VILLAROEL vs ESTRADA G.R. No.

47362 December 19, 1940

FACTS:
On May 9, 1912, Alejandro Callao, mother of Juan Villaroel, obtained a loan of P1,000 from spouses Mariano
Estrada and Severina payable after seven years.
Alejandra died, leaving Juan Villaroel as sole heir, Spouses Mariano Estrada and Severina also died, leaving
Bernardino Estrada as sole heir.
On August 9, 1930, Juan Villaroel signed a document in which he declared to pay the debt of his deceased
mother in the amount of P1,000 with legal interest of 12% per annum.
The Court of First Instance of Laguna ordered Juan Villaroel to pay the amount of P1,000 with an interest of
12% per annum since August 9, 1930 until full payment
Villaroel appealed.
ISSUE: Whether or not the right to prescription may be waived or renounced.

HELD: Yes, right to prescription may be waived or renounced. As a general rule, when a debt has already
prescribed, it cannot be imposed by the creditor. However, a new contract which recognizes and assumes the
prescribed debt is an exception, for it would be valid and enforceable. Hence, a person who acknowledges the
correctness of the debt and promises to pay it despite knowing that the debt has already prescribed, such as the
case at bar, waived the benefit of the prescription.

G.R. No. L-13667 April 29, 1960

PRIMITIVO ANSAY, ETC., ET AL., plaintiffs-appellants,

vs.
THE BOARD OF DIRECTORS OF THE NATIONAL DEVELOPMENT COMPANY, ET AL., defendants-appellees.

Celso A. Fernandez for appellants.

Juan C. Jimenez, for appellees.

PARAS, C. J.:

On July 25, 1956, appellants filed against appellees in the Court of First Instance of Manila a complaint praying for a 20% Christmas bonus for the years 1954 and
1955. The court a quo on appellees' motion to dismiss, issued the following order:

Considering the motion to dismiss filed on 15 August, 1956, set for this morning; considering that at the hearing thereof, only respondents appeared
thru counsel and there was no appearance for the plaintiffs although the court waited for sometime for them; considering, however, that petitioners have
submitted an opposition which the court will consider together with the arguments presented by respondents and the Exhibits marked and presented,
namely, Exhibits 1 to 5, at the hearing of the motion to dismiss; considering that the action in brief is one to compel respondents to declare a Christmas
bonus for petitioners workers in the National Development Company; considering that the Court does not see how petitioners may have a cause of
action to secure such bonus because:

(a) A bonus is an act of liberality and the court takes it that it is not within its judicial powers to command respondents to be liberal;

(b) Petitioners admit that respondents are not under legal duty to give such bonus but that they had only ask that such bonus be given to them because
it is a moral obligation of respondents to give that but as this Court understands, it has no power to compel a party to comply with a moral obligation
(Art. 142, New Civil Code.).

IN VIEW WHEREOF, dismissed. No pronouncement as to costs.

A motion for reconsideration of the afore-quoted order was denied. Hence this appeal.

Appellants contend that there exists a cause of action in their complaint because their claim rests on moral grounds or what in brief is defined by law as a natural
obligation.

Since appellants admit that appellees are not under legal obligation to give such claimed bonus; that the grant arises only from a moral obligation or the natural
obligation that they discussed in their brief, this Court feels it urgent to reproduce at this point, the definition and meaning of natural obligation.
Article 1423 of the New Civil Code classifies obligations into civil or natural. "Civil obligations are a right of action to compel their performance. Natural obligations,
not being based on positive law but on equity and natural law, do not grant a right of action to enforce their performance, but after voluntary fulfillment by the
obligor, they authorize the retention of what has been delivered or rendered by reason thereof".

It is thus readily seen that an element of natural obligation before it can be cognizable by the court is voluntary fulfillment by the obligor. Certainly retention can be
ordered but only after there has been voluntary performance. But here there has been no voluntary performance. In fact, the court cannot order the performance.

At this point, we would like to reiterate what we said in the case of Philippine Education Co. vs. CIR and the Union of Philippine Education Co., Employees (NUL)
(92 Phil., 381; 48 Off. Gaz., 5278) —

xxx xxx xxx

From the legal point of view a bonus is not a demandable and enforceable obligation. It is so when it is made a part of the wage or salary
compensation.

And while it is true that the subsequent case of H. E. Heacock vs. National Labor Union, et al., 95 Phil., 553; 50 Off. Gaz., 4253, we stated that:

Even if a bonus is not demandable for not forming part of the wage, salary or compensation of an employee, the same may nevertheless, be granted on
equitable consideration as when it was given in the past, though withheld in succeeding two years from low salaried employees due to salary increases.

still the facts in said Heacock case are not the same as in the instant one, and hence the ruling applied in said case cannot be considered in the present action.

Premises considered, the order appealed from is hereby affirmed, without pronouncement as to costs.

G.R. No. L-48889 May 11, 1989

DEVELOPMENT BANK OF THE PHILIPPINES (DBP), petitioner,

vs.
THE HONORABLE MIDPAINTAO L. ADIL, Judge of the Second Branch of the Court of First Instance of Iloilo and SPOUSES PATRICIO CONFESOR and
JOVITA VILLAFUERTE, respondents.

GANCAYCO, J.:

The issue posed in this petition for review on certiorari is the validity of a promissory note which was executed in consideration of a previous promissory note the
enforcement of which had been barred by prescription.

On February 10, 1940 spouses Patricio Confesor and Jovita Villafuerte obtained an agricultural loan from the Agricultural and Industrial Bank (AIB), now the
Development of the Philippines (DBP), in the sum of P2,000.00, Philippine Currency, as evidenced by a promissory note of said date whereby they bound
themselves jointly and severally to pay the account in ten (10) equal yearly amortizations. As the obligation remained outstanding and unpaid even after the lapse
of the aforesaid ten-year period, Confesor, who was by then a member of the Congress of the Philippines, executed a second promissory note on April 11, 1961
expressly acknowledging said loan and promising to pay the same on or before June 15, 1961. The new promissory note reads as follows —

I hereby promise to pay the amount covered by my promissory note on or before June 15, 1961. Upon my failure to do so, I hereby agree to
the foreclosure of my mortgage. It is understood that if I can secure a certificate of indebtedness from the government of my back pay I will
be allowed to pay the amount out of it.

Said spouses not having paid the obligation on the specified date, the DBP filed a complaint dated September 11, 1970 in the City Court of Iloilo City against the
spouses for the payment of the loan.

After trial on the merits a decision was rendered by the inferior court on December 27, 1976, the dispositive part of which reads as follows:

WHEREFORE, premises considered, this Court renders judgment, ordering the defendants Patricio Confesor and Jovita Villafuerte Confesor
to pay the plaintiff Development Bank of the Philippines, jointly and severally, (a) the sum of P5,760.96 plus additional daily interest of P l.04
from September 17, 1970, the date Complaint was filed, until said amount is paid; (b) the sum of P576.00 equivalent to ten (10%) of the total
claim by way of attorney's fees and incidental expenses plus interest at the legal rate as of September 17,1970, until fully paid; and (c) the
costs of the suit.

Defendants-spouses appealed therefrom to the Court of First Instance of Iloilo wherein in due course a decision was rendered on April 28, 1978 reversing the
appealed decision and dismissing the complaint and counter-claim with costs against the plaintiff.

A motion for reconsideration of said decision filed by plaintiff was denied in an order of August 10, 1978. Hence this petition wherein petitioner alleges that the
decision of respondent judge is contrary to law and runs counter to decisions of this Court when respondent judge (a) refused to recognize the law that the right to
prescription may be renounced or waived; and (b) that in signing the second promissory note respondent Patricio Confesor can bind the conjugal partnership; or
otherwise said respondent became liable in his personal capacity. The petition is impressed with merit. The right to prescription may be waived or renounced.
Article 1112 of Civil Code provides:

Art. 1112. Persons with capacity to alienate property may renounce prescription already obtained, but not the right to prescribe in the future.
 Prescription is deemed to have been tacitly renounced when the renunciation results from acts which imply the abandonment of the right
acquired.

There is no doubt that prescription has set in as to the first promissory note of February 10, 1940. However, when respondent Confesor executed the second
promissory note on April 11, 1961 whereby he promised to pay the amount covered by the previous promissory note on or before June 15, 1961, and upon failure
to do so, agreed to the foreclosure of the mortgage, said respondent thereby effectively and expressly renounced and waived his right to the prescription of the
action covering the first promissory note.

This Court had ruled in a similar case that –

... when a debt is already barred by prescription, it cannot be enforced by the creditor. But a new contract recognizing and assuming the
prescribed debt would be valid and enforceable ... .1

Thus, it has been held —

Where, therefore, a party acknowledges the correctness of a debt and promises to pay it after the same has prescribed and with full
knowledge of the prescription he thereby waives the benefit of prescription. 2

This is not a mere case of acknowledgment of a debt that has prescribed but a new promise to pay the debt. The consideration of the new promissory note is the
pre-existing obligation under the first promissory note. The statutory limitation bars the remedy but does not discharge the debt.

A new express promise to pay a debt barred ... will take the case from the operation of the statute of limitations as this proceeds upon the
ground that as a statutory limitation merely bars the remedy and does not discharge the debt, there is something more than a mere moral
obligation to support a promise, to wit a – pre-existing debt which is a sufficient consideration for the new the new promise; upon this
sufficient consideration constitutes, in fact, a new cause of action.
3

... It is this new promise, either made in express terms or deduced from an acknowledgement as a legal implication, which is to be regarded
as reanimating the old promise, or as imparting vitality to the remedy (which by lapse of time had become extinct) and thus enabling the
creditor to recover upon his original contract.
4

However, the court a quo held that in signing the promissory note alone, respondent Confesor cannot thereby bind his wife, respondent Jovita Villafuerte, citing
Article 166 of the New Civil Code which provides:

Art. 166. Unless the wife has been declared a non compos mentis or a spend thrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without, the wife's consent. If she ay
compel her to refuses unreasonably to give her consent, the court m grant the same.

We disagree. Under Article 165 of the Civil Code, the husband is the administrator of the conjugal partnership. As such administrator, all debts and obligations
contracted by the husband for the benefit of the conjugal partnership, are chargeable to the conjugal partnership. No doubt, in this case, respondent Confesor
5

signed the second promissory note for the benefit of the conjugal partnership. Hence the conjugal partnership is liable for this obligation.

WHEREFORE, the decision subject of the petition is reversed and set aside and another decision is hereby rendered reinstating the decision of the City Court of
Iloilo City of December 27, 1976, without pronouncement as to costs in this instance. This decision is immediately executory and no motion for extension of time to
file motion for reconsideration shall be granted.

SO ORDERED.

[G.R. No. L-23861. February 17, 1968.]

EMILIANA CRUZ, Petitioner-Appellant, v. ERNESTO OPPEN, INC., HON. CRISANTO ARAGON, as Judge of the Municipal Court of Manila and THE SHERIFF OF
MANILA, Respondents-Appellees.

Paulino Carreon for Petitioner-Appellant.

Plaridel C. Jose for Respondent-Appellees.

SYLLABUS

1. JUDGMENT; RELIEF; PETITION FOR RELIEF FILED AFTER 71 DAYS IS OUTSIDE THE REQUIRED 60-DAY PERIOD IN SECTION 3, RULE 38, RULES OF COURT. — Where the
petition for relief was filed 71 days after the petitioner had notice of the judgment, that petition must be dismissed for having been filed 11 days late. Section 3, Rule 38, Rules of
Court, requires, amongst others, that a petition for relief must be filed "within sixty days (60) days after the petitioner learns of the judgment, order, or other proceeding to be
set aside."
cralaw virtua 1aw lib rary

2. ID.; ID.; 60-DAY PERIOD IN RULE 38 IS FIXED AND INEXTENDIBLE. — The 60-day period set forth in Rule 38 is absolutely fixed, inextendible, never interrupted, and cannot
be subjected to any condition or contingency, because the period fixed is itself devised to meet a condition or contingency. Neither the pendency of certiorari proceedings before
the Supreme Court nor the filing of a motion to reconsider the order, the subject of the petition for relief, will toll the running of the limited period.

3. ID.; ID.; MOTION TO SET ASIDE DEFAULT ORDER, DECISION AND EXECUTION FILED IN WRONG COURT IS NOT A PETITION FOR RELIEF. — Petitioner’s motion to set aside
the city court’s default order, decision and writ of execution was filed in the wrong court, the city court, which had no jurisdiction to grant relief from judgment. That motion is no
petition for relief at all; the time consumed in the proceedings therefor did not suspend the running of the 60-day period.

4. ID.; ID,; AFFIDAVIT OF MERITS DEFECTIVE; CASE AT BAR. — Where the affidavit of merits attached to the petition for relief does not show that if the judgment were
overturned and a new trial ordered probability exists that a different conclusion will be reached, that petition suffers from an infirmity. In the case at bar for ejectment, as there
is no denial of failure to pay in full rentals previously due and that the balance of unpaid rentals had not been pai d there is a clear case of ejectment.

5. ID.; ID.; NO EXCUSABLE NEGLIGENCE NOR FRAUD, ACCIDENT, OR MISTAKE. — Where a person of age, petitioner’s helper in a store, received the summons and copy of the
complaint, against petitioner, but failed to deliver them to petitioner because the former immediately proceeded to the province after petitioner’s store was closed, and since
then has not communicated with petitioner, there is no excusable negligence in petitioner’s default nor fraud, accident or mistake.

6. ID.; ID.; JUDGMENT ON THE PLEADINGS; WHEN EX PARTE MOTION THEREFOR IS CONSIDERED VALID. — Where the petition for relief recites the facts, explains the bearing
of the facts on the legal issues, but where respondents’ answer concedes the facts and says that petitioner is not entitled to relief as a matter of law, and petitioner’s reply rebuts
the points of law raised, respondents’ motion for resolution of answer, in effect, a motion for judgment on the pleadings, need not be set for oral arguments. The court may
make a decision upon the legal issues and on the basis of the pleadings and the reasons advanced by the parties.

7. ID.; ID; ID; ID; SEC 1, RULE 19, CLARIFIED. — Section 1, Rule 19, Rules of Court provides that where an answer "admits the material allegations of the adverse party’s
pleading, the court may, on motion of that party, direct judgment on such pleading." The rule does not state whether the moti on may be considered ex-parte or only upon notice
served on the adverse party. A motion for judgment on the pleadings in which all the material averments of the complaint are admitted is one that may be considered ex-parte
because, upon the particular fact thus presented and laid before the court, the plaintiff is entitled to the precise order applied for.

8. ID.; DUE PROCESS; MOTION FOR RECONSIDERATION CURES ORDER ISSUED WITHOUT HEARING ON ORAL ARGUMENTS. — Where the court order dismissing the petition for
relief was issued without hearing the parties on oral arguments, but petitioner filed a motion for reconsideration in which she has had opportunity to present, and, in fact did
present, her written arguments once again on legal issues, and set her motion for hearing where she had opportunity to be heard, it cannot be said that petitioner was denied
her day in court. Lack of original notice to set respondent’s motion to resolve for hearing was cured by the fact that petitioner was heard on her motion for reconsideration.

9. ID.; ID; HARMLESS ERROR. — If the court erred in not setting for hearing respondent’s motion to resolve the answer, it was a harmless error because it does not affect the
substantial rights of petitioner who will not fare any better if the case were tried anew. The law does not require useless ceremony.

