the latter. It totally escapes this Court how lighting and ventilation conditions at the

malls could be affected by the fact that parking facilities thereat are free or paid for.

The OSG attempts to provide the missing link by arguing that:

Under Section 803 of the National Building Code, complimentary parking spaces are required to enhance light and ventilation, that

is, to avoid traffic congestion in areas surrounding the building, which certainly affects the ventilation within the building itself,

which otherwise, the annexed parking spaces would have served. Free-of-charge parking avoids traffic congestion by ensuring quick

and easy access of legitimate shoppers to off-street parking spaces annexed to the malls, and thereby removing the vehicles of these

legitimate shoppers off the busy streets near the commercial establishments.33

The Court is unconvinced. The National Building Code regulates buildings, by setting the minimum specifications and requirements

for the same. It does not concern itself with traffic congestion in areas surrounding the building. It is already a stretch to say that the

National Building Code and its IRR also intend to solve the problem of traffic congestion around the buildings so as to ensure that the

said buildings shall have adequate lighting and ventilation. Moreover, the Court cannot simply assume, as the OSG has apparently

done, that the traffic congestion in areas around the malls is due to the fact that respondents charge for their parking facilities, thus,

forcing vehicle owners to just park in the streets. The Court notes that despite the fees charged by respondents, vehicle owners still

use the mall parking facilities, which are even fully occupied on some days. Vehicle owners may be parking in the streets only

because there are not enough parking spaces in the malls, and not because they are deterred by the parking fees charged by

respondents. Free parking spaces at the malls may even have the opposite effect from what the OSG envisioned: more people may

be encouraged by the free parking to bring their own vehicles, instead of taking public transport, to the malls; as a result, the parking

facilities would become full sooner, leaving more vehicles without parking spaces in the malls and parked in the streets instead,

causing even more traffic congestion.

Without using the term outright, the OSG is actually invoking police power to justify the regulation by the State, through the DPWH

Secretary and local building officials, of privately owned parking facilities, including the collection by the owners/operators of such

facilities of parking fees from the public for the use thereof. The Court finds, however, that in totally prohibiting respondents from

collecting parking fees from the public for the use of the mall parking facilities, the State would be acting beyond the bounds of

police power.

Police power is the power of promoting the public welfare by restraining and regulating the use of liberty and property. It is usually

exerted in order to merely regulate the use and enjoyment of the property of the owner. The power to regulate, however, does not

include the power to prohibit. A fortiori, the power to regulate does not include the power to confiscate. Police power does not

involve the taking or confiscation of property, with the exception of a few cases where there is a necessity to confiscate private

property in order to destroy it for the purpose of protecting peace and order and of promoting the general welfare; for instance, the

confiscation of an illegally possessed article, such as opium and firearms. 34

When there is a taking or confiscation of private property for public use, the State is no longer exercising police power, but another

of its inherent powers, namely, eminent domain. Eminent domain enables the State to forcibly acquire private lands intended for

public use upon payment of just compensation to the owner.35

Normally, of course, the power of eminent domain results in the taking or appropriation of title to, and possession of, the

expropriated property; but no cogent reason appears why the said power may not be availed of only to impose a burden upon the

owner of condemned property, without loss of title and possession.36

It is a settled rule that neither acquisition of title nor total

destruction of value is essential to taking. It is usually in cases where title remains with the private owner that inquiry should be

made to determine whether the impairment of a property is merely regulated or amounts to a compensable taking. A regulation

that deprives any person of the profitable use of his property constitutes a taking and entitles him to compensation, unless the

invasion of rights is so slight as to permit the regulation to be justified under the police power. Similarly, a police regulation that

unreasonably restricts the right to use business property for business purposes amounts to a taking of private property, and the

owner may recover therefor.37

1avvphi1

Although in the present case, title to and/or possession of the parking facilities remain/s with respondents, the prohibition against

their collection of parking fees from the public, for the use of said facilities, is already tantamount to a taking or confiscation of their

properties. The State is not only requiring that respondents devote a portion of the latter’s properties for use as parking spaces, but

is also mandating that they give the public access to said parking spaces for free. Such is already an excessive intrusion into the

property rights of respondents. Not only are they being deprived of the right to use a portion of their properties as they wish, they

are further prohibited from profiting from its use or even just recovering therefrom the expenses for the maintenance and operation

of the required parking facilities.

The ruling of this Court in City Government of Quezon City v. Judge Ericta38

is edifying. Therein, the City Government of Quezon City

passed an ordinance obliging private cemeteries within its jurisdiction to set aside at least six percent of their total area for charity,

that is, for burial grounds of deceased paupers. According to the Court, the ordinance in question was null and void, for it authorized

the taking of private property without just compensation:

There is no reasonable relation between the setting aside of at least six (6) percent of the total area of all private cemeteries for

charity burial grounds of deceased paupers and the promotion of' health, morals, good order, safety, or the general welfare of the

people. The ordinance is actually a taking without compensation of a certain area from a private cemetery to benefit paupers who

are charges of the municipal corporation. Instead of' building or maintaining a public cemetery for this purpose, the city passes the

burden to private cemeteries.

'The expropriation without compensation of a portion of private cemeteries is not covered by Section 12(t) of Republic Act 537, the

Revised Charter of Quezon City which empowers the city council to prohibit the burial of the dead within the center of population of

the city and to provide for their burial in a proper place subject to the provisions of general law regulating burial grounds and

cemeteries. When the Local Government Code, Batas Pambansa Blg. 337 provides in Section 177(q) that a sangguniang panlungsod

may "provide for the burial of the dead in such place and in such manner as prescribed by law or ordinance" it simply authorizes the

city to provide its own city owned land or to buy or expropriate private properties to construct public cemeteries. This has been the

law, and practise in the past. It continues to the present. Expropriation, however, requires payment of just compensation. The

questioned ordinance is different from laws and regulations requiring owners of subdivisions to set aside certain areas for streets,

parks, playgrounds, and other public facilities from the land they sell to buyers of subdivision lots. The necessities of public safety,

health, and convenience are very clear from said requirements which are intended to insure the development of communities with

salubrious and wholesome environments. The beneficiaries of the regulation, in turn, are made to pay by the subdivision developer

when individual lots are sold to homeowners.

In conclusion, the total prohibition against the collection by respondents of parking fees from persons who use the mall parking

facilities has no basis in the National Building Code or its IRR. The State also cannot impose the same prohibition by generally

invoking police power, since said prohibition amounts to a taking of respondents’ property without payment of just compensation.

Given the foregoing, the Court finds no more need to address the issue persistently raised by respondent SM Prime concerning the

unconstitutionality of Rule XIX of the IRR. In addition, the said issue was not among those that the parties, during the pre-trial

conference for Civil Cases No. 12-08 and No. 00-1210, agreed to submit for resolution of the RTC. It is likewise axiomatic that the

constitutionality of a law, a regulation, an ordinance or an act will not be resolved by courts if the controversy can be, as in this case

it has been, settled on other grounds.39

WHEREFORE, the instant Petition for Review on Certiorari is hereby DENIED. The Decision dated 25 January 2007 and Resolution

dated 14 March 2007 of the Court of Appeals in CA-G.R. CV No. 76298, affirming in toto the Joint Decision dated 29 May 2002 of the

Regional Trial Court of Makati City, Branch 138, in Civil Cases No. 00-1208 and No. 00-1210 are hereby AFFIRMED. No costs.

SO ORDERED.

EN BANC

G.R. No. L-18719 October 31, 1964

PILAR JOAQUIN, ET AL., plaintiffs-appellants,

vs.

FELIX ANICETO, ET AL., defendants-appellee.

Arturo B. Atienza & F. B. del Rosario for plaintiff appellants.

D. A. Karganilla for defendants-appellees.

REGALA, J.:

This case comes to Us for review directly from the Court of First Instance of Manila. The facts are not in dispute. They are as follows:

While Pilar Joaquin was on the sidewalk of Aviles Street, Manila, on April 27, 1960, a taxicab driven by Felix Aniceto and owned by

Ruperto Rodelas bumped her As a result, she suffered physical injuries.

Aniceto was charged with serious physical injuries through reckless imprudence in the Municipal Court (now the City Court) of

Manila. He was subsequently found guilty and sentenced to imprisonment. However, no ruling was made on his civil liability to the

offended party in view of the latter's reservation to file a separate civil action for damages for the injuries suffered by her.

Aniceto appealed the judgment of conviction to the Court of First Instance of Manila. While the criminal case was thus pending

appeal, Pilar Joaquin, the injured party, filed this case for damages in the Court of First Instance of Manila, in accordance with the

reservation which she had earlier made. Felix Aniceto and Ruperto Rodelas, driver and owner, respectively, of the taxicab were

made party defendants.

At the trial of this case, the plaintiff blocked all attempts of Rodelas to prove that, as employer, he had exercised due diligence in the

selection and supervision of his employee, on the ground that such a defense is not available in a civil action brought under the

Penal Code to recover the subsidiary civil liability arising from the crime. The lower court sustained plaintiff's objection. However, it

dismissed the case on the ground that in the absence of a final judgment of conviction against the driver in the criminal case, any

action to enforce the employer's subsidiary civil liability would be premature. Such liability, the trial court added, may only be

enforced on proof of the insolvency of the employee. Hence, this appeal.

The issue in this case is: May an employee's primary civil liability for crime and his employer's subsidiary liability therefor be proved

in a separate civil action even while the criminal case against the employee is still pending?

To begin with, obligations arise from law, contract, quasi-contract, crime and quasi-delict.1According to appellant, her action is one

to enforce the civil liability arising from crimes. With respect to obligations arising from crimes, Article 1161 of the New Civil Code

provides:

Civil obligations arising from criminal offenses shall be governed by the penal laws, subject to the provisions of article 2177,

and of the pertinent provisions of Chapter 2, Preliminary, Title, on Human Relations, and of Title XVIII of this Book,

regulating damages. (Emphasis supplied)

The Revised Penal Code provides in turn that "every person criminally liable for a felony is also civilly liable"2and that in default of

the persons criminally liable, employers, teachers persons and corporations engaged in any kind of industry shall be civilly liable for

felonies committed by their servants, pupils, workmen, apprentices or employees in the discharge of their duties.3

As this Court held in City of Manila v. Manila Electric Co., 52 Phil. 586:

... The Penal Code authorizes the determination of subsidiary liability. The Civil Code negatives its applicability providing

that civil obligations arising from crimes or misdemeanors shall be governed by the provisions of the Penal Code. In other

words, the Penal Code affirms its jurisdiction while the Civil Code negatives its jurisdiction.

It is now settled that for an employer to be subsidiarily liable, the following requisites must be present: (1) That an employee has

committed a crime in the discharge of his duties; (2) that said employee is insolvent and has not satisfied his civil liability; (3) that the

employer is engaged in some kind of industry. (1 Padilla, Criminal Law, Revised Penal Code 794 [1964])

Without the conviction of the employee, the employer cannot be subsidiarily liable.

Now, it is no reason to bring such action against the employer on the ground that in cases of defamation, fraud and physical injuries,

Article 33 of the Civil Code authorizes a civil action that is "entirely separate, and distinct from the criminal action," (Carangdang v.

Santiago, 51 O.G. 2878; Reyes v. De la Rosa, 52 O.G. 6548; Dyogi v. Yatco, G. R. No. L-9623, January 22, 1957).

Can Article 33 above cited be made applicable to an employer in a civil action for subsidiary liability? The answer to this question is

undoubtedly in the negative.

What this article 33 authorizes is an action against the employee on his primary civil liability. It cannot apply to an action against the

employer to enforce his subsidiary civil liability as stated above, because such liability arises only after conviction of the employee in

the criminal case. Any action brought against him before the conviction of his employee is premature.

In cases of negligence, the injured party or his heirs has the choice, between an action to enforce the civil liability arising from crime

under Article 100 of the Revised Penal Code and an action for quasi-delict under Articles 2176-2194 of the Civil Code. (See Barredo v.

Garcia and Almario, 73 Phil. 607; Parker v. Panlilio, et al., 91 Phil. 1)

If he chooses an action for quasi-delict, he may hold an employer liable for the negligent act of the employee subject, however, to

the employer's defense of exercise of the diligence of a good father of the family. (Art. 2180, Civil Code)

On the other hand, should he choose to prosecute his action under Article 100 of the Penal Code, he can hold the employer

subsidiarily liable only upon prior conviction of the employee. While a separate and independent civil action for damages may be

brought against the employee under Article 33 of the Civil Code, no such action may be filed against the employer on the latter's

subsidiary civil liability because such liability is governed not by the Civil Code but by the Penal Code, under which conviction of the

employee is a condition sine qua non for the employer's subsidiary liability. If the court trying the employee's liability adjudges the

employee liable, but the court trying the criminal action acquits the employee, the subsequent insolvency of the employee cannot

make the employer subsidiary liable to the offended party or to the latter's heirs.

WHEREFORE, the decision appealed from is affirmed, without pronouncement as to costs.

Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur.

SPECIAL THIRD DIVISION

G.R. No. 133347 April 23, 2010

ABS-CBN BROADCASTING CORPORATION, EUGENIO LOPEZ, JR., AUGUSTO ALMEDA-LOPEZ, and OSCAR M. LOPEZ, Petitioners,

vs.

OFFICE OF THE OMBUDSMAN, ROBERTO S. BENEDICTO, EXEQUIEL B. GARCIA, MIGUEL V. GONZALES, and SALVADOR (BUDDY)

TAN, Respondents.

R E S O L U T I O N

NACHURA, J.:

Before us is a Motion for Reconsideration filed by petitioners Eugenio, Jr., Oscar and Augusto Almeda, all surnamed Lopez, in their

capacity as officers and on behalf of petitioner ABS-CBN Broadcasting Corporation (ABS-CBN), of our Decision in G.R. No. 133347,

dismissing their petition for certiorari because of the absence of grave abuse of discretion in the Ombudsman Resolution which, in

turn, found no probable cause to indict respondents for the following violations of the Revised Penal Code (RPC): (1) Article 298 –

Execution of Deeds by Means of Violence or Intimidation; (2) Article 315, paragraphs 1[b], 2[a], and 3[a] – Estafa; (3) Article 308 –

Theft; (4) Article 302 – Robbery; (5) Article 312 – Occupation of Real Property or Usurpation of Real Rights in Property; and (6) Article

318 – Other Deceits.

The assailed Decision disposed of the case on two (2) points: (1) the dropping of respondents Roberto S. Benedicto and Salvador

(Buddy) Tan as respondents in this case due to their death, consistent with our rulings in People v. Bayotas1 and Benedicto v. Court

of Appeals;2 and (2) our finding that the Ombudsman did not commit grave abuse of discretion in dismissing petitioners’ criminal

complaint against respondents.

Undaunted, petitioners ask for a reconsideration of our Decision on the following grounds:

I.

WITH DUE RESPECT, THE EXECUTION AND VALIDITY OF THE LETTER-AGREEMENT DATED 8 JUNE 1973 ARE PLAINLY IRRELEVANT TO

ASCERTAINING THE CRIMINAL LIABILITY OF THE RESPONDENTS AND, THEREFORE, THE ISSUE AS TO WHETHER SAID AGREEMENT

WAS RATIFIED OR NOT IS IMMATERIAL IN THE PRESENT CASE.

II.

WITH DUE RESPECT, RESPONDENTS BENEDICTO AND TAN SHOULD NOT BE DROPPED AS RESPONDENTS SIMPLY BECAUSE THEY MET

THEIR UNTIMELY DEMISE DURING THE PENDENCY OF THE CASE.3

Before anything else, we note that petitioners filed a Motion to Refer the Case to the Court en banc.4 Petitioners aver that the

arguments contained in their Motion for Reconsideration, such as: (1) the irrelevance of the civil law concept of ratification in

determining whether a crime was committed; and (2) the continuation of the criminal complaints against respondents Benedicto

and Tan who have both died, to prosecute their possible civil liability therefor, present novel questions of law warranting resolution

by the Court en banc.

In the main, petitioners argue that the Decision is contrary to law because: (1) the ratification of the June 8, 1973 letter-agreement is

immaterial to the determination of respondents’ criminal liability for the aforestated felonies in the RPC; and (2) the very case cited

in our Decision, i.e. People v. Bayotas,5 allows for the continuation of a criminal case to prosecute civil liability based on law and is

independent of the civil liability arising from the crime.

We disagree with petitioners. The grounds relied upon by petitioners in both motions, being intertwined, shall be discussed jointly.

Before we do so, parenthetically, the counsel for respondent Miguel V. Gonzales belatedly informed this Court of his client’s demise

on July 20, 2007.6 Hence, as to Gonzales, the case must also be dismissed.1avvphi1

Contrary to petitioners’ assertion, their motion for reconsideration does not contain a novel question of law as would merit the

attention of this Court sitting en banc. We also find no cogent reason to reconsider our Decision.

First and foremost, there is, as yet, no criminal case against respondents, whether against those who are living or those otherwise

dead.

The question posed by petitioners on this long-settled procedural issue does not constitute a novel question of law. Nowhere in

People v. Bayotas7 does it state that a criminal complaint may continue and be prosecuted as an independent civil action. In fact,

Bayotas, once and for all, harmonized the rules on the extinguished and on the subsisting liabilities of an accused who dies. We

definitively ruled:

From this lengthy disquisition, we summarize our ruling herein:

1. Death of an accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based

solely thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates

his criminal liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil

liability ex delicto in senso strictiore."

2. Corollarily, the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated

on a source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from

which the civil liability may arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) xxx xxx xxx

e) Quasi-delicts

3. Where the civil liability survives, as explained in Number 2 above, an action for recovery thereof may be pursued but only

by filing a separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This

separate civil action may be enforced either against the executor/administrator or the estate of the accused, depending on

the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in

cases where during the prosecution of the criminal action and prior to its extinction, the private offended party instituted

together therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during

the pendency of the criminal case, conformably with provisions of Article 1155 of the Civil Code, that should thereby avoid

any apprehension on a possible [de]privation of right by prescription.

From the foregoing, it is quite apparent that Benedicto, Tan, and Gonzales, who all died during the pendency of this case, should be

dropped as party respondents. If on this score alone, our ruling does not warrant reconsideration. We need not even delve into the

explicit declaration in Benedicto v. Court of Appeals.8

Second, and more importantly, we dismissed the petition for certiorari filed by petitioners because they failed to show grave abuse

of discretion on the part of the Ombudsman when he dismissed petitioners’ criminal complaint against respondents for lack of

probable cause. We reiterate that our inquiry was limited to a determination of whether the Ombudsman committed grave abuse of

discretion when he found no probable cause to indict respondents for various felonies under the RPC. The invocation of our

certiorari jurisdiction over the act of a constitutional officer, such as the Ombudsman, must adhere to the strict requirements

provided in the Rules of Court and in jurisprudence. The determination of whether there was grave abuse of discretion does not, in

any way, constitute a novel question of law.

We first pointed out in our Decision that the complaint-affidavits of petitioners, apart from a blanket charge that remaining

respondents, Gonzales (who we thought was alive at that time) and Exequiel Garcia, are officers of KBS/RPN and/or alter egos of

Benedicto, are bereft of sufficient ground to engender a well-founded belief that crimes have been committed and that

respondents, namely, Gonzales and Garcia, are probably guilty thereof and should be held for trial. Certainly, no grave abuse of

discretion can be imputed to the Ombudsman that would warrant a reversal of his Resolution.

The charges of individual petitioners Eugenio, Jr., Oscar and Augusto Almeda against respondents, Gonzales and Garcia, contained in

their respective complaint-affidavits simply consisted of the following:

1. Complaint-affidavit of Eugenio, Jr.

32.1. I was briefed that Senator Estanislao Fernandez in representation of Benedicto, met with Senator Tañada at the Club Filipino in

June 1976. Discussions were had on how to arrive at the "reasonable rental" for the use of ABS-CBN stations and facilities. A second

meeting at Club Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Miguel

Gonzales, a close associate and lawyer of Benedicto and an officer of KBS.

x x x x

38.2. The illegal takeover of ABS-CBN stations, studios and facilities, and the loss and/or damages caused to our assets occurred

while Benedicto, Exequiel Garcia, Miguel Gonzales, and Salvador Tan were in possession, control and management of our network.

Roberto S. Benedicto was the Chairman of the Board of KBS-RPN and its Chief Executive Officer (CEO), to whom most of the KBS-RPN

officers reported while he was in Metro Manila. Miguel Gonzales, the Vice-President of KBS, and Exequiel Garcia, the Treasurer,

were the alter egos of Benedicto whenever the latter was out of the country; x x x.9

2. Complaint-affidavit of Oscar

25. All the illegal activities as complained of above, were done upon the orders, instructions and directives of Roberto S. Benedicto,

the Chairman of the Board and Chief Executive Officer of the KBS/RPN group; Miguel Gonzales and Exequiel Garcia, close colleagues

and business partners of Benedicto who were either directors/officers KBS/RPN and who acted as Benedicto’s alter egos whenever

the latter was out of the country; x x x.

x x x x

38. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Tañada at the Club Filipino on June 1976.

Discussions were had on how to arrive at the "reasonable rental" for the use of ABS stations and facilities. A second meeting at Club

Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Mike Gonzales, a close

associate and friend of Benedicto and an officer of KBS.10

3. Complaint-affidavit of Augusto Almeda

21.1. Barely two weeks from their entry into the ABS Broadcast Center, KBS personnel started making unauthorized withdrawals

from the ABS Stock Room. All these withdrawals of supplies and equipment were made under the orders of Benedicto, Miguel

Gonzales, Exequiel Garcia, and Salvador Tan, the Chairman, the Vice-President, Treasurer, and the General Manager of KBS,

respectively. No payment was ever made by either Benedicto or KBS for all the supplies and equipment withdrawn from the ABS

Broadcast Center.

x x x x

31. Senator Estanislao Fernandez, in representation of Benedicto, met with Senator Tañada at the Club Filipino on June 1976.

Discussions were had on how to arrive at the "reasonable rental" for the use of ABS stations and facilities. A second meeting at Club

Filipino took place on July 7, 1976 between Senators Tañada and Fernandez, who brought along Atty. Mike Gonzales, a close

associate and friend of Benedicto and an officer of KBS.11

From the foregoing, it is beyond cavil that there is no reason for us to depart from our policy of non-interference with the

Ombudsman’s finding of probable cause or lack thereof. On the strength of these allegations, we simply could not find any rational

basis to impute grave abuse of discretion to the Ombudsman’s dismissal of the criminal complaints.

Third, we did not state in the Decision that ratification extinguishes criminal liability. We simply applied ratification in determining

the conflicting claims of petitioners regarding the execution of the letter-agreement. Petitioners, desperate to attach criminal

liability to respondents’ acts, specifically to respondent Benedicto, alleged in their complaint-affidavits that Benedicto forced,

coerced and intimidated petitioners into signing the letter-agreement. In other words, petitioners disown this letter-agreement that

they were supposedly forced into signing, such that this resulted in a violation of Article 298 of the RPC (Execution of Deeds by

means of Violence or Intimidation).

However, three elements must concur in order for an offender to be held liable under Article 298:

(1) that the offender has intent to defraud another.

(2) that the offender compels him to sign, execute, or deliver any public instrument or document.

(3) that the compulsion is by means of violence or intimidation.12

The element of intent to defraud is not present because, even if, initially, as claimed by petitioners, they were forced to sign the

letter-agreement, petitioners made claims based thereon and invoked the provisions thereof. In fact, petitioners wanted

respondents to honor the letter-agreement and to pay rentals for the use of the ABS-CBN facilities. By doing so, petitioners

effectively, although they were careful not to articulate this fact, affirmed their signatures in this letter-agreement.

True, ratification is primarily a principle in our civil law on contracts. Yet, their subsequent acts in negotiating for the rentals of the

facilities ― which translate into ratification of the letter-agreement ― cannot be disregarded simply because ratification is a civil law

concept. The claims of petitioners must be consistent and must, singularly, demonstrate respondents’ culpability for the crimes they

are charged with. Sadly, petitioners failed in this regard because, to reiterate, they effectively ratified and advanced the validity of

this letter-agreement in their claim against the estate of Benedicto.