DECISION

SANCHEZ, J.:

Petitioner seeks a reversal of the order of the Court of First Instance of Manila dismissing her petition for relief under Rule 38 of the Revised Rules of Court. The pertinent
proceedings in the courts below are: chanrob1es vi rtual 1aw libra ry

On March 28, 1963, respondent judge of the City Court (formerly Municipal Court) of Manila rendered judgment by default 1 against petitioner directing her, inter alia to vacate
Stall No. 78 of the Manila Cartimar Market, subject of the ejectment suit; to pay P71.00 for rentals in arrears and rentals at the rate of P2.70 a day from March 20, 1963 until the
premises shall have been vacated. On May 22, 1963, petitioner moved to set aside the default order, decision and the writ of execution issued to enforce the judgment. Ground:
Want of jurisdiction over her person. Because, so she avers, summons and copy of the complaint were served upon her salesgirl, Teresita Burce, who did not turn over said
papers to her. On May 25, 1963, respondent judge denied the motion. On June 4, 1963, petitioner moved to reconsider and sought new trial, reiterating the jurisdictional
ground. This time, she appended to the motion an affidavit of her salesgirl, Teresita Burce, which recites that certain papers which she came to know later as summons and
complaint in said case were served upon her; that she "was not able to give said papers" to petitioner Emiliana Cruz; that she closed the store in the last week of March, 1963
upon instructions of petitioner; and that thereafter she went to Albay, by reasons of which she was unable to pay "the balance of the March rental" with the P30 given her by
petitioner for the purpose. On June 8, 1963, respondent judge again denied the motion.

On August 1, 1963, petitioner went to the Court of First Instance for relief from the city court’s judgment of March 28, 1963. 2 She asked that the decision and writ of execution
be set aside and that trial on the merits be had. Respondents’ answer to the petition — bearing date of October 14, 1963 — presented solely issues of law, principally (1) that the
petition was time-barred; and (2) granting that the petition was filed within the reglementary period, the negligence of petitioner’s salesgirl , Teresita Burce, is not excusable.
Petitioner’s reply of December 16, 1963 reasoned out that her petition for relief was timely and that the negligence of her salesgirl is one not "pertaini ng to petitioner herself"
and that the latter’s "failure to answer the complaint and air her side of the case before the respondent inferior court cannot be blamed on her entirely and absolutely." 3 On
June 8, 1964, respondent corporation filed a motion to resolve its answer to the petition, upon the averment that said answer partakes of a motion to dismiss. Copy of this
motion, sent by registered mail, was received by petitioner’s counsel on June 25, 1964. On July 3, 1964, the Court of First Instance issued an order, which reads: "It appearing
that the petitioner came to know of the judgment from which relief is sought on May 22, 1963; that she filed this petition only on August 1, 1963, or after a lapse of 71 days;
and that the period of 60 days from the time the petitioner learns of the judgment within which she may file a petition for relief is never interrupted, as prayed for, the petition is
dismissed with costs against the petitioner." cralaw vi rt ua1aw lib rary

A motion to reconsider was denied, Hence, this appeal.

The petition must be dismissed. And for a number of reasons.

1. Petitioner had notice of the judgment of the city court at the latest on May 22, 1963. For, in her motion filed on that date — May 22, 1963 — to set aside the default order,
decision and writ of execution, she averred" [t]hat it was only a few days ago that defendant came to know of the case filed against her and she forthwith referred the matter to
her undersigned counsel, who immediately went to court and looked for the record of the case." 4 She filed the petition for relief on August 1 following. Between May 22 and
August 1, 71 days elapsed. Her petition for relief is eleven (11) days late. Because, Section 3, Rule 38 of the Revised Rules of Court, requires, amongst others, that a petition for
relief be filed "within sixty (60) days after the petitioner learns of the judgment, order, or other proceeding to be set aside." Her failure to comply with this period peremptorily
exacted by the rules warrants dismissal. 5

2. But petitioner argues that the period consumed by the proceedings in the city court should be deducted from the 60-day period. Here is how she explains her case: She lodged
with the inferior court her motion to set aside the order of default, decision and writ of execution on May 22. Respondent judge denied this motion on May 25. On June 4, she
moved for reconsideration and new trial — which was denied on June 8. Notice of this denial was received by her counsel on July 3. Between July 3 and August 1, when her
petition for relief before the Court of First Instance was filed — is only 29 days. Ergo, the 60-day time limit has not expired.

Petitioner’s argument fails of its purpose. For, a doctrine which gained foothold through reiteration is that the 60-day period set forth in Rule 38 is absolutely fixed, inextendible,
never interrupted, 6 and cannot be subjected to any condition or contingency. Because the period fixed "is itself devised to meet a condition or contingency" ; the equitable
remedy in Rule 38 "is an act of grace, as it were, designed to give the aggrieved party another and last chance" ; and a petitioner for relief being "in the position of one who
begs, such party’s privilege is not to impose conditions, haggle or dilly-dally, but to grab what is offered him." 7 So it is, that neither the pendency of certiorari proceedings
before this Court, as in Palomares v. Jimenez, supra, nor the filing of a motion to reconsider the order, the subject of the petition for relief, after learning of it, as in Rafanan v.
Rafanan, supra, will toll the running of the limited period.

Petitioner here is in a worse position. Her motion to set aside the city court’s default order, decision (which has become final) and writ of execution, was filed in the wrong court
— the said inferior court which did not have jurisdiction to grant relief from judgment That motion amounts to nothing; it is no petition for relief at all. Certainly, the time
consumed in the proceedings therefor did not suspend the running of the 60-day period.

In the circumstances here presented, the Court of First Instance of Manila had no alternative but to dismiss the petition for relief.

3. The petition for relief from judgment in the Court of First Instance suffers from another infirmity. Petitioner’s affidavit and that of Teresita Burce attached thereto do not show
that if the judgment of the city court were overturned and a new trial ordered, probability exists that a different conclusion will be reached. On this point, all that the affidavits
could say is that the premises were vacated in the last week of March, 1963; that petitioner gave Teresita Burce money — P30.00 — to pay for the balance of the unpaid rental
for that month; that Teresita was not able to pay as she "went to the province of Albay after closing the store." Apart from the fact that the excuse for nonpayment is puerile,
there is the other fact that the amount given was short. For, the judgment calls for the payment of P71.00, rentals in arrears up to March 19, and daily rentals of P2.70 from
March 20, 1963. Since there is no denial of failure to pay in full rentals previously due, and that the balance of unpaid rentals for the month of March had not been paid,
respondent corporation made a clear case for ejectment.

4. Nor is there any showing of fraud, accident, mistake or excusable negligence which would authorize relief under Rule 33. Teresita Burce is of age. Her affidavit is to the effect
that she received the summons and copy of the complaint; that she failed to deliver them to petitioner, as she immediately proceeded to Albay after she closed the store in the
last week of March, 1963; and that since then, she has not communicated with petitioner. Citation of jurisprudential support is unnecessary for the view that this affidavit does
not show excusable negligence.

5. Petitioner assails the order of the Court of First Instance of July 8, 1964 dismissing her petition for relief, as one issued without a hearing on the merits thereof.
That petition for relief recites the facts and the proceedings had in the city court, explains the bearing of the facts on the legal issues. Respondents’ answer thereto concedes the
facts but says that petitioner is not entitled to relief as a matter of law. Petitioner’s reply to the answer rebuts the points of law raised. It is in this setting that on June 8, 1964
respondents filed their "Motion for Resolution of Answer Filed by Defendant Ernesto Oppen, Inc." This motion may not have been skillfully labeled. In effect, however, it is a
motion for judgment on the pleadings. No question of facts is involved. The court may make a decision upon the legal issues and on the basis of the pleadings and the reasons
advanced by the parties.

Applicable then is Section 1, Rule 19 of the Revised Rules of Court (formerly Section 10, Rule 35 of the old Rules), which states that where an answer "admits the material
allegations of the adverse party’s pleading, the court may, on morion of that party, direct judgment on such pleading." 8 On this point, then Justice Arsenio P. Dizon of the Court
of Appeals, now of this Court, analyzing the provisions of Section 10, Rule 35 of the old Rules of Court, observed 9 that "the rule does not state whether the motion for judgment
on the pleadings may be considered ex-parte or only upon notice served on the adverse party," and concluded that a motion for judgment on the pleadings in which all the
material averments of the complaint are admitted, "is one that may be considered ex-parte because, upon the particular fact thus presented and laid before the court, the
plaintiff is entitled to the precise order applied for." Such is the situation here. No need there was to set for oral arguments 10 respondents’ motion of June 8.

6. Concededly, the order of July 3, 1964 dismissing the petition was issued without hearing the parties on oral arguments. But the proceedings did not end there. For, petitioner
moved to reconsider that order. In that motion for reconsideration, she has had the opportunity to present, and in fact did present, her written arguments once again on the
legal issues. She set her aforesaid motion to reconsider for hearing on August 15, 1964. She has had opportunity to be heard. She cannot complain. Unfortunately for her it was
denied on that same day.

In this factual environment, it cannot be said that petitioner was denied her day in court. Lack of original notice to set the motion to resolve for hearing was cured by the fact
that she was heard on her motion for reconsideration.

She was not, therefore, prejudiced by the fact that respondents’ motion to decide the case was not set for hearing.

7. At all events, if the Court of First Instance erred in resolving respondent corporation’s motion for resolution of its answer without setting it for hearing under the circumstances
here stated, it was a harmless error; 11 it does not affect the substantial rights of petitioner; petitioner will not fare any better if the case were to be returned to the inferior
court for a new trial; the appealed-orders need not be disturbed. For, the law does not require useless ceremony. 12

For the reasons given, the orders under review are hereby affirmed.

Costs against petitioner. So ordered.

GUTIERREZ HERMANOS, plaintiff-appellee,

vs.
ENGRACIO ORENSE, defendant-appellant.

William A. Kincaid, Thos. L. Hartigan, and Ceferino M. Villareal for appellant.

Rafael de la Sierra for appellee.

TORRES, J.:

Appeal through bill of exceptions filed by counsel for the appellant from the judgment on April 14, 1913, by the Honorable P. M. Moir, judge, wherein he sentenced
the defendant to make immediate delivery of the property in question, through a public instrument, by transferring and conveying to the plaintiff all his rights in the
property described in the complaint and to pay it the sum of P780, as damages, and the costs of the suit.

On March 5, 1913, counsel for Gutierrez Hermanos filed a complaint, afterwards amended, in the Court of First Instance of Albay against Engacio Orense, in
which he set forth that on and before February 14, 1907, the defendant Orense had been the owner of a parcel of land, with the buildings and improvements
thereon, situated in the pueblo of Guinobatan, Albay, the location, area and boundaries of which were specified in the complaint; that the said property has up to
date been recorded in the new property registry in the name of the said Orense, according to certificate No. 5, with the boundaries therein given; that, on February
14, 1907, Jose Duran, a nephew of the defendant, with the latter's knowledge and consent, executed before a notary a public instrument whereby he sold and
conveyed to the plaintiff company, for P1,500, the aforementioned property, the vendor Duran reserving to himself the right to repurchase it for the same price
within a period of four years from the date of the said instrument; that the plaintiff company had not entered into possession of the purchased property, owing to its
continued occupancy by the defendant and his nephew, Jose Duran, by virtue of a contract of lease executed by the plaintiff to Duran, which contract was in force
up to February 14, 1911; that the said instrument of sale of the property, executed by Jose Duran, was publicly and freely confirmed and ratified by the defendant
Orense; that, in order to perfect the title to the said property, but that the defendant Orense refused to do so, without any justifiable cause or reason, wherefore he
should be compelled to execute the said deed by an express order of the court, for Jose Duran is notoriously insolvent and cannot reimburse the plaintiff company
for the price of the sale which he received, nor pay any sum whatever for the losses and damages occasioned by the said sale, aside from the fact that the plaintiff
had suffered damage by losing the present value of the property, which was worth P3,000; that, unless such deed of final conveyance were executed in behalf of
the plaintiff company, it would be injured by the fraud perpetrated by the vendor, Duran, in connivance with the defendant; that the latter had been occupying the
said property since February 14, 1911, and refused to pay the rental thereof, notwithstanding the demand made upon him for its payment at the rate of P30 per
month, the just and reasonable value for the occupancy of the said property, the possession of which the defendant likewise refused to deliver to the plaintiff
company, in spite of the continuous demands made upon him, the defendant, with bad faith and to the prejudice of the firm of Gutierrez Hermanos, claiming to
have rights of ownership and possession in the said property. Therefore it was prayed that judgment be rendered by holding that the land and improvements in
question belong legitimately and exclusively to the plaintiff, and ordering the defendant to execute in the plaintiff's behalf the said instrument of transfer and
conveyance of the property and of all the right, interest, title and share which the defendant has therein; that the defendant be sentenced to pay P30 per month for
damages and rental of the property from February 14, 1911, and that, in case these remedies were not granted to the plaintiff, the defendant be sentenced to pay
to it the sum of P3,000 as damages, together with interest thereon since the date of the institution of this suit, and to pay the costs and other legal expenses.

The demurrer filed to the amended complaint was overruled, with exception on the part of the defendant, whose counsel made a general denial of the allegations
contained in the complaint, excepting those that were admitted, and specifically denied paragraph 4 thereof to the effect that on February 14, 1907, Jose Duran
executed the deed of sale of the property in favor of the plaintiff with the defendant's knowledge and consent. 1awphil.net

As the first special defense, counsel for the defendant alleged that the facts set forth in the complaint with respect to the execution of the deed did not constitute a
cause of action, nor did those alleged in the other form of action for the collection of P3,000, the value of the realty.

As the second special defense, he alleged that the defendant was the lawful owner of the property claimed in the complaint, as his ownership was recorded in the
property registry, and that, since his title had been registered under the proceedings in rem prescribed by Act No. 496, it was conclusive against the plaintiff and
the pretended rights alleged to have been acquired by Jose Duran prior to such registration could not now prevail; that the defendant had not executed any written
power of attorney nor given any verbal authority to Jose Duran in order that the latter might, in his name and representation, sell the said property to the plaintiff
company; that the defendant's knowledge of the said sale was acquired long after the execution of the contract of sale between Duran and Gutierrez Hermanos,
and that prior thereto the defendant did not intentionally and deliberately perform any act such as might have induced the plaintiff to believe that Duran was
empowered and authorized by the defendant and which would warrant him in acting to his own detriment, under the influence of that belief. Counsel therefore
prayed that the defendant be absolved from the complaint and that the plaintiff be sentenced to pay the costs and to hold his peace forever.

After the hearing of the case and an examination of the evidence introduced by both parties, the court rendered the judgment aforementioned, to which counsel for
the defendant excepted and moved for a new trial. This motion was denied, an exception was taken by the defendant and, upon presentation of the proper bill of
exceptions, the same was approved, certified and forwarded to the clerk of his court.

This suit involves the validity and efficacy of the sale under right of redemption of a parcel of land and a masonry house with the nipa roof erected thereon, effected
by Jose Duran, a nephew of the owner of the property, Engracio Orense, for the sum of P1,500 by means of a notarial instrument executed and ratified on
February 14, 1907.

After the lapse of the four years stipulated for the redemption, the defendant refused to deliver the property to the purchaser, the firm of Gutierrez Hermanos, and
to pay the rental thereof at the rate of P30 per month for its use and occupation since February 14, 1911, when the period for its repurchase terminated. His refusal
was based on the allegations that he had been and was then the owner of the said property, which was registered in his name in the property registry; that he had
not executed any written power of attorney to Jose Duran, nor had he given the latter any verbal authorization to sell the said property to the plaintiff firm in his
name; and that, prior to the execution of the deed of sale, the defendant performed no act such as might have induced the plaintiff to believe that Jose Duran was
empowered and authorized by the defendant to effect the said sale.

The plaintiff firm, therefore, charged Jose Duran, in the Court of First Instance of the said province, with estafa, for having represented himself in the said deed of
sale to be the absolute owner of the aforesaid land and improvements, whereas in reality they did not belong to him, but to the defendant Orense. However, at the
trial of the case Engracio Orense, called as a witness, being interrogated by the fiscal as to whether he and consented to Duran's selling the said property under
right of redemption to the firm of Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the court acquitted Jose Duran of the charge
of estafa.