Finally, we take note of the conflicting claim of petitioners by filing a separate civil action to enforce a claim against the estate of

respondent Benedicto. Petitioners do not even specifically deny this fact and simply sidestep this issue which was squarely raised in

the Decision. The Rules of Court has separate provisions for different claims against the estate of a decedent under Section 5 of Rule

86 and Section 1 of Rule 87:

RULE 86.

SECTION 5. Claims which must be filed under the notice. If not filed, barred; exceptions. – All claims for money against the decedent,

arising from contract, express or implied, whether the same be due, not due, or contingent, all claims for funeral expenses and

expenses for the last sickness of the decedent, and judgment for money against the decedent, must be filed within the time limited

in the notice; otherwise they are barred forever, except that they may be set forth as counter claims in any action that the executor

or administrator may bring against the claimants. Xxx Claims not yet due, or contingent, may be approved at their present value.

RULE 87.

SECTION 1. Actions which may and which may not be brought against executor or administrator. – No action upon a claim for the

recovery of money or debt or interest thereon shall be commenced against the executor or administrator; but actions to recover

real or personal property, or an interest therein, from the estate, or to enforce a lien thereon, and actions to recover damages for an

injury to person or property, real or personal, may be commenced against him.

If, as insisted by petitioners, respondents committed felonies in forcing them to sign the letter-agreement, petitioners should have

filed an action against the executor or administrator of Benedicto’s estate based on Section 1, Rule 87 of the Rules of Court. But they

did not. Instead they filed a claim against the estate based on contract, the unambiguous letter-agreement, under Section 5, Rule 86

of the Rules of Court. The existence of this claim against the estate of Benedicto as opposed to the filing of an action against the

executor or administrator of Benedicto’s estate forecloses all issues on the circumstances surrounding the execution of this letter-

agreement.

We are not oblivious of the fact that, in the milieu prevailing during the Marcos years, incidences involving intimidation of

businessmen were not uncommon. Neither are we totally unaware of the reputed closeness of Benedicto to President Marcos.

However, given the foregoing options open to them under the Rules of Court, petitioners’ choice of remedies by filing their claim

under Section 5, Rule 86 ― after Marcos had already been ousted and full democratic space restored ― works against their

contention, challenging the validity of the letter-agreement. Now, petitioners must live with the consequences of their choice.

WHEREFORE, in light of the foregoing, the Motion to Refer the Case to the Court en banc and the Motion for Reconsideration are

DENIED.

SO ORDERED.

SECOND DIVISION

G.R. No. 169467 February 25, 2010

ALFREDO P. PACIS and CLEOPATRA D. PACIS, Petitioners,

vs.

JEROME JOVANNE MORALES, Respondent.

D E C I S I O N

CARPIO, J.:

The Case

This petition for review1 assails the 11 May 2005 Decision

2 and the 19 August 2005 Resolution of the Court of Appeals in CA-G.R. CV

No. 60669.

The Facts

On 17 January 1995, petitioners Alfredo P. Pacis and Cleopatra D. Pacis (petitioners) filed with the trial court a civil case for damages

against respondent Jerome Jovanne Morales (respondent). Petitioners are the parents of Alfred Dennis Pacis, Jr. (Alfred), a 17-year

old student who died in a shooting incident inside the Top Gun Firearms and Ammunitions Store (gun store) in Baguio City.

Respondent is the owner of the gun store.

The facts as found by the trial court are as follows:

On January 19, 1991, Alfred Dennis Pacis, then 17 years old and a first year student at the Baguio Colleges Foundation taking up BS

Computer Science, died due to a gunshot wound in the head which he sustained while he was at the Top Gun Firearm[s] and

Ammunition[s] Store located at Upper Mabini Street, Baguio City. The gun store was owned and operated by defendant Jerome

Jovanne Morales.

With Alfred Pacis at the time of the shooting were Aristedes Matibag and Jason Herbolario. They were sales agents of the defendant,

and at that particular time, the caretakers of the gun store.

The bullet which killed Alfred Dennis Pacis was fired from a gun brought in by a customer of the gun store for repair.

The gun, an AMT Automag II Cal. 22 Rimfire Magnum with Serial No. SN-H34194 (Exhibit "Q"), was left by defendant Morales in a

drawer of a table located inside the gun store.

Defendant Morales was in Manila at the time. His employee Armando Jarnague, who was the regular caretaker of the gun store was

also not around. He left earlier and requested sales agents Matibag and Herbolario to look after the gun store while he and

defendant Morales were away. Jarnague entrusted to Matibag and Herbolario a bunch of keys used in the gun store which included

the key to the drawer where the fatal gun was kept.

It appears that Matibag and Herbolario later brought out the gun from the drawer and placed it on top of the table. Attracted by the

sight of the gun, the young Alfred Dennis Pacis got hold of the same. Matibag asked Alfred Dennis Pacis to return the gun. The latter

followed and handed the gun to Matibag. It went off, the bullet hitting the young Alfred in the head.

A criminal case for homicide was filed against Matibag before branch VII of this Court. Matibag, however, was acquitted of the

charge against him because of the exempting circumstance of "accident" under Art. 12, par. 4 of the Revised Penal Code.

By agreement of the parties, the evidence adduced in the criminal case for homicide against Matibag was reproduced and adopted

by them as part of their evidence in the instant case.3

On 8 April 1998, the trial court rendered its decision in favor of petitioners. The dispositive portion of the decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs [Spouses Alfredo P. Pacis and Cleopatra D.

Pacis] and against the defendant [Jerome Jovanne Morales] ordering the defendant to pay plaintiffs —

(1) P30,000.00 as indemnity for the death of Alfred Pacis;

(2) P29,437.65 as actual damages for the hospitalization and burial expenses incurred by the plaintiffs;

(3) P100,000.00 as compensatory damages;

(4) P100,000.00 as moral damages;

(5) P50,000.00 as attorney’s fees.

SO ORDERED.4

Respondent appealed to the Court of Appeals. In its Decision5 dated 11 May 2005, the Court of Appeals reversed the trial court’s

Decision and absolved respondent from civil liability under Article 2180 of the Civil Code.6

Petitioners filed a motion for reconsideration, which the Court of Appeals denied in its Resolution dated 19 August 2005.

Hence, this petition.

The Trial Court’s Ruling

The trial court held respondent civilly liable for the death of Alfred under Article 2180 in relation to Article 2176 of the Civil Code.7

The trial court held that the accidental shooting of Alfred which caused his death was partly due to the negligence of respondent’s

employee Aristedes Matibag (Matibag). Matibag and Jason Herbolario (Herbolario) were employees of respondent even if they were

only paid on a commission basis. Under the Civil Code, respondent is liable for the damages caused by Matibag on the occasion of

the performance of his duties, unless respondent proved that he observed the diligence of a good father of a family to prevent the

damage. The trial court held that respondent failed to observe the required diligence when he left the key to the drawer containing

the loaded defective gun without instructing his employees to be careful in handling the loaded gun.

The Court of Appeals’ Ruling

The Court of Appeals held that respondent cannot be held civilly liable since there was no employer-employee relationship between

respondent and Matibag. The Court of Appeals found that Matibag was not under the control of respondent with respect to the

means and methods in the performance of his work. There can be no employer-employee relationship where the element of control

is absent. Thus, Article 2180 of the Civil Code does not apply in this case and respondent cannot be held liable.

Furthermore, the Court of Appeals ruled that even if respondent is considered an employer of Matibag, still respondent cannot be

held liable since no negligence can be attributed to him. As explained by the Court of Appeals:

Granting arguendo that an employer-employee relationship existed between Aristedes Matibag and the defendant-appellant, we

find that no negligence can be attributed to him.

Negligence is best exemplified in the case of Picart vs. Smith (37 Phil. 809). The test of negligence is this:

"x x x. Could a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a

reasonable consequence of the course about to be pursued? If so, the law imposes a duty on the actor to refrain from that course or

take precaution against its mischievous results, and the failure to do so constitutes negligence. x x x."

Defendant-appellant maintains that he is not guilty of negligence and lack of due care as he did not fail to observe the diligence of a

good father of a family. He submits that he kept the firearm in one of his table drawers, which he locked and such is already an

indication that he took the necessary diligence and care that the said gun would not be accessible to anyone. He puts [sic] that his

store is engaged in selling firearms and ammunitions. Such items which are per se dangerous are kept in a place which is properly

secured in order that the persons coming into the gun store would not be able to take hold of it unless it is done intentionally, such

as when a customer is interested to purchase any of the firearms, ammunitions and other related items, in which case, he may be

allowed to handle the same.

We agree. Much as We sympathize with the family of the deceased, defendant-appellant is not to be blamed. He exercised due

diligence in keeping his loaded gun while he was on a business trip in Manila. He placed it inside the drawer and locked it. It was

taken away without his knowledge and authority. Whatever happened to the deceased was purely accidental.8

The Issues

Petitioners raise the following issues:

I. THE APPELLATE COURT COMMITTED SERIOUS ERROR IN RENDERING THE DECISION AND RESOLUTION IN QUESTION IN DISREGARD

OF LAW AND JURISPRUDENCE BY REVERSING THE ORDER OF THE REGIONAL TRIAL COURT (BRANCH 59) OF BAGUIO CITY

NOTWITHSTANDING CLEAR, AUTHENTIC RECORDS AND TESTIMONIES PRESENTED DURING THE TRIAL WHICH NEGATE AND

CONTRADICT ITS FINDINGS.

II. THE APPELLATE COURT COMMITTED GRAVE, REVERSIBLE ERROR IN RENDERING THE DECISION AND RESOLUTION IN QUESTION BY

DEPARTING FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS THEREBY IGNORING THE FACTUAL FINDINGS OF

THE REGIONAL TRIAL COURT (BRANCH 59) OF BAGUIO CITY SHOWING PETITIONER’S CLEAR RIGHTS TO THE AWARD OF DAMAGES.9

The Ruling of the Court

We find the petition meritorious.

This case for damages arose out of the accidental shooting of petitioners’ son. Under Article 116110

of the Civil Code, petitioners may

enforce their claim for damages based on the civil liability arising from the crime under Article 10011

of the Revised Penal Code or

they may opt to file an independent civil action for damages under the Civil Code. In this case, instead of enforcing their claim for

damages in the homicide case filed against Matibag, petitioners opted to file an independent civil action for damages against

respondent whom they alleged was Matibag’s employer. Petitioners based their claim for damages under Articles 2176 and 2180 of

the Civil Code.

Unlike the subsidiary liability of the employer under Article 10312

of the Revised Penal Code,13

the liability of the employer, or any

person for that matter, under Article 2176 of the Civil Code is primary and direct, based on a person’s own negligence. Artic le 2176

states:

Art. 2176. 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 quasi-delict and is

governed by the provisions of this Chapter.

This case involves the accidental discharge of a firearm inside a gun store.1avvphi1 Under PNP Circular No. 9, entitled the "Policy on

Firearms and Ammunition Dealership/Repair," a person who is in the business of purchasing and selling of firearms and ammunition

must maintain basic security and safety requirements of a gun dealer, otherwise his License to Operate Dealership will be suspended

or canceled.14

Indeed, a higher degree of care is required of someone who has in his possession or under his control an instrumentality extremely

dangerous in character, such as dangerous weapons or substances. Such person in possession or control of dangerous

instrumentalities has the duty to take exceptional precautions to prevent any injury being done thereby.15

Unlike the ordinary affairs

of life or business which involve little or no risk, a business dealing with dangerous weapons requires the exercise of a higher degree

of care.

As a gun store owner, respondent is presumed to be knowledgeable about firearms safety and should have known never to keep a

loaded weapon in his store to avoid unreasonable risk of harm or injury to others. Respondent has the duty to ensure that all the

guns in his store are not loaded. Firearms should be stored unloaded and separate from ammunition when the firearms are not

needed for ready-access defensive use.16

With more reason, guns accepted by the store for repair should not be loaded precisely

because they are defective and may cause an accidental discharge such as what happened in this case. Respondent was clearly

negligent when he accepted the gun for repair and placed it inside the drawer without ensuring first that it was not loaded. In the

first place, the defective gun should have been stored in a vault. Before accepting the defective gun for repair, respondent should

have made sure that it was not loaded to prevent any untoward accident. Indeed, respondent should never accept a firearm from

another person, until the cylinder or action is open and he has personally checked that the weapon is completely unloaded.17

For

failing to insure that the gun was not loaded, respondent himself was negligent. Furthermore, it was not shown in this case whether

respondent had a License to Repair which authorizes him to repair defective firearms to restore its original composition or enhance

or upgrade firearms.18

Clearly, respondent did not exercise the degree of care and diligence required of a good father of a family, much less the degree of

care required of someone dealing with dangerous weapons, as would exempt him from liability in this case.

WHEREFORE, we GRANT the petition. We SET ASIDE the 11 May 2005 Decision and the 19 August 2005 Resolution of the Court of

Appeals in CA-G.R. CV No. 60669. We REINSTATE the trial court’s Decision dated 8 April 1998.

SO ORDERED.

FIRST DIVISION

G.R. Nos. 159017-18 March 9, 2011

PAULINO S. ASILO, JR., Petitioner,

vs.

THE PEOPLE OF THE PHILIPPINES and Spouses VISITACION AND CESAR C. BOMBASI, Respondents.

x - - - - - - - - - - - - - - - - - - - - - - -x

G.R. No. 159059

VICTORIA BUETA VDA. DE COMENDADOR, IN REPRESENTATION OF DEMETRIO T. COMENDADOR, Petitioner,

vs.

VISITACION C. BOMBASI AND CESAR C. BOMBASI, Respondents.

D E C I S I O N

PEREZ, J.:

At bench are appeals by certiorari1 from the Decision

2 of the Fourth Division of the Sandiganbayan; (1) finding Demetrio T.

Comendador3 (Mayor Comendador) and Paulino S. Asilo, Jr.

4 guilty beyond reasonable doubt of violation of Sec. 3(e) of Republic Act

No. 3019; (2) dismissing the cases against accused Alberto S. Angeles;5 (3) ordering the defendants Municipality of Nagcarlan,

Laguna, Demetrio T. Comendador and Paulino S. Asilo, Jr. to pay the plaintiffs now respondents Visitacion C. Bombasi (Visitacion)

and Cesar C. Bombasi damages; and (4) dismissing the cases against the spouses Alida and Teddy Coroza6 and Benita and Isagani

Coronado.7

The factual antecedents of the case are:

On 15 March 1978, Private Respondent Visitacion’s late mother Marciana Vda. De Coronado (Vda. De Coronado) and the

Municipality of Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo P. Manalang) entered into a lease contract

whereby the Municipality allowed the use and enjoyment of property comprising of a lot and a store located at the corner of

Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondent’s mother for a period of twenty (20)

years beginning on 15 March 1978 until 15 March 1998, extendible for another 20 years.8

The lease contract provided that the late Vda. De Coronado could build a firewall on her rented property which must be at least as

high as the store; and in case of modification of the public market, she or her heir/s would be given preferential rights.

Visitacion took over the store when her mother died sometime in 1984.9 From then on up to January 1993, Visitacion secured the

yearly Mayor’s permits.10

Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacion’s request for inspection on 15 May 1986, Distr ict

Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public Works and Highways,11

Regional Office No. IV-A,

found that the store of Visitacion remained intact and stood strong. This finding of Engineer Gorospe was contested by the

Municipality of Nagcarlan.

The store of Visitacion continued to operate after the fire until 15 October 1993.

On 1 September 1993, Visitacion received a letter12

from Mayor Comendador directing her to demolish her store within five (5) days

from notice. Attached to the letter were copies of Sangguniang Bayan Resolution No. 15613

dated 30 August 1993 and a

Memorandum issued by Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.

The relevant provisos of the Resolution No. 156 states that:

NOW THEREFORE, be it RESOLVED, as it hereby resolved to authorize Hon. Demetrio T. Comendador to enforce and order the

Coronado’s to demolish the building constructed on the space previously rented to them in order to give way for the construct ion of

a new municipal market building.

RESOLVED FURTHER, to authorize Demetrio T. Comendador, Honorable Mayor of Nagcarlan to file an Unlawful Detainer Case with

damages for the expenses incurred due to the delay in the completion of the project if the Coronado’s continuously resists the

order.

On 3 September 1993, Visitacion wrote a reply letter to Mayor Comendador saying that: (1) the lease contract was still existing and

legally binding; (2) she was willing to vacate the store as long as same place and area would be given to her in the new public

market; and (3) in case her proposals are not acceptable to Mayor Comendador, for the latter to just file an unlawful detainer case

against her pursuant to Sangguniang Bayan Resolution No. 156. Pertinent portions of the letter read:

x x x With all due respect to the resolution of the Municipal Council and the opinion rendered by the Laguna Asst. Provincial

Prosecutor, it is my considered view, however, arrived at after consultation with my legal counsel, that our existing lease contract is

still legally binding and in full force and effect. Lest I appear to be defiant, let me reiterate to you and the council that we are willing

to vacate the said building provided that a new contract is executed granting to us the same space or lot and the same area. I believe

that our proposal is most reasonable and fair under the circumstance. If you are not amenable to the said proposal, I concur with the

position taken by the Council for you to file the appropriate action in court for unlawful detainer to enable our court to finally thresh

out our differences.14

1avvphi1

On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to Visitacion ordering her to vacate the portion of

the public market she was occupying within 15 days from her receipt of the letter; else, a court action will be filed against her.

On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No. 183 authorizing Mayor Comendador to

demolish the store being occupied by Visitacion using legal means. The significant portion of the Resolution reads:

Kung kaya ang Sangguniang Bayan ay buong pagkakaisang IPINASIYA: Ang pagbibigay kapangyarihan kay Kgg. Demetrio T.

Comendador na ipagiba ang anumang istrakturang nagiging sagabal sa mabilis at maayos na pagbabangon ng pamilihang bayan.15

On 14 October 1993, Municipal Administrator Paulino S. Asilo, Jr. (Asilo) also sent a letter16

to Visitacion informing her of the

impending demolition of her store the next day. Within the same day, Visitacion wrote a reply letter17

to Asilo, alleging that there is

no legal right to demolish the store in the absence of a court order and that the Resolutions did not sanction the demolition of her

store but only the filing of an appropriate unlawful detainer case against her. She further replied that if the demolition will take

place, appropriate administrative, criminal and civil actions will be filed against Mayor Comendador, Asilo and all persons who will

take part in the demolition.

On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan Resolution Nos. 183 and 156 authorized the

demolition of the store with Asilo and Angeles supervising the work.

Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost of the demolished property as

amounting to P437,900.0018

On 19 August 1994, Visitacion, together with her husband Cesar Bombasi (Spouses Bombasi) filed with the Regional Trial Court of

San Pablo City, Laguna a Civil Case19

for damages with preliminary injunction against the Municipality of Nagcarlan, Laguna, Mayor

Demetrio T. Comendador, Paulino S. Asilo, Jr., and Alberto S. Angeles. The complaint was soon after amended to include the Spouses

Benita and Isagani Coronado and Spouses Alida and Teddy Coroza as formal defendants because they were then the occupants of

the contested area.

The spouses prayed for the following disposition:

1. RESTRAINING or ENJOINING defendant Municipality and defendant Municipal Mayor from leasing the premises subject of

lease Annex "A" hereof, part of which is now occupied by PNP Outpost and by the Municipal Collectors’ Office, and the

equivalent adjacent area thereof, and to cause the removal of said stalls;

2. UPHOLDING the right of plaintiffs to occupy the equivalent corner area of the leased areas being now assigned to other

persons by defendants Municipality and/or by defendant Municipal Mayor, and to allow plaintiffs to construct their stalls

thereon;

3. MAKING the injunction permanent, after trial;

4. ORDERING defendants to pay plaintiffs, jointly and severally, the following –

(a) P437,900.00 for loss of building/store and other items therein;

(b) P200,000.00 for exemplary damages;

(c) P200,000.00 for moral damages;

(d) P30,.00 for attorney’s fees and P700.00 for every attendance of counsel in court.

5. GRANTING further reliefs upon plaintiffs as justice and equity may warrant in the premises.20

Spouses Bombasi, thereafter, filed a criminal complaint21

against Mayor Comendador, Asilo and Angeles for violation of Sec. 3(e) of

Republic Act No. 3019 otherwise known as the "Anti-Graft and Corrupt Practices Act" before the Office of the Ombudsman. On 22

February 1996, an Information22

against Mayor Comendador, Asilo and Angeles was filed, which reads:

That on or about October 15, 1993, at Nagcarlan, Laguna, Philippines, and within the jurisdiction of this Honorable Court, the above-

named accused, all public officers, accused Demetrio T. Comendador, being then the Municipal Mayor, accused Paulino S. Asilo, Jr.

being then the Municipal Administrator and accused Alberto S. Angeles being then the Municipal Planning and Development

Coordinator, all of the Municipality of Nagcarlan, Laguna, committing the crime herein charged in relation to, while in the

performance and taking advantage of their official functions, conspiring and confederating with each other, and with evident bad

faith, manifest partiality or through gross inexcusable negligence, did then and there willfully, unlawfully, criminally cause the

demolition of a public market stall leased by the municipal government in favor of one Visitacion Coronado-Bombasi without legal or

justifiable ground therefor, thus, causing undue injury to the latter in the amount of PESOS: FOUR HUNDRED THIRTY SEVEN

THOUSAND AND NINE HUNDRED ONLY (P437,900.00).

Upon their arraignments, all the accused entered their separate pleas of "Not Guilty."

On 4 March 1997, the Sandiganbayan promulgated a Resolution ordering the consolidation of Civil Case No. SP-4064 (94)23

with

Criminal Case No. 23267 pending before the Third Division pursuant to Section 4, Presidential Decree No. 1606, which pertinently

reads:

Any provision of law or Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for the

recovery of civil liability arising from the offense charged shall at all times be simultaneously instituted with, and jointly determined

in the same proceeding by the Sandiganbayan or the appropriate courts, the filing of the criminal action being deemed to necessarily

carry with it the filing of the civil action, and no right to reserve the filing of such civil action separately from the criminal action shall

be recognized; Provided, however, that where the civil action had heretofore been filed separately but judgment therein has not yet

been rendered, and the criminal case is hereafter filed with the Sandiganbayan or the appropriate court, said civil action shall be

transferred to the Sandiganbayan or the appropriate court as the case may be, for consolidation and joint determination with the

criminal action, otherwise the separate civil action shall be deemed abandoned.24

During the pendency of the case, Alberto S. Angeles died on 16 November 1997. Accordingly, the counsel of Angeles filed a motion

to drop accused Angeles. On 22 September 1999, the Third Division of Sandiganbayan issued an Order25

DISMISSING the case against

Angeles. The germane portion of the Order reads:

In view of the submission of the death certificate of accused/defendant Alberto S. Angeles, and there being no objection on the part

of the Public Prosecutor, cases against deceased accused/defendant Angeles only, are hereby DISMISSED.

The death of Mayor Comendador followed on 17 September 2002. As a result, the counsel of the late Mayor filed on 3 March 2003 a

Manifestation before the Sandiganbayan informing the court of the fact of Mayor Comendador’s death.

On 28 April 2003, the Sandiganbayan rendered a decision, the dispositive portion of which reads as follows:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

In Criminal Case No. 23267, the court finds accused Demetrio T. Comendador and Paulino S. Asilo, Jr. guilty beyond reasonable

doubt of violation of Sec. 3(e) of Republic Act. No. 3019 as amended, and in the absence of aggravating and mitigating

circumstances, applying the Indeterminate Sentence Law, said accused are sentenced to suffer the indeterminate penalty of 6 years

and 2 months imprisonment as minimum to 10 years and 1 day as maximum.

The order of the court dated September 22, 1999 dismissing the cases against the accused Alberto S. Angeles, who died on

November 16, 1997 is hereby reiterated.

In Civil Case No. 4064, defendants Municipality of Nagcarlan, Laguna, Demetrio T. Comendador and Paulino S. Asilo, Jr. are hereby

ordered jointly and severally to pay plaintiff P437,900.00 as actual damages for the destruction of the store; P100,000.00 as moral

damages; P30,000.00 as attorney’s fees, and to pay the cost of the suit. The prayer for exemplary damages is denied as the court

found no aggravating circumstances in the commission of the crime.