As a result of the acquittal of Jose Duran, based on the explicit testimony of his uncle, Engacio Orense, the owner of the property, to the effect that he had
consented to his nephew Duran's selling the property under right of repurchase to Gutierrez Hermanos, counsel for this firm filed a complainant praying, among
other remedies, that the defendant Orense be compelled to execute a deed for the transfer and conveyance to the plaintiff company of all the right, title and
interest with Orense had in the property sold, and to pay to the same the rental of the property due from February 14, 1911. itc-alf

Notwithstanding the allegations of the defendant, the record in this case shows that he did give his consent in order that his nephew, Jose Duran, might sell the
property in question to Gutierrez Hermanos, and that he did thereafter confirm and ratify the sale by means of a public instrument executed before a notary.

It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon
his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who
acted within the scope of his authority. (Civil Code, arts. 1709, 1710 and 1727.)

Even should it be held that the said consent was granted subsequently to the sale, it is unquestionable that the defendant, the owner of the property, approved the
action of his nephew, who in this case acted as the manager of his uncle's business, and Orense'r ratification produced the effect of an express authorization to
make the said sale. (Civil Code, arts. 1888 and 1892.)

Article 1259 of the Civil Code prescribes: "No one can contract in the name of another without being authorized by him or without his legal representation
according to law.

A contract executed in the name of another by one who has neither his authorization nor legal representation shall be void, unless it should be ratified
by the person in whose name it was executed before being revoked by the other contracting party.

The sworn statement made by the defendant, Orense, while testifying as a witness at the trial of Duran for estafa, virtually confirms and ratifies the sale of his
property effected by his nephew, Duran, and, pursuant to article 1313 of the Civil Code, remedies all defects which the contract may have contained from the
moment of its execution.

The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void in the beginning, but afterwards became perfectly valid and cured of
the defect of nullity it bore at its execution by the confirmation solemnly made by the said owner upon his stating under oath to the judge that he himself consented
to his nephew Jose Duran's making the said sale. Moreover, pursuant to article 1309 of the Code, the right of action for nullification that could have been brought
became legally extinguished from the moment the contract was validly confirmed and ratified, and, in the present case, it is unquestionable that the defendant did
confirm the said contract of sale and consent to its execution.

On the testimony given by Engacio Orense at the trial of Duran for estafa, the latter was acquitted, and it would not be just that the said testimony, expressive of
his consent to the sale of his property, which determined the acquittal of his nephew, Jose Duran, who then acted as his business manager, and which testimony
wiped out the deception that in the beginning appeared to have been practiced by the said Duran, should not now serve in passing upon the conduct of Engracio
Orense in relation to the firm of Gutierrez Hermanos in order to prove his consent to the sale of his property, for, had it not been for the consent admitted by the
defendant Orense, the plaintiff would have been the victim of estafa.

If the defendant Orense acknowledged and admitted under oath that he had consented to Jose Duran's selling the property in litigation to Gutierrez Hermanos, it is
not just nor is it permissible for him afterward to deny that admission, to the prejudice of the purchaser, who gave P1,500 for the said property.

The contract of sale of the said property contained in the notarial instrument of February 14, 1907, is alleged to be invalid, null and void under the provisions of
paragraph 5 of section 335 of the Code of Civil Procedure, because the authority which Orense may have given to Duran to make the said contract of sale is not
shown to have been in writing and signed by Orense, but the record discloses satisfactory and conclusive proof that the defendant Orense gave his consent to the
contract of sale executed in a public instrument by his nephew Jose Duran. Such consent was proven in a criminal action by the sworn testimony of the principal
and presented in this civil suit by other sworn testimony of the same principal and by other evidence to which the defendant made no objection. Therefore the
principal is bound to abide by the consequences of his agency as though it had actually been given in writing (Conlu vs. Araneta and Guanko, 15 Phil. Rep., 387;
Gallemit vs. Tabiliran, 20 Phil. Rep., 241; Kuenzle & Streiff vs. Jiongco, 22 Phil. Rep., 110.)

The repeated and successive statements made by the defendant Orense in two actions, wherein he affirmed that he had given his consent to the sale of his
property, meet the requirements of the law and legally excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew
Jose Duran, they produce the effects of an express power of agency.

The judgment appealed from in harmony with the law and the merits of the case, and the errors assigned thereto have been duly refuted by the foregoing
considerations, so it should be affirmed.

The judgment appealed from is hereby affirmed, with the costs against the appellant.

G.R. No. L-44546 January 29, 1988

RUSTICO ADILLE, petitioner,

vs.
THE HONORABLE COURT OF APPEALS, EMETERIA ASEJO, TEODORICA ASEJO, DOMINGO ASEJO, JOSEFA ASEJO and SANTIAGO
ASEJO, respondents.

SARMIENTO, J.:

In issue herein are property and property rights, a familiar subject of controversy and a wellspring of enormous conflict that has led not only to protracted legal
entanglements but to even more bitter consequences, like strained relationships and even the forfeiture of lives. It is a question that likewise reflects a tragic
commentary on prevailing social and cultural values and institutions, where, as one observer notes, wealth and its accumulation are the basis of self-fulfillment and
where property is held as sacred as life itself. "It is in the defense of his property," says this modern thinker, that one "will mobilize his deepest protective devices,
and anybody that threatens his possessions will arouse his most passionate enmity." 1

The task of this Court, however, is not to judge the wisdom of values; the burden of reconstructing the social order is shouldered by the political leadership-and the
people themselves.

The parties have come to this Court for relief and accordingly, our responsibility is to give them that relief pursuant to the decree of law.

The antecedent facts are quoted from the decision appealed from:
2

xxx xxx xxx

... [T]he land in question Lot 14694 of Cadastral Survey of Albay located in Legaspi City with an area of some 11,325 sq. m. originally
belonged to one Felisa Alzul as her own private property; she married twice in her lifetime; the first, with one Bernabe Adille, with whom she
had as an only child, herein defendant Rustico Adille; in her second marriage with one Procopio Asejo, her children were herein plaintiffs, —
now, sometime in 1939, said Felisa sold the property in pacto de retro to certain 3rd persons, period of repurchase being 3 years, but she
died in 1942 without being able to redeem and after her death, but during the period of redemption, herein defendant repurchased, by himself
alone, and after that, he executed a deed of extra-judicial partition representing himself to be the only heir and child of his mother Felisa with
the consequence that he was able to secure title in his name alone also, so that OCT. No. 21137 in the name of his mother was transferred
to his name, that was in 1955; that was why after some efforts of compromise had failed, his half-brothers and sisters, herein plaintiffs, filed
present case for partition with accounting on the position that he was only a trustee on an implied trust when he redeemed,-and this is the
evidence, but as it also turned out that one of plaintiffs, Emeteria Asejo was occupying a portion, defendant counterclaimed for her to vacate
that, —

Well then, after hearing the evidence, trial Judge sustained defendant in his position that he was and became absolute owner, he was not a
trustee, and therefore, dismissed case and also condemned plaintiff occupant, Emeteria to vacate; it is because of this that plaintiffs have
come here and contend that trial court erred in:

I. ... declaring the defendant absolute owner of the property;

II. ... not ordering the partition of the property; and

III. ... ordering one of the plaintiffs who is in possession of the portion of the property to vacate the land, p. 1 Appellant's brief.

which can be reduced to simple question of whether or not on the basis of evidence and law, judgment appealed from should be maintained. 3

xxx xxx xxx

The respondent Court of appeals reversed the trial Court, and ruled for the plaintiffs-appellants, the private respondents herein. The petitioner now appeals, by
4

way of certiorari, from the Court's decision.

We required the private respondents to file a comment and thereafter, having given due course to the petition, directed the parties to file their briefs. Only the
petitioner, however, filed a brief, and the private respondents having failed to file one, we declared the case submitted for decision.
The petition raises a purely legal issue: May a co-owner acquire exclusive ownership over the property held in common?

Essentially, it is the petitioner's contention that the property subject of dispute devolved upon him upon the failure of his co-heirs to join him in its redemption within
the period required by law. He relies on the provisions of Article 1515 of the old Civil Article 1613 of the present Code, giving the vendee a retro the right to
demand redemption of the entire property.

There is no merit in this petition.

The right of repurchase may be exercised by a co-owner with aspect to his share alone. While the records show that the petitioner redeemed the property in its
5

entirety, shouldering the expenses therefor, that did not make him the owner of all of it. In other words, it did not put to end the existing state of co-ownership.

Necessary expenses may be incurred by one co-owner, subject to his right to collect reimbursement from the remaining co-owners. There is no doubt that
6

redemption of property entails a necessary expense. Under the Civil Code:

ART. 488. Each co-owner shall have a right to compel the other co-owners to contribute to the expenses of preservation of the thing or right
owned in common and to the taxes. Any one of the latter may exempt himself from this obligation by renouncing so much of his undivided
interest as may be equivalent to his share of the expenses and taxes. No such waiver shall be made if it is prejudicial to the co-ownership.

The result is that the property remains to be in a condition of co-ownership. While a vendee a retro, under Article 1613 of the Code, "may not be compelled to
consent to a partial redemption," the redemption by one co-heir or co-owner of the property in its totality does not vest in him ownership over it. Failure on the part
of all the co-owners to redeem it entitles the vendee a retro to retain the property and consolidate title thereto in his name. But the provision does not give to the
7

redeeming co-owner the right to the entire property. It does not provide for a mode of terminating a co-ownership.

Neither does the fact that the petitioner had succeeded in securing title over the parcel in his name terminate the existing co-ownership. While his half-brothers and
sisters are, as we said, liable to him for reimbursement as and for their shares in redemption expenses, he cannot claim exclusive right to the property owned in
common. Registration of property is not a means of acquiring ownership. It operates as a mere notice of existing title, that is, if there is one.

The petitioner must then be said to be a trustee of the property on behalf of the private respondents. The Civil Code states:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property comes.

We agree with the respondent Court of Appeals that fraud attended the registration of the property. The petitioner's pretension that he was the sole heir to the land
in the affidavit of extrajudicial settlement he executed preliminary to the registration thereof betrays a clear effort on his part to defraud his brothers and sisters and
to exercise sole dominion over the property. The aforequoted provision therefore applies.

It is the view of the respondent Court that the petitioner, in taking over the property, did so either on behalf of his co-heirs, in which event, he had constituted
himself a negotiorum gestor under Article 2144 of the Civil Code, or for his exclusive benefit, in which case, he is guilty of fraud, and must act as trustee, the
private respondents being the beneficiaries, under the Article 1456. The evidence, of course, points to the second alternative the petitioner having asserted claims
of exclusive ownership over the property and having acted in fraud of his co-heirs. He cannot therefore be said to have assume the mere management of the
property abandoned by his co-heirs, the situation Article 2144 of the Code contemplates. In any case, as the respondent Court itself affirms, the result would be
the same whether it is one or the other. The petitioner would remain liable to the Private respondents, his co-heirs.

This Court is not unaware of the well-established principle that prescription bars any demand on property (owned in common) held by another (co-owner) following
the required number of years. In that event, the party in possession acquires title to the property and the state of co-ownership is ended . In the case at bar, the
8

property was registered in 1955 by the petitioner, solely in his name, while the claim of the private respondents was presented in 1974. Has prescription then, set
in?

We hold in the negative. Prescription, as a mode of terminating a relation of co-ownership, must have been preceded by repudiation (of the co-ownership). The act
of repudiation, in turn is subject to certain conditions: (1) a co-owner repudiates the co-ownership; (2) such an act of repudiation is clearly made known to the other
co-owners; (3) the evidence thereon is clear and conclusive, and (4) he has been in possession through open, continuous, exclusive, and notorious possession of
the property for the period required by law. 9

The instant case shows that the petitioner had not complied with these requisites. We are not convinced that he had repudiated the co-ownership; on the contrary,
he had deliberately kept the private respondents in the dark by feigning sole heirship over the estate under dispute. He cannot therefore be said to have "made
known" his efforts to deny the co-ownership. Moreover, one of the private respondents, Emeteria Asejo, is occupying a portion of the land up to the present, yet,
the petitioner has not taken pains to eject her therefrom. As a matter of fact, he sought to recover possession of that portion Emeteria is occupying only as a
counterclaim, and only after the private respondents had first sought judicial relief.

It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a
10

shield for fraud. It is therefore no argument to say that the act of registration is equivalent to notice of repudiation, assuming there was one, notwithstanding the
11

long-standing rule that registration operates as a universal notice of title.

For the same reason, we cannot dismiss the private respondents' claims commenced in 1974 over the estate registered in 1955. While actions to enforce a
constructive trust prescribes in ten years, reckoned from the date of the registration of the property, we, as we said, are not prepared to count the period from
12 13

such a date in this case. We note the petitioner's sub rosa efforts to get hold of the property exclusively for himself beginning with his fraudulent misrepresentation
in his unilateral affidavit of extrajudicial settlement that he is "the only heir and child of his mother Feliza with the consequence that he was able to secure title in
his name also." Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of
14

defraudation. According to the respondent Court of Appeals, they "came to know [of it] apparently only during the progress of the litigation." Hence, prescription
15 16

is not a bar.
Moreover, and as a rule, prescription is an affirmative defense that must be pleaded either in a motion to dismiss or in the answer otherwise it is deemed
waived, and here, the petitioner never raised that defense. There are recognized exceptions to this rule, but the petitioner has not shown why they apply.
17 18

WHEREFORE, there being no reversible error committed by the respondent Court of Appeals, the petition is DENIED. The Decision sought to be reviewed is
hereby AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED,

G.R. No. 82670 September 15, 1989

DOMETILA M. ANDRES, doing business under the name and style "IRENE'S WEARING APPAREL," petitioner,
vs.
MANUFACTURERS HANOVER & TRUST CORPORATION and COURT OF APPEALS, respondents.

Roque A. Tamayo for petitioner.

Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles for private respondent.

CORTES, J.:

Assailed in this petition for review on certiorari is the judgment of the Court of Appeals, which, applying the doctrine of solutio indebiti, reversed the decision of the
Regional Trial Court, Branch CV, Quezon City by deciding in favor of private respondent.

Petitioner, using the business name "Irene's Wearing Apparel," was engaged in the manufacture of ladies garments, children's wear, men's apparel and linens for
local and foreign buyers. Among its foreign buyers was Facets Funwear, Inc. (hereinafter referred to as FACETS) of the United States.

In the course of the business transaction between the two, FACETS from time to time remitted certain amounts of money to petitioner in payment for the items it
had purchased. Sometime in August 1980, FACETS instructed the First National State Bank of New Jersey, Newark, New Jersey, U.S.A. (hereinafter referred to
as FNSB) to transfer $10,000.00 to petitioner via Philippine National Bank, Sta. Cruz Branch, Manila (hereinafter referred to as PNB).

Acting on said instruction, FNSB instructed private respondent Manufacturers Hanover and Trust Corporation to effect the above- mentioned transfer through its
facilities and to charge the amount to the account of FNSB with private respondent. Although private respondent was able to send a telex to PNB to pay petitioner
$10,000.00 through the Pilipinas Bank, where petitioner had an account, the payment was not effected immediately because the payee designated in the telex was
only "Wearing Apparel." Upon query by PNB, private respondent sent PNB another telex dated August 27, 1980 stating that the payment was to be made to
"Irene's Wearing Apparel." On August 28, 1980, petitioner received the remittance of $10,000.00 through Demand Draft No. 225654 of the PNB.

Meanwhile, on August 25, 1980, after learning about the delay in the remittance of the money to petitioner, FACETS informed FNSB about the situation. On
September 8, 1980, unaware that petitioner had already received the remittance, FACETS informed private respondent about the delay and at the same time
amended its instruction by asking it to effect the payment through the Philippine Commercial and Industrial Bank (hereinafter referred to as PCIB) instead of PNB.

Accordingly, private respondent, which was also unaware that petitioner had already received the remittance of $10,000.00 from PNB instructed the PCIB to pay
$10,000.00 to petitioner. Hence, on September 11, 1980, petitioner received a second $10,000.00 remittance.

Private respondent debited the account of FNSB for the second $10,000.00 remittance effected through PCIB. However, when FNSB discovered that private
respondent had made a duplication of the remittance, it asked for a recredit of its account in the amount of $10,000.00. Private respondent complied with the
request.