In view of this court’s finding that the defendant spouses Alida and Teddy Coroza are lawful occupants of the subject market stalls

from which they cannot be validly ejected without just cause, the complaint against them is dismissed. The complaint against

defendant spouses Benita and Isagani Coronado is likewise dismissed, it appearing that they are similarly situated as the spouses

Coroza. Meanwhile, plaintiff Visitacion Bombasi is given the option to accept market space being given to her by the municipality,

subject to her payment of the appropriate rental and permit fees.

The prayer for injunctive relief is denied, the same having become moot and academic.

The compulsory counterclaim of defendant Comendador is likewise denied for lack of merit.26

Within the same day, Asilo, through his counsel, filed a Motion for Reconsideration27

of the Decision alleging that there was only an

error of judgment when he complied with and implemented the order of his superior, Mayor Comendador. He likewise alleged that

there is no liability when a public officer commits in good faith an error of judgment. The Sandiganbayan, on its Resolution28

dated

21 July 2003 denied the Motion for Reconsideration on the ground that good faith cannot be argued to support his cause in the face

of the court’s finding that bad faith attended the commission of the offense charged. The Court further explained that the invocation

of compliance with an order of a superior is of no moment for the "demolition [order] cannot be described as having the semblance

of legality inasmuch as it was issued without the authority and therefore the same was patently illegal."29

The counsel for the late Mayor also filed its Motion for Reconsideration30

on 12 May 2003 alleging that the death of the late Mayor

had totally extinguished both his criminal and civil liability. The Sandiganbayan on its Resolution31

granted the Motion insofar as the

extinction of the criminal liability is concerned and denied the extinction of the civil liability holding that the civil action is an

independent civil action.

Hence, these Petitions for Review on Certiorari.32

Petitioner Asilo argues that in order to sustain conviction under Sec. 3(e) of Republic Act No. 3019 or "The Anti-Graft and Corrupt

Practices Act," the public officer must have acted with manifest partiality, evident bad faith or gross negligence. He also contended

that he and his co-accused acted in good faith in the demolition of the market and, thereby, no liability was incurred.

On the other hand, Petitioner Victoria argues that the death of Mayor Comendador prior to the promulgation of the decision

extinguished NOT ONLY Mayor Comendador’s criminal liability but also his civil liability. She also asserted good faith on the part of

the accused public officials when they performed the demolition of the market stall. Lastly, she contended that assuming arguendo

that there was indeed liability on the part of the accused public officials, the actual amount of damages being claimed by the

Spouses Bombasi has no basis and was not duly substantiated.

Liability of the accused public officials

under Republic Act No. 3019

Section 3(e) of Republic Act No. 3019 provides:

In addition to acts or omissions of public officers already penalized by existing law, the following shall constitute corrupt practices of

any public officer and are hereby declared to be unlawful:

x x x x

(e) Causing any undue injury to any party, including the Government, or giving any private party any unwarranted benefits,

advantage or preference in the discharge of his official, administrative or judicial functions through manifest partiality, evident bad

faith or gross inexcusable negligence. This provision shall apply to officers and employees of offices or government corporations

charged with the grant of licenses or permits or other concessions.

The elements of the offense are as follows: (1) that the accused are public officers or private persons charged in conspiracy with

them; (2) that said public officers commit the prohibited acts during the performance of their official duties or in relation to their

public positions; (3) that they caused undue injury to any party, whether the Government or a private party; (4) OR that such injury

is caused by giving unwarranted benefits, advantage or preference to the other party; and (5) that the public officers have acted

with manifest partiality, evident bad faith or gross inexcusable negligence.33

We sustain the Sandiganbayan in its finding of criminal and civil liabilities against petitioner Asilo and petitioner Mayor Comendador

as here represented by his widow Victoria Bueta.

We agree with the Sandiganbayan that it is undisputable that the first two requisites of the criminal offense were present at the

time of the commission of the complained acts and that, as to the remaining elements, there is sufficient amount of evidence to

establish that there was an undue injury suffered on the part of the Spouses Bombasi and that the public officials concerned acted

with evident bad faith when they performed the demolition of the market stall.

Causing undue injury to any party, including the government, could only mean actual injury or damage which must be established by

evidence.34

In jurisprudence, "undue injury" is consistently interpreted as "actual." Undue has been defined as "more than necessary, not

proper, [or] illegal;" and injury as "any wrong or damage done to another, either in his person, rights, reputation or property [that is,

the] invasion of any legally protected interest of another." Actual damage, in the context of these definitions, is akin to that in civil

law.35

It is evident from the records, as correctly observed by the Sandiganbayan, that Asilo and Mayor Comendador as accused below did

not deny that there was indeed damage caused the Spouses Bombasi on account of the demolition. We affirm the finding that:

xxx. Clearly, the demolition of plaintiff’s store was carried out without a court order, and notwithstanding a restraining order which

the plaintiff was able to obtain. The demolition was done in the exercise of official duties which apparently was attended by evident

bad faith, manifest partiality or gross inexcusable negligence as there is nothing in the two (2) resolutions which gave the herein

accused the authority to demolish plaintiff’s store.

"Evident bad faith" connotes not only bad judgment but also palpably and patently fraudulent and dishonest purpose to do moral

obliquity or conscious wrongdoing for some perverse motive or ill will.36

[It] contemplates a state of mind affirmatively operating

with furtive design or with some motive or self-interest or ill will or for ulterior purposes.37

It is quite evident in the case at bar that the accused public officials committed bad faith in performing the demolition.

First, there can be no merit in the contention that respondents’ structure is a public nuisance. The abatement of a nuisance without

judicial proceedings is possible if it is nuisance per se.38

Nuisance per se is that which is nuisance at all times and under any

circumstance, regardless of location and surroundings.39

In this case, the market stall cannot be considered as a nuisance per se

because as found out by the Court, the buildings had not been affected by the 1986 fire. This finding was certified to by Supervising

Civil Engineer Wilfredo A. Sambrano of the Laguna District Engineer Office.40

To quote:

An inspection has been made on the building (a commercial establishment) cited above and found out the following:

1. It is a two-storey building, sketch of which is attached.

2. It is located within the market site.

3. The building has not been affected by the recent fire.

4. The concrete wall[s] does not even show signs of being exposed to fire.41

Second, the Sangguniang Bayan resolutions are not enough to justify demolition. Unlike its predecessor law,42

the present Local

Government Code43

does not expressly provide for the abatement of nuisance.44

And even assuming that the power to abate

nuisance is provided for by the present code, the accused public officials were under the facts of this case, still devoid of any power

to demolish the store. A closer look at the contested resolutions reveals that Mayor Comendador was only authorized to file an

unlawful detainer case in case of resistance to obey the order or to demolish the building using legal means. Clearly, the act of

demolition without legal order in this case was not among those provided by the resolutions, as indeed, it is a legally impossible

provision.

Furthermore, the Municipality of Nagcarlan, Laguna, as represented by the then Mayor Comendador, was placed in estoppel after it

granted yearly business permits45

in favor of the Spouses Bombasi. Art. 1431 of the New Civil Code provides that, through estoppel,

an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the

person relying thereon. The representation made by the municipality that the Spouses Bombasi had the right to continuously

operate its store binds the municipality. It is utterly unjust for the Municipality to receive the benefits of the store operation and

later on claim the illegality of the business.

The bad faith of the petitioners completes the elements of the criminal offense of violation of Sec. 3(e) of Republic Act No. 3019. The

same bad faith serves as the source of the civil liability of Asilo, Angeles, and Mayor Comendador.

It must be noted that when Angeles died on 16 November 1997, a motion to drop him as an accused was filed by his counsel with no

objection on the part of the prosecution. The Sandiganbayan acted favorably on the motion and issued an Order dismissing all the

cases filed against Angeles. On the other hand, when Mayor Comendador died and an adverse decision was rendered against him

which resulted in the filing of a motion for reconsideration by Mayor Comendador’s counsel, the prosecution opposed the Motion

specifying the ground that the civil liability did not arise from delict, hence, survived the death of the accused. The Sandiganbayan

upheld the opposition of the prosecution which disposition was not appealed.

We note, first off, that the death of Angeles and of Mayor Comendador during the pendency of the case extinguished their criminal

liabilities.

We now hold, as did the Sandiganbayan that the civil liability of Mayor Comendador survived his death; and that of Angeles could

have likewise survived had it not been for the fact that the resolution of the Sandiganbayan that his death extinguished the civil

liability was not questioned and lapsed into finality.

We laid down the following guidelines in People v. Bayotas:46

Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability based solely

thereon. As opined by Justice Regalado, in this regard, "the death of the accused prior to final judgment terminates his criminal

liability and only the civil liability directly arising from and based solely on the offense committed, i.e., civil liability ex delicto in senso

strictiore."

Corollarily, the claim for civil liability survives notwithstanding the death of (the) accused, if the same may also be predicated on a

source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation from which the

civil liability may arise as a result of the same act or omission:

a) Law

b) Contracts

c) Quasi-contracts

d) Acts or omissions punished by law; and

e) Quasi-delicts. (Emphasis ours)

Where the civil liability survives, as explained [above], an action for recovery therefore may be pursued but only by way of filing a

separate civil action47

and subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This separate civil

action may be enforced either against the executor/administrator or the estate of the accused, depending on the source of

obligation upon which the same is based as explained above.

Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by prescription, in cases

where during the prosecution of the criminal action and prior to its extinction, the private-offended party instituted together

therewith the civil action. In such case, the statute of limitations on the civil liability is deemed interrupted during the pendency of

the criminal case, conformably with provisions of Article 1155 of the New Civil Code, which should thereby avoid any apprehension

on a possible privation of right by prescription.

Upon death of the accused pending appeal of his conviction, the criminal action is extinguished inasmuch as there is no longer a

defendant to stand as the accused; the civil action instituted therein for recovery of civil liability ex delicto is ipso facto extinguished,

grounded as it is on the criminal.48

The New Civil Code provisions under the Chapter, Human Relations, were cited by the prosecution to substantiate its argument that

the civil action based therein is an independent one, thus, will stand despite the death of the accused during the pendency of the

case.

On the other hand, the defense invoked Section 4 of Presidential Decree No. 1606, as amended by Republic Act No. 8249, in support

of its argument that the civil action was dependent upon the criminal action, thus, was extinguished upon the death of the accused.

The law provides that:

Any provision of law or the Rules of Court to the contrary notwithstanding, the criminal action and the corresponding civil action for

the recovery of civil liability arising from the offense charged shall at all times be simultaneously instituted with, and jointly

determined in the same proceeding by, the Sandiganbayan, the filing of the criminal action being deemed to necessarily carry with it

the filing of the civil action, and no right to reserve the filing of such action shall be recognized. (Emphasis ours)

We agree with the prosecution.

Death of Mayor Comendador during the pendency of the case could have extinguished the civil liability if the same arose directly

from the crime committed. However, in this case, the civil liability is based on another source of obligation, the law on human

relations.49

The pertinent articles follow:

Art. 31 of the Civil Code states:

When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may

proceed independently of the criminal proceedings and regardless of the result of the latter.

And, Art. 32(6) states:

Any public officer or employee, or any private individual, who directly or indirectly obstructs, defeats, violates or in any manner

impedes or impairs any of the following rights and liberties of another person shall be liable to the latter for damages:

(6) The right against deprivation of property without due process of law;

x x x x

In any of the cases referred to in this article, whether or not the defendant's act or omission constitutes a criminal offense, the

aggrieved party has a right to commence an entirely separate and distinct civil action for damages, and for other relief. Such civil

action shall proceed independently of any criminal prosecution (if the latter be instituted), and may be proved by a preponderance

of evidence.