Private respondent asked petitioner for the return of the second remittance of $10,000.00 but the latter refused to pay. On May 12, 1982 a complaint was filed with
the Regional Trial Court, Branch CV, Quezon City which was decided in favor of petitioner as defendant. The trial court ruled that Art. 2154 of the New Civil Code
is not applicable to the case because the second remittance was made not by mistake but by negligence and petitioner was not unjustly enriched by virtue thereof
[Record, p. 234]. On appeal, the Court of Appeals held that Art. 2154 is applicable and reversed the RTC decision. The dispositive portion of the Court of Appeals'
decision reads as follows:

WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and another one entered in favor of plaintiff-appellant and
against defendant-appellee Domelita (sic) M. Andres, doing business under the name and style "Irene's Wearing Apparel" to reimburse
and/or return to plaintiff-appellant the amount of $10,000.00, its equivalent in Philippine currency, with interests at the legal rate from the filing
of the complaint on May 12, 1982 until the whole amount is fully paid, plus twenty percent (20%) of the amount due as attomey's fees; and to
pay the costs.

With costs against defendant-appellee.

SO ORDERED. [Rollo, pp. 29-30.]

Thereafter, this petition was filed. The sole issue in this case is whether or not the private respondent has the right to recover the second $10,000.00 remittance it
had delivered to petitioner. The resolution of this issue would hinge on the applicability of Art. 2154 of the New Civil Code which provides that:

Art. 2154. If something received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it
arises.
This provision is taken from Art. 1895 of the Spanish Civil Code which provided that:

Art. 1895. If a thing is received when there was no right to claim it and which, through an error, has been unduly delivered, an obligation to
restore it arises.

In Velez v. Balzarza, 73 Phil. 630 (1942), the Court, speaking through Mr. Justice Bocobo explained the nature of this article thus:

Article 1895 [now Article 2154] of the Civil Code abovequoted, is therefore applicable. This legal provision, which determines the quasi-
contract of solution indebiti, is one of the concrete manifestations of the ancient principle that no one shall enrich himself unjustly at the
expense of another. In the Roman Law Digest the maxim was formulated thus: "Jure naturae acquum est, neminem cum alterius detrimento
et injuria fieri locupletiorem." And the Partidas declared: "Ninguno non deue enriquecerse tortizeramente con dano de otro." Such axiom has
grown through the centuries in legislation, in the science of law and in court decisions. The lawmaker has found it one of the helpful guides in
framing statutes and codes. Thus, it is unfolded in many articles scattered in the Spanish Civil Code. (See for example, articles, 360, 361,
464, 647, 648, 797, 1158, 1163, 1295, 1303, 1304, 1893 and 1895, Civil Code.) This time-honored aphorism has also been adopted by
jurists in their study of the conflict of rights. It has been accepted by the courts, which have not hesitated to apply it when the exigencies of
right and equity demanded its assertion. It is a part of that affluent reservoir of justice upon which judicial discretion draws whenever the
statutory laws are inadequate because they do not speak or do so with a confused voice. [at p. 632.]

For this article to apply the following requisites must concur: "(1) that he who paid was not under obligation to do so; and, (2) that payment was made by reason of
an essential mistake of fact" [City of Cebu v. Piccio, 110 Phil. 558, 563 (1960)].

It is undisputed that private respondent delivered the second $10,000.00 remittance. However, petitioner contends that the doctrine of solutio indebiti, does not
apply because its requisites are absent.

First, it is argued that petitioner had the right to demand and therefore to retain the second $10,000.00 remittance. It is alleged that even after the two $10,000.00
remittances are credited to petitioner's receivables from FACETS, the latter allegedly still had a balance of $49,324.00. Hence, it is argued that the last $10,000.00
remittance being in payment of a pre-existing debt, petitioner was not thereby unjustly enriched.

The contention is without merit.

The contract of petitioner, as regards the sale of garments and other textile products, was with FACETS. It was the latter and not private respondent which was
indebted to petitioner. On the other hand, the contract for the transmittal of dollars from the United States to petitioner was entered into by private respondent with
FNSB. Petitioner, although named as the payee was not privy to the contract of remittance of dollars. Neither was private respondent a party to the contract of sale
between petitioner and FACETS. There being no contractual relation between them, petitioner has no right to apply the second $10,000.00 remittance delivered by
mistake by private respondent to the outstanding account of FACETS.

Petitioner next contends that the payment by respondent bank of the second $10,000.00 remittance was not made by mistake but was the result of negligence of
its employees. In connection with this the Court of Appeals made the following finding of facts:

The fact that Facets sent only one remittance of $10,000.00 is not disputed. In the written interrogatories sent to the First National State Bank
of New Jersey through the Consulate General of the Philippines in New York, Adelaide C. Schachel, the investigation and reconciliation clerk
in the said bank testified that a request to remit a payment for Facet Funwear Inc. was made in August, 1980. The total amount which the
First National State Bank of New Jersey actually requested the plaintiff-appellant Manufacturers Hanover & Trust Corporation to remit to
Irene's Wearing Apparel was US $10,000.00. Only one remittance was requested by First National State Bank of New Jersey as per
instruction of Facets Funwear (Exhibit "J", pp. 4-5).

That there was a mistake in the second remittance of US $10,000.00 is borne out by the fact that both remittances have the same reference
invoice number which is 263 80. (Exhibits "A-1- Deposition of Mr. Stanley Panasow" and "A-2-Deposition of Mr. Stanley Panasow").

Plaintiff-appellant made the second remittance on the wrong assumption that defendant-appellee did not receive the first remittance of US
$10,000.00. [Rollo, pp. 26-27.]

It is evident that the claim of petitioner is anchored on the appreciation of the attendant facts which petitioner would have this Court review. The Court holds that
the finding by the Court of Appeals that the second $10,000.00 remittance was made by mistake, being based on substantial evidence, is final and conclusive. The
rule regarding questions of fact being raised with this Court in a petition for certiorari under Rule 45 of the Revised Rules of Court has been stated in Remalante v.
Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA 138, thus:

The rule in this jurisdiction is that only questions of law may be raised in a petition for certiorari under Rule 45 of the Revised Rules of Court.
"The jurisdiction of the Supreme Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors of law
imputed to it, its findings of fact being conclusive" [Chan v. Court of Appeals, G.R. No. L-27488, June 30, 1970, 33 SCRA 737, reiterating a
long line of decisions]. This Court has emphatically declared that "it is not the function of the Supreme Court to analyze or weigh such
evidence all over again, its jurisdiction being limited to reviewing errors of law that might have been committed by the lower court" [Tiongco v.
De la Merced, G.R. No. L-24426, July 25, 1974, 58 SCRA 89; Corona v. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121 SCRA 865;
Baniqued v. Court of Appeals, G. R. No. L-47531, February 20, 1984, 127 SCRA 596]. "Barring, therefore, a showing that the findings
complained of are totally devoid of support in the record, or that they are so glaringly erroneous as to constitute serious abuse of discretion,
such findings must stand, for this Court is not expected or required to examine or contrast the oral and documentary evidence submitted by
the parties" [Santa Ana, Jr. v. Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 9731. [at pp. 144-145.]

Petitioner invokes the equitable principle that when one of two innocent persons must suffer by the wrongful act of a third person, the loss must be borne by the
one whose negligence was the proximate cause of the loss.

The rule is that principles of equity cannot be applied if there is a provision of law specifically applicable to a case [Phil. Rabbit Bus Lines, Inc. v. Arciaga, G.R. No.
L-29701, March 16, 1987,148 SCRA 433; Zabat, Jr. v. Court of Appeals, G.R. No. L36958, July 10, 1986, 142 SCRA 587; Rural Bank of Paranaque, Inc. v.
Remolado, G.R. No. 62051, March 18, 1985, 135 SCRA 409; Cruz v. Pahati, 98 Phil. 788 (1956)]. Hence, the Court in the case of De Garcia v. Court of
Appeals, G.R. No. L-20264, January 30, 1971, 37 SCRA 129, citing Aznar v. Yapdiangco, G.R. No. L-18536, March 31, 1965, 13 SCRA 486, held:

... The common law principle that where one of two innocent persons must suffer by a fraud perpetrated by another, the law imposes the loss
upon the party who, by his misplaced confidence, has enabled the fraud to be committed, cannot be applied in a case which is covered by an
express provision of the new Civil Code, specifically Article 559. Between a common law principle and a statutory provision, the latter must
prevail in this jurisdiction. [at p. 135.]

Having shown that Art. 2154 of the Civil Code, which embodies the doctrine of solutio indebiti, applies in the case at bar, the Court must reject the common law
principle invoked by petitioner.

Finally, in her attempt to defeat private respondent's claim, petitioner makes much of the fact that from the time the second $10,000.00 remittance was made, five
hundred and ten days had elapsed before private respondent demanded the return thereof. Needless to say, private respondent instituted the complaint for
recovery of the second $10,000.00 remittance well within the six years prescriptive period for actions based upon a quasi-contract [Art. 1145 of the New Civil
Code].

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals is hereby AFFIRMED.

SO ORDERED.

G.R. No. L-17447 April 30, 1963

GONZALO PUYAT & SONS, INC., plaintiff-appelle,

vs.
CITY OF MANILA AND MARCELO SARMIENTO, as City Treasurer of Manila, defendants-appellants

Feria, Manglapus & Associates for plainttiff-appelle.Asst. City Fiscal Manuel T. Reyes for defendants-appellants.

PAREDES, J.:

This is an appeal from the judgment of the CFI of Manila, the dispostive portion of which reads:

"xxx Of the payments made by the plaintiff, only that made on October 25, 1950 in the amount of P1,250.00 has prescribed Payments made in 1951
and thereafter are still recoverable since the extra-judicial demand made on October 30, 1956 was well within the six-year prescriptive period of the
New CivilCode.

In view of the foregoing considerations, judgment is hereby rendered in favor of the plaintiff, ordering the defendants to refund the amount of
P29,824.00, without interest. No costs.

Wherefore, the parties respectfully pray that the foregoing stipulation of facts be admitted and approved by this Honorable Court, without prejudice to
the parties adducing other evidence to prove their case not covered by this stipulation of facts. 1äwphï1.ñët

Defendants' counterclaim is hereby dismissed for not having been substantiated."

On August 11, 1958, the plaintiff Gonzalo Puyat & Sons, Inc., filed an action for refund of Retail DealerlsTaxes paid by it, corresponding to the first Quarter of 1950
up to the third Quarter of 1956, amounting to P33,785.00, against the City of Manila and its City Treasurer.The case was submitted on the following stipulation of
facts, to wit--

"1. That the plaintiff is a corporation duly organized and existing according to the laws of the Philippines, with offices at Manila; while defendant City
Manila is a Municipal Corporation duly organized in accordance with the laws of the Philippines, and defendant Marcelino Sarmiento is the dulyqualified
incumbent City Treasurer of Manila;

"2. That plaintiff is engaged in the business of manufacturing and selling all kinds of furniture at its factory at 190 Rodriguez-Arias, San Miguel, Manila,
and has a display room located at 604-606 Rizal Avenue, Manila, wherein it displays the various kind of furniture manufactured by it and sells some
goods imported by it, such as billiard balls, bowling balls and other accessories;

"3. That acting pursuant to the provisions of Sec. 1. group II, of Ordinance No. 3364, defendant City Treasurer of Manilaassessed from plaintiff retail
dealer's tax corresponding to the quarters hereunder stated on the sales of furniture manufactured and sold by it at its factory site, all of which
assessments plaintiff paid without protest in the erroneous belief that it was liable therefor, on the dates and in the amount enumerated herein below:

Amount
Period Date Paid O.R. No. Assessed
and Paid.

First Quarter 1950 Jan. 25, 1950 436271X P1,255.00

Second Quarter 1950 Apr. 25, 1950 215895X 1,250.00

Third Quarter 1950 Jul. 25, 1950 243321X 1,250.00

 Fourth Quarter 1950 Oct. 25, 1950 271165X 1,250.00

(Follows the assessment for different quarters in 1951, 1952,

1953, 1954 and 1955, fixing the same amount quarterly.) x x x..

First Quarter 1956 Jan. 25, 1956 823047X 1,250.00

Second Quarter 1956 Apr. 25, 1956 855949X 1,250.00

Third Quarter 1956 Jul. 25, 1956 880789X 1,250.00

TOTAL ............. P33,785.00

===========

"4. That plaintiff, being a manufacturer of various kinds of furniture, is exempt from the payment of taxes imposed under the provisions of Sec. 1, Group
II, of Ordinance No. 3364,which took effect on September 24, 1956, on the sale of the various kinds of furniture manufactured by it pursuant to the
provisions of Sec. 18(n) of Republic Act No. 409 (Revised Charter of Manila), as restated in Section 1 of Ordinance No.3816.

"5. That, however, plaintiff, is liable for the payment of taxes prescribed in Section 1, Group II or Ordinance No. 3364mas amended by Sec. 1, Group II
of Ordinance No. 3816, which took effect on September 24, 1956, on the sales of imported billiard balls, bowling balls and other accessories at its
displayroom. The taxes paid by the plaintiff on the sales of said article are as follows:

xxx xxx xxx

"6. That on October 30, 1956, the plaintiff filed with defendant City Treasurer of Manila, a formal request for refund of the retail dealer's taxes unduly
paid by it as aforestated in paragraph 3, hereof.

"7. That on July 24, 1958, the defendant City Treasurer of Maniladefinitely denied said request for refund.

"8. Hence on August 21, 1958, plaintiff filed the present complaint.

"9. Based on the above stipulation of facts, the legal issues to be resolved by this Honorable Court are: (1) the period of prescription applicable in
matters of refund of municipal taxes errenously paid by a taxpayer and (2) refund of taxes not paid under protest. x x x."

Said judgment was directly appealed to this Court on two dominant issues to wit: (1) Whether or not the amounts paid by plaintiff-appelle, as retail dealer's taxes
under Ordinance 1925, as amended by Ordinance No. 3364of the City of Manila, without protest, are refundable;(2) Assuming arguendo, that plaintiff-appellee is
entitled to the refund of the retail taxes in question, whether or not the claim for refund filed in October 1956, in so far as said claim refers to taxes paid from 1950
to 1952 has already prescribed. .

Under the first issue, defendants-appellants contend tht the taxes in question were voluntarily paid by appellee company and since, in this jurisdiction, in order that
a legal basis arise for claim of refund of taxes erroneously assessed, payment thereof must be made under protest, and this being a condition sine qua non, and
no protest having been made, -- verbally or in writing, therebyindicating that the payment was voluntary, the action must fail. Cited in support of the above
contention, are the cases of Zaragoza vs. Alfonso, 46 Phil. 160-161, and Gavino v. Municipality of Calapan, 71 Phil. 438..

In refutation of the above stand of appellants, appellee avers tht the payments could not have been voluntary.At most, they were paid "mistakenly and in good
faith"and "without protest in the erroneous belief that it was liable thereof." Voluntariness is incompatible with protest and mistake. It submits that this is a simple
case of "solutio indebiti"..

Appellants do not dispute the fact that appellee-companyis exempted from the payment of the tax in question.This is manifest from the reply of appellant City
Treasurer stating that sales of manufactured products at the factory site are not taxable either under the Wholesalers Ordinance or under the Retailers' Ordinance.
With this admission, it would seem clear that the taxes collected from appellee were paid, thru an error or mistake, which places said act of payment within the
pale of the new Civil Code provision on solutio indebiti. The appellant City of Manila, at the very start, notwithstanding the Ordinance imposing the Retailer's Tax,
had no right to demand payment thereof..

"If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligationto retun it arises" (Art. 2154, NCC)..

Appelle categorically stated that the payment was not voluntarily made, (a fact found also by the lower court),but on the erronoues belief, that they were due.
Under this circumstance, the amount paid, even without protest is recoverable. "If the payer was in doubt whether the debt was due, he may recover if he proves
that it was not due" (Art. 2156, NCC). Appellee had duly proved that taxes were not lawfully due. There is, therefore, no doubt that the provisions of solutio
indebtiti, the new Civil Code, apply to the admitted facts of the case..

With all, appellant quoted Manresa as saying: "x x x De la misma opinion son el Sr. Sanchez Roman y el Sr. Galcon, et cual afirma que si la paga se hizo por error
de derecho, ni existe el cuasi-contrato ni esta obligado a la restitucion el que cobro, aunque no se debiera lo que se pago" (Manresa, Tomo 12, paginas 611-612).
This opinion, however, has already lost its persuasiveness, in view of the provisions of the Civil Code, recognizing "error de derecho" as a basis for the quasi-
contract, of solutio indebiti. .

"Payment by reason of a mistake in the contruction or application of a doubtful or difficult question of law may come within the scope of the preceding article" (Art.
21555)..
There is no gainsaying the fact that the payments made by appellee was due to a mistake in the construction of a doubtful question of law. The reason underlying
similar provisions, as applied to illegal taxation, in the United States, is expressed in the case of Newport v. Ringo, 37 Ky. 635, 636; 10 S.W. 2, in the following
manner:.

"It is too well settled in this state to need the citation of authority that if money be paid through a clear mistake of law or fact, essentially affecting the rights of the
parties, and which in law or conscience was not payable, and should not be retained by the party receiving it, it may be recovered. Both law and sound morality so
dictate. Especially should this be the rule as to illegal taxation. The taxpayer has no voice in the impositionof the burden. He has the right to presume that the
taxing power has been lawfully exercised. He should not be required to know more than those in authority over him, nor should he suffer loss by complying with
what he bona fide believe to be his duty as a good citizen. Upon the contrary, he should be promoted to its ready performance by refunding to him any legal
exaction paid by him in ignorance of its illegality; and, certainly, in such a case, if be subject to a penalty for nonpayment, his compliance under belief of its legality,
and without awaitinga resort to judicial proceedings should not be regrded in law as so far voluntary as to affect his right of recovery.".

"Every person who through an act or performance by another, or any other means, acquires or comes into possession of something at the expense of the latter
without just or legal grounds, shall return the same to him"(Art. 22, Civil Code). It would seems unedifying for the government, (here the City of Manila), that
knowing it has no right at all to collect or to receive money for alleged taxes paid by mistake, it would be reluctant to return the same. No one should enrich itself
unjustly at the expense of another (Art. 2125, Civil Code)..

Admittedly, plaintiff-appellee paid the tax without protest.Equally admitted is the fact that section 76 of the Charter of Manila provides that "No court shall entertain
any suit assailing the validity of tax assessed under this article until the taxpayer shall have paid, under protest the taxes assessed against him, xx". It should be
noted, however, that the article referred to in said section is Article XXI, entitled Department of Assessment and the sections thereunder manifestly show that said
article and its sections relate to asseessment, collection and recovery of real estate taxes only. Said section 76, therefor, is not applicable to the case at bar, which
relates to the recover of retail dealer taxes..

In the opinion of the Secretary of Justice (Op. 90,Series of 1957, in a question similar to the case at bar, it was held that the requiredment of protest refers only to
the payment of taxes which are directly imposed by the charter itself, that is, real estate taxes, which view was sustained by judicial and administrative precedents,
one of which is the case of Medina, et al., v. City of Baguio, G.R. No. L-4269, Aug. 29, 1952. In other words, protest is not necessary for the recovery of retail
dealer's taxes, like the present, because they are not directly imposed by the charter. In the Medina case, the Charter of Baguio (Chap. 61, Revised Adm. Code),
provides that "no court shall entertain any suit assailing the validity of a tax assessed unde this charter until the tax-payer shall have paid, under protest, the taxes
assessed against him (sec.25474[b], Rev. Adm. Code), a proviso similar to section 76 of the Manila Charter. The refund of specific taxes paid under a void
ordinance was ordered, although it did not appear that payment thereof was made under protest..

In a recent case, We said: "The appellants argue that the sum the refund of which is sought by the appellee, was not paid under protest and hence is not
refundable. Again, the trial court correctly held that being unauthorized, it is not a tax assessed under the Charter of the Appellant City of Davao and for that
reason, no protest is necessary for a claim or demand for its refund" (Citing the Medina case, supra; East Asiatic Co., Ltd. v. City of Davao, G.R. No. L-16253,
Aug. 21, 1962). Lastly, being a case of solutio indebiti, protest is not required as a condition sine qua non for its application..

The next issue in discussion is that of prescription. Appellants maintain that article 1146 (NCC), which provides for a period of four (4) years (upon injury to the
rights of the plaintiff), apply to the case. On the other hand, appellee contends that provisions of Act 190 (Code of Civ. Procedure) should apply, insofar as
payments made before the effectivity of the New Civil Code on August 30, 1950, the period of which is ten (10) years, (Sec. 40,Act No. 190; Osorio v. Tan Jongko,
51 O.G. 6211) and article 1145 (NCC), for payments made after said effectivity, providing for a period of six (6) years (upon quasi-contracts like solutio indebiti).
Even if the provisionsof Act No. 190 should apply to those payments made before the effectivity of the new Civil Code, because "prescription already runnig before
the effectivity of this Code shall be governed by laws previously in force x x x" (art. 1116, NCC), for payments made after said effectivity,providing for a period of
six (6) years (upon quasi-contracts like solutio indebiti). Even if the provisions of Act No. 190should apply to those payments made before the effectivity of the new
Civil Code, because "prescription already running before the effectivity of of this Code shall be govern by laws previously in force xxx " (Art. 1116, NCC), Still
payments made before August 30, 1950 are no longer recoverable in view of the second paragraph of said article (1116), which provides:"but if since the time this
Code took effect the entire period herein required for prescription should elapse the present Code shall be applicable even though by the former laws a longer
period might be required". Anent the payments made after August 30, 1950, it is abvious that the action has prescribed with respect to those made before October
30, 1950 only, considering the fact that the prescription of action is interrupted xxx when is a writteen extra-judicial demand x x x" (Art. 1155, NCC), and the written
demand in the case at bar was made on October 30, 1956 (Stipulation of Facts).MODIFIED in the sense that only payments made on or after October 30, 1950
should be refunded, the decision appealed from is affirmed, in all other respects. No costs. .

G.R. No. 179337 April 30, 2008

JOSEPH SALUDAGA, petitioner,

vs.
FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his capacity as President of FEU, respondents.

DECISION

YNARES-SANTIAGO, J.:

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the June 29, 2007 Decision2 of the Court of Appeals in CA-G.R. CV No. 87050,
nullifying and setting aside the November 10, 2004 Decision3 of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 and dismissing the
complaint filed by petitioner; as well as its August 23, 2007 Resolution4 denying the Motion for Reconsideration.5

The antecedent facts are as follows:

Petitioner Joseph Saludaga was a sophomore law student of respondent Far Eastern University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the
security guards on duty at the school premises on August 18, 1996. Petitioner was rushed to FEU-Dr. Nicanor Reyes Medical Foundation (FEU-NRMF) due to the
wound he sustained.6Meanwhile, Rosete was brought to the police station where he explained that the shooting was accidental. He was eventually released
considering that no formal complaint was filed against him.

Petitioner thereafter filed a complaint for damages against respondents on the ground that they breached their obligation to provide students with a safe and
secure environment and an atmosphere conducive to learning. Respondents, in turn, filed a Third-Party Complaint7 against Galaxy Development and Management
Corporation (Galaxy), the agency contracted by respondent FEU to provide security services within its premises and Mariano D. Imperial (Imperial), Galaxy's
President, to indemnify them for whatever would be adjudged in favor of petitioner, if any; and to pay attorney's fees and cost of the suit. On the other hand,
Galaxy and Imperial filed a Fourth-Party Complaint against AFP General Insurance.8

On November 10, 2004, the trial court rendered a decision in favor of petitioner, the dispositive portion of which reads:

WHEREFORE, from the foregoing, judgment is hereby rendered ordering:

1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly and severally Joseph Saludaga the amount of P35,298.25
for actual damages with 12% interest per annum from the filing of the complaint until fully paid; moral damages of P300,000.00, exemplary
damages of P500,000.00, attorney's fees of P100,000.00 and cost of the suit;

2. Galaxy Management and Development Corp. and its president, Col. Mariano Imperial to indemnify jointly and severally 3rd party plaintiffs
(FEU and Edilberto de Jesus in his capacity as President of FEU) for the above-mentioned amounts;

3. And the 4th party complaint is dismissed for lack of cause of action. No pronouncement as to costs.

SO ORDERED.9

Respondents appealed to the Court of Appeals which rendered the assailed Decision, the decretal portion of which provides, viz:

WHEREFORE, the appeal is hereby GRANTED. The Decision dated November 10, 2004 is hereby REVERSED and SET ASIDE. The complaint filed
by Joseph Saludaga against appellant Far Eastern University and its President in Civil Case No. 98-89483 is DISMISSED.

SO ORDERED.10

Petitioner filed a Motion for Reconsideration which was denied; hence, the instant petition based on the following grounds:

THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO LAW AND JURISPRUDENCE IN RULING THAT:

5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT;

5.2. RESPONDENTS ARE NOT LIABLE FOR DAMAGES FOR THE INJURY RESULTING FROM A GUNSHOT WOUND SUFFERED BY THE
PETITIONER FROM THE HANDS OF NO LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION OF THEIR BUILT-IN CONTRACTUAL
OBLIGATION TO PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME, TO PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL
ENVIRONMENT;

5.3. SECURITY GAURD, ALEJANDRO ROSETE, WHO SHOT PETITIONER WHILE HE WAS WALKING ON HIS WAY TO THE LAW LIBRARY OF
RESPONDENT FEU IS NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT FOR SECURITY SERVICES BETWEEN GALAXY AND FEU
NOTWITHSTANDING THE FACT THAT PETITIONER, NOT BEING A PARTY TO IT, IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE OF
RELATIVITY OF CONTRACTS; and

5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS THE AGENCY WHICH WOULD PROVIDE SECURITY SERVICES
WITHIN THE PREMISES OF RESPONDENT FEU.11

Petitioner is suing respondents for damages based on the alleged breach of student-school contract for a safe learning environment. The pertinent portions of
petitioner's Complaint read:

6.0. At the time of plaintiff's confinement, the defendants or any of their representative did not bother to visit and inquire about his condition. This abject
indifference on the part of the defendants continued even after plaintiff was discharged from the hospital when not even a word of consolation was
heard from them. Plaintiff waited for more than one (1) year for the defendants to perform their moral obligation but the wait was fruitless. This
indifference and total lack of concern of defendants served to exacerbate plaintiff's miserable condition.

xxxx

11.0. Defendants are responsible for ensuring the safety of its students while the latter are within the University premises. And that should anything
untoward happens to any of its students while they are within the University's premises shall be the responsibility of the defendants. In this case,
defendants, despite being legally and morally bound, miserably failed to protect plaintiff from injury and thereafter, to mitigate and compensate plaintiff
for said injury;

12.0. When plaintiff enrolled with defendant FEU, a contract was entered into between them. Under this contract, defendants are supposed to ensure
that adequate steps are taken to provide an atmosphere conducive to study and ensure the safety of the plaintiff while inside defendant FEU's
premises. In the instant case, the latter breached this contract when defendant allowed harm to befall upon the plaintiff when he was shot at by, of all
people, their security guard who was tasked to maintain peace inside the campus.12

In Philippine School of Business Administration v. Court of Appeals,13 we held that:

When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both
parties are bound to comply with. For its part, the school undertakes to provide the student with an education that would presumably suffice to equip
 him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's
academic requirements and observe its rules and regulations.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes or assists in
attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore
the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there looms around the school premises a
constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order within the campus
premises and to prevent the breakdown thereof.14

It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such, there was created a contractual obligation between the two
parties. On petitioner's part, he was obliged to comply with the rules and regulations of the school. On the other hand, respondent FEU, as a learning institution is
mandated to impart knowledge and equip its students with the necessary skills to pursue higher education or a profession. At the same time, it is obliged to ensure
and take adequate steps to maintain peace and order within the campus.

It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of its compliance justify, prima facie, a corresponding right of
relief.15 In the instant case, we find that, when petitioner was shot inside the campus by no less the security guard who was hired to maintain peace and secure the
premises, there is a prima facie showing that respondents failed to comply with its obligation to provide a safe and secure environment to its students.

In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event because they could not have reasonably foreseen nor
avoided the accident caused by Rosete as he was not their employee;16and that they complied with their obligation to ensure a safe learning environment for their
students by having exercised due diligence in selecting the security services of Galaxy.

After a thorough review of the records, we find that respondents failed to discharge the burden of proving that they exercised due diligence in providing a safe
learning environment for their students. They failed to prove that they ensured that the guards assigned in the campus met the requirements stipulated in the
Security Service Agreement. Indeed, certain documents about Galaxy were presented during trial; however, no evidence as to the qualifications of Rosete as a
security guard for the university was offered.

Respondents also failed to show that they undertook steps to ascertain and confirm that the security guards assigned to them actually possess the qualifications
required in the Security Service Agreement. It was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital documents
enumerated in its contract with Galaxy. Total reliance on the security agency about these matters or failure to check the papers stating the qualifications of the
guards is negligence on the part of respondents. A learning institution should not be allowed to completely relinquish or abdicate security matters in its premises to
the security agency it hired. To do so would result to contracting away its inherent obligation to ensure a safe learning environment for its students.

Consequently, respondents' defense of force majeure must fail. In order for force majeure to be considered, respondents must show that no negligence or
misconduct was committed that may have occasioned the loss. An act of God cannot be invoked to protect a person who has failed to take steps to forestall the
possible adverse consequences of such a loss. One's negligence may have concurred with an act of God in producing damage and injury to another; nonetheless,
showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be
partly the result of a person's participation - whether by active intervention, neglect or failure to act - the whole occurrence is humanized and removed from the
rules applicable to acts of God.17

Article 1170 of the Civil Code provides that those who are negligent in the performance of their obligations are liable for damages. Accordingly, for breach of
contract due to negligence in providing a safe learning environment, respondent FEU is liable to petitioner for damages. It is essential in the award of damages
that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts.18

In the instant case, it was established that petitioner spent P35,298.25 for his hospitalization and other medical expenses. 19 While the trial court correctly imposed
interest on said amount, however, the case at bar involves an obligation arising from a contract and not a loan or forbearance of money. As such, the proper rate
of legal interest is six percent (6%) per annum of the amount demanded. Such interest shall continue to run from the filing of the complaint until the finality of this
Decision.20 After this Decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum until its satisfaction.

The other expenses being claimed by petitioner, such as transportation expenses and those incurred in hiring a personal assistant while recuperating were
however not duly supported by receipts.21 In the absence thereof, no actual damages may be awarded. Nonetheless, temperate damages under Art. 2224 of the
Civil Code may be recovered where it has been shown that the claimant suffered some pecuniary loss but the amount thereof cannot be proved with certainty.
Hence, the amount of P20,000.00 as temperate damages is awarded to petitioner.

As regards the award of moral damages, there is no hard and fast rule in the determination of what would be a fair amount of moral damages since each case
must be governed by its own peculiar circumstances.22 The testimony of petitioner about his physical suffering, mental anguish, fright, serious anxiety, and moral
shock resulting from the shooting incident23 justify the award of moral damages. However, moral damages are in the category of an award designed to compensate
the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The award is not meant to enrich the complainant at the expense of the
defendant, but to enable the injured party to obtain means, diversion, or amusements that will serve to obviate the moral suffering he has undergone. It is aimed at
the restoration, within the limits of the possible, of the spiritual status quo ante, and should be proportionate to the suffering inflicted. Trial courts must then guard
against the award of exorbitant damages; they should exercise balanced restrained and measured objectivity to avoid suspicion that it was due to passion,
prejudice, or corruption on the part of the trial court.24 We deem it just and reasonable under the circumstances to award petitioner moral damages in the amount of
P100,000.00.

Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of damages is reasonable in view of Article 2208 of the Civil
Code.25 However, the award of exemplary damages is deleted considering the absence of proof that respondents acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner.

We note that the trial court held respondent De Jesus solidarily liable with respondent FEU. In Powton Conglomerate, Inc. v. Agcolicol,26 we held that:

[A] corporation is invested by law with a personality separate and distinct from those of the persons composing it, such that, save for certain exceptions,
corporate officers who entered into contracts in behalf of the corporation cannot be held personally liable for the liabilities of the latter. Personal liability
of a corporate director, trustee or officer along (although not necessarily) with the corporation may so validly attach, as a rule, only when - (1) he
assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross negligence in directing its affairs, or when there is a
 conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) he consents to the issuance of watered down stocks or
who, having knowledge thereof, does not forthwith file with the corporate secretary his written objection thereto; (3) he agrees to hold himself personally
and solidarily liable with the corporation; or (4) he is made by a specific provision of law personally answerable for his corporate action.27

None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus should not be held solidarily liable with respondent FEU.

Incidentally, although the main cause of action in the instant case is the breach of the school-student contract, petitioner, in the alternative, also holds respondents
vicariously liable under Article 2180 of the Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is
responsible.

xxxx

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

xxxx

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

We agree with the findings of the Court of Appeals that respondents cannot be held liable for damages under Art. 2180 of the Civil Code because respondents are
not the employers of Rosete. The latter was employed by Galaxy. The instructions issued by respondents' Security Consultant to Galaxy and its security guards
are ordinarily no more than requests commonly envisaged in the contract for services entered into by a principal and a security agency. They cannot be construed
as the element of control as to treat respondents as the employers of Rosete.28

As held in Mercury Drug Corporation v. Libunao:29

In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires and assigns the works of its watchmen or security guards to a client,
the employer of such guards or watchmen is such agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the
duty to observe the diligence of a good father of a family cannot be demanded from the said client:

… [I]t is settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of its watchmen or security
guards, the agency is the employer of such guards or watchmen. Liability for illegal or harmful acts committed by the security guards
attaches to the employer agency, and not to the clients or customers of such agency. As a general rule, a client or customer of a security
agency has no hand in selecting who among the pool of security guards or watchmen employed by the agency shall be assigned to it; the
duty to observe the diligence of a good father of a family in the selection of the guards cannot, in the ordinary course of events, be demanded
from the client whose premises or property are protected by the security guards.

xxxx

The fact that a client company may give instructions or directions to the security guards assigned to it, does not, by itself, render the client responsible
as an employer of the security guards concerned and liable for their wrongful acts or omissions. 31

We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and Rubber Company of the Philippines v. Tempengko,32 we held that:

The third-party complaint is, therefore, a procedural device whereby a 'third party' who is neither a party nor privy to the act or deed complained of by
the plaintiff, may be brought into the case with leave of court, by the defendant, who acts as third-party plaintiff to enforce against such third-party
defendant a right for contribution, indemnity, subrogation or any other relief, in respect of the plaintiff's claim. The third-party complaint is actually
independent of and separate and distinct from the plaintiff's complaint. Were it not for this provision of the Rules of Court, it would have to be filed
independently and separately from the original complaint by the defendant against the third-party. But the Rules permit defendant to bring in a third-
party defendant or so to speak, to litigate his separate cause of action in respect of plaintiff's claim against a third-party in the original and principal case
with the object of avoiding circuitry of action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the entire subject
matter arising from one particular set of facts.33

Respondents and Galaxy were able to litigate their respective claims and defenses in the course of the trial of petitioner's complaint. Evidence duly supports the
findings of the trial court that Galaxy is negligent not only in the selection of its employees but also in their supervision. Indeed, no administrative sanction was
imposed against Rosete despite the shooting incident; moreover, he was even allowed to go on leave of absence which led eventually to his
disappearance.34 Galaxy also failed to monitor petitioner's condition or extend the necessary assistance, other than the P5,000.00 initially given to petitioner.
Galaxy and Imperial failed to make good their pledge to reimburse petitioner's medical expenses.

For these acts of negligence and for having supplied respondent FEU with an unqualified security guard, which resulted to the latter's breach of obligation to
petitioner, it is proper to hold Galaxy liable to respondent FEU for such damages equivalent to the above-mentioned amounts awarded to petitioner.

Unlike respondent De Jesus, we deem Imperial to be solidarily liable with Galaxy for being grossly negligent in directing the affairs of the security agency. It was
Imperial who assured petitioner that his medical expenses will be shouldered by Galaxy but said representations were not fulfilled because they presumed that
petitioner and his family were no longer interested in filing a formal complaint against them.35

WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of Appeals in CA-G.R. CV No. 87050 nullifying the Decision of the trial court
and dismissing the complaint as well as the August 23, 2007 Resolution denying the Motion for Reconsideration are REVERSED and SET ASIDE. The Decision
of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 finding respondent FEU liable for damages for breach of its obligation to provide
students with a safe and secure learning atmosphere, is AFFIRMED with the following MODIFICATIONS:

a. respondent Far Eastern University (FEU) is ORDERED to pay petitioner actual damages in the amount of P35,298.25, plus 6% interest per annum from the
filing of the complaint until the finality of this Decision. After this decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum
until its satisfaction;

b. respondent FEU is also ORDERED to pay petitioner temperate damages in the amount of P20,000.00; moral damages in the amount of P100,000.00; and
attorney's fees and litigation expenses in the amount of P50,000.00;

c. the award of exemplary damages is DELETED.

The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The counterclaims of respondents are likewise DISMISSED.

Galaxy Development and Management Corporation (Galaxy) and its president, Mariano D. Imperial are ORDEREDto jointly and severally pay respondent FEU
damages equivalent to the above-mentioned amounts awarded to petitioner.

SO ORDERED.

G.R. No. L-3756 June 30, 1952

SAGRADA ORDEN DE PREDICADORES DEL SANTISMO ROSARIO DE FILIPINAS, plaintiff-appellee,

vs.
NATIONAL COCONUT CORPORATION, defendant-appellant.

First Assistant Corporate Counsel Federico C. Alikpala and Assistant Attorney Augusto Kalaw for appellant.
Ramirez and Ortigas for appellee.

LABRADOR, J.:

This is an action to recover the possession of a piece of real property (land and warehouses) situated in Pandacan Manila, and the rentals for its occupation and
use. The land belongs to the plaintiff, in whose name the title was registered before the war. On January 4, 1943, during the Japanese military occupation, the land
was acquired by a Japanese corporation by the name of Taiwan Tekkosho for the sum of P140,00, and thereupon title thereto issued in its name (transfer
certificate of title No. 64330, Register of Deeds, Manila). After liberation, more specifically on April 4, 1946, the Alien Property Custodian of the United States of
America took possession, control, and custody thereof under section 12 of the Trading with the Enemy Act, 40 Stat., 411, for the reason that it belonged to an
enemy national. During the year 1946 the property was occupied by the Copra Export Management Company under a custodianship agreement with United States
Alien Property Custodian (Exhibit G), and when it vacated the property it was occupied by the defendant herein. The Philippine Government made representations
with the Office Alien Property Custodian for the use of property by the Government (see Exhibits 2, 2-A, 2-B, and 1). On March 31, 1947, the defendant was
authorized to repair the warehouse on the land, and actually spent thereon the repairs the sum of P26,898.27. In 1948, defendant leased one-third of the
warehouse to one Dioscoro Sarile at a monthly rental of P500, which was later raised to P1,000 a month. Sarile did not pay the rents, so action was brought
against him. It is not shown, however, if the judgment was ever executed.

Plaintiff made claim to the property before the Alien Property Custodian of the United States, but as this was denied, it brought an action in court (Court of First
Instance of Manila, civil case No. 5007, entitled "La Sagrada Orden Predicadores de la Provinicia del Santisimo Rosario de Filipinas," vs. Philippine Alien Property
Administrator, defendant, Republic of the Philippines, intervenor) to annul the sale of property of Taiwan Tekkosho, and recover its possession. The Republic of
the Philippines was allowed to intervene in the action. The case did not come for trial because the parties presented a joint petition in which it is claimed by plaintiff
that the sale in favor of the Taiwan Tekkosho was null and void because it was executed under threats, duress, and intimidation, and it was agreed that the title
issued in the name of the Taiwan Tekkosho be cancelled and the original title of plaintiff re-issued; that the claims, rights, title, and interest of the Alien Property
Custodian be cancelled and held for naught; that the occupant National Coconut Corporation has until February 28, 1949, to recover its equipment from the
property and vacate the premises; that plaintiff, upon entry of judgment, pay to the Philippine Alien Property Administration the sum of P140,000; and that the
Philippine Alien Property Administration be free from responsibility or liability for any act of the National Coconut Corporation, etc. Pursuant to the agreement the
court rendered judgment releasing the defendant and the intervenor from liability, but reversing to the plaintiff the right to recover from the National Coconut
Corporation reasonable rentals for the use and occupation of the premises. (Exhibit A-1.)

The present action is to recover the reasonable rentals from August, 1946, the date when the defendant began to occupy the premises, to the date it vacated it.
The defendant does not contest its liability for the rentals at the rate of P3,000 per month from February 28, 1949 (the date specified in the judgment in civil case
No. 5007), but resists the claim therefor prior to this date. It interposes the defense that it occupied the property in good faith, under no obligation whatsoever to
pay rentals for the use and occupation of the warehouse. Judgment was rendered for the plaintiff to recover from the defendant the sum of P3,000 a month, as
reasonable rentals, from August, 1946, to the date the defendant vacates the premises. The judgment declares that plaintiff has always been the owner, as the
sale of Japanese purchaser was void ab initio; that the Alien Property Administration never acquired any right to the property, but that it held the same in trust until
the determination as to whether or not the owner is an enemy citizen. The trial court further declares that defendant can not claim any better rights than its
predecessor, the Alien Property Administration, and that as defendant has used the property and had subleased portion thereof, it must pay reasonable rentals for
its occupation.

Against this judgment this appeal has been interposed, the following assignment of error having been made on defendant-appellant's behalf:

The trial court erred in holding the defendant liable for rentals or compensation for the use and occupation of the property from the middle of August,
1946, to December 14, 1948.

1. Want to "ownership rights" of the Philippine Alien Property Administration did not render illegal or invalidate its grant to the defendant of the free use
of property.
 2. the decision of the Court of First Instance of Manila declaring the sale by the plaintiff to the Japanese purchaser null and void ab initio and that the
plaintiff was and has remained as the legal owner of the property, without legal interruption, is not conclusive.

3. Reservation to the plaintiff of the right to recover from the defendant corporation not binding on the later;

4. Use of the property for commercial purposes in itself alone does not justify payment of rentals.

5. Defendant's possession was in good faith.

6. Defendant's possession in the nature of usufruct.

In reply, plaintiff-appellee's counsel contends that the Philippine Allien Property Administration (PAPA) was a mere administrator of the owner (who ultimately was
decided to be plaintiff), and that as defendant has used it for commercial purposes and has leased portion of it, it should be responsible therefore to the owner,
who had been deprived of the possession for so many years. (Appellee's brief, pp. 20, 23.)

We can not understand how the trial court, from the mere fact that plaintiff-appellee was the owner of the property and the defendant-appellant the occupant, which
used for its own benefit but by the express permission of the Alien Property Custodian of the United States, so easily jumped to the conclusion that the occupant is
liable for the value of such use and occupation. If defendant-appellant is liable at all, its obligations, must arise from any of the four sources of obligations, namley,
law, contract or quasi-contract, crime, or negligence. (Article 1089, Spanish Civil Code.) Defendant-appellant is not guilty of any offense at all, because it entered
the premises and occupied it with the permission of the entity which had the legal control and administration thereof, the Allien Property Administration. Neither
was there any negligence on its part. There was also no privity (of contract or obligation) between the Alien Property Custodian and the Taiwan Tekkosho, which
had secured the possession of the property from the plaintiff-appellee by the use of duress, such that the Alien Property Custodian or its permittee (defendant-
appellant) may be held responsible for the supposed illegality of the occupation of the property by the said Taiwan Tekkosho. The Allien Property Administration
had the control and administration of the property not as successor to the interests of the enemy holder of the title, the Taiwan Tekkosho, but by express provision
of law (Trading with the Enemy Act of the United States, 40 Stat., 411; 50 U.S.C.A., 189). Neither is it a trustee of the former owner, the plaintiff-appellee herein,
but a trustee of then Government of the United States (32 Op. Atty. Gen. 249; 50 U.S.C.A. 283), in its own right, to the exclusion of, and against the claim or title
of, the enemy owner. (Youghioheny & Ohio Coal Co. vs. Lasevich [1920], 179 N.W., 355; 171 Wis., 347; U.S.C.A., 282-283.) From August, 1946, when defendant-
appellant took possession, to the late of judgment on February 28, 1948, Allien Property Administration had the absolute control of the property as trustee of the
Government of the United States, with power to dispose of it by sale or otherwise, as though it were the absolute owner. (U.S vs. Chemical Foundation [C.C.A.
Del. 1925], 5 F. [2d], 191; 50 U.S.C.A., 283.) Therefore, even if defendant-appellant were liable to the Allien Property Administration for rentals, these would not
accrue to the benefit of the plaintiff-appellee, the owner, but to the United States Government.

But there is another ground why the claim or rentals can not be made against defendant-appellant. There was no agreement between the Alien Property Custodian
and the defendant-appellant for the latter to pay rentals on the property. The existence of an implied agreement to that effect is contrary to the circumstances. The
copra Export Management Company, which preceded the defendant-appellant, in the possession and use of the property, does not appear to have paid rentals
therefor, as it occupied it by what the parties denominated a "custodianship agreement," and there is no provision therein for the payment of rentals or of any
compensation for its custody and or occupation and the use. The Trading with the Enemy Act, as originally enacted, was purely a measure of conversation, hence,
it is very unlikely that rentals were demanded for the use of the property. When the National coconut Corporation succeeded the Copra Export Management
Company in the possession and use of the property, it must have been also free from payment of rentals, especially as it was Government corporation, and steps
where then being taken by the Philippine Government to secure the property for the National Coconut Corporation. So that the circumstances do not justify the
finding that there was an implied agreement that the defendant-appellant was to pay for the use and occupation of the premises at all.

The above considerations show that plaintiff-appellee's claim for rentals before it obtained the judgment annulling the sale of the Taiwan Tekkosho may not be
predicated on any negligence or offense of the defendant-appellant, or any contract, express or implied, because the Allien Property Administration was neither a
trustee of plaintiff-appellee, nor a privy to the obligations of the Taiwan Tekkosho, its title being based by legal provision of the seizure of enemy property. We have
also tried in vain to find a law or provision thereof, or any principle in quasi contracts or equity, upon which the claim can be supported. On the contrary, as
defendant-appellant entered into possession without any expectation of liability for such use and occupation, it is only fair and just that it may not be held liable
therefor. And as to the rents it collected from its lessee, the same should accrue to it as a possessor in good faith, as this Court has already expressly held.
(Resolution, National Coconut Corporation vs. Geronimo, 83 Phil. 467.)

Lastly, the reservation of this action may not be considered as vesting a new right; if no right to claim for rentals existed at the time of the reservation, no rights can
arise or accrue from such reservation alone.

Wherefore, the part of the judgment appealed from, which sentences defendant-appellant to pay rentals from August, 1946, to February 28, 1949, is hereby
reversed. In all other respects the judgment is affirmed. Costs of this appeal shall be against the plaintiff-appellee.

[G.R. No. L-36840. May 22, 1973.]

PEOPLE’S CAR, INC., Plaintiff-Appellant, v. COMMANDO SECURITY SERVICE AGENCY, Defendant-Appellee.