As held in Aberca v. Ver:

It is obvious that the purpose of the above codal provision [Art. 32 of the New Civil Code] is to provide a sanction to the deeply

cherished rights and freedoms enshrined in the Constitution. Its message is clear; no man may seek to violate those sacred rights

with impunity. x x x.50

Indeed, the basic facts of this case point squarely to the applicability of the law on human relations. First, the complaint for civil

liability was filed way AHEAD of the information on the Anti-Graft Law. And, the complaint for damages specifically invoked

defendant Mayor Comendador’s violation of plaintiff’s right to due process. Thus:

x x x x

In causing or doing the forcible demolition of the store in question, the individual natural defendants did not only act with grave

abuse of authority but usurped a power which belongs to our courts of justice; such actuations were done with malice or in bad faith

and constitute an invasion of the property rights of plaintiff(s) without due process of law.

x x x x

The Court is in one with the prosecution that there was a violation of the right to private property of the Spouses Bombasi. The

accused public officials should have accorded the spouses the due process of law guaranteed by the Constitution and New Civil

Code. The Sangguniang Bayan Resolutions as asserted by the defense will not, as already shown, justify demolition of the store

without court order. This Court in a number of decisions51

held that even if there is already a writ of execution, there must still be a

need for a special order for the purpose of demolition issued by the court before the officer in charge can destroy, demolish or

remove improvements over the contested property.52

The pertinent provisions are the following:

Before the removal of an improvement must take place, there must be a special order, hearing and reasonable notice to remove.

Section 10(d), Rule 39 of the Rules of Court provides:

(d) Removal of improvements on property subject of execution. – When the property subject of execution contains improvements

constructed or planted by the judgment obligor or his agent, the officer shall not destroy, demolish or remove said improvements

except upon special order of the court, issued upon motion of the judgment obligee after due hearing and after the former has

failed to remove the same within a reasonable time fixed by the court.

The above-stated rule is clear and needs no interpretation. If demolition is necessary, there must be a hearing on the motion filed

and with due notices to the parties for the issuance of a special order of demolition.53

This special need for a court order even if an ejectment case has successfully been litigated, underscores the independent basis for

civil liability, in this case, where no case was even filed by the municipality.

The requirement of a special order of demolition is based on the rudiments of justice and fair play. It frowns upon arbitrariness and

oppressive conduct in the execution of an otherwise legitimate act. It is an amplification of the provision of the Civil Code that every

person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe

honesty and good faith.54

Notably, the fact that a separate civil action precisely based on due process violations was filed even ahead of the criminal case, is

complemented by the fact that the deceased plaintiff Comendador was substituted by his widow, herein petitioner Victoria who

specified in her petition that she has "substituted him as petitioner in the above captioned case." Section 1, Rule III of the 1985 Rules

in Criminal Procedure mentioned in Bayotas is, therefore, not applicable. Truly, the Sandiganbayan was correct when it maintained

the separate docketing of the civil and criminal cases before it although their consolidation was erroneously based on Section 4 of

Presidential Decree No. 1606 which deals with civil liability "arising from the offense charged."

We must, however, correct the amount of damages awarded to the Spouses Bombasi.

To seek recovery of actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty,

premised upon competent proof and on the best evidence obtainable.55

In this case, the Court finds that the only evidence

presented to prove the actual damages incurred was the itemized list of damaged and lost items56

prepared by Engineer Cabrega, an

engineer commissioned by the Spouses Bombasi to estimate the costs.

As held by this Court in Marikina Auto Line Transport Corporation v. People of the Philippines,57

x x x [W]e agree with the contention of petitioners that respondents failed to prove that the damages to the terrace caused by the

incident amounted to P100,000.00. The only evidence adduced by respondents to prove actual damages claimed by private

respondent were the summary computation of damage made by Engr. Jesus R. Regal, Jr. amounting to P171,088.46 and the receipt

issued by the BB Construction and Steel Fabricator to private respondent for P35,000.00 representing cost for carpentry works,

masonry, welding, and electrical works. Respondents failed to present Regal to testify on his estimation. In its five-page decision, the

trial court awarded P150,000.00 as actual damages to private respondent but failed to state the factual basis for such award. Indeed,

the trial court merely declared in the decretal portion of its decision that the "sum of P150,000.00 as reasonable compensation

sustained by plaintiff for her damaged apartment." The appellate court, for its part, failed to explain how it arrived at the amount of

P100,000.00 in its three-page decision. Thus, the appellate court merely declared:

With respect to the civil liability of the appellants, they contend that there was no urgent necessity to completely demolish the

apartment in question considering the nature of the damages sustained as a result of the accident. Consequently, appellants

continue, the award of P150,000.00 as compensation sustained by the plaintiff-appellee for her damaged apartment is an

unconscionable amount.

Further, in one case,58

this Court held that the amount claimed by the respondent-claimant’s witness as to the actual amount of

damages "should be admitted with extreme caution considering that, because it was a bare assertion, it should be supported by

independent evidence." The Court further said that whatever claim the respondent witness would allege must be appreciated in

consideration of his particular self-interest.59

There must still be a need for the examination of the documentary evidence presented

by the claimants to support its claim with regard to the actual amount of damages.

The price quotation made by Engineer Cabrega presented as an exhibit60

partakes of the nature of hearsay evidence considering that

the person who issued them was not presented as a witness.61

Any evidence, whether oral or documentary, is hearsay if its

probative value is not based on the personal knowledge of the witness but on the knowledge of another person who is not on the

witness stand. Hearsay evidence, whether objected to or not, has no probative value unless the proponent can show that the

evidence falls within the exceptions to the hearsay evidence rule.62

Further, exhibits do not fall under any of the exceptions provided

under Sections 37 to 47 of Rule 130 of the Rules of Court.

Though there is no sufficient evidence to award the actual damages claimed, this Court grants temperate damages for P200,000.00

in view of the loss suffered by the Spouses Bombasi. Temperate damages are awarded in accordance with Art. 2224 of the New Civil

Code when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be

proven with certainty. The amount of temperate or moderated damages is usually left to the discretion of the courts but the same

should be reasonable, bearing in mind that the temperate damages should be more than nominal but less than compensatory.63

Without a doubt, the Spouses Bombasi suffered some form of pecuniary loss in the impairment of their store. Based on the record of

the case,64

the demolished store was housed on a two-story building located at the market’s commercial area and its concrete walls

remained strong and not affected by the fire. However, due to the failure of the Spouses Bombasi to prove the exact amount of

damage in accordance with the Rules of Evidence,65

this court finds that P200,000.00 is the amount just and reasonable under the

circumstances.

WHEREFORE, the instant appeal is DENIED. Accordingly, the Decision of the Sandiganbayan dated 28 April 2003 is hereby AFFIRMED

WITH MODIFICATION. The Court affirms the decision finding the accused Paulino S. Asilo, Jr. and Demetrio T. Comendador guilty of

violating Section 3(e) of Republic Act No. 3019. We declare the finality of the dismissal of both the criminal and civil cases against

Alberto S. Angeles as the same was not appealed. In view of the death of Demetrio T. Comendador pending trial, his criminal liability

is extinguished; but his civil liability survives. The Municipality of Nagcarlan, Paulino Asilo and Demetrio T. Comendador, as

substituted by Victoria Bueta Vda. De Comendador, are hereby declared solidarily liable to the Spouses Bombasi for temperate

damages in the amount of P200,000.00 and moral damages in the amount of P100,000.00.

Costs against the petitioners-appellants.

SO ORDERED.

SECOND DIVISION

G.R. No. 121810 December 7, 2001

SPOUSES INOCENCIO AND ADORACION SAN ANTONIO, petitioners,

vs.

COURT OF APPEALS AND SPOUSES MARIO AND GREGORIO GERONIMO, respondents.

QUISUMBING, J.:

This is a petition for review seeking the reversal of the decision1 dated April 28, 1995, of the Court of Appeals in CA-G.R. SP No.

35271 affirming the orders dated May 5, 1994,2 July 12, 1994

3 and September 1, 1994,

4 respectively, of the Regional Trial Court of

Malolos Bulacan, Branch 22, granting the motion for execution of compromise judgment dated September 22, 1993 in Civil Case No.

233-M-92.

The facts, as culled from the records, are as follows:

Private respondents spouses Mario and Gregoria Geronimo obtained a loan in the amount of One Million Twenty Eight Thousand

Pesos (P1,028,000) from petitioners, the spouses Inocencio and Adoracion San Antonio. To secure the loan, private respondents

mortgaged two parcels of land covered by TCT No. RT-6653 with an area of 10,390 square meters and TCT No. RT-6652 with an area

of 2,556 square meters, both situated in Barrio Tabe, Guiguinto, Bulacan. Subsequently, private respondents obtained an additional

loan of Nine Hundred Fifty Nine Pesos (P991,859) with an interest of 3.33% per month, thus making their total obligation in the

amount of Two Million Nineteen Thousand Eight Hundred Fifty Nine Pesos (P2,019,859), payable on or before February 15, 1991.

Private respondents failed to pay the loan and the interest on the due date, hence, the mortgage was extra-judicially foreclosed.

During the auction sale, petitioners, being the highest bidder bought the two parcels of land.

Before the one-year redemption period expired, private respondents filed a complaint for annulment of extra-judicial foreclosure

with preliminary mandatory injunction, docketed as Civil Case No. 233-M-92, with the Regional Trial Court of Bulacan, Branch 22.

After the parties presented their respective evidence, they submitted to the court on September 16, 1993, a compromise agreement

dated August 25, 1993, the terms and conditions of which are quoted as follows:

COME NOW parties assisted by their respective counsels and before the Honorable Court most respectfully submit this

compromise agreement, the terms and conditions of which are:

1. For a consideration of TWO MILLION PESOS (P2,000,000.00) Philippine Currency in hand received today by the defendants

spouses Inocencio and Adoracion San Antonio from the plaintiffs, defendants San Antonio will execute a deed of

resale/reconveyance/redemption of that subject property covered by TCT No. RT-6653 (T-209250) of the Registry of Deeds of

Bulacan including its improvements;

2. For the release/resale/reconveyance of the other property involved in the case described in TCT No. RT-6652 (T-296744) of the

other property involved in the case described in TCT No. RT-6652 (T-296744) of the Registry of Deeds of Bulacan together with its

improvements, plaintiffs obligate themselves to transfer the ownership of the following to the defendants San Antonio.

a. That lot including its improvements situated in Brgy. Tuctucan, Municipality of Guiguinto, Bulcan, covered by TCT

No. 29832, Blk. 4, Lot No. 3 consisting of 135 square meters;

b. That lot situated in Brgy. Tuctucan, Municipality of Guiguinto, Bulcan covered by TCT No. 30078, Blk. 9, Lot 27

consisting of 78 square meters;

c. Another lot situated in Brgy. Tuctucan, Municipality of Guiguinto, Bulcan, covered by TCT No. 30079, Blk. No. 38

consisting of 75 square meters.

Within six (6) months from signing of this compromise agreement simultaneous to which delivery of the title to the afore-

mentioned properties in the names of the defendants San Antonio, the defendants San Antonio will execute the

corresponding instrument of resale/reconveyance/redemption over that properly together with its improvements covered

by TCT No. RT-6652 (T-296744), for the purpose of the cancellation of the annulment of the sale in the title subject to the

condition that should plaintiffs fail to deliver the titles to the three lots heretofore mentioned to the defendants San

Antonio, the said plaintiffs shall be deemed to have waived and renounced any all rights, claims and demands whatsoever

they may have over that property covered by TCT No. RT-6652 (T-296744) including its improvements and thenceforth bind

themselves to respect the right of ownership, and possession of the defendants San Antonio over said property, or to pay

Two Million Pesos (P2,000,000.00) within the same period;

3. That the parties further agree to set aside any claim, damages and counter-claims they may have against each other;

4. That in the meantime, the possession of the plaintiffs of the subject property covering TCT No. 6652 (T-296744) and TCT

No. RT-6653 (T-209250) shall it be respect; (SIC)

5. This compromise agreement shall be in full settlement of the obligations of the plaintiffs with respect to Kasulatan ng

Sanglaan dated February 14, 1989 and the Susog ng Kasulatan ng Sanglaan dated July 16, 1990, subject matter of the

complaint, and those related there.

6. This compromise agreement is immediately executory (underscoring supplied).5

Finding the above to be in order, the trial court approved the same in its order dated September 22, 1993, thus:

A careful perusal of the Compromise Agreement dated August 25, 1993 reveals that the terms and conditions thereof are

not contrary to law, morals and public policy.