DECISION

TEEHANKEE, J.:

In this appeal from the adverse judgment of the Davao court of first instance limiting plaintiff-appellant’s recovery under its complaint to the sum of P1,000.00 instead of the
actual damages of P8,489.10 claimed and suffered by it as a direct result of the wrongful acts of defendant security agency’s guard assigned at plaintiff’s premises in pursuance
of their "Guard Service Contract", the Court finds merit in the appeal and accordingly reverses the trial court’s judgment.

The appeal was certified to this Court by a special division of the Court of Appeals on a four-to-one vote as per its resolution of April 14, 1973 that "since the case was submitted
to the court a quo for decision on the strength of the stipulation of facts, only questions of law can he involved in the present appeal."
cralaw virtua1aw li bra ry

The Court has accepted such certification and docketed this appeal on the strength of its own finding from the records that plaintiff’s notice of appeal was expressly to this Court
(not to the appellate court) "on pure questions of law" 1 and its record on appeal accordingly prayed that "the corresponding records be certified and forwarded to the Honorable
Supreme Court." 2 The trial court so approved the same 3 on July 3, 1971 instead of having required the filing of a petition for review of the judgment sought to be appealed
from directly with this Court, in accordance with the provisions of Republic Act 5440. By some unexplained and hitherto undiscovered error of the clerk of court, furthermore, the
record on appeal was erroneously forwarded to the appellate court rather than to this Court.

The parties submitted the case for judgment on a stipulation of facts. There is thus no dispute as to the factual bases of plaintiff’s complaint for recovery of actual damages
against defendant, to wit, that under the subsisting "Guard Service Contract" between the parties, defendant-appellee as a duly licensed security service agency undertook in
consideration of the payments made by plaintiff "to safeguard and protect the business premises of (plaintiff) from theft, pilferage, robbery, vandalism and all other unlawful acts
of any person or persons prejudicial to the interest of (plaintiff)." 4

On April 5, 1970 at around 1:00 A.M., however, defendant’s security guard on duty at plaintiff’s premises, "without any authority, consent, approval, knowledge or orders of the
plaintiff and/or defendant brought out of the compound of the plaintiff a car belonging to its customer, and drove said car for a place or places unknown, abandoning his post as
such security guard on duty inside the plaintiff’s compound, and while so driving said car in one of the City streets lost control of said car, causing the same to fall into a ditch
along J.P. Laurel St., Davao City by reason of which the plaintiff’s complaint for qualified theft against said driver, was blottered in the office of the Davao City Police
Department." 5

As a result of these wrongful acts of defendant’s security guard, the car of plaintiff’s customer, Joseph Luy, which had been left with plaintiff for servicing and maintenance,
"suffered extensive damage in the total amount of P7,07910" 6 besides the car rental value "chargeable to defendant" in the sum of P1,410.00 for a car that plaintiff had to rent
and make available to its said customer to enable him to pursue his business and occupation for the period of forty-seven (47) days (from April 25 to June 10, 1970) that it took
plaintiff to repair the damaged car, 7 or total actual damages incurred by plaintiff in the sum of P8,489.10.

Plaintiff claimed that defendant was liable for the entire amount under paragraph 5 of their contract whereunder defendant assumed "sole responsibility for the acts done during
their watch hours" by its guards, whereas defendant contended, without questioning the amount of the actual damages incurred by plaintiff, that its liability "shall not exceed one
thousand (P1,000.00) pesos per guard post" under paragraph 4 of their contract.

The parties thus likewise stipulated on this sole issue submitted by them for adjudication, as follows: jgc:chanrobles. com.ph

"Interpretation of the contract, ad to the extent of the liability of the defendant to the plaintiff by reason of the acts of the employees of the defendant is the only issue to be
resolved.

"The defendant relies on Par. 4 of the contract to support its contention while the plaintiff relies on Par. 5 of the same contract in support of its claims against the defendant. For
ready reference they are quoted hereunder: chanro b1es vi rt ual 1aw li bra ry

‘Par. 4. — Party of the Second Part (defendant) through the negligence of its guards, after an investigation has been conducted by the Party of the First Part (plaintiff) wherein
the Party of the Second Part has been duly represented, shall assume full responsibilities for any loss or damages that may occur to any property of the Party of the First Part for
which it is accountable, during the watch hours of the Party of the Second Part, provided the same is reported to the Party of the Second Part within twenty-four (24) hours of
the occurrence, except where such loss or damage is due to force majeure, provided however that after the proper investigation to be made thereof that the guard on post is
found negligent and that the amount of the loss shall not exceed ONE THOUSAND (P1,000.00) PESOS per guard post.’

‘Par. 5— The party of the Second Part assumes the responsibility for the proper performance by the guards employed, of their duties and (shall) be solely responsible for the acts
done during their watch hours, the Party of the First Part being specifically released from any and all liabilities to the former’s employee or to the third parties arising from the
acts or omissions done by the guards during their tour of duty.’" 8

The trial court, misreading the above-quoted contractual provisions, held that "the liability of the defendant in favor of the plaintiff falls under paragraph 4 of the Guard Service
Contract" and rendered judgment "funding the defendant liable to the plaintiff in the amount of P1,000.00 with costs." cralaw virtua 1 aw libra ry

Hence, this appeal, which, as already indicated, is meritorious and must be granted.

Paragraph 4 of the contract, which limits-defendant’s liability for the amount of loss or damage to any property of plaintiff to "P1,000.00 per guard post," is by its own terms
applicable only for loss or damage "through the negligence of its guards . . . during the watch hours" provided that the same is duly reported by plaintiff within 24 hours of the
occurrence and the guard’s negligence is verified after proper investigation with the attendance of both contracting parties. Said paragraph is manifestly inapplicable to the
stipulated facts of record, which involve neither property of plaintiff that has been lost or damaged at its premises nor mere negligence of defendant’s security guard on duty.

Here, instead of defendant, through its assigned security guards, complying with its contractual undertaking "to safeguard and protect the business premises of (plaintiff) from
theft, robbery, vandalism and all other unlawful acts of any person or persons," defendant’s own guard on duty unlawfully and wrongfully drove out of plaintiff’s premises a
customer’s car, lost control of it on the highway causing it to fall into a ditch, thereby directly causing plaintiff to incur actual damages in the total amount of P8,489.10.

Defendant is therefore undoubtedly liable to indemnify plaintiff for the entire damages thus incurred, since under paragraph 5 of their contract it "assumed the responsibility for
the proper performance by the guards employed of their duties and (contracted to) be solely responsible for the acts done during their watch hours" and "specifically released
(plaintiff) from any and all liabilities . . . to the third parties arising from the acts or omissions done by the guards during their tour of duty." As plaintiff had duly discharged its
liability to the third party, its customer, Joseph Luy, for the undisputed damages of P8,489.10 caused said customer, due to the wanton and unlawful act of defendant’s guard,
defendant in turn was clearly liable under the terms of paragraph 5 of their contract to indemnify plaintiff in the same amount.

The trial court’s approach that "had plaintiff understood the liability of the defendant to fall under paragraph 5, it should have told Joseph Luy, owner of the car, that under the
Guard Service Contract, it was not liable for the damage but the defendant and had Luy insisted on the liability of the plaintiff, the latter should have challenged him to bring the
matter to court. If Luy accepted the challenge and instituted an action against the plaintiff, it should have filed a third-party complaint against the Commando Security Service
Agency. But if Luy instituted the action against the plaintiff and the defendant, the plaintiff should have filed a crossclaim against the latter," 9 was unduly technical and
unrealistic and untenable.

Plaintiff was in law liable to its customer for the damages caused the customer’s car, which had been entrusted into its custody. Plaintiff therefore was in law justified in making
good such damages and relying in turn on defendant to honor its contract and indemnify it for such undisputed damages, which had been caused directly by the unlawful and
wrongful acts of defendant’s security guard in breach of their contract. As ordained in Article 1159, Civil Code, "obligations arising from contracts have the force of law between
the contracting parties and should be complied with in good faith." cralaw virtua1aw l ibra ry

Plaintiff in law could not tell its customer, as per the trial court’s view, that "under the Guard Service Contract it was not liable for the damage but the defendant" — since the
customer could not hold defendant to account for the damages as he had no privity of contract with defendant. Such an approach of telling the adverse party to go to court,
notwithstanding his plainly valid claim, aside from its ethical deficiency among others, could hardly create any goodwill for plaintiff’s business, in the same way that defendant’s
baseless attempt to evade fully discharging its contractual liability to plaintiff cannot be expected to have brought it more business. Worse, the administration of justice is
prejudiced, since the court dockets are unduly burdened with unnecessary litigation.

ACCORDINGLY, the judgment appealed from is hereby reversed and judgment is hereby rendered sentencing defendant-appellee to pay plaintiff-appellant the sum of P8,489.10
as and by way of reimbursement of the stipulated actual damages and expenses, as well as the costs of suit in both instances. It is so ordered.

G.R. No. L-12191 October 14, 1918

JOSE CANGCO, plaintiff-appellant,

vs.
MANILA RAILROAD CO., defendant-appellee.

Ramon Sotelo for appellant.

Kincaid & Hartigan for appellee.
FISHER, J.:

At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila Railroad Company in the capacity of
clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of Rizal, which is located upon the line of the defendant railroad company;
and in coming daily by train to the company's office in the city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride
upon the company's trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his seat in the second class-car where he was
riding and, making, his exit through the door, took his position upon the steps of the coach, seizing the upright guardrail with his right hand for support.

On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a moderate gradient some distance
away from the company's office and extends along in front of said office for a distance sufficient to cover the length of several coaches. As the train slowed down
another passenger, named Emilio Zuñiga, also an employee of the railroad company, got off the same car, alighting safely at the point where the platform begins
to rise from the level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of his feet came in
contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on the platform. His body at once rolled from the
platform and was drawn under the moving car, where his right arm was badly crushed and lacerated. It appears that after the plaintiff alighted from the train the car
moved forward possibly six meters before it came to a full stop.

The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light located some distance away, objects
on the platform where the accident occurred were difficult to discern especially to a person emerging from a lighted car.

The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was the customary season for harvesting
these melons and a large lot had been brought to the station for the shipment to the market. They were contained in numerous sacks which has been piled on the
platform in a row one upon another. The testimony shows that this row of sacks was so placed of melons and the edge of platform; and it is clear that the fall of the
plaintiff was due to the fact that his foot alighted upon one of these melons at the moment he stepped upon the platform. His statement that he failed to see these
objects in the darkness is readily to be credited.

The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had received were very serious. He was
therefore brought at once to a certain hospital in the city of Manila where an examination was made and his arm was amputated. The result of this operation was
unsatisfactory, and the plaintiff was then carried to another hospital where a second operation was performed and the member was again amputated higher up
near the shoulder. It appears in evidence that the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other expenses in
connection with the process of his curation.

Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of the defendant company, founding his
action upon the negligence of the servants and employees of the defendant in placing the sacks of melons upon the platform and leaving them so placed as to be
a menace to the security of passenger alighting from the company's trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts
substantially as above stated, and drew therefrom his conclusion to the effect that, although negligence was attributable to the defendant by reason of the fact that
the sacks of melons were so placed as to obstruct passengers passing to and from the cars, nevertheless, the plaintiff himself had failed to use due caution in
alighting from the coach and was therefore precluded form recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff
appealed.

It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the platform in the manner above stated; that
their presence caused the plaintiff to fall as he alighted from the train; and that they therefore constituted an effective legal cause of the injuries sustained by the
plaintiff. It necessarily follows that the defendant company is liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory
negligence. In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the defendant company and the
contributory negligence of the plaintiff should be separately examined.

It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation to respond for the damage which
plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of defendant to exercise due care in its performance. That is to say, its
liability is direct and immediate, differing essentially, in legal viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article
1903 of the Civil Code, which can be rebutted by proof of the exercise of due care in their selection and supervision. Article 1903 of the Civil Code is not applicable
to obligations arising ex contractu, but only to extra-contractual obligations — or to use the technical form of expression, that article relates only to culpa aquiliana
and not to culpa contractual.

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction, which was also recognized by this
Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359). In commenting upon article 1093 Manresa clearly points out the
difference between "culpa, substantive and independent, which of itself constitutes the source of an obligation between persons not formerly connected by any
legal tie" and culpa considered as an accident in the performance of an obligation already existing . . . ."

In the Rakes case (supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the Civil Code is not applicable to acts of
negligence which constitute the breach of a contract.

Upon this point the Court said:

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not growing out of pre-existing duties of
the parties to one another. But where relations already formed give rise to duties, whether springing from contract or quasi-contract, then breaches of
those duties are subject to article 1101, 1103, and 1104 of the same code. (Rakes vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)

This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon employers with respect to damages
occasioned by the negligence of their employees to persons to whom they are not bound by contract, is not based, as in the English Common Law, upon the
principle of respondeat superior — if it were, the master would be liable in every case and unconditionally — but upon the principle announced in article 1902 of
the Civil Code, which imposes upon all persons who by their fault or negligence, do injury to another, the obligation of making good the damage caused. One who
places a powerful automobile in the hands of a servant whom he knows to be ignorant of the method of managing such a vehicle, is himself guilty of an act of
negligence which makes him liable for all the consequences of his imprudence. The obligation to make good the damage arises at the very instant that the
unskillful servant, while acting within the scope of his employment causes the injury. The liability of the master is personal and direct. But, if the master has not
been guilty of any negligence whatever in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of his
employment or not, if the damage done by the servant does not amount to a breach of the contract between the master and the person injured.

It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from liability for the latter's acts — on the
contrary, that proof shows that the responsibility has never existed. As Manresa says (vol. 8, p. 68) the liability arising from extra-contractual culpa is always based
upon a voluntary act or omission which, without willful intent, but by mere negligence or inattention, has caused damage to another. A master who exercises all
possible care in the selection of his servant, taking into consideration the qualifications they should possess for the discharge of the duties which it is his purpose
to confide to them, and directs them with equal diligence, thereby performs his duty to third persons to whom he is bound by no contractual ties, and he incurs no
liability whatever if, by reason of the negligence of his servants, even within the scope of their employment, such third person suffer damage. True it is that under
article 1903 of the Civil Code the law creates a presumption that he has been negligent in the selection or direction of his servant, but the presumption is rebuttable
and yield to proof of due care and diligence in this respect.

The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these articles are applicable to cases of extra-
contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep., 624), which was an action brought
upon the theory of the extra-contractual liability of the defendant to respond for the damage caused by the carelessness of his employee while acting within the
scope of his employment. The Court, after citing the last paragraph of article 1903 of the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there instantly arises a
presumption of law that there was negligence on the part of the master or employer either in selection of the servant or employee, or in supervision over
him after the selection, or both; and (2) that that presumption is juris tantum and not juris et de jure, and consequently, may be rebutted. It follows
necessarily that if the employer shows to the satisfaction of the court that in selection and supervision he has exercised the care and diligence of a good
father of a family, the presumption is overcome and he is relieved from liability.

This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is the notable peculiarity of the
Spanish law of negligence. It is, of course, in striking contrast to the American doctrine that, in relations with strangers, the negligence of the servant in
conclusively the negligence of the master.

The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is necessary that there shall have been
some fault attributable to the defendant personally, and that the last paragraph of article 1903 merely establishes a rebuttable presumption, is in complete accord
with the authoritative opinion of Manresa, who says (vol. 12, p. 611) that the liability created by article 1903 is imposed by reason of the breach of the duties
inherent in the special relations of authority or superiority existing between the person called upon to repair the damage and the one who, by his act or omission,
was the cause of it.

On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when such acts or omissions cause
damages which amount to the breach of a contact, is not based upon a mere presumption of the master's negligence in their selection or control, and proof of
exercise of the utmost diligence and care in this regard does not relieve the master of his liability for the breach of his contract.

Every legal obligation must of necessity be extra-contractual or contractual. Extra-contractual obligation has its source in the breach or omission of those mutual
duties which civilized society imposes upon it members, or which arise from these relations, other than contractual, of certain members of society to others,
generally embraced in the concept of status. The legal rights of each member of society constitute the measure of the corresponding legal duties, mainly negative
in character, which the existence of those rights imposes upon all other members of society. The breach of these general duties whether due to willful intent or to
mere inattention, if productive of injury, give rise to an obligation to indemnify the injured party. The fundamental distinction between obligations of this character
and those which arise from contract, rests upon the fact that in cases of non-contractual obligation it is the wrongful or negligent act or omission itself which
creates the vinculum juris, whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties when
entering into the contractual relation.

With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect — and our Legislature
has so elected — whom such an obligation is imposed is morally culpable, or, on the contrary, for reasons of public policy, to extend that liability, without regard to
the lack of moral culpability, so as to include responsibility for the negligence of those person who acts or mission are imputable, by a legal fiction, to others who
are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability —
with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may
consist in having failed to exercise due care in the selection and control of one's agents or servants, or in the control of persons who, by reason of their status,
occupy a position of dependency with respect to the person made liable for their conduct.

The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different from that to which article 1903 relates.
When the sources of the obligation upon which plaintiff's cause of action depends is a negligent act or omission, the burden of proof rests upon plaintiff to prove
the negligence — if he does not his action fails. But when the facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged
that plaintiff has failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the contract is due to
willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the contract and of its nonperformance is sufficient prima facie to
warrant a recovery.

As a general rule . . . it is logical that in case of extra-contractual culpa, a suing creditor should assume the burden of proof of its existence, as the only
fact upon which his action is based; while on the contrary, in a case of negligence which presupposes the existence of a contractual obligation, if the
creditor shows that it exists and that it has been broken, it is not necessary for him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).

As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent conduct of defendant or of his
servants, even though such be in fact the actual cause of the breach, it is obvious that proof on the part of defendant that the negligence or omission of his
servants or agents caused the breach of the contract would not constitute a defense to the action. If the negligence of servants or agents could be invoked as a
means of discharging the liability arising from contract, the anomalous result would be that person acting through the medium of agents or servants in the
performance of their contracts, would be in a better position than those acting in person. If one delivers a valuable watch to watchmaker who contract to repair it,
and the bailee, by a personal negligent act causes its destruction, he is unquestionably liable. Would it be logical to free him from his liability for the breach of his
contract, which involves the duty to exercise due care in the preservation of the watch, if he shows that it was his servant whose negligence caused the injury? If
such a theory could be accepted, juridical persons would enjoy practically complete immunity from damages arising from the breach of their contracts if caused by
negligent acts as such juridical persons can of necessity only act through agents or servants, and it would no doubt be true in most instances that reasonable care
had been taken in selection and direction of such servants. If one delivers securities to a banking corporation as collateral, and they are lost by reason of the
negligence of some clerk employed by the bank, would it be just and reasonable to permit the bank to relieve itself of liability for the breach of its contract to return
the collateral upon the payment of the debt by proving that due care had been exercised in the selection and direction of the clerk?

This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the performance of a contract has frequently
been recognized by the supreme court of Spain. (Sentencias of June 27, 1894; November 20, 1896; and December 13, 1896.) In the decisions of November 20,
1896, it appeared that plaintiff's action arose ex contractu, but that defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a
defense. The Spanish Supreme Court rejected defendant's contention, saying:

These are not cases of injury caused, without any pre-existing obligation, by fault or negligence, such as those to which article 1902 of the Civil Code
relates, but of damages caused by the defendant's failure to carry out the undertakings imposed by the contracts . . . .

A brief review of the earlier decision of this court involving the liability of employers for damage done by the negligent acts of their servants will show that in no
case has the court ever decided that the negligence of the defendant's servants has been held to constitute a defense to an action for damages for breach of
contract.

In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages caused by the negligence of his
driver. In that case the court commented on the fact that no evidence had been adduced in the trial court that the defendant had been negligent in the employment
of the driver, or that he had any knowledge of his lack of skill or carefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for damages caused by the loss of a
barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's servants in the course of the performance of a contract of towage. The
court held, citing Manresa (vol. 8, pp. 29, 69) that if the "obligation of the defendant grew out of a contract made between it and the plaintiff . . . we do not think that
the provisions of articles 1902 and 1903 are applicable to the case."

In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages for the personal injuries caused by the negligence of
defendant's chauffeur while driving defendant's automobile in which defendant was riding at the time. The court found that the damages were caused by the
negligence of the driver of the automobile, but held that the master was not liable, although he was present at the time, saying:

. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable opportunity to observe them and to direct
the driver to desist therefrom. . . . The act complained of must be continued in the presence of the owner for such length of time that the owner by his
acquiescence, makes the driver's acts his own.

In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court rested its conclusion as to the liability
of the defendant upon article 1903, although the facts disclosed that the injury complaint of by plaintiff constituted a breach of the duty to him arising out of the
contract of transportation. The express ground of the decision in this case was that article 1903, in dealing with the liability of a master for the negligent acts of his
servants "makes the distinction between private individuals and public enterprise;" that as to the latter the law creates a rebuttable presumption of negligence in
the selection or direction of servants; and that in the particular case the presumption of negligence had not been overcome.

It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather than as based upon the breach of the
contract of carriage, and an examination of the pleadings and of the briefs shows that the questions of law were in fact discussed upon this theory. Viewed from
the standpoint of the defendant the practical result must have been the same in any event. The proof disclosed beyond doubt that the defendant's servant was
grossly negligent and that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of negligence in
its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the injury suffered by plaintiff, whether the breach of the
duty were to be regarded as constituting culpa aquiliana or culpa contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident
in the course of the performance of a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential characteristics are
identical. There is always an act or omission productive of damage due to carelessness or inattention on the part of the defendant. Consequently, when the court
holds that a defendant is liable in damages for having failed to exercise due care, either directly, or in failing to exercise proper care in the selection and direction
of his servants, the practical result is identical in either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada case that
defendant was liable for the damages negligently caused by its servants to a person to whom it was bound by contract, and made reference to the fact that the
defendant was negligent in the selection and control of its servants, that in such a case the court would have held that it would have been a good defense to the
action, if presented squarely upon the theory of the breach of the contract, for defendant to have proved that it did in fact exercise care in the selection and control
of the servant.

The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-contractual obligations. The field of non-
contractual obligation is much more broader than that of contractual obligations, comprising, as it does, the whole extent of juridical human relations. These two
fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual
liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes the
source of an extra-contractual obligation had no contract existed between the parties.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe means of entering and leaving its
trains (civil code, article 1258). That duty, being contractual, was direct and immediate, and its non-performance could not be excused by proof that the fault was
morally imputable to defendant's servants.

The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing an obstruction upon the platform
was a breach of its contractual obligation to maintain safe means of approaching and leaving its trains, the direct and proximate cause of the injury suffered by
plaintiff was his own contributory negligence in failing to wait until the train had come to a complete stop before alighting. Under the doctrine of comparative
negligence announced in the Rakes case (supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's negligence and
plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is, therefore, important to ascertain if defendant was in fact guilty of
negligence.

It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular injury suffered by him could not have occurred.
Defendant contends, and cites many authorities in support of the contention, that it is negligence per se for a passenger to alight from a moving train. We are not
disposed to subscribe to this doctrine in its absolute form. We are of the opinion that this proposition is too badly stated and is at variance with the experience of
every-day life. In this particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it came to stop within six
meters from the place where he stepped from it. Thousands of person alight from trains under these conditions every day of the year, and sustain no injury where
the company has kept its platform free from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in alighting
as he did had it not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence (vol. 3, sec. 3010) as follows:

The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving railway train, is that of
ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex and condition of the passenger, would have
acted as the passenger acted under the circumstances disclosed by the evidence. This care has been defined to be, not the care which may or should
be used by the prudent man generally, but the care which a man of ordinary prudence would use under similar circumstances, to avoid injury."
(Thompson, Commentaries on Negligence, vol. 3, sec. 3010.)

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the test is this; Was there anything in the
circumstances surrounding the plaintiff at the time he alighted from the train which would have admonished a person of average prudence that to get off the train
under the conditions then existing was dangerous? If so, the plaintiff should have desisted from alighting; and his failure so to desist was contributory negligence. 1awph!l.net

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was guilty of contributory negligence is that
he stepped off the car without being able to discern clearly the condition of the platform and while the train was yet slowly moving. In considering the situation thus
presented, it should not be overlooked that the plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on
the platform existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe egress from its trains, the
plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that the platform was clear. The place, as we have already stated,
was dark, or dimly lighted, and this also is proof of a failure upon the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by
any possibility concede that it had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their presence would be
revealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are to be noted: The company's platform
was constructed upon a level higher than that of the roadbed and the surrounding ground. The distance from the steps of the car to the spot where the alighting
passenger would place his feet on the platform was thus reduced, thereby decreasing the risk incident to stepping off. The nature of the platform, constructed as it
was of cement material, also assured to the passenger a stable and even surface on which to alight. Furthermore, the plaintiff was possessed of the vigor and
agility of young manhood, and it was by no means so risky for him to get off while the train was yet moving as the same act would have been in an aged or feeble
person. In determining the question of contributory negligence in performing such act — that is to say, whether the passenger acted prudently or recklessly — the
age, sex, and physical condition of the passenger are circumstances necessarily affecting the safety of the passenger, and should be considered. Women, it has
been observed, as a general rule are less capable than men of alighting with safety under such conditions, as the nature of their wearing apparel obstructs the free
movement of the limbs. Again, it may be noted that the place was perfectly familiar to the plaintiff as it was his daily custom to get on and of the train at this station.
There could, therefore, be no uncertainty in his mind with regard either to the length of the step which he was required to take or the character of the platform
where he was alighting. Our conclusion is that the conduct of the plaintiff in undertaking to alight while the train was yet slightly under way was not characterized
by imprudence and that therefore he was not guilty of contributory negligence.

The evidence shows that the plaintiff, at the time of the accident, was earning P25 a month as a copyist clerk, and that the injuries he has suffered have
permanently disabled him from continuing that employment. Defendant has not shown that any other gainful occupation is open to plaintiff. His expectancy of life,
according to the standard mortality tables, is approximately thirty-three years. We are of the opinion that a fair compensation for the damage suffered by him for his
permanent disability is the sum of P2,500, and that he is also entitled to recover of defendant the additional sum of P790.25 for medical attention, hospital
services, and other incidental expenditures connected with the treatment of his injuries.

The decision of lower court is reversed, and judgment is hereby rendered plaintiff for the sum of P3,290.25, and for the costs of both instances. So ordered.

Arellano, C.J., Torres, Street and Avanceña, JJ., concur.

.R. No. 34840 September 23, 1931

NARCISO GUTIERREZ, plaintiff-appellee,

vs.
BONIFACIO GUTIERREZ, MARIA V. DE GUTIERREZ, MANUEL GUTIERREZ, ABELARDO VELASCO, and SATURNINO CORTEZ, defendants-appellants.

L.D. Lockwood for appellants Velasco and Cortez.

San Agustin and Roxas for other appellants.
Ramon Diokno for appellee.

MALCOLM, J.:

This is an action brought by the plaintiff in the Court of First Instance of Manila against the five defendants, to recover damages in the amount of P10,000, for
physical injuries suffered as a result of an automobile accident. On judgment being rendered as prayed for by the plaintiff, both sets of defendants appealed.

On February 2, 1930, a passenger truck and an automobile of private ownership collided while attempting to pass each other on the Talon bridge on the Manila
South Road in the municipality of Las Piñas, Province of Rizal. The truck was driven by the chauffeur Abelardo Velasco, and was owned by Saturnino Cortez. The
automobile was being operated by Bonifacio Gutierrez, a lad 18 years of age, and was owned by Bonifacio's father and mother, Mr. and Mrs. Manuel Gutierrez. At
the time of the collision, the father was not in the car, but the mother, together will several other members of the Gutierrez family, seven in all, were accommodated
therein. A passenger in the autobus, by the name of Narciso Gutierrez, was en route from San Pablo, Laguna, to Manila. The collision between the bus and the
automobile resulted in Narciso Gutierrez suffering a fracture right leg which required medical attendance for a considerable period of time, and which even at the
date of the trial appears not to have healed properly.
It is conceded that the collision was caused by negligence pure and simple. The difference between the parties is that, while the plaintiff blames both sets of
defendants, the owner of the passenger truck blames the automobile, and the owner of the automobile, in turn, blames the truck. We have given close attention to
these highly debatable points, and having done so, a majority of the court are of the opinion that the findings of the trial judge on all controversial questions of fact
find sufficient support in the record, and so should be maintained. With this general statement set down, we turn to consider the respective legal obligations of the
defendants.

In amplification of so much of the above pronouncement as concerns the Gutierrez family, it may be explained that the youth Bonifacio was in incompetent
chauffeur, that he was driving at an excessive rate of speed, and that, on approaching the bridge and the truck, he lost his head and so contributed by his
negligence to the accident. The guaranty given by the father at the time the son was granted a license to operate motor vehicles made the father responsible for
the acts of his son. Based on these facts, pursuant to the provisions of article 1903 of the Civil Code, the father alone and not the minor or the mother, would be
liable for the damages caused by the minor.

We are dealing with the civil law liability of parties for obligations which arise from fault or negligence. At the same time, we believe that, as has been done in other
cases, we can take cognizance of the common law rule on the same subject. In the United States, it is uniformly held that the head of a house, the owner of an
automobile, who maintains it for the general use of his family is liable for its negligent operation by one of his children, whom he designates or permits to run it,
where the car is occupied and being used at the time of the injury for the pleasure of other members of the owner's family than the child driving it. The theory of the
law is that the running of the machine by a child to carry other members of the family is within the scope of the owner's business, so that he is liable for the
negligence of the child because of the relationship of master and servant. (Huddy On Automobiles, 6th ed., sec. 660; Missell vs. Hayes [1914], 91 Atl., 322.) The
liability of Saturnino Cortez, the owner of the truck, and of his chauffeur Abelardo Velasco rests on a different basis, namely, that of contract which, we think, has
been sufficiently demonstrated by the allegations of the complaint, not controverted, and the evidence. The reason for this conclusion reaches to the findings of the
trial court concerning the position of the truck on the bridge, the speed in operating the machine, and the lack of care employed by the chauffeur. While these facts
are not as clearly evidenced as are those which convict the other defendant, we nevertheless hesitate to disregard the points emphasized by the trial judge. In its
broader aspects, the case is one of two drivers approaching a narrow bridge from opposite directions, with neither being willing to slow up and give the right of way
to the other, with the inevitable result of a collision and an accident.

The defendants Velasco and Cortez further contend that there existed contributory negligence on the part of the plaintiff, consisting principally of his keeping his
foot outside the truck, which occasioned his injury. In this connection, it is sufficient to state that, aside from the fact that the defense of contributory negligence
was not pleaded, the evidence bearing out this theory of the case is contradictory in the extreme and leads us far afield into speculative matters.

The last subject for consideration relates to the amount of the award. The appellee suggests that the amount could justly be raised to P16,517, but naturally is not
serious in asking for this sum, since no appeal was taken by him from the judgment. The other parties unite in challenging the award of P10,000, as excessive. All
facts considered, including actual expenditures and damages for the injury to the leg of the plaintiff, which may cause him permanent lameness, in connection with
other adjudications of this court, lead us to conclude that a total sum for the plaintiff of P5,000 would be fair and reasonable. The difficulty in approximating the
damages by monetary compensation is well elucidated by the divergence of opinion among the members of the court, three of whom have inclined to the view that
P3,000 would be amply sufficient, while a fourth member has argued that P7,500 would be none too much.

In consonance with the foregoing rulings, the judgment appealed from will be modified, and the plaintiff will have judgment in his favor against the defendants
Manuel Gutierrez, Abelardo Velasco, and Saturnino Cortez, jointly and severally, for the sum of P5,000, and the costs of both instances.