ACCORDINGLY, the compromise agreement dated August 25, 1993 is hereby APPROVED. The parties are enjoined to comply

faithfully with their obligation under said agreement.

SO ORDERED.6

In accordance with the stipulations in paragraph 1 of the Compromise Agreement, petitioners executed a Certificate of Redemption

and Cancellation of Sale covering TCT No. RT-6653 after private respondents paid them Two Million Pesos (P2,000,000). Private

respondents, however, failed to transfer the ownership and deliver the titles of the three parcels of land described in paragraph 2 of

the agreement or to pay 2 Million Pesos within the six-month period from August 25, 1993. It was only on March 4, 1994, after the

lapse of six months that private respondents delivered the three titles to petitioners. As the delivery was beyond the agreed six-

month period, petitioners refused to accept the same or execute an instrument for the resale, reconveyance or redemption of the

property covered by TCT No. RT-6652. Consequently, TCT No. RT-6652 was cancelled and in lieu thereof, TCT No. T-47229 was issued

in the names of petitioners.

Private respondents filed a motion for execution of the September 22, 1993 order with the trial court. This was granted on May 5,

1994. Petitioners filed a motion for reconsideration but this was denied on July 12, 1994. A second motion for reconsideration by

petitioners was likewise denied in an order dated September 1, 1994.

Petitioners filed a Petition for Certiorari with application for a Temporary Restraining Order and/or Writ of Preliminary Injunction

with the Court of Appeals. As said earlier, the Court of Appeals denied the petition on April 28, 1995, thus:

WHEREFORE, the petition for certiorari is hereby DENIED DUE COURSE, and is DISMISSED. The Orders of respondent court

dated May 1[5], July 12, and September 1, 1994 are AFFIRMED.

SO ORDERED.7

Hence this petition for review wherein petitioners aver that the Court of Appeals erred in:

I. …RULING THAT THE ORDER DATED MAY 5, 1994 DID NOT SUBSTANTIALLY AMEND THE FINAL AND EXECUTORY

JUDGMENT RENDERED BASED ON A COMPROMISE AGREEMENT.

II. …RULING THAT THE PRINCIPLE OF EQUITY IS A GROUND TO JUSTIFY THE AMENDMENT OF A FINAL AND EXECUTORY

JUDGMENT.

III. …RULING THAT THE DELAY IN THE DELIVERY OF THE TITLES IS ATTRIBUTABLE TO THE REGISTER OF DEEDS OF BULACAN.

IV. …APPLYING ARTICLE 1191 OF THE NEW CIVIL CODE.

V. …NOT RULING THAT THE COMPROMISE AGREEMENT IS IMMEDIATELY EXECUTORY AS PROVIDED IN PARAGRAPH 6

THEREOF.

VI. … NOT RULING THAT PETITIONERS HAVE ALREADY COMPLIED WITH PARAGRAPH 1 OF THE COMPROMISE AGREEMENT.8

In sum, petitioners raise the following issues for our resolution:

1. Did the trial court err in granting the writ to execute the compromise judgment?

2. Is Article 1191 of the New Civil Code applicable in this case?

On the first issue, did the trial court err in granting the writ to execute the compromise judgment? Petitioners claim that the trial

court did. The compromise agreement approved by the trial court in its order dated September 22, 1993, provided that private

respondents had six months within which to deliver the titles. If they failed, ownership of the land covered by TCT No. RT-6652

would be transferred to petitioners. Petitioners contend that judgement based on a compromise is conclusive upon the parties and

is immediately executory. It has the force and effect of res judicata, hence it cannot be modified. The trial court therefore, cannot

compel petitioners, via a writ of execution, to accept the three titles beyond the six-month period, because it is in effect an

amendment to the compromise agreement, petitioners said. They explain that even on equitable considerations this was not

allowed because once a decision becomes final, the court which rendered it loses jurisdiction over the case and it can no longer be

modified except for clerical errors.

Petitioners also contend that private respondents should not blame the Register of Deeds for the delay in the delivery of the three

titles since private respondents submitted the registration documents to the Register of Deeds only on March 2, 1994, beyond the

six-month period deadline.

Further, petitioners deny that they are guilty of delay for not executing the deed of resale, reconveyance or redemption despite

their receipt of two million pesos. They said that as early as August 25, 1993, they already executed a Certificate of Redemption and

Cancellation of Sale of the land covered by TCT No. RT-6653.

Private respondents counter that there has been no modification of the final judgment when the trial judge issued the writ of

execution, as the judge issued the writ of execution, as the judge was merely performing a ministerial duty. Also, private

respondents deny that they delivered the three titles late and if ever the delivery was delayed it was the Register of Deeds who was

to blame. Private respondents additionally point out that in reciprocal obligations, like the ones in this case, delay sets in only when

one part fulfills his obligation and the other is unable to perform his part of the obligation. Likewise, a person obligated to deliver

something incurs in delay only after demand. As herein petitioners have not yet made demand and as they have not yet performed

their part of the agreement, which was the execution of the deed of reconveyance, delay by private respondents has not yet

occurred.

We find petitioners' petition impressed with merit.

A compromise agreement, once approved by final order of the court, has the force of res judicata between the parties and should

not be disturbed except for vices of consent or forgery.9 In this case, the compromise agreement clearly provided private

respondents six months, i.e., from August 25, 1993 to February 25, 1994, to deliver the titles to the three parcels of land described in

the agreement. If after the lapse of the said period and no delivery is yet made by private respondents, ownership over the land

covered by TCT No. RT-6652 would be transferred to petitioners. As the facts of this case show, private respondents failed to deliver

the titles on February 25, 1994, as it was only on March 4, 1994, when they gave the titles to petitioners. Hence, pursuant to the

terms of the compromise agreement, petitioners could rightfully refuse acceptance of the titles. It was error therefore for the trial

court to grant the writ of execution in favor of private respondents because it effectively compelled petitioners to accept delivery of

the three titles in exchange for the release of the land covered by TCT No. RT-6652 even after the lapse of the six-month period.

Private respondents claim that the trial court, in issuing the writ, was merely performing a ministerial duty. While it becomes the

trial court's ministerial duty to issue a writ of execution may be refused on equitable grounds.10

In this case, it will be unjust to

petitioners if we compel them to accept the three titles despite the lapse of the agreed period. 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.11

Both the trial court and the Court of Appeals attributed to the Register of Deeds private respondents' delay in the delivery of the

three titles. But as shown in their decisions, private respondents submitted to the Register of Deeds the pertinent documents for

registration of the three titles in petitioners' name only on March 2, 1994, beyond the six-month period.12

Private respondents could

have done so earlier, but they did not. This only shows that private respondents did not intend to truly comply with their obligations.

As to the alleged delay on the part of petitioners in executing the Deed of Resale and Reconveyance, we find that this point serves

only to confuse the Court on the real facts of the case. Despite the fact that the compromise agreement involved two parcels of land

up for redemption, private respondents did not indicate as to which parcel of land petitioners did not execute a deed of resale.13

Nevertheless, private respondents admitted that petitioners already executed a Certificate of Redemption.14

For us, this was

sufficient compliance of petitioners' duty under the Compromise Agreement.

Lastly, is Article 1191 of the New Civil Code15

applicable in this case? According to petitioners, the Court of Appeals erred when it

found that private respondents' delay did not constitute substantial breach to warrant rescission of the compromise agreement.

They assert that they were not seeking rescission of the compromise agreement but its full enforcement regardless of whether the

delay is slight or substantial.

While indeed private respondents did not meet head on this issue, we find that it should be properly addressed. In filing the petition

before the Court of Appeals, petitioners sought the appellate court's declaration that the trial court committed grave abuse of

discretion. In their view, the trial court should have enforced the compromise agreement instead of rescinding it. Thus, it was error

for the Court of Appeals to apply Article 1191 of the New Civil Code which concerns rescission of contract. Applicable here is Article

1159 which enjoins compliance in good faith by the parties who entered into a valid contract.16

Compromise agreements are

contracts, whereby the parties undertake reciprocal obligations to avoid litigation, or put an end to one already commenced.17

WHEREFORE, the petition is GRANTED. The decision dated April 28, 1995, and resolution dated September 11, 1995, of the Court of

Appeals in CA-G.R. SP No. 35271 are REVERSED AND SET ASIDE. Accordingly, the orders dated May 5, 1994, July 12, 1994 and

September 1, 1994, of the Regional Trial Court of Malolos, Bulacan, Branch 22, are hereby declared NULL AND VOID. Private

respondents are ordered to cease and desist from disturbing the ownership and possession by petitioners of the parcel of land

covered by TCT No. RT-6652. Costs against private respondents.

SO ORDERED.

SECOND DIVISION

G.R. No. 142830 March 24, 2006

WILLIAM GOLANGCO CONSTRUCTION CORPORATION, Petitioner,

vs.

PHILIPPINE COMMERCIAL INTERNATIONAL BANK*, Respondent

D E C I S I O N

CORONA, J.:

The facts of this case are straightforward.1

William Golangco Construction Corporation (WGCC) and the Philippine Commercial International Bank (PCIB) entered into a contract

for the construction of the extension of PCIB Tower II (denominated as PCIB Tower II, Extension Project [project])2 on October 20,

1989. The project included, among others, the application of a granitite wash-out finish3 on the exterior walls of the building.

PCIB, with the concurrence of its consultant TCGI Engineers (TCGI), accepted the turnover of the completed work by WGCC in a

letter dated June 1, 1992. To answer for any defect arising within a period of one year, WGCC submitted a guarantee bond dated

July 1, 1992 issued by Malayan Insurance Company, Inc. in compliance with the construction contract.4

The controversy arose when portions of the granitite wash-out finish of the exterior of the building began peeling off and falling

from the walls in 1993. WGCC made minor repairs after PCIB requested it to rectify the construction defects. In 1994, PCIB entered

into another contract with Brains and Brawn Construction and Development Corporation to re-do the entire granitite wash-out

finish after WGCC manifested that it was "not in a position to do the new finishing work," though it was willing to share part of the

cost. PCIB incurred expenses amounting to P11,665,000 for the repair work.

PCIB filed a request for arbitration with the Construction Industry Arbitration Commission (CIAC) for the reimbursement of its

expenses for the repairs made by another contractor. It complained of WGCC’s alleged non-compliance with their contractual terms

on materials and workmanship. WGCC interposed a counterclaim for P5,777,157.84 for material cost adjustment.

The CIAC declared WGCC liable for the construction defects in the project.5 WGCC filed a petition for review with the Court of

Appeals (CA) which dismissed it for lack of merit.6 Its motion for reconsideration was similarly denied.

7

In this petition for review on certiorari, WGCC raises this main question of law: whether or not petitioner WGCC is liable for defects

in the granitite wash-out finish that occurred after the lapse of the one-year defects liability period provided in Art. XI of the

construction contract.8

We rule in favor of WGCC.

The controversy pivots on a provision in the construction contract referred to as the defects liability period:

ARTICLE XI – GUARANTEE

Unless otherwise specified for specific works, and without prejudice to the rights and causes of action of the OWNER under Article

1723 of the Civil Code, the CONTRACTOR hereby guarantees the work stipulated in this Contract, and shall make good any defect

in materials and workmanship which [becomes] evident within one (1) year after the final acceptance of the work. The

CONTRACTOR shall leave the work in perfect order upon completion and present the final certificate to the ENGINEER promptly.

If in the opinion of the OWNER and ENGINEER, the CONTRACTOR has failed to act promptly in rectifying any defect in the work

which appears within the period mentioned above, the OWNER and the ENGINEER may, at their own discretion, using the Guarantee

Bond amount for corrections, have the work done by another contractor at the expense of the CONTRACTOR or his bondsmen.

However, nothing in this section shall in any way affect or relieve the CONTRACTOR’S responsibility to the OWNER. On the

completion of the [w]orks, the CONTRACTOR shall clear away and remove from the site all constructional plant, surplus materials,

rubbish and temporary works of every kind, and leave the whole of the [s]ite and [w]orks clean and in a workmanlike condition to

the satisfaction of the ENGINEER and OWNER.9 (emphasis ours)

Although both parties based their arguments on the same stipulations, they reached conflicting conclusions. A careful reading of the

stipulations, however, leads us to the conclusion that WGCC’s arguments are more tenable.

Autonomy of contracts

The autonomous nature of contracts is enunciated in Article 1306 of the Civil Code.

Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient,

provided they are not contrary to law, morals, good customs, public order, or public policy.

Obligations arising from contracts have the force of law between the parties and should be complied with in good faith.10

In

characterizing the contract as having the force of law between the parties, the law stresses the obligatory nature of a binding and

valid agreement.

The provision in the construction contract providing for a defects liability period was not shown as contrary to law, morals, good

customs, pubic order or public policy. By the nature of the obligation in such contract, the provision limiting liability for defects and

fixing specific guaranty periods was not only fair and equitable; it was also necessary. Without such limitation, the contractor would

be expected to make a perpetual guarantee on all materials and workmanship.

The adoption of a one-year guarantee, as done by WGCC and PCIB, is established usage in the Philippines for private and

government construction contracts.11

The contract did not specify a different period for defects in the granitite wash-out finish;

hence, any defect therein should have been brought to WGCC’s attention within the one-year defects liability period in the contract.

We cannot countenance an interpretation that undermines a contractual stipulation freely and validly agreed upon. The courts will

not relieve a party from the effects of an unwise or unfavorable contract freely entered into.12

[T]he inclusion in a written contract for a piece of work [,] such as the one in question, of a provision defining a warranty period

against defects, is not uncommon. This kind of a stipulation is of particular importance to the contractor, for as a general rule, after

the lapse of the period agreed upon therein, he may no longer be held accountable for whatever defects, deficiencies or

imperfections that may be discovered in the work executed by him.13

Interpretation of contracts

To challenge the guarantee period provided in Article XI of the contract, PCIB calls our attention to Article 62.2 which provides:

62.2 Unfulfilled Obligations

Notwithstanding the issue of the Defects Liability Certificate[,] the Contractor and the Owner shall remain liable for the fulfillment

of any obligation[,] incurred under the provisions of the Contract prior to the issue of the Defects Liability Certificate[,] which

remains unperformed at the time such Defects Liability Certificate is issued[. And] for the purpose of determining the nature and

extent of any such obligation, the Contract shall be deemed to remain in force between the parties of the Contract. (emphasis ours)

The defects in the granitite wash-out finish were not the "obligation" contemplated in Article 62.2. It was not an obligation that

remained unperformed or unfulfilled at the time the defects liability certificate was issued. The alleged defects occurred more than a

year from the final acceptance by PCIB.

An examination of Article 1719 of the Civil Code is enlightening:

Art. 1719. Acceptance of the work by the employer relieves the contractor of liability for any defect in the work, unless:

(1) The defect is hidden and the employer is not, by his special knowledge, expected to recognize the same; or

(2) The employer expressly reserves his rights against the contractor by reason of the defect.

The lower courts conjectured that the peeling off of the granitite wash-out finish was probably due to "defective materials and

workmanship." This they characterized as hidden or latent defects. We, however, do not agree with the conclusion that the alleged

defects were hidden.

First, PCIB’s team of experts14

(who were specifically employed to detect such defects early on) supervised WGCC’s workmanship.

Second, WGCC regularly submitted progress reports and photographs. Third, WGCC worked under fair and transparent

circumstances. PCIB had access to the site and it exercised reasonable supervision over WGCC’s work. Fourth, PCIB issued several

"punch lists" for WGCC’s compliance before the issuance of PCIB’s final certificate of acceptance. Fifth, PCIB supplied the materials

for the granitite wash-out finish. And finally, PCIB’s team of experts gave their concurrence to the turnover of the project.

The purpose of the defects liability period was precisely to give PCIB additional, albeit limited, opportunity to oblige WGCC to make

good any defect, hidden or otherwise, discovered within one year.

Contrary to the CA’s conclusion, the first sentence of the third paragraph of Article XI on guarantee previously quoted did not

operate as a blanket exception to the one-year guarantee period under the first paragraph. Neither did it modify, extend, nullify or

supersede the categorical terms of the defects liability period.

Under the circumstances, there were no hidden defects for which WGCC could be held liable. Neither was there any other defect for

which PCIB made any express reservation of its rights against WGCC. Indeed, the contract should not be interpreted to favor the one

who caused the confusion, if any. The contract was prepared by TCGI for PCIB.15

WHEREFORE, the petition is hereby GRANTED. The decision of the Court of Appeals in CA-G.R. SP No. 41152 is ANNULED and SET

ASIDE.

SO ORDERED.

EN BANC

G.R. No. L-5671 August 24, 1910

BENITO DE LOS REYES, plaintiff-appellant,

vs.

VERONICA ALOJADO, defendant-appellee.

Ramon Diokno, for appellant.

No appearance for appellee.

TORRES, J.:

On or about January 22, 1905, Veronica Alojado received, as a loan, from Benito de los Reyes that the sum P67 .60, for the purpose

of paying a debt she owed to Olimpia Zaballa. It was agreed between Alojado and Reyes that the debtor should remain as a servant

in the house and in the service of her creditor, without any renumeration whatever, until she should find some one who would

furnish her with the said sum where with to repeat the loan. The defendant, Veronica Alojado, afterwards left the house of the

plaintiff, on March 12, 1906, without having paid him her debt, nor did she do so at any subsequent date, notwithstanding his

demands. The plaintiff, therefore, on the 15th of march, 1906, filed suit in the court of the justice of the peace of Santa Rosa, La

Laguna, against Veronica Alojado to recover the said sum or, in a contrary case, to compel her to return to his service. The trial

having been had, the justice of the peace, on April 14, 1906, rendered judgment whereby he sentenced the defendant to pay to the

plaintiff the sum claimed and declared that, in case the debtor should be insolvent, she should be obliged to fulfill the agreement

between her and the plaintiff. The costs of the trial were assessed against the defendant.

The defendant appealed from the said judgment to the Court of First Instance to which the plaintiff, after the case had been

docketed by the clerk of court, made a motion on May 4, 1906, requesting that the appeal interposed by the defendant be

disallowed, with the costs of both instances against her. The grounds alleged in support of this motion. were that the appeal had

been filed on the sixth day following that when judgment was rendered in the trial, on April 14th, and that it, therefore, did not

come within the period of the five days prescribed by section 76 of the Code of Civil Procedure, as proven by the certificate issued by

the justice of the peace of Santa Rosa. The Court of First Instance, however, by order of July 16, 1906, overruled the motion of the

plaintiff-appellee, for the reasons therein stated, namely, that the defendant was not notified of the judgment rendered in the case

on April 14th of that year until the 16th of the same month, and the appeal having been filed four days later, on the 20th, it could

having seen that the five days specified by section 76 of the Code of Civil Procedure had not expired. The plaintiff was advised to

reproduce his complaint within ten days, in order that due procedure might he had thereupon.

The plaintiff took exception to the aforementioned order and at the same time reproduced the complaint he had filed in the court of

the justice of the peace, in which, after relating to the facts hereinbefore stated, added that the defendant, besides the sum above-

mentioned, had also received from the plaintiff, under the same conditions, various small amounts between the dates of January 22,

1905, and March 10, 1906, aggregating altogether P11.97, and that they had not been repaid to him. He therefore asked that

judgment be rendered sentencing the defendant to comply with the said contract and to pay to the plaintiff the sums referred to,

amounting in all to P79.57, and that until this amount should have been in paid, the defendant should remain gratuitously in the

service of plaintiff's household, and that she should pay the costs of the trial.

The defendant, in her written answer of August 15, 1906, to the aforesaid complaint, denied the allegations contained in paragraphs

1 and 2 of the complaint and alleged that, although she had left the plaintiff's service, it was because the latter had paid her no sum

whatever for the services she had rendered in his house. The defendant likewise denied the conditions expressed in paragraph 4 of

the complaint, averring that the effects purchased, to the amount of P11.97, were in the possession of the plaintiff, who refused to

deliver them to her. She therefore asked that she be absolved from the complaint and that the plaintiff be absolved from the

complaint the wages due her for the services she had rendered.

The case came to trial on October 19, 1906, and, after the production of testimony by both parties, the judge, on November 21st of

the same year, rendered judgment absolving the defendant from the complain, with the costs against the plaintiff, and sentencing

the latter to pay to the former the sum of P2.43, the balance found to exist between the defendant's debt of P79.57 and the wages

due her by the plaintiff, which amounted to P82. The plaintiff, on the 6th of December, filed a written exception to the judgment

aforesaid through the regular channels, and moved for a new trial on the ground that the findings of fact set forth in the judgment

were manifestly contrary to the weight of the evidence. This motion was overruled on the 17th of the same month, to which

exception was taken by the appellant, who afterwards filed the proper bill of exceptions, which was approved, certified, and

forwarded to the clerk of this court.

The present suit, initiated in a justice of the peace court and appealed to the Court of First Instance of La Laguna at a time prior to

the enactment of Act No. 1627, which went into effect on July 1, 1907, which limited to two instances the procedure to be observed

in verbal actions, concerns the collection of certain sum received as a loan by the defendant from the plaintiff, and of the wages

earned by the former for services rendered as a servant in the said plaintiff's house.

Notwithstanding the denial of the defendant, it is a fact clearly proven, as found in the judgment appealed from, that the plaintiff

did deliver to Hermenegildo de los Santos the sum of P67.60 to pay a debt was paid by De los Santos with the knowledge and in

behalf of the said defendant who, of her free will, entered the service of the plaintiff and promised to pay him as soon as she should

find the money wherewith to do so.

The duty to pay the said sum, as well as that of P11.97 delivered to the defendant in small amounts during the time that she was in

the plaintiff's house, is unquestionable, inasmuch as it is a positive debt demandable of the defendant by her creditor. (Arts. 1754,

1170, Civil Code.) However, the reason alleged by the plaintiff as a basis for the loan is untenable, to wit, that the defendant was

obliged to render service in his house as a servant without remuneration whatever and to remain therein so long as she had not paid

her debt, inasmuch as this condition is contrary to law and morality. (Art. 1255, Civil Code.)

Domestic services are always to be remunerated, and no agreement may subsist in law in which it is stipulated that any domestic

service shall be absolutely gratuitous, unless it be admitted that slavery may be established in this country through a covenant

entered into between the interested parties.

Articles 1583, 1584, and 1585 of the Civil Code prescribe rules governing the hiring of services of domestics servants, the conditions

of such hire, the term during which the service may rendered and the wages that accrue to the servant, also the duties of the latter

and of the master. The first of the articles cited provides that a hiring for life by either of the contracting parties is void, and,

according to the last of three articles just mentioned, besides what is prescribed in the preceding articles with regard to masters and

servants, the provisions of special laws and local ordinances shall be observed.

During the regime of the former sovereignty, the police regulations governing domestic service, of the date of September 9, 1848,

were in force, article 19 of which it is ordered that all usurious conduct toward the servants and employees of every class is

prohibited, and the master who, under pretext of an advance of pay or of having paid the debts or the taxes of his servant, shall

have succeeded in retaining the latter in his service at his house, shall be compelled to pay to such servant all arrears due him and

any damages he may have occasioned him, and the master shall also be fined.

The aforementioned article 1585 of the Civil Code undoubtedly refers to the provisions of the regulations just cited.

When legal regulations prohibit even a usurious contract and all abuses prejudicial to subordinates and servant, in connection with

their salaries and wages, it will be understood at once that the compact whereby service rendered by a domestic servant in the

house of any inhabitant of this country is to be gratuitous, is in all respects reprehensible and censurable; and consequently, the

contention of the plaintiff, that until the defendant shall have paid him her debt she must serve him in his house gratuitously is

absolutely inadmissible.

The trial record discloses no legal reason for the rejection of the findings of fact and of law contained in the judgment appealed

from, nor for an allowance of the errors attributed appealed from, nor for an allowance of the errors attributed thereto; on the

contrary, the reasons hereinabove stated show the propriety of the said judgment.

For the foregoing reasons, and accepting those set forth in the judgment appealed from, it is proper, in our opinion, to affirm and we

hereby affirm the said judgment, with the costs against the appellant.

Arellano, C. J., Johnson, Moreland and Trent, JJ., concur